Inventories decreased, coffee exports are optimistic

Although coffee export value recorded a significant decline in the first two months of the year, coffee exports for the whole year areseen to havemany optimistic factors. In particular, coffee prices will recover after going through a cycle of four consecutive years of price declines.

After a cycle of four consecutive years of decline, coffee prices are forecast to recover this year.

Export value decreased by 15.6%

According to the latest information from the Ministry of Agriculture and Rural Development, from the beginning of the year to the end of February 2021, coffee exports reached US$474 million, down by 15.6% compared to the same period last year. At the beginning of the year, especially in February, the domestic market operated for a few days, so the decrease in export volume was inevitable. It is expected that in March 2021, coffee exports will increase again.

In terms of prices, the Import and Export Department (the Ministry of Industry and Trade) saidthat in the middle of February 2021, global coffee prices increased due to increased demand and limited supply. The Brazilian market decreased due to the Carnival holiday and the expiration date of term options contracts in March 2021. Meanwhile, Vietnam started to return to the market after a long holiday, but the spread of Covid-19 slowed down the circulation of goods.

After the Lunar New Year 2021, the coffee trading market in the country was quiet due to the influence of the Covid-19 pandemic. Even so, domestic Robusta prices are still increasing in line with global coffee prices. For example, on February 19, 2021, coffee prices increased by 0.3 to 1% compared to February 8, 2021, to the highest level of VND32,100/kg in Cu M'gar district, DakLak province; the lowest is VND31,300/kg in Di Linh district, Lam Dong province. At the port of Ho Chi Minh City, Robusta coffee type R1 increased by VND300/kg (up by 0.9%) compared to February 8, 2021, to VND33,400/ kg.

Coffee prices are forecasted to continue to increase when the US economy shows positive signs. In addition, cold weather causes the demand for coffee at home in the United States to increase. The demand for the high-quality instant coffee segment has also increased as the need to work from home has increased dramatically since the outbreak of Covid-19.

Mr. Luong Van Tu, Chairman of Vietnam Coffee and Cocoa Association Vicofa (VICOFA), said that the coffee market has gone through a cycle of declinefor four consecutive years. With global and Vietnamese coffee production on a current downward trend, coffee prices may recover in 2021.

Many positive signals

According to the Import-Export Department, Vietnam's coffee productivity is the highest in the world, averaging 2.6 tons per ha for Robusta coffee and 1.4 tons per ha for Arabica coffee. Vietnam ranks 3rd in terms of the certified sustainable coffee area, 2nd in terms of exports and accounts for 8.3% of the global coffee export market share.

Mr. Nguyen QuocToan, Director of the Department of Agro-Processing and Market Development, saidthat available coffee inventories in port warehouses aroundthe world have fallen to their lowest levels in many years, which is an optimistic sign. The coffee export market will improve in 2021. In addition, the major coffee import markets of Vietnam all suffered great losses due to the Covid-19 pandemic andare continuing to implement social distancing, andincrease demand for coffee at home. In addition, vaccine trial information will also boost exports.

Regarding the coffee exports in 2020, Mr. Luong Van Tu said, while many businesses and coffee growers fell into a difficult situation with losses, there are many creative ways to do business, change business methods, invest in processing to increase the added value of coffee beans.

"In order to solve the problem for long-term difficulties, most businesses in the coffee industry have engaged in e-commerce. Many private businesses set up websites to sell coffee online. In addition, many enterprises have promoted the deep processingof roasted and ground coffee and instant coffee to serve the growing diversified consumer demand; taking advantage of the opportunity to export processed coffee with double added value compared to exporting green coffee to markets that have just signed a Free Trade Agreement (FTA),"said Mr. Luong Van Tu.

Some experts said that they continue to promote creative and methodical ways of enterprises in the coffee industry, especially deep processing, taking advantage of opportunities to promote exports to markets with FTAs, typically the EVFTA is a viable direction to help the coffee industry overcome difficulties and gainbetter results this year.

With FTAs in general and the EVFTA in particular, Deputy Minister of Agriculture and Rural Development Le QuocDoanhsaid, in order to make better use of the opportunity to suggest localities continue to guide farmers to produce certified coffee required by EU importers with clear and transparent traceability; accelerate the application of scientific and technical advances in growing, tending, harvesting, and preliminarily processing and preserving coffee products.

In addition, the Ministry of Agriculture and Rural Development also requested localities to convert coffee varieties to improve quality, increase the market share of specialty coffee, continue to register geographical indications, and build brands for local products.