The highest export turnover in more than a decade
2022 is a very successful year for Vietnam’s coffee exports. According to preliminary statistics from the General Department of Customs, Vietnam has exported 1.78 million tons of coffee in the past year with a total turnover of over 4.06 billion USD. This is the highest level in more than a decade.
This success comes from the promotion of exports, when the price of coffee in the market reached the highest level since 2011, combined with the fact that the US Federal Reserve (Fed) has raised interest rates 7 times in a row, causing the rate to be higher. USD/VND price increased sharply.
However, it is also the massive export that has caused the domestic supply to drop to a very low level since the end of 2022 until now. Pham Quang Anh, Director of the Vietnam Commodity News Center assessed: “In the period of the second quarter and the third quarter of last year, when the demand was high and the exchange rate was favorable, businesses actively collected coffee. from farmers and boost exports. Both domestic and export prices are good, leading to pushing as much as possible. This resulted in a sharp drop in actual inventories from the end of 2022 and affected export volumes in the first period of 2023.”
In 2022, Vietnam’s coffee exports increased by nearly 14% compared to 2021, while output increased only 9% from 1.74 million tons to 1.89 million tons (according to data from the US Department of Agriculture). ). Even, coffee output harvested at the end of 2022 is forecasted to decrease by 10% to 15% due to heavy rain affecting the harvesting process. Thus, the total export supply this year may be lower than last year, and this will make it difficult for the coffee export industry to maintain the same growth rate as in 2022.
Besides, the Fed has gradually reduced the momentum of raising interest rates in 2023, with an increase of 25 basis points in the first adjustment of this year and is likely to continue to maintain this rate of increase in March. This will cause the exchange rate difference to narrow compared to the time of a sharp increase in interest rates in 2022, somewhat limiting the export demand of Vietnamese enterprises.
Barriers from main export markets
The difficulties in boosting Vietnam’s coffee exports in 2023 are not only the supply challenge but also the problem of coffee quality and origin. At the end of 2022, the European Union (EU) issued a decree banning the import of coffee related to deforestation, causing concerns about the amount of Vietnamese coffee that could be exported to this market. solve the problem of developing coffee in a more sustainable way.
In Vietnam, the situation of ken, burning pine and eucalyptus roots to occupy land for coffee is not too strange and has been a top concern for the development of the coffee industry. The new European decree not only leads to stricter restrictions on coffee exports, but it is also a factor that can promote the development of a more sustainable coffee industry.
Moreover, the EU’s tightening regulation of pesticide residues for nuts, including coffee at 0.1 mg/kg is also a difficulty, requiring farmers to adjust production methods to can meet new standards for export activities. “On a positive note, this is the driving force for the Vietnamese coffee industry to make changes and improvements to keep up with the general trend of major export markets. If done well in this period, it will create a premise to maintain Vietnam’s leading position, not only in terms of output and export, but also in terms of quality and scale of the industry”, Mr. Quang Anh added. .
A new bright spot in the gloomy overall picture
Despite many difficulties and challenges in promoting coffee exports in 2023, the common market still has new bright spots to look forward to.
China is actively opening up its economy after the Covid-19 pandemic. This will not only promote China’s own economic recovery, but can also contribute to the overall development of the world when this is currently the second largest country in the world and a partner in the world economy. leading trade of many countries such as the US, Vietnam, …
It is also thanks to this opening that the International Monetary Fund (IMF) has adjusted global economic growth in 2023. Accordingly, the world economic growth rate is adjusted from 2.7 % to 2.9%. Major economies such as the US and the euro area also prospered from 1.0% to 1.4% and 0.5% to 0.7%, respectively. The return to growth helps the market to expect that people’s spending will be eased and demand for coffee, which depends heavily on the health of the economies of countries, will prosper.
The price difference between Arabica and Robusta coffee in the context of economic recession fears, makes people tend to switch from Arabica to Robusta to reduce costs but still be able to use coffee. This means that demand will probably weaken but not focus on Robusta, and is still a positive news for Robusta coffee at the moment. According to the forecast of the Commodity Exchange of Vietnam (MXV), Vietnam will continue to be the world’s largest coffee producer and exporter in the period of 2023-2033.
Besides, the supply from other major exporting countries such as Brazil and Indonesia is showing signs of shrinking, giving Vietnam the opportunity to expand its export market share. According to the Brazilian Institute of Geography and Statistics, the country’s Robusta coffee production in 2023 is likely to decline by nearly 9% compared to last year, and Indonesia is predicted by Volcafe to reduce production to the lowest level in nearly a decade. century.
Thus, Vietnam’s coffee exports still have a lot of big challenges to face in order to maintain the previous upward momentum, but there have also been more positive signals from macro factors to sources. domestic force. Therefore, export volume and turnover may be weaker compared to the past record year but will still be higher than 2020 and 2021 and will likely be above the average turnover of 3 billion USD.
