Vietnam's coffee exports for the year ended 2014 surged 32% in value on-year to a new record high of US$3.6 billion, according to the Vietnam Coffee and Cocoa Association (Vicofa).
For the year, the country exported more than 1.7 million tons of coffee, an increase of 33% in volume, with an average price of US$2,086/tonne per ton, 2.46% lower than 2013.
According to the Ministry of Agriculture and Rural Development (MARD), the US was the largest importer, accounting for 11.7% of the country's total coffee exports, followed by Germany (10.1%).
Markets posting a high growth rate included Belgium (up 92.8% in volume and triple in value) and the Netherlands (46.4% in volume and double in value), reports MARD.
Currently, Vietnam has ascended to become the world's second largest coffee producer and exporter, trailing Brazil in the number one spot.
According to the (Vicofa), Vietnam’s coffee market share in the world has improved significantly, making up 19% of the global market, up 21.3% from 2013. In the local market, the price of coffee was only VND30.700 per kilo putting Vietnamese coffee at a disadvantage.
Another disadvantage is that Vietnam mainly exported raw coffee which has made up over 90% of the total value. The country has some 100 businesses involving in exporting coffee beans.
Fourteen out of the 30 export businesses with the largest turnover have been foreign invested ones. These businesses have faced fierce competition from FDI businesses in order to become the main supplier for international coffee roasters and grinders.
Le Tien Hung, general director of the Daklak September 2nd Import-Export Company Limited (Simexco Daklak) says major exporters have long been in need of high quality coffee to sell at high prices without selling directly to foreign roasters and grinders.
Moreover, foreign grinders do not want to purchase all of their coffee from one nation like Vietnam while purchasing coffee through a broker to ensure the timely supply source of materials.
Consequently, Vietnamese businesses would have to export through brokerage channels and have to suffer a loss.
Forecasts for the market in 2015
Vicofa predicts that in the new crop, Vietnam’s coffee output would decrease 20-25% compared to the 2013-2014 period as Arabia coffee drops 30% and Robusta coffee in the Central Highlands has been hit by severe drought.
The nation aims to export 1.4 million tonnes of coffee next year, grossing over US$3 billion, down 200,000 tonnes compared to the previous crop.
The Institute of Policy and Strategy for Agriculture and Rural Development has forecast that Vietnam’s coffee growing area would remain at some 626,000 hectares with output reaching 1.3 million tonnes.
However, foreign news agencies namely Group Sopex and Bloomberg analyzed Vietnam’s coffee output would increase in the new crop with an estimated volume of 1.8 million tonnes and 1.6 million tonnes, respectively.
Vietnamese market analyst Nguyen Quang Binh appeared pessimistic about the export growth next year due to inventories. He expressed belief that the coffee prices would not increase sharply as there are huge coffee stockpiles in the country.
Luong Van Tu, Vicofa President said Vietnamese coffee would face challenges due to the signing of free trade agreements (FTA) and the establishment of ASEAN Economic Community (AEC) in the coming time.
Local businesses would have to face tough competition from regional nations in terms of price and volume.Vicofa would co-ordinate with the Ministry of Health's Food Safety Department to build a set of standards for Vietnamese coffee in 2015 with a focus on helping farmers re-cultivate coffee and call on businesses to become involved in the processing field.
(VOV)
