Vietnam coffee exporters expect another gloomy year

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Coffee exporters are likely to face difficulties this year since prices are expected to remain low as a global supply glut continues.

“Our coffee exports might continue to be low due to… low global market demand and big supply,” Nguyen Xuan Thai, director of coffee production and export company Thang Loi, said.

Lower demand for farm products caused partly by the prolonged economic crisis saw prices of coffee fall by 24 percent last year. Arabica coffee plunged to its lowest prices in six years and robusta to the lowest in four, Loi said.

Prices are set to remain low this year, he said.

Global production, including of robusta which accounts for around 42 percent of supply, would exceed demand by 6.04 million bags in the 2013-14 season, compared with a surplus of 11.06 million a year earlier, Bloomberg quoted the US Department of Agriculture as saying.

Inventories will reach 36.33 million bags, the highest since 2008-09. A bag contains 60 kilograms or 132 pounds.

In the domestic market, traders offered VND34,000-35,000 (US$1.6-1.7) per kilogram to farmers late last month, up from VND29,000-30,000 four months ago, but still lower than VND39,000-40,000 more than a year ago, Thai said.

Nguyen Viet Vinh, general secretary of the Vietnam Coffee-Cocoa Association, said Vietnam’s exports would also be affected by the lower harvest this year.

“Coffee output in the 2013-14 crop (lasting from October to September) is expected to fall by 10-15 percent from the previous year due to unfavorable weather conditions and a high proportion of old trees with low yields.”

According to the Ministry of Agriculture and Rural Development, Vietnam has some 600,000 hectares of coffee trees that yield 1.4 million tons of beans annually. A fourth of the area has old trees with low yields and poor quality account for 25 percent.

Vietnamese traders are reluctant to sell because many are still waiting for value-added tax refunds from 2013. The government has announced the scrapping of the 5 percent VAT but has yet to issue guidelines for the refund.

Vietnam exported 165,000 tons of coffee worth $323 million in January, down 24.7 percent in volume and 29 percent in value year-on-year, according to the Ministry of Agriculture and Rural Development.

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