The paradox of Vietnamese coffee

VietNamNet Bridge – When selling a kilo of coffee beans, Vietnam earns two dollars, which is equal to the price of a cup of coffee sold in foreign countries. Meanwhile, 50 cups of coffee can be created from the one kilo of coffee beans.

 Big exports can bring modest income

The figures show that coffee growers can receive a very small proportion of the profit chain, while the majority of the profit falls into the hands of roasters and distributors.

Being a big coffee producer and exporter, Vietnam cannot earn much money from coffee exports. A report showed that in the 2011-2012 coffee crop, Vietnam grew coffee on 600,000 hectares of land which had the yield of 2.3 tons per hectare. And despite the big amount of export, about 1,667,000 tons, Vietnam could earn 3.74 billion dollars only in export turnover.

In the crop, Vietnam’s coffee amounted to 30 percent of total coffee transaction volume, but the export turnover only amounted to 10 percent of the total global trade value. The problem was that Vietnam could not make deeply processed products which have high added values. Instant coffee and roasted coffee products just accounted for 10 percent of the total exports.

Nguyen Thanh Tung, Deputy General Director of Vinacafe Bien Hoa, said when selling one kilo of coffee beans, Vietnam can earn two dollars only, the sum of money foreign distributors can earn by selling only one cup of coffee.

Tung went on to say that there exists a big gap in the development of the coffee industry in Vietnam and in Brazil. While Vietnam only has four instant coffee brands and 20 roaster brands, Brazil has 20 and 3,000 brands, respectively.

Brazil once met similar problems like Vietnam’s 20 years ago. However, a big scaled campaign to restructure the coffee industry which lasted 10 years has created a new face to the industry. Analysts believe that Vietnam should also undertake such a restructuring process to earn more money in the world market.

Big challenges waiting

According to Luong Van Tu, Chair of the Vietnam Association of Coffee and Cocoa Association, Vietnam’s coffee industry has been facing a lot of challenges.

The area of the coffee plants--older than 20 years now, accounts for 30 percent of the total growing area. If these cannot be re-cultivated quickly, Vietnam’s area of old coffee plants would account for 50 percent, which would make Vietnam fall out of the position as the biggest coffee exporter in the world.

Tu also said that though the coffee growing area in Vietnam is big, coffee plants have been grown in separated areas, which makes it difficult to apply advanced techniques in growing and processing. Besides, there are too many coffee export companies (more than 150), but the coffee quality remains unstable, while the exports have been mostly unprocessed coffee beans.

According to Nguyen Van Hoa, a senior official from the Ministry of Agriculture and Rural Development, in 2012, the rain fall in the central highlands was very low if compared with the average rain falls in previous years, because of which the area of coffee growing area suffering from drought has been increasing rapidly.

“It’s necessary to draw up a plan to get adapted to the climate changes in order to minimize losses,” Hoa suggested.

Meanwhile, the current difficulties have discouraged people to farm coffee. People manage more than 80 percent of the coffee area, but since they lack market information, they have to sell products at low prices and face high risks.