Vietnam´s coffee exports plummet

HANOI: Vietnam exported 943,000 tonnes of coffee worth $1.6 billion in the first half of 2019, representing decreases of 9.2 per cent and 19.9 per cent year on year respectively, reported VNA.

In June alone, the country shipped abroad 165,000 tonnes of coffee, raking in $274 million, reported the Ministry of Agriculture and Rural Development (MARD), saying that most markets except the Philippines reduced purchases.

The sharp fall in export earnings was caused by the price of robusta coffee falling in London due to a global glut, with Vietnam getting the lowest rates of all exporters.

Around 80 per cent of Vietnam’s exports comprise of raw beans, which do not always meet ripeness requirements and are occasionally contaminated by impurities.

Exporters said around 80 per cent of coffee exports are done using a method in which they sign a sales contract, receive a certain proportion of the contract value beforehand, and deliver the products after harvest (also called differential).

Vietnam coffee beans attract the lowest rates. Photo: Bernama

The price is decided by rates fixed on global coffee trading floors at the time of delivery.

But Vietnamese exporters are often forced to sell at cheaper prices because of this differential business model in addition to the unstable quality of their products when compared with international benchmarks.

Experts have suggested businesses to move away from this business model to reduce the reliance on global prices. – Bernama