From the “abnormal” coffee price, worries about the new crop

The 2023-2024 crop year recorded a record export turnover of Vietnamese coffee. Source: Internet.

Many surprises

“Special”, “miraculous”, “unusual” are phrases that experts and businesses have repeated many times when looking back at the 2023-2024 crop year of the Vietnamese coffee industry.

Mr. Do Ha Nam, Vice President of the Vietnam Coffee and Cocoa Association (Vicofa), said that in his 30 years working in the coffee industry, this is the first time he has witnessed so many unusual things. That is, the price of Vietnamese coffee has become the most expensive in the world. In addition, there was a time when the price of robusta coffee was more expensive than arabica coffee. "This is something that 3-5 years ago, anyone who mentioned it would be laughed at" - Mr. Nam shared. According to Mr. Nam, in this crop year, for the first time he witnessed the price of coffee on the London floor surpassing the threshold of 5,000 USD/ton.

Along with those unusual things is the "pain" of many businesses in delivering goods on time. This has met with fierce reactions from foreign partners. Even when the price of coffee was very high, the situation of losing goods during transportation occurred, causing damage to businesses.

However, Mr. Nguyen Quang Binh, a coffee market expert, still believes that the 2023-2024 crop year is a miracle crop year for the Vietnamese coffee industry when the export output is less than 1.5 million tons but the turnover reaches over 5 billion USD. There are many reasons for this success of the coffee industry. In particular, farmers have produced good products with sufficient output. Because they bring sufficient supply to the market, the price is good.

But entering the 2024-2025 crop year (October 1, 2024), coffee prices have continuously decreased. Price reduction is inevitable after each sharp increase. As a result, in coffee growing areas, many gardeners, agents and export enterprises all said that sales are currently very sluggish.

Previously, many coffee consumers complained about the high price of Vietnamese coffee and said that if this situation continued, no consumer would be able to afford it. Some processors have switched to buying coffee from other countries, but only temporarily, because world consumers have become accustomed to the taste of Vietnamese robusta coffee. Therefore, in the long term, customers still want to return to Vietnamese coffee.

What will the new crop be like?

From the abnormalities that occurred in the 2023-2024 crop year, what Vietnamese coffee exporting enterprises are concerned about when entering the new crop year is what price is appropriate for Vietnamese coffee and how farmers can make a good living from coffee trees while still retaining world consumers.

Expert Nguyen Quang Binh assessed that coffee prices are unlikely to repeat the history of the last crop year. Recently, when coffee prices increased to 3,000 USD/ton, many countries such as Kenya, Uganda, India... started to grow more coffee. "In the next few years, the world's coffee production will explode, causing damage to the market, especially farmers" - Mr. Binh predicted. Therefore, investing in quality instead of chasing quantity is the direction recommended by this expert for the Vietnamese coffee industry in the coming time.

The positive thing is that Vietnam is scoring points in implementing the European anti-deforestation regulations (EUDR). Mr. Do Ha Nam said that just one month after the EU announced this regulation, the Minister of Agriculture and Rural Development of Vietnam went to Europe to work on this issue and affirmed the view of the Ministry of Agriculture and Rural Development of Vietnam that it is ready to cooperate to the maximum to help Vietnamese enterprises implement the regulations.

Up to now, most Vietnamese enterprises are ready to implement this regulation from January 1, 2025. Meanwhile, in other coffee exporting countries, the implementation of EUDR still faces many problems. Some countries have implemented it but have not received active support from the Government, some countries even oppose this regulation. While enterprises have spent a lot of money to implement EUDR

“If this regulation is applied on January 1, 2025, Vietnamese coffee prices will certainly continue to be the highest in the world, because Vietnam is the best supplier that meets this regulation” - Mr. Nam commented.

However, the EC has decided to postpone the implementation of this regulation until the end of 2025. This has made many enterprises somewhat disappointed. Because after the proposal to postpone, coffee prices on the London floor have decreased significantly. According to expert Nguyen Quang Binh, the price of robusta coffee has decreased by about 800 USD/ton compared to the peak of 5,300 USD/ton in September 2024.

Mr. Nam also said that through discussions, European importers said that although prices have decreased after the postponement of EUDR implementation, sooner or later this regulation will be implemented. Therefore, these enterprises will continue to implement EUDR coffee purchase contracts signed with Vietnamese enterprises and request Vietnamese enterprises to continue supplying EUDR coffee for these contracts.

Mr. Do Xuan Hien, Chief of Office of Vicofa, recommended that enterprises continue to closely coordinate and closely follow the instructions of the Ministry of Agriculture and Rural Development to grasp information and requirements from the EU side related to EUDR so as not to interrupt this process. This will help the Vietnamese coffee industry always be ready to meet EUDR whenever this regulation is officially applied by the EU.