Vietnam’s output to drop, down 32% year-on-year

During the course of 2015 we’ve mentioned the goings on surrounding the Vietnamese coffee industry quite a bit. Thus far, we’ve looked at why wholesale costs are declining in the country, and some of the effects of that. On a more positive note, we’ve also chronicled the increased investment that Vietnam has seen, specifically that from Nestle.

To date, we’d say that it’s been equal parts gloom and equal part optimism in terms of coverage.

However the latest report emanating from the world’s leading producer of robusta isn’t positive at all: Over the weekend the Vietnam Coffee and Cocoa Association (VICOFA) stated that crop output is likely to decline – by at least 20%.

The 20% figure is startling. But, as VICOFA have alluded to, Vietnam has been exposed to some rather tumultuous and diametrically opposing climatic conditions recently.

In their report they note that drought seriously affected crops in some of the biggest agricultural areas in the country with Dak Lam, Dak Nong and Gia Lai provinces being subjected to a lack of water which was then further compounded by unexpected cold spells and widespread frost damage.

Additionally, the process of replanting is expected to stifle output as the newly installed trees won’t be ‘up to speed’ so to speak for another few years.

Worryingly though, the Xinhua News Agency has reported that this replanting initiative has been rather sluggish in recent months and hasn’t been carried out as quickly as was originally planned.

The Chinese agency highlights the plight of the Central Highlands region which, they say, has around 120,000 hectares of coffees trees that are at least two decades old and are in urgent need of replacing.

Earlier this year Vietnam exported in the region of 876,000 tonnes of coffee, worth an estimated $1.8 billion, both roughly 32% down on last year.