Behind the coffee record
Table of Contents
During the days when the whole country entered the holiday from April 30 to May 1, Mr. LT, director of a coffee export company, was extremely depressed because of losses. Sharing with close friends, he sadly said that he had to sell his real estate and the apartment he had just bought for his son to move out to pay for an export contract. “Most coffee export companies have to sign contracts in advance and set prices. But no one expected the price of coffee to increase so rapidly. Up to now, if any business does not have coffee in stock, it is extremely difficult to find and buy it. If they grit their teeth and carry out the contract, it will be considered a loss, but Failure to do so will result in a deposit being compensated and loss of reputation. Either way, I lose capital, like I have to sell assets because of coffee,” Mr. T. lamented.
Farmers have a successful harvest because coffee prices have increased, but businesses are facing difficulties
It’s not as tragic as Mr. LT’s business mentioned above, but Global Trade Link Company, which owns the Meet More agricultural coffee brand, is also in a difficult situation because of rising coffee prices. Talking with Thanh Nien, Mr. Nguyen Ngoc, CEO of this business, shared: “Even though Meet More’s products mix many types of fruits and other agricultural products, they still use coffee ingredients mainly. For signed export contracts, we tried to renegotiate them but could not change much. In this situation, we can only balance and calculate everything to save costs. If we are lucky enough to break even, that’s great.”
Days before the holiday, domestic coffee prices soared to 133,000 VND/kg, an all-time record high price. However, most farmers sold out right from the beginning of the season. Mr. Truong Van Ty, owner of a coffee garden of more than 3 hectares in Dak Lak, regretted: “When the coffee price was 75,000 VND/kg, I sold it and thought it was a good price. But who would have thought that the price would almost double in just 2 months. If I calculate the current price, I have lost more than 300 million VND.”
According to some coffee exporting businesses, agents are currently continuing to hold goods, making it more difficult for exporting businesses to find supplies. It is currently estimated that businesses may not have been able to deliver goods according to signed contracts about 150,000 – 200,000 tons since Vietnam started the harvest in October 2023, equivalent to about 10% – 13% of harvest output. . This could cause a wave of defaults in the near future.
Pepper and cashew nuts are also suffering because of rising prices
Enterprises processing and exporting cashew nuts have been losing money for many years, and this year their losses are even heavier because of rising raw material prices. Reply PV Youth, Mr. Vu Thai Son, Chairman of Binh Phuoc Cashew Association, General Director of Long Son Joint Stock Company, lamented: “A few years ago, the cashew industry was difficult because of competition in purchasing raw materials at high prices, and high inventory when debt repayment was due. Banks have to sell, leading to losses. This year, it’s the same vicious cycle but more severe. At the beginning of the season, we were losing money right away because raw material prices increased too quickly. For the past six years, cashew prices have gone down, businesses have signed contracts in advance to follow that trend. Unexpectedly, this year’s crop failure, the price of imported raw materials increased by 25%, businesses accidentally signed low-price contracts, it was considered a loss.
Vietnam has many cashew kernel processing facilities but has not been proactive in raw materials
According to the Vietnam Cashew Association, Vietnam’s cashew kernel exports still account for 80% of total global output for 16 consecutive years, however, the advantage is gradually being lost as raw material areas are narrowed and many cashew-growing countries are losing money. Gradually become more independent in processing technology. Mr. Vu Thai Son explained that cashew kernel processing factories have sprung up like mushrooms in Vietnam, but the raw material areas are held by other countries. This situation makes factories extremely passive in maintaining production. “This year’s crop failure caused African countries to immediately restrict exports and impose floor prices to benefit their farmers. Sales must be through bidding. In Cambodia, Chinese traders quickly purchased them in advance, brought them to Vietnam for processing and exported them to China for consumption. The domestic raw cashew material area only meets about 15% of the needs of factories. This year, due to drought, prices have increased but productivity has decreased and quality has also decreased, making it more difficult for businesses to compete to buy raw materials,” Mr. Son analyzed.
Similarly, pepper prices have increased to nearly 100,000 VND/kg but many people are still not willing to sell. A representative of an agricultural export company in Dak Lak said: “This year, pepper growers are not selling out massively like in previous years due to the price support of some other agricultural products such as durian and coffee. higher. Many people are willing to store for up to 2-3 years because they have another source of income. Some people even say that if the price of pepper drops low, they will stop growing it and grow other crops such as durian and coffee to get higher prices. That’s why it is currently very difficult for businesses to purchase pepper, so we temporarily do not dare to sign a new contract.”
At a recent conference with Vietnamese business deals abroad organized by the Ministry of Industry and Trade, Ms. Hoang Thi Lien, President of the Vietnam Pepper and Spice Association (VPSA), shared: “A while ago a year, pepper prices are at
67,000 VND/kg but has now increased to 97,000 – 98,000 VND/kg, equivalent to an increase of 44%. Price increases like this are very happy for farmers, but it is also very difficult for purchasing businesses because people actively hoard goods. One of the main reasons driving up pepper prices is limited supply worldwide, not just Vietnam. The prolonged drought weather phenomenon has led to this year’s pepper output decreasing by 10% to about 170,000 tons compared to last year, the lowest level in the past year.
The last 5 years. Meanwhile, consumers around the world have not accepted the price increase too quickly, so they still do not agree to much adjustment. That’s why it creates tension in the market and very high risks for export businesses.”
Raw cashew producing countries are pushing prices up
Regarding the cashew industry, Mr. Vu Thai Son recommended: “In the context that raw cashew producing countries are applying export restrictions, pushing up prices, factories in Vietnam need to link up and unite. . In the immediate future, we must reduce factory capacity and not increase raw material purchases at any cost. For example, if your processing capacity is 50 tons/day, you should reduce it to 40 tons/day. Only this way can help raw material suppliers reduce the price of raw cashew nuts, but with the current increase in momentum, the more Vietnamese businesses sell, the more they lose money.”
According to Thanh Nien
