High raw coffee prices delight farmers, yet cause unease among businesses

The Central Highlands region now has 639,000ha of coffee trees. The continuous rise in raw coffee has cheered local farmers significantly. Pham Thu Cong from Pleiku City of Gia Lai Province eagerly shared that he harvested ten tonnes of coffee beans last crop, earning a profit of VND200 million (US$8,065) even though at the time he sold his produce, the prices were not this high.

Other farmers patiently wait for a more lucrative time to sell their crops. Tran Van Toan from Cu M’gar District of Dak Lak Province informed that he first harvested three tonnes of coffee beans of his last crop and stored them. Last week, seeing that the prices were profitable enough, he decided to sell two tonnes, earning VND200 million ($8,065), and still has one more tonne for transaction later. He excitedly commented that with such an impressively high price, coffee farmers earned big this time!

Not as lucky, farmers in Lam Dong Province have had to sell their yield of about 40 tonnes each year immediately as they lack warehouses to store the produce.

Director Le Duc Huy of Dak Lak September 2 Import-Export Co. Ltd. (Simexco Dak Lak) explained that the non-stop increase in raw coffee prices is because of a lack of input material, resulting from the fact that local farmers switch to growing durian or other industrial trees.

Opposite to the delight of coffee farmers, many import-export businesses are worried that when buying raw materials at this moment, they might face profit loss later after produce processing. General Director Nguyen Ngoc Luan of Meet More Coffee shared that his company has had to stop collecting raw coffee for fear of even more serious profit loss. His fellow enterprises have opted to import coffee beans from India thanks to cheaper prices by $1,000 a tonne there.

Director Pham Quang Thang of VI-EN Coffee Co. in Buon Ma Thuot City (Dak Lak Province) admitted the trouble his business is facing trouble due to surges in raw coffee prices. The profit margin of his company drops remarkably when he has to maintain the prices of processed coffee whereas those of input materials keep going up to nearly VND100,000 ($4) per kilo.

Chairman Nguyen Hai Nam of the Vietnam Coffee – Cocoa Association (Vicofa) commented that as the consumption of other nations increases while the storage of coffee beans from last year was rather low, many processing companies are undergoing material shortages.

“Businesses should closely monitor the market to timely sign import-export contracts. They should follow the model of ‘Buy Now – Sell Now’ to actively balance supply and demand and minimize profit loss. The Association is going to watch the market as well in order to promptly inform or warn its members of future trends”, said Chairman Nam.

Director of the Department of Crop Production Nguyen Nhu Cuong (under the Ministry of Agriculture and Rural Development) said that rising coffee bean prices are good news to farmers. He reminded localities to strictly monitor the expansion of coffee crops in compliance with current planning in order to avoid uncontrollable blooming of coffee planting areas just when the prices are high but then shrinking when they become lower.