Coffee bean prices in the Central Highlands, Vietnam’s largest coffee growing area, have now rocketed to VND31,000-32,000/kg, the record figure so far. However, coffee growers are still bitter about the whole process.
Demand outstrips supply
According to the International Coffee Organisation (ICO), total global coffee output of the 2007-2008 crop is estimated at 116 million bags, down by 7 percent against 2006, while total coffee sales are expected to reach 125 million bags. As demand outstrips supply, particularly the limited supply from leading coffee exporters such as Brazil, Colombia and Vietnam, the global coffee market has become overheated. Businesses rushed to purchase coffee in large quantities to make up losses or speculate the product, prompting coffee prices to go up dramatically.
Vietnam’s Robusta coffee is a case in point. In the 2006-2007 crop, Vietnam exported more than 1 million tonnes at an average price of US$1,500/tonne, the highest figure to date. The price now stands at US$1,900-1,960/tonne (for second-class coffee), up US$200/tonne compared to the first week of 2008 and by 40percent against the same period last year.
The Vietnam Coffee and Cacao Association has warned that its member companies should offer the global prices for their future export contracts at the time of delivery, and businesses will be fined if they fail to deliver adequate amounts as agreed. Since the middle of January 2008, the price of Robusta coffee bean in Buon Me Thuot city, which is famous for Buon Me Thuot coffee brand, has increased from VND30,000/kg to VND32,000/kg – a high level beyond the expectations of growers and businesses. Ironically, when coffee prices rocket, growers have no coffee to sell.
Heavy crop failure
“What a heavy crop failure!”. The outcry is often heard in despair by coffee growers in the Central Highlands. Though the traditional Lunar New Year Festival is several days away, the growers are not thinking about pre-Tet shopping sprees as they experienced last year. Among the four Central Highland provinces, Dak Lak and Dak Nong are suffering the heaviest losses. According to statistics, Dak Lak yielded barely 350,000 tonnes, down by 100,000 tonnes compared to last year, while Dak Nong fetched 121,000 tonnes, down by one third compared to the previous crop.
“Though coffee prices remain high, heavy crop losses have put a damper on celebrations,” says Nguyen Van, a coffee grower in Ea Hleo district.
Another coffee grower Pham Thanh in Krong Buk district complains that he had only harvested nearly six tonnes for the 2006-2007 crop, four tonnes less than the previous crop. He attributes the low yield to unfavourable weather conditions, including prolonged rain and frost, pests and the soaring prices of input materials including fertilizer and pesticides. Many growers face losses or break even by the end of the crop.
As coffee prices are high, theft occurs more often, mostly at night. The thieves pick leaves and fruit and even break branches. As a result, the growers have to harvest the fruit when it is unripe, and accept low quality, quantity and prices.
Agricultural experts say that harvesting unripe coffee causes the output to reduce by from 15 to 35 percent. However, the growers have their own reasons. They say that they will have nothing to harvest if the theft continues.