Vietnam coffee exports stuck at bottom of value chain

TN News

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Though Vietnam exports the second largest quantity of coffee in the world, it does not get much value from them, industry insiders admit.

Nguyen Thanh Tung of Vinacafe Bien Hoa JSC said while Vietnamese coffee has a 20 percent market share in terms of volumes, it earns only around 2 percent of the market revenue.

This is because the country mostly sells the raw product, he said.

A kilogram of coffee beans fetch around US$2, which is equal to the average price of a cup of coffee in most importing countries, he said. But once the coffee is processed, the same kilogram can be made into 50 cups, he pointed out.

Luong Van Tu, chairman of the Vietnam Coffee and Cocoa Association (Vicofa), said Vietnamese coffee fetches low prices because of inconsistency in quality.

But the country is in danger of losing even its second position in volume terms in the next 10 years if it does not replant coffee trees.

The number of old trees that need to be replaced use up almost 50 percent of the land under coffee, he said.

Figures from the Ministry of Agriculture and Rural Development show that trees on 140,000-160,000 hectares need replacing.

The trees age quickly and are stunted because of the heavy use of pesticides and chemical fertilizers, according to the ministry.

Truong Hong of the Western Highlands Agriculture and Forestry Scientific and Technical Institute said a survey by the institute found that more than 50 percent of coffee farmers in the Central Highlands overuse fertilizers.

This also increases their cost, he said, adding the cost of irrigation too is 32 percent higher than the recommended level.

Vietnam exported 1.76 million tons of coffee last year for $3.74 billion, up 40.3 percent and 30 percent in terms of output and value.

Drought hurts harvest

The coffee harvest may decline for the second straight year because of drought in the main growing region, according to Vicofa.

Bloomberg quoted Vicofa chairman Luong Van Tu as saying the output could drop 30 percent.

A Bloomberg survey published on March 7 estimated the 2012-13 crop at 1.43 million tons.

"There are already tens of thousands of hectares that have no hope in the next coffee season," Tu was quoted as saying.

In other areas, the beans are likely to be small, he said.

Drought in five coffee-growing provinces in the central region, including Dak Lak, could continue and even worsen, the National Center for Hydro-Meteorological Forecasting said on its website.

Coffee trees in Vietnam usually flower and bear fruit between January and March, according to farmers.

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