Coffee Industry in Vietnam in Trouble – For Now

Last week we reported that a high-ranking official from the US Department of Agriculture had predicted that exports of Vietnamese coffee would leap up by around 30% next year.

This week, however, we’re heading back down to earth (with a rather large bump) and focusing on how the country is currently fairing. Safe to say, it isn’t had been a good couple of months.

“The international coffee market has seen unexpected trends and [has] seriously impact [our] exports,” Le Quoc Doanh said.

The Deputy Minister of Agriculture was speaking at recent 2015 Vietnam Coffee Outlook and Sustainability forum and appeared to be quite downbeat.

“We should find a way to cope with the situation,” he added.

His sentiments were echoed by Tran Cong Thang, of the Institute of Policy and Strategy for Agriculture.

“Low-quality coffee – because farmers rarely invest in post-harvest technology – and exchange rate volatility causes risks,” Thang said.

Farmers have also been hoarding stock, waiting for the futures markets to pick up.

The result has been that exports and revenues have declined.

When compared to last year’s figures, the volume of coffee that has been exported has decreased by 29%. And in terms of monetary value, that has dropped by 31%.

To compound matters, the land used to grow coffee is expected to decrease by 30,500ha.

Earlier this year, we reported that many traditional coffee farmers were shunning the crop in favour of pepper which was commanding a higher price on the international markets.

There is some hope, though.

As we’ve previously mentioned, many external analysts are predicting a bounce back year for Vietnamese growers over the next twelve months.

The government has plans to spend $540m on the replanting of coffee trees in a number of provinces, specifically those located in the Central Highlands region.