Coffee export is forecast to continue to win big

VCN - After reaching a record in price and export turnover, the coffee industry continues to have high expectations for the coming crop year thanks to favourable factors from the market as well as the industry's efforts in promoting processing and meeting new EU regulations.
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The demand for delicious and high-quality coffee in the EU will be an opportunity for Vietnam to increase its market share. Photo: ST

New record

Reporting at the Conference summarizing the 2022 - 2023 coffee crop year and the direction of tasks for the 2023 - 2024 crop year, Mr. Do Xuan Hien, Chief of Office of the Vietnam Coffee - Cocoa Association (VICOFA) said that at the end of 2022-2023 crop year (from October 2022 to September 2023), Vietnam's coffee export reached 1.66 million tons (about more than 27.7 million bags, 60kg/bag), down 4.5% compared to the 2021-2022 crop year. However, revenue still increased by 3.4% to US$ 4.08 billion thanks to high prices. This is the highest turnover level in any crop year to date.

A notable point in this crop year is that coffee prices have reached their highest level in nearly 30 years. However, due to long-term low prices, many coffee areas have converted previously crops to grow durian and fruit, and farmers do not invest much in coffee, except for coffee companies and some cooperatives. This situation, along with the impact of climate change, has caused coffee production to shrink, with old crop inventory transferred to new crop at the lowest level over the years. Specifically, in the previous crop year, inventory by ending crop was about 160,000 tons in September 2022, while in September 2023 it was only about 58,000 tons. The sharp decline in output is the cause of high coffee prices.

Mr. Do Ha Nam, Chairman of the Board of Directors and General Director of Intimex Group Joint Stock Company, said that despite the historically high price of 70,000 VND/kg, farmers had sold out at 60,000 VND/kg. it was the first time there had been a shortage of goods in the market and businesses had to buy goods at high prices to deliver pre-signed orders at low prices.

​According to VICOFA, since August 2023 until now, the amount of coffee exported has decreased significantly. In October 2023, export volume only reached 43,725 tons, equivalent to 54% over the same period last year. It is expected that in the 2023-2024 coffee crop, output will decrease by 10% due to the effects of climate change and the area of intercropping will increase. Farmers will invest in crops with high economic efficiency such as durian, fruit trees. With this forecast, Mr. Do Ha Nam believed that coffee prices would continue to be high because market demand was still large, especially in the EU from now until April next year. Along with that, in China, young people are also increasingly preferring coffee over tea.

Expect many new opportunities

In the export coffee structure of this crop year, Robusta coffee accounts for the highest proportion with 1.49 million tons, turnover of US$ 3.25 billion, Arabica green coffee exports only 41,500 tons, turnover of US$ 169 million, decaffeinated green coffee exports 36,000 tons, turnover of US$ 136 million. Notably, roasted and soluble coffee exports about 90,000 tons (not converted into green coffee), turnover is about US$ 510 million (volume accounts for about 5.4% and turnover accounts for about 12.5%. total types of coffee exported in the 2022-2023 coffee season).

In the coming time, processing activities are expected to bring new momentum to the coffee industry, helping to improve the quality and value of coffee. Mr. Do Ha Nam said that Indonesia always sold raw coffee at the highest price in the world because they were supported by the coffee processing industry, which accounts for 50% of production output. However, investing in processing required large capital and technology... The positive signal was that since the EU-Vietnam Free Trade Agreement (EVFTA), Vietnamese and foreign enterprises Foreigners had also invested a lot in coffee processing and were gradually increasing the proportion of processed coffee for export.

Mr. Phan Minh Thong, Chairman of the Board of Directors of Phuc Sinh Joint Stock Company, said that for concerns about Vietnamese coffee being mainly exported as raw materials, the world did not know much about Vietnamese coffee, Phuc Sinh had embarked on building the K Coffee brand to promote the presence of the Vietnamese coffee brand in the international market. Accordingly, Phuc Sinh cooperated with farmers in growing areas to build deep processing factories and continuously updated international standard coffee processing technologies to produce pure, clean and delicious finished coffee products.

Since 2022, K Coffee products have been distributed in 37 states in the US and received very good feedback. Last weekend, Phuc Sinh continued to sign a cooperation agreement with LNS International Corporation to expand the distribution of K Coffee products in the European, Japanese, Australian and New Zealand markets from December 2023.

Along with Vietnamese businesses, with the advantage of abundant raw materials, Vietnam's coffee processing industry is also attracting many foreign businesses. In early October 2023, Cao Nguyen Coffee Service Joint Stock Company (owner of the Highlands Coffee chain) started construction of the Cao Nguyen Coffee Roasting Factory project, with an investment of up to VND 500 billion, meeting international standards. with the ambition to put Vietnamese roasted coffee on the world map. The factory has a capacity of nearly 10,000 tons of coffee/year in the first phase and can increase to 75,000 tons/year in the next phase. A few days earlier, two European companies, Louis Dreyfus Company (LDC) and Instanta Sp. z o.o. (Instanta) also put into operation the joint venture ILD Coffee Vietnam, for a coffee processing factory with a capacity of 5,600 tons/year in Binh Duong.

Besides processing activities, the coffee industry also expects to turn challenges into opportunities by meeting new EU market regulations such as the EU anti-deforestation and forest degradation regulations (EUDR); Supply Chain Appraisal Law; regulations to reduce greenhouse gas emissions; Carbon border adjustment mechanism (CBAM) and carbon certificates...

Regarding these regulations, according to Mr. Nguyen Nam Hai, Chairman of Vicofa, Vicofa had many working sessions with the Ministry of Agriculture and Rural Development, the Sustainable Trade Initiative (IDH), 4C Coffee Organization, Private Economic Development Advisory Board (Board IV) to discuss solutions to comply with regulations as well as measures to support coffee businesses. The Ministry of Agriculture and Rural Development has repeatedly organized conferences to deploy EUDR, as well as worked directly with the Director General of the European Union Environment Department on Vietnam's commitment to be highly responsible for the protection of nature and environmental protection through urgent implementation of EUDR and CBAM according to European Union regulations.

Mr. Do Ha Nam believed that when Vietnam met EU regulations, coffee prices would definitely increase and the increase would be no less than 20 USD/ton.

By Nguyen Hien/ Binh Minh

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