The paradox of exporting coffee and pepper

Compared to the same period last year, pepper prices increased by 30%, coffee prices increased by more than 100%. This has attracted many domestic and foreign enterprises to participate in purchasing, processing and exporting these two types of agricultural products because of their high profitability.

Foreign enterprises dominate

Regarding pepper, Vietnam has been the world’s leading country in production and export for the past 20 years. However, according to a recent announcement by the Vietnam Pepper and Spice Association (VPSA), the leading enterprises in pepper exports in the first 2 months of 2024 are all from abroad. Specifically, leading is Nedspice Vietnam Company (Netherlands) with 3,555 tons, up 44% over the same period last year; followed by Olam Vietnam (India) with 3,229 tons, an increase of 32%. Meanwhile, the two Vietnamese enterprises in the next position both had a decrease in export output. Specifically, Tran Chau Company reached 2,265 tons, down 33.4%; Phuc Sinh Company 1,744 tons, down 31.5%.

The ranking of pepper export enterprises with top output also belongs to Olam Vietnam and Nedspice Vietnam, while Tran Chau Company and Phuc Sinh Company ranked 3rd and 4th. While previously, Tran Chau and Phuc Sinh regularly holds the top position in Vietnam’s pepper exports. Mr. Phan Minh Thong, founder of Phuc Sinh Company, is known as the “pepper king” for this reason.

In the processed coffee segment, enterprises with foreign direct investment (FDI) also account for an overwhelming market share in exports. According to the Vietnam Coffee – Cocoa Association (Vicofa), in the first 5 months of the 2023 – 2024 coffee season (from October 2023 to February 2024), the top 10 enterprises exporting roasted, ground and mixed coffee Most tans have FDI capital. Among them, Nestlé Vietnam (Switzerland) leads with about 57.5 million USD and a series of other names such as Outspan Vietnam (India), Delicious Coffee (India), Trung Nguyen Group (Vietnam) , Iguacu Vietnam (Japan), URC Vietnam (Philippines), Tata Coffee Vietnam (India), Instanta Vietnam (Europe), Sucafina Vietnam (multinational) and Select Food International Joint Stock Company select vertices. Thus, in this list there is only one Vietnamese brand, Trung Nguyen Group.

In previous crop years, such as the 2022 – 2023 crop year, FDI enterprises exporting raw coffee beans (raw materials) accounted for a market share of about 33.1% and 71.7% of processed coffee exports (roasted and ground coffee). dissolve). In the 2021 – 2022 crop year, this rate is 31.7% and 66% respectively.

Talking to a reporter from Nguoi Lao Dong Newspaper, Mr. Nguyen Nam Hai, Chairman of Vicofa, said that FDI enterprises are also Vicofa members and they have advantages and potential in capital, technology, and market. “Recently, the export market share of FDI enterprises has tended to increase. Part of the reason is due to the increase in coffee prices, making the capital weakness of Vietnamese enterprises clearly exposed. With the same amount of capital, enterprises only buy about half of last year’s coffee volume” – Mr. Hai explained.

Not easy to change

Explaining the fact that foreign enterprises occupy a large market share in processed coffee exports, Mr. Nguyen Ngoc Luan, General Director of Toan Cau Trading Co., Ltd. (Meet More coffee brand), said that in order to invest Investing in an instant coffee processing factory is very expensive, especially the coffee essence extraction line requires an initial capital of about 1,000 billion VND. This is a huge barrier for Vietnamese businesses. Meanwhile, foreign corporations with hundreds of years of experience have strong capital at low costs, they have technology and global brands, so they have an overwhelming advantage. “The instant coffee segment in the world is growing very well at a rate of 30%/year due to convenience and nutritional value; the future is very potential” – Mr. Luan assessed.

As for roasted and ground coffee, Mr. Luan said that the difficulty for Vietnamese businesses is that they have not yet caught the consumer taste of international customers and the taste of Vietnamese roasted and ground coffee is quite different. Therefore, export output to other countries is still small. However, Prof. Dr. Bui Chi Buu, former Director of the Southern Institute of Agricultural Sciences, said that Vietnam is the world’s coffee and pepper raw material area, so it is important for foreign agricultural and food corporations to Looking to purchase is inevitable. “Vietnamese enterprises do not have the same capital resources as FDI enterprises, but they are very flexible and do business effectively. Many Vietnamese enterprises also buy coffee and pepper from Brazil, Indonesia… to process for export, bringing profits.” good even though they are not leading in export output” – Professor Buu acknowledged.

Prof. Dr. Bui Chi Buu said that foreign corporations investing in Vietnamese agriculture, especially coffee, pepper… bring many benefits, helping the invested industries develop methodically and increase productivity. competitive force. Overall, attracting FDI capital into agriculture brings many benefits and it is necessary to attract more of this capital flow. “In the value chain of many agricultural product industries, Vietnamese farmers and businesses still account for a high proportion” – Professor Buu compared.