Coffee exports will flourish this year

After 2020, exports are not favourable due to the serious impact of the Covid-19 pandemic, Vietnam's coffee exports are expected to flourish in the first months of 2021.

Among 39 geographical indications of Vietnam committed to protect by the EU when EVFTA is officially put into effect, there are geographical indications on coffee. This is a huge competitive advantage for Vietnam's coffee industry with competitors in the EU market. Photo: N.Thanh

Reduce quantity and value

According to the latest information from the Bureau of Agricultural Product Processing and Market Development (Ministry of Agriculture and Rural Development), coffee exports for the whole 2020 will reach 1.51 million tonnes, worth US$2.66 billion, down 8.8% in volume, and down 7.2% in value compared to 2019. Germany, the US and Italy continue to be the three largest coffee consuming markets of Vietnam. The average export coffee price for 2020 is estimated at US$1,759 per tonne, an increase of 1.8% compared to 2019

In the first 11 months of 2020, the coffee export value increased sharply in the following markets: Poland (up 35.6%, reaching US$36.5 million), Japan (up 15.4%, reaching US$170.3 million), and Malaysia (up 15.2%, reaching US$65.3 million). In contrast, export value of coffee decreased the most in the UK market (down 36.5%, reaching US$46.4 million).

The average price of exported coffee in 11 months of 2020 reached US$1,744.3 / tonne, up 1.1% over the same period in 2019. Estimated in December 2020, the average export coffee price reached US$2,000 per tonne, up 3.9% over November 2020 and up 14.9% over the same period in 2019.

In terms of prices on the world market, in December 2020, coffee prices on the derivatives exchange floor fluctuated complicatedly. Compared with the previous month, Robusta coffee price delivered in January 2021 in London market decreased by US$ 39 per tonne to US$1,362 per tonne. Coffee prices fell when the majority of speculators continued to show caution at the negative news of the world economy caused by the Covid-19 pandemic and in the context of waiting for vaccines. Meanwhile, in New York, the price of Arabica coffee delivered in December 2020 continued to grow and increased by more than 9% from the previous month, maintained at US$2,796 per tonne.

Looking back to the whole year of 2020, Mr. Nguyen Quoc Toan, Director of the Bureau of Agricultural Product Processing and Market Development assessed coffee prices fluctuated and decreased in the first six months of the year and tended to increase slightly in the last six months. Compared to the end of 2019, the price of Robusta coffee in Central Highlands provinces increased slightly at 500 VND per kg. However, the price fell by 100-200 VND per kg compared to November 2020. Currently, the buying price is at 32,500 - 32,900 VND per kg.

Coffee prices recorded the highest in Dak Lak province and the lowest in Lam Dong province. FOB price of Robusta coffee delivered at HCM City port was stable at 34,500 VND per kg. This year's coffee crop in Vietnam had lost its crop and harvested later than in previous years, so it did not put pressure on the market.

Exports will improve

The Bureau of Agricultural Product Processing and Market Development said coffee inventories in ports around the world fell to the lowest level in many years, which was an optimistic signal the coffee export market would improve in 2021. The major coffee import markets of Vietnam all suffered great losses due to the Covid-19 pandemic and continued to implement social distancing which led to increase the demand for coffee at home. Along with that, vaccine trial information would boost exports. It was forecasted that coffee exports would have many positive signals in the first months of 2021.

From a price perspective, Luong Van Tu, Chairman of the Vietnam Coffee-Cocoa Association, said with the current global and Vietnam's coffee output, the coffee price might increase in 2021. The coffee market had gone through a cycle of price declines for four consecutive years. As a result, coffee prices would recover in 2021 on reduced output. However, Tu also said: “The recovery of coffee prices will depend a lot on the level of recovery of the tourism industry after the Covid-19 pandemic. This is a huge coffee consuming industry, so as long as the tourism industry recovers, coffee will also recover.”

Regarding coffee exports this year, one of the visible advantages is to make better use of opportunities from the Vietnam-EU FTA (EVFTA) to promote exports. According to Deputy Minister of Agriculture and Rural Development Le Quoc Doanh, with the implementation of the EVFTA, the EU eliminated all taxes on unroasted or roasted coffee products (down from 7-11% to 0%); processed coffee types would be reduced from 9-12% to 0% at the time of entry into force of the agreement. At the same time, out of 39 geographical indications of Vietnam that is committed to protect by the EU when the EVFTA is officially put into effect, there were geographical indications on coffee. This is a huge competitive advantage for Vietnam's coffee industry with competitors in the EU market.

However, meeting EU technical standards requirements to enjoy preferential taxes from EVFTA is not easy; it takes a lot of time and efforts from enterprises. To continue implementing the EVFTA effectively, the Ministry of Agriculture and Rural Development suggests localities continue to guide farmers to produce certified coffee to the requirements of EU importers, with clear and transparent traceability; at the same time, to accelerate the application of scientific and technical advances in growing, tending, harvesting and preliminarily processing coffee products. In addition, the Ministry of Agriculture and Rural Development requests localities convert coffee varieties to improve quality, increase market share of speciality coffee, continue to register geographical indications, and build brands for local products.