Debts and a fall in global prices have hit the coffee industry hard, with many exporters facing the threat of bankruptcy.
The Vietnam Coffee and Cocoa Association said exporters in the country, the world's biggest robusta producer, have bad and overdue bank debts of VND6.33 trillion (US$298.65 million).
In the first half of the year they exported only 795,000 tons, down 24 percent year-on-year. Their revenues were down 22 percent to $1.7 billion.
News website Saigon Times quoted an unidentified director at a Ho Chi Minh City-based coffee exporter as saying companies are left with no choice but export despite falling prices and losses of 10-20 percent to repay debts.
During the industry's peak years in 2008-10 firms paid interest of 24 percent, so it is "understandable" that many are now drowning in debt since the interest rates are still very high but the situation has become adverse, the director said.
Domestic robusta prices fell to $1,740 a ton on June 14, the lowest in 16 months, according to the Promotion Center for Trade, Investment, and Tourism in Dak Lak Province, the nation's main growing region.
In London, coffee futures for September delivery stood at $1,753 a ton on June 18, lower than the $2,120 level exporters had hoped for, according to news website VOV.
Last year 43 coffee exporters in Dak Lak alone defaulted on bank loans, the province's Department of Industry and Trade said.
The southern province of Binh Duong had over 100 such borrowers.
Vicofa has proposed to the government a program to lend to exporters at low interest rates that would help them hold on to 200,000-300,000 tons of coffee and wait for prices to recover. The volume represents a fifth of the expected output in 2013-14.
The finance and agriculture ministries have asked the government to roll over the industry's loans for one to three years.
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