Vietnam, the world's largest robusta coffee producer, has finalized a plan to stockpile 200,000 tons of coffee for six months, with purchasing to start on April 15, a major exporter said on Friday.
"Coffee companies will buy beans at a price of VND25 million ($1,316 per tonne) to ensure profit for farmers," Chief Executive Nguyen Van An of Thai Hoa Group told Reuters after attending a government meeting on Friday to finalize the stockpiling plan.
Government and industry officials have been talking since late 2009 about a plan to put aside one fifth of Vietnam's coffee output to boost prices, but a lack of funding and details on companies to stockpile the beans have delayed the process.
Thai Hoa, along with Vinacafe, Intimex and Simexco will be among the firms to conduct the stockpile, although a final list of the companies will be signed off by the government early next week, An said, adding a maximum 10 companies will be enlisted.
Robusta coffee prices hit an eight-month low in late February before starting to recover last month, partly on news the government granted initial approval to the stockpiling plan.
Prices further rose on a weaker dollar and concerns over supply from Vietnam due to defaults and delays of a combined 200,000 tons by exporters, as well as a wave of defaults on domestic markets, the risk that turned sentiment bearish.
An said a deputy central bank governor present at the meeting promised immediate disbursement to help companies buy coffee.
A shortage of bank loans has limited domestic purchase so far by Vietnamese coffee firms as the central bank aims to slow the lending rate to 25 percent this year to help control inflation, after loans jumped nearly 38 percent last year.
"But export companies will have to calculate their own selling prices and take full responsibility of losses if any," An said.
Domestic prices stood at VND24.4 million ($1,284) per ton of robusta beans in Daklak, Vietmam's main coffee growing province, below the target price of VND25 million under the stockpiling plan.
But traders said prices could go up as soon as coffee farmers heard of the start of the stockpiling plan.
The volume of VND200,000 tons to be set aside from trade is equivalent roughly to half of what has been left in Vietnam, after the country sold around 600,000 tons between last October and this March out of a crop of around 1 million tons