Increase processing to increase the value of Vietnamese coffee beans

Under the commitments of the free trade agreements that Vietnam has signed, all member markets are open to Vietnam's roasted and deep-processed coffee to enjoy preferential tariffs upon import. This has encouragedbusinesses to invest in many projects forroasted and ground coffee processing and instant coffee.

Currently, the proportion of roasted and ground coffee exports in Vietnam has increased to 12% of total coffee export turnover. Photo: Internet.

Invest more in processing

Luong Van Tu, Chairman of Vietnam Cocoa Coffee Association (Viacofa), said Vietnam's coffee industry has had many changes over the years. In addition to green coffee beans, Vietnam has stepped up processing and export of roasted and instant coffee. The proportion of roasted and ground coffee exports in Vietnam has increased to 12% of total coffee export turnover. This is aresult of moves to increase productivity, quality and added value, which is being promoted by Vicofa in recent years. This is considered a strategic solution for the sustainable development of the coffee industry in both domestic and export markets.

Tu said that in the crop year 2020-2021, Vietnam's coffee output is forecast to falllby about 15% due to the impact of floods and storms andlow coffee prices for many years, making farmers not interested in caring. Despite the decline, Vietnam's coffee output remains high, helping provide an abundant supply of raw materials for processing activities. In addition, of the 14 FTAs Vietnam has signed, all markets are open to Vietnam's processed coffee with preferential tariffs of 0-5%. This is a huge advantage for firmswhen investing in coffee processing in Vietnam.

With these advantages, over the past time, a series of investment projects in instant coffee production have been put into operation such as Intimex Group's Instant Coffee Processing Plant built onadvanced technological lines of world with investment value ofUS$30 million, capacity of 550kg perhour, estimated at 4,000 tonnes / year. Recently, Nestlé Vietnam also put into operation the Nescafe Dolce Gusto tablet production line with a capacity of 2,500 tonnes of coffee / year; Tin Nghia Coffee Joint Stock Company inaugurated phase 1 instant coffee factory of 3,200 tonnes of finished coffee in Nhon Trach 3 Industrial Park. Vinh Hiep Company also linked up with 10,000 households to build raw material areas with 10,000 hectares of coffee, with production of about 30,000 tonnes, including 45 hectares of high quality coffee according to the standards of the US Department of Agriculture. Vinh Hiep has also invested in high quality German coffee production lines to produce the product line branded L’amant coffee to promote exports of processed coffee.

Higher value

According to the Department of Trade Promotion of theMinistry of Industry and Trade, Vietnam has exported coffee to more than 80 markets around the world with total annual export output of about 11.6 - 11.8 million tonnes, turnover is about US$2.6 - 2.8 billion. However, Vietnam's coffee export value is still low because green coffee accounts for a large proportion.

The coffee industry is striving to reach an export turnover of US$6 billion by 2030 according to the Government's target,ofwhich, exports of roasted and instant coffee increased by 30%. This goal is set in the context of roasted and instant coffee favoured by countries around the world. In particular, during the Covid-19 pandemic, when the global economy was heavily impacted, the demand for coffee still increases.

This is evidenced by the coffee export results in 2020 of Nestlé Vietnam Company. According to William Mackereth, Supply Chain Director of Nestlé Vietnam, Nestlé Vietnam's exports in 2020 will grow by 20% and all of the firm’sproducts are deeply processed coffee products.

Investment in quality and processing also helps many Vietnamese enterprises to export coffee at very high prices. Typically, Arabica coffee roasted by Phuc Sinh Company is being sold to foreign customers forUS$28 / kg (equivalent to more thanVND 600,000/kg.) According to Phan Minh Thong, General Director of Phuc Company Sinh, over the past time, the company has strongly invested in processing and creating value-added products aimed at the high-end market Currently 70-80% of Phuc Sinh's coffee exports are deeply processed, instead of regular green coffee.

Luong Van Tu said, from now to the end of the year, the coffee industry will try to export equal to last year with 1.6 million tons of coffee, reaching an export turnover of US$2.8 billion. If there is a decrease, only a small decrease, the export volume of roasted and instant coffee must increase in export volume.