Vietnam’s total coffee production for 2008/2009 is expected to increase by 17%, according to a U.S. Department of Agriculture attache report posted on the Foreign Agricultural Services Web site.
Coffee production in 2007/2008 was about 13.7% less than the previous crop year. Consequently, export volumes were also down 10% from the previous market year.
Vietnam produced 1.1 million metric tons or 18.33 million 60-kilogram bags of coffee in market year (MY) 2007/2008. This represents a 13.7 percent decline in production from the previous crop year, though still 5 percent higher than our earlier forecast. Post maintains its earlier estimate for MY 2008/2009 coffee production at about 21.5 million 60 kg bags or 1.29 million metric tons, which is 17 percent more than the current market year. This improved outlook takes into account an anticipated small increase in the growing area as well as improved weather conditions and better yields.
Even with a 10 percent reduction in coffee export volume in MY 2007/2008, Vietnam remains the world’s top Robusta exporter. This market year also marks the first time exports reached a value of over $2 billion. This 20 percent increase in value over the previous market year was largely due to higher coffee prices. It should be noted, however, that coffee prices are expected to fall during the first months of MY 2008/2009 due to effects from the global financial crisis on commodity markets, including coffee, despite the fact that, as International Coffee Organization (ICO) reports, coffee supply and demand fundamentals remain unchanged. The effects of falling coffee prices are already being felt by Vietnam’s coffee growers, some of which have already started holding more stock as prices continue the sharp decline since July. Post has therefore revised upwards its earlier estimate for ending stocks for market year 2007/2008. PRODUCTION Vietnam’s 2007/2008 Coffee Crop
Post revises Vietnam’s 2007/2008 coffee production estimate to 1.1 million metric tons or 18.3 million 60kg bags. This represents a decrease of 13.7 percent from the previous crop which is largely attributable to loss of coffee blossoming during heavy rainfall as well as unseasonable frost in several key planting areas (Graph 1). Coffee yields for the 2007/2008 crop year was down 14.8 percent from the previous crop year.
Coffee growers continued to expand their production area in the face of high export coffee prices despite of government efforts urging growers to focus on sustainable production techniques and better harvesting practices in order to improve coffee quality. Farmers reportedly spend an average of VND20 million to grow one hectare of coffee. Application of such sustainable cultivation techniques as reasonable use of fertilizer (i.e. correct amt.) and sufficient water, the expense is reduced to VND15-16 million per hectare, a 25 percent cost savings.
The Ministry of Agriculture and Rural Development (MARD) reports that coffee is currently planted in 20 provinces across Vietnam, but the primary plantation areas are in Dak Lak, Lam Dong, Gia Lai, and Daknong provinces in the Central Highlands (picture 1). All but about 2.2 percent of Vietnam’s coffee production is Robusta coffee. Coffee growers note the difficulty in developing Arabica plantation areas, which need to be at an appropriate elevation. Farmers must also change their farming and harvesting/handling techniques to one requiring more intensive labor, which can be quite costly as is the investment needed for processors’ equipment and the higher processing standards required for Arabica beans.
Moreover, all of these factors/requirements have to be in place at the same time in order to have a good marketable Arabica product.