Mainly export raw materials
Thanks to rising prices, the coffee industry continuously sets many records in terms of export value, but inside there are still many unsustainable factors.
According to statistics from the General Department of Customs, in the first 2 months of 2024, Vietnam exported about 394,167 tons of coffee, bringing in a value of about 1.25 billion USD – an increase of 15.1% in volume and an increase of 67.7% in value. value compared to the same period last year. It is forecasted that the coffee industry will reach a new peak in 2024 after the record export of 4.18 billion USD in 2023.
Farmers win big
Mr. Nguyen Van Thach (living in Krong Pak district, Dak Lak province) said his family has nearly 2 hectares of coffee grown for more than 20 years. For a long time, coffee prices were low, while the cost of fertilizers and pesticides continuously increased, so his family only “made a profit”.
Since the end of last year until now, coffee prices have continuously increased. With more than 3 tons of green coffee, Mr. Thach’s family earned more than 250 million VND – a high level beyond his and many others’ expectations. Some households who once wanted to replace coffee with other crops have given up the idea.
In Dak Lak, in 2023, the total export turnover of the province will reach 1.6 billion USD, of which coffee brings in up to 900 million USD. In the first 2 months of 2024, the province’s export turnover is estimated to reach 327 million USD (up 40.5% over the same period in 2023) and coffee is still the main product.
In Lam Dong, this locality currently has nearly 176,000 hectares of coffee with an average output of 600,000 tons/year. With this area, Lam Dong ranks second after Dak Lak but has the highest output and productivity in the country. According to Lam Dong Provincial People’s Committee, the province’s export value in 2024 as of March 15 reached more than 71 million USD, of which coffee reached nearly 40.5 million USD (accounting for 57%), with the main markets being Japan. Japan, Korea, Europe.
Mr. Hoang Dat – a farmer who grows 9 hectares of coffee in Lam Ha district, Lam Dong province – said that it has been many years since coffee had an “unbelievable” price like today – up to 95,000 VND/kg – without any storage. sell.
Mr. Bui Xuan Thang, Director of Cau Dat Bean Company Limited (Xuan Truong commune, Da Lat city, Lam Dong province), calculated that at the current price of 95,000 VND/kg, after deducting costs, coffee growers still have The profit is about 200 million VND/ha. Mr. Doan Manh Trinh, Deputy Director of Tam Trinh Coffee Import-Export Company (Gia Lam commune, Lam Ha district), excitedly said: “This year coffee growers make a lot of money!”.
Domestic coffee prices have continuously set records within the past year. Photo: Cao Nguyen
Crude export more than 80%
According to a report by the Vietnam Coffee – Cocoa Association (VICOFA), in the 2022-2023 crop year (from October 2022 to September 2023), Vietnam’s coffee exports reached 4.08 billion USD – a high level. highest ever.
Of which, the main export is still Robusta coffee with 1.49 million tons, turnover of 3.25 billion USD; Arabica green coffee reached 169 million USD; Decaffeinated green coffee reached a turnover of 136 million USD. The remaining processed coffee (roasted and instant) is worth 510 million USD, accounting for about 12.5% of the total value of exported coffee.
Therefore, commenting on the past crop year, Mr. Nguyen Nam Hai, Chairman of VICOFA, said that raw coffee exports are still at a high rate. Although the export turnover rate of processed coffee products has increased, it is still low. Because the main export of raw coffee is, international consumers rarely know about Vietnamese coffee because the products are sold under the names of processors.
Mr. Nguyen Duc Hung, Director of Napoli Coffee Import-Export Production Trading Joint Stock Company, said he has traveled to more than 120 countries around the world but rarely finds Vietnamese brand coffee on foreign shelves. As a person in the industry, he found that the biggest reason is that Vietnamese enterprises lack capital and technology.
“To build a coffee processing factory for export, the capital must be at least 1,000 billion VND. Very few businesses in the industry have this amount of initial investment, including loans. It is time for the state to focus on Investing in agricultural product processing factories, because that is Vietnam’s national advantage” – Mr. Hung acknowledged.
Prof. Dr. Bui Chi Buu, former Director of the Southern Institute of Agricultural Sciences, said that in the past, Vietnam’s policies focused on encouraging the food industry in the food sector rather than beverages. This makes Vietnam’s beverage industry slow to develop and inferior to foreign corporations.
“In the coffee segment, many corporations are more than a hundred years old and have global brands, so it is not easy for young Vietnamese businesses to compete. Some businesses may choose the outsourcing route to start” – GS- Dr. Bui Chi Buu commented.
Gone are the days of cheap coffee
The coffee market is in a period of feverish prices, focusing on Robusta – the type of coffee for which Vietnam is the number 1 supplier globally. The current sudden increase in coffee prices is due to a decrease in Robusta output of nearly 20% – partly due to the influence of climate change and the strong impact of the El Nino phenomenon.
Supply is limited while demand is increasing, pushing coffee prices to record levels. The price of 95,000 VND/kg is considered short-term and local. So in the future, what will coffee prices be like?
To answer this question, we need to look back at the changes in the coffee industry over the years. That is the quality of Vietnamese Robusta coffee beans has increased dramatically. From being considered only a low quality source, Vietnamese Robusta coffee, which was only 1/3 the price, has now increased to more than 80% of the price of Arabica coffee. To date, roasters around the world have included Robusta coffee in their recipes. Among popular types of roasted coffee in the world, the proportion of Robusta from the previous 20%-30% is now 40%-50%. As for instant coffee, Robusta dominates thanks to its caffeine content and many other characteristics.
Year by year, coffee processing factories around the world become increasingly dependent on Vietnamese Robusta raw materials. However, they are accustomed to setting low prices to get high profits.
Because coffee is undervalued, farmers’ livelihoods are not guaranteed when sticking to this crop. When passion fruit or durian appear, some households growing passion fruit earn 150-300 million VND, durian 500-700 million VND/hectare/year, it will be difficult for farmers to be loyal to coffee trees when the profit is less than 100 million VND. million dong. So they intercrop, even cut down coffee gardens to specialize in durian or passion fruit. This is also one of the reasons why Vietnam’s coffee output is in short supply. This trend is still happening because when land is limited, people will choose to plant the most economically effective crop.
Robusta coffee is a product consumed globally, and for many people it is even an essential commodity that cannot be abandoned. But for farmers, if growing coffee is not profitable, they are willing to give up – then it will be a threat to the world’s supply. This year, the Central Highlands is in drought, and a serious Robusta coffee shortage is still ahead.
Therefore, in order to have a sustainable source of goods to serve the market, coffee processors need to share profits adequately with Vietnamese farmers, without forcing prices on them during the season like before.
I think that the current coffee price of 95,000 VND/kg may be temporary and local. However, I also believe that the price of Vietnamese coffee will not be as cheap as before. Roasters should prepare for a new level of raw coffee prices, at least 50,000-70,000 VND/kg, to ensure profits for growers and business calculations.
Meanwhile, Vietnamese Robusta coffee is at a “golden opportunity” to build a national brand when it has all the following factors: high quality, good value, modest output.
THAI NHU HIEP, Vice President of Vietnam Coffee – Cocoa Association (Ngoc Anh wrote)
