Strength Vietnam top 2 in the world plunged
As reported by the Department of Agricultural Product Processing and Market Development (Ministry of Agriculture and Rural Development), to November 2019, world coffee prices fluctuated in an uptrend, although the increase was not strong.
The reason is that the trade tensions showed signs of increasing that made speculative capital flow away from the stock exchanges and poured into the agricultural product exchanges. As a result, coffee prices turned back to increase again.
In addition, the increase in coffee prices was supported by concerns that Brazil reported a drop in October exports, ending the chain of exports that rose to a historic record. Because, Brazil entered a period of crop failure that occurs every two years. At the same time, low prices (lower than production costs in some coffee growing countries) in recent years forced coffee growers to reduce investment in coffee, causing global output to decline.
Vietnam’s coffee exports continued to decline sharply
The latest report by the International Coffee Organization (ICO) also forecasts a global shortage of 0.5 million bags of coffee instead of the excess as previously reported due to estimates of global consumption increase. Robusta coffee consumption also tends to increase as the instant coffee market expands to emerging economies. Supply decreases in the next season as global consumption increases, causing coffee prices to rise, while Vietnam – the world’s leading coffee producer – estimates coffee crop 2018/2019 exports have just ended. down more than 10% compared to the previous coffee season.
Along with the trend of the world market, the domestic coffee market also increased volatility in November 2019. Compared to October 2019, the price of Robusta coffee in the Central Highlands provinces increased by 1,200-1,300 VND / kg to 33,500-33,900 VND / kg.
Robusta coffee price fob delivered at Saigon port increased 80 USD / ton to 1,527 USD / ton.
It is forecasted that coffee prices will continue to increase in the coming time following the trend of world coffee and at the same time Vietnam’s coffee supply is forecasted to decline sharply as growers reduce investment in coffee trees and switch to plant intercropping and other plants.
Despite many positive signals, Vietnam’s coffee export continues to decline sharply in both volume and value.
Specifically, coffee exports from the beginning of the year so far are estimated at 1.46 million tons and $ 2.52 billion, down 15.2% in volume and 22.7% in value over the same period in 2018. In which, the average export price of Vietnamese coffee in the first 10 months of 2019 reached 1,723 USD / ton, down 9% over the same period in 2018.
According to Mr. Nguyen Do Anh Tuan – Director of International Cooperation Department (Ministry of Agriculture and Rural Development), Vietnam’s coffee industry is facing many great challenges due to price fluctuations and the balance of supply and demand. Currently, coffee prices have decreased by 40% compared to 2010, making coffee farmers difficult and tending to reduce the planted area, reducing investment in coffee, leading to productivity and quality of coffee. coffee is affected.
 Coffee businesses are stepping up processing, actively promoting consumption in the domestic market to get out of the crisis |
Back to find opportunities in the domestic market
The seminar “Sustainable development of Vietnam’s coffee industry in the context of climate change and price crisis 2019” took place on December 3, said Mr. Luong Van Tu – President of Vietnam Cocoa Coffee Association. The fact that coffee prices fell to a very low level and lasted for more than 2 years, plus the negative impacts of climate change, has had a great impact on Vietnam’s coffee industry.
Accordingly, the coffee sold is not enough to offset production costs, making farmers unable to pay interest on bank loans.
To solve this situation, Mr. Tu said that instead of raw export as before, businesses need to strengthen their capacity to process roasted and instant coffee to increase the value of export products. as well as for domestic consumption. From there, supporting farmers to overcome the price crisis.
Mr. Tu also said that many coffee companies are also developing domestic consumption markets to boost output for Vietnamese coffee. Because, the country has nearly 30,000 cafes and tends to increase rapidly. While the amount of coffee consumed in the country is still quite modest. On average, the world per person consumes about 7kg of coffee / year, in Vietnam only 2kg / person / year.
Businesses expect to raise this target to 4 kg / person / year through the development of convenient and deep-processed coffee products. From there, reducing dependence on world price fluctuations, helping farmers feel secure in farming.
Agreeing, Mr. Gerardo Patacconi – Head of the ICO Cashew Board, also said that in the long run, Vietnamese businesses need to diversify processed products to export to many markets around the world, as well as domestically. . For example, Brazil has up to 40% of coffee is consumed domestically, this is also the trend that the major coffee producing countries of the world are doing, he said.
