Vietnam ascending to world’s largest coffee exporter
In the staunchly competitive coffee industry, leading economists forecast Vietnam is set to become the world’s largest coffee exporter, providing the Southeast Asian nation can surmount its shortcomings.
The Ministry of Agriculture and Rural Development (MARD) reports Vietnamese coffee exports in the seven months leading up to August jumped 26.9% in volume and 21.9% in value on-year.
The country shipped a total of 1.12 million tonnes of coffee beans to foreign markets during the period grossing US$2.31 billion in revenue at an average sales price of US$2,043/tonne, 4.84% lower than the previous year’s figure.
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Key coffee importers included Germany and the US with Belgium doubling its coffee imports over last year’s figures.
In recent years, coffee has been one of Vietnam’s key export items achieving high revenue. The local coffee industry aims to record higher export growth in the future, with about 95% of its output being shipped abroad.
Currently, Vietnam is the world’s largest exporter of Robusta coffee. It ranks second in coffee export volume and third in value. Economists say Vietnam is on a path to becoming the world’s largest coffee exporter within the next few years.
According to a recent report on exports by the Ministry of Industry and Trade (MoIT), Vietnamese coffee has sharpened its competitive edge thanks to favourable climate conditions, lower-cost production and a bumper coffee crop. However, product quality remains low due to out-dated harvest technology and poor processing facilities.
Additionally, Vietnamese coffee suffers from lack of brand name recognition as local exporters’ marketing skills are still limited and over 90% of coffee products are essentially raw unprocessed materials with low added value, MARD reports.
With such disadvantages, Vietnamese coffee’s export price is lower than the world’s average. Nevertheless, thanks to its firm foothold in the global market, Vietnam holds great potential for improving its coffee quality and recording higher export turnover.
Technology upgrade – a must
Economists suggest Vietnam improve its production chain and distribution networks, from producing, processing to marketing processes, in order to increase export value for Vietnamese coffee.
Nguyen Thi Thu Hang, a senior advisor in export evaluation and capacity building for small-and-medium-sized enterprises, raises her concern over the shrinking coffee cultivation area as aging coffee trees are becoming prevalent and irrigation networks stay outdated, she says.
the local coffee industry should increase product quality by investing more in research, post-harvest technology, and processing facility. It is also equally essential to apply sustainable standards for coffee production and supply high-quality products on request despite low consumption, she says.
Other experts recommend the industry more effectively control coffee growing areas to avoid an imbalance between supply and demand. Coffee farmers should also be required to follow a strict protocol to meet rising requirements of consumers.
The general consensus of industry experts is sustainable coffee export growth will only be achieved if domestic coffee producers, processors and exporters, increase product quality in line with international standards.
