Jibber
Mr. Nguyen Ngoc Luan, founder of agricultural coffee brand Meet More (Hoc Mon district, Ho Chi Minh City), said his business is greatly affected because the price of fresh coffee ingredients increases day by day. A few days ago, the new price was 86,000 VND/kg, the next day it was 91,000 VND/kg…
Currently the price is 95,000 VND/kg. “This day last year, the price of coffee was only 41,000 VND/kg, now it has jumped to nearly 100,000 VND/kg. Coffee prices are like an unstoppable horse, businesses can’t keep up,” Mr. Luan said.
According to Mr. Luan, since mid-June 2023, coffee prices have shown signs of increasing from 40,000 – 45,000 VND/kg, then to 50,000 VND/kg. Each price change lasts for several months. But after Tet, prices increased rapidly and unusually high. Although the price is high, farmers do not benefit because they do not have coffee to sell. They sell it in the garden immediately after harvesting, rather than storing it waiting for a price increase.
A representative of Meet More Company said that it can only hold out until June if coffee prices continue to increase. Photo: UP
Mr. Luan said that when raw material prices increase, Meet More as well as other coffee producers and processors are greatly affected by previously signed export orders.
Normally, the time from signing the contract to delivery is about 7 months. Prices increased rapidly and suddenly, making it impossible for businesses to store raw materials, if they did, not much. Mr. Luan said that there are two reasons why businesses cannot increase prices with partners. That is, the USD exchange rate is increasing, logistics costs are also increasing, if the price of goods increases, it will be almost impossible to sell goods. Therefore, businesses have to cut all profits, even make up for losses on previously signed large orders.
“We can only buy raw materials in small doses to complete orders. Since the beginning of the year, many foreign partners have come to buy goods, but we have all refused, because if we accept more, we will incur more losses, unless the partner is willing to increase the price,” Mr. Luan said. According to him, he can only hold out until about June.
Real Bean Coffee Company manages by closing orders from time to time. Photo: NVCC
According to Mr. Do Ha Nam, Chairman of the Board of Directors of Intimex Group, coffee prices have doubled over the same period, this is the dream price of farmers. According to Mr. Nam, the reason why coffee prices are increasing is because the world supply is lacking and Vietnam is almost “alone in the market”.
In addition, the EU’s regulation that coffee exported to this market must meet anti-deforestation regulations (EUDR) is also a factor affecting current coffee prices. Meanwhile, many countries have not yet prepared the procedures to meet the above regulatory requirements, but Vietnam has basically met it, so customers choose Vietnamese coffee.
Closing prices by time
Ms. Van Thi Loan, Director of Real Bean Coffee Co., Ltd. (Thu Duc City), said that on average, this company only exports 2-3 containers of coffee per month, a decrease of 50% compared to the previous period. The price of coffee ingredients is high but there is not enough supply. Ms. Loan’s business manages by not signing long-term contracts with foreign partners but fixing prices from time to time. At the same time, accept breaking even to keep the relationship.
With the current high price of coffee, Ms. Loan believes that this is not the real price. Agricultural product prices go up and down. Once they reach their peak, they will have to come down. Around April and May, when the Brazilian and Indonesian markets return to stock, there will likely be a market correction.
Many agricultural exporters believe that with current historic peak prices, they cannot buy goods, not to mention some suppliers do not deliver due to price fluctuations.
For imported goods, due to difficulties in output, they cannot raise prices for consumers according to this new price. The market has not yet accepted and kept up, so both exporters and importers are at risk.
According to Mr. Nguyen Van Muoi, Head of the Southern Department of the Vietnam Horticultural Association, the coffee shortage is not only happening in Vietnam but globally, thereby pushing up prices.
In the Central Highlands, buyers come to the garden and accept to buy coffee types that were previously criticized. Output decreased relatively much.
“I think that at this time, each business must have its own plan. We have to accept waiting to overcome the current difficult period,” Mr. Muoi said.
The shop owner is worried that the coffee is “bitter”
Many coffee shop owners stood still when the price of this item skyrocketed. Ms. Nguyen Thi Ha, owner of Ha Minh coffee shop (Nam Ky Khoi Nghia, District 1, Ho Chi Minh City) said that since the beginning of the year until now, the coffee supplier has twice announced price increases, each time from 5,000 – 10,000 VND/kg (depending on type).
“After the increase, coffee has a new price of 135,000 – 155,000 VND/kg. Even though the price has increased, the shop cannot increase the price of a cup of coffee because the number of customers has decreased a lot” – Ms. Ha said.
Trading take-away coffee for only 10,000 – 15,000 VND/cup, Mr. Tran Van Binh (living in Binh Thanh district, Ho Chi Minh City) has a headache when the price has increased many times in the past 3 months.
“I try to keep the selling price to keep customers, but if the increase in raw materials continues, I will be forced to increase the price by about 2,000 – 3,000 VND/cup” – Mr. Binh said.
The price of pure powdered filtered coffee has now increased to 200,000 – 250,000 VND/kg depending on the type, with many places even quoting prices up to 300,000 VND/kg. Mr. Nguyen Van Thanh (living in Tan Phu district, Ho Chi Minh City), specializing in providing packaged coffee, said he had sought out many farmers in Gia Lai, Dak Lak… to buy raw materials but they did not have any.
To develop sustainably, businesses need to promote processing, increase value, and chain production. According to Mr. Phan Minh Thong, Chairman of the Board of Directors of Phuc Sinh Joint Stock Company, the coffee industry needs to continue to promote processing. “We need to look straight at the problem that we cannot always do business in a purely commercial manner, we need to build factories, invest in deep processing and every year we must pay attention to technology and deeper processing capabilities. again. That is the key point and advantage that helps Vietnam export agricultural products of higher value” – Mr. Thong commented.
