Coffee exports set to break record

	Coffee exports enjoy double-digit growth in February
	Vietnam posts 78.9% growth in coffee export value to Spain

Coffee has been one of the agricultural export items with the highest growth rate in the past 10 years for Vietnam. Photo: Internet

Possibility of exceeding US$4 billion in coffee exports

With these achievements, there is a possibility that in 2023 Vietnam will achieve another record-breaking US$4 billion in coffee exports (after reaching a record US$4 billion in 2022).

A closer analysis revealed that despite the decrease in coffee exports in the first half of 2023, the continuous upward trend in world Robusta coffee prices over the past months has contributed to the positive growth of Vietnam's coffee export turnover. In particular, in June 2023 alone, Vietnam exported 150,000 tons of coffee worth US$392 million, a 9.1% increase in quantity and a 24.3% increase in value compared to the same period in 2022.

The price differential between Arabica and Robusta coffee in the context of economic concerns has led consumers to shift from consuming Arabica to Robusta to minimize costs while still being able to enjoy coffee. Additionally, the supply from other major exporting countries like Brazil and Indonesia is showing signs of shrinking, allowing Vietnam the opportunity to expand its export market share. According to forecasts from the Vietnam Commodity Exchange (MXV), Vietnam will continue to be the world's largest coffee producer and exporter in the period from 2023 to 2033.

According to Do Ha Nam, Vice Chairman of the Vietnam Coffee-Cocoa Association (VICOFA), acurrent domestic and international coffee prices are high compared to recent years, providing an opportunity for Vietnam to maintain coffee export turnover above US$4 billion, a record set in 2022. In May 2023, world coffee prices fluctuated sharply due to low Robusta supply in leading producing countries. The price of Robusta coffee for July 2023 delivery on the London market (UK) increased by US$148 per ton, reaching US$2,557 per ton. Alongside this, the average coffee export price for the first five months of 2023 was estimated to reach US$2,295 per ton, a 2.4% increase compared to the same period in 2022. Therefore, in the remaining months of the year, export values are expected to be even higher as contracts based on the new prices are fulfilled. The continuous rise in coffee prices is due to insufficient supply. From now until the end of the year, coffee exports remain favorable as demand increases while supply improves. Additionally, the cost advantage of Robusta coffee over Arabica coffee opens up a competitive edge for Vietnam's Robusta coffee in the context of increasing global economic concerns. This is also a crucial factor providing a foundation for boosting coffee exports in Vietnam in the future.

New barriers

Alongside the advantages, the challenges in boosting Vietnam's coffee exports in 2023 extend beyond supply constraints, encompassing issues of quality and the origin of coffee. The current trend of rising coffee prices may lead to the expansion of cultivation areas. Specifically, at the end of 2022, the EU issued strict orders prohibiting the import of coffee related to deforestation, raising concerns about the amount of Vietnamese coffee that could be exported to this market and posing a challenge for developing coffee in a more sustainable manner. The EU's new regulations not only imposed stricter requirements on exported coffee but also served as a factor that could drive the coffee industry's sustainable development, shifting the focus from expanding acreage for increased production to emphasizing productivity issues.

Simultaneously, the EU's tightening of residue limits of pesticides for various types of seeds, including coffee, at 0.1 mg/kg, has presented a difficulty, necessitating farmers to adjust their production methods to meet the new standards for export activities.

According to the VICOFA, the EU is a significant export market for Vietnamese coffee, accounting for around 40% of Vietnam's total annual coffee exports. Major coffee purchasers from Vietnam are mostly large corporations such as Nestle, JDE, Newman, Louis Dreyfus, and others. Therefore, to stabilize the coffee export market to the EU, Vietnam's coffee industry must adhere to the European Union Timber Regulation (EUTR). Given this context, the VICOFA warned that, under the EU's new regulations, coffee products originating from deforested and degraded areas after December 30, 2020, would not be allowed for export to this market. Therefore, it's essential to avoid cultivation on land with deforestation risks as this would negatively impact Vietnam's coffee exports in the future.

Nguyen Do Anh Tuan, Director of the International Cooperation Department (MARD), stated that the EUTR required 100% of certain agricultural products from Vietnam, particularly coffee destined for the EU, to have GPS-based localization information for each plantation. This information is used to confirm the risk of deforestation through remote sensing monitoring systems. "Various sectors will face multiple challenges in meeting the EUTR requirements. However, challenges also come with opportunities, and we must be prepared to seize these opportunities," said Tuan.