Coffee prices continue to rise, fear of supply chain disruption

Exceeding the 100,000 VND/kg mark, will coffee prices continue to increase? Many attractive activities at the "Honoring Vietnamese Coffee and Tea" Festival

Exports increase, prices increase

At the workshop "Solutions to help Vietnam's coffee exports reach 5 billion USD" organized by Nguoi Lao Dong newspaper on the afternoon of March 30, Mr. Nguyen Nam Hai, Chairman of the Vietnam Coffee and Cocoa Association (VICOFA) - informed about the current picture of the Vietnamese coffee industry.

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Experts and businesses attending the workshop

Mr. Hai said that according to statistics in the first quarter of 2024, Vietnam is expected to export about 600,000 tons of coffee with a turnover of about 1.9 billion USD, an increase of 3.1% in export quantity but an increase of 54.7% in export turnover. Of which, green coffee exports are the main ones, about 91% in output, about 85% in value. Although instant coffee and deeply processed products have increased in export, they are still at a low rate (turnover accounts for 15% of the total coffee export turnover of the country).

Besides the increase in exports, according to Mr. Hai, domestic coffee prices are at an all-time high and are currently at 102,000 VND/kg. Due to the increase in coffee prices, there is a disruption in the supply chain. "From farmers not selling to exporters but selling to agents and traders, it leads to a disruption in the supply chain," Mr. Hai said.

Sharing the same view, Mr. Do Ha Nam , Chairman of the Board of Directors and General Director of Intimex Group Joint Stock Company, Vice Chairman of the Vietnam Coffee - Cocoa Association, said that in the current wave of high coffee prices, many businesses are facing difficulties, even losses. "Many buyers warn that if exporting businesses do not deliver on time, they will find other sources of supply," Mr. Nam warned.

In fact, according to Mr. Nam, Vietnamese coffee cannot be replaced. Intimex company itself has tried to buy coffee from other countries to make instant coffee but could not produce the taste of Vietnamese instant coffee, the world market did not accept it. Meanwhile, Vietnamese coffee is an irreplaceable product in the European market. However, we still need solutions and strategies for sustainable development.

“The increase in coffee prices benefits farmers, but the story is not only this year but also next year and the years after that. Our industry will face difficulties if it cannot meet export contracts. Therefore, it requires the participation of the whole system, not just export enterprises,” said Master Nguyen Quang Binh, a coffee analyst.

Need a systematic strategy

At the conference, experts and businesses affirmed that with the current price, there is no need to discuss any solutions for the coffee industry to reach an export turnover of 5 billion USD. However, solutions for the sustainable development of the coffee industry are necessary. Because, recently, the EU has introduced anti-deforestation laws for some agricultural products.

Mr. Nguyen Nam Hai, Chairman of the Vietnam Coffee and Cocoa Association (VICOFA): "We also have plans and warnings for businesses to maintain and ensure the supply chain."

Therefore, to ensure the supply chain and at the same time develop sustainably for the coffee industry, Mr. Nguyen Nam Hai said that VICOFA has recommended to the Ministry of Agriculture and Rural Development to review the current actual area of coffee and long-term industrial crops in a relatively accurate manner. In addition, VICOFA also recommended that the Ministry of Agriculture and Rural Development be the focal point to implement the roadmap for implementing EU regulations on combating deforestation and forest degradation, with specific instructions for localities, associations and businesses.

Regarding these issues, Mr. Le Thanh Tung, Deputy Director of the Department of Crop Production in charge of the South - Ministry of Agriculture and Rural Development - said: Vietnam has 9 million hectares of agricultural cultivation, of which 4 million hectares are for coffee and many other crops. When the price of coffee had not reached 100,000 VND/kg, the whole country had 714,000 hectares of coffee. Now that the price of coffee has increased to 100,000 VND/kg, the coffee growing area is only about 660,000 hectares.

According to Mr. Tung, the special thing about Vietnam is that there are up to 1 million households participating in the production of over 660,000 hectares of coffee, but the connection between coffee growers is still fragmented. "For many years, we have changed the work of varieties, production, maintaining the quality of coffee, but that is not enough, we must meet quality standards, traceability, grow on land without deforestation... according to the development of domestic and international requirements" - Mr. Tung assessed and said, the upcoming solution is not a technical issue, businesses looking for markets, processing, but how producers and exporters achieve harmony of personal interests with national interests to promote the value chain for coffee beans. And, the lesson of coffee is not only for coffee trees but for many other crops.

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