Increase value of Vietnamese coffee beans through increased production

According to the commitments inthe Free Trade Agreements that Vietnam has signed, all member markets are open to Vietnam's roasted and processed coffee enjoy tax incentives. This has encouragedenterprises to invest in roasted and ground coffee processing and instant coffee.

Currently, the proportion of roasted and ground coffee exports in Vietnam has increased to 12% of the total coffee export turnover. Photo: Internet

Invest more in processing

Mr. Luong Van Tu, Chairman of Vietnam Cocoa Coffee Association (Viacofa), said that Vietnam's coffee industry has seen many changes over the years. Besides exporting green coffee beans, Vietnam has stepped up the processing and export of roasted and instant coffee. Currently, the proportion of roasted and ground coffee exports in Vietnam has increased to 12% of the total coffee export turnover. This is the result of the orientation to increase productivity, quality and added value, which has been promoted by Vicofa in recent years. Accordingly, this is a strategic solution for the sustainable development of the coffee industry in both domestic and export markets.

Mr. Tu said that in the 2020-2021 v, Vietnam's coffee output is forecast to decrease by about 15% due to the impact of floods and storms, low coffee prices for many yearsaffectingfarmers. Despite the decline, Vietnam's coffee output remains high globally, helping to provide an abundant supply of raw materials for processing. In addition, Vietnam signed14 FTAs, all markets are open to Vietnam's processed coffee with preferential tariffs of 0-5%. This is a huge advantage for businesses when investing in coffee processing in Vietnam.

With these advantages, a series of investment projects in instant coffee production have been put into operation, such as Intimex Group's Instant Coffee Processing Factory built on advanced technological lines with investment of US$30 million and capacity of 550kg each hour, estimated at 4,000 tons each year.

Recently, Nestlé Vietnam also put into operation the Nescafe Dolce Gusto tablet production line with a capacity of 2,500 tons of coffee each year; Tin Nghia Coffee Joint Stock Company inaugurated an instant coffee factory of 3,200 tons of finished coffee each year in thefirst period at Nhon Trach 3 Industrial Park. Vinh Hiep Company also linked with 10,000 households to establish10,000 hectares of coffee, with production of about 30,000 tons, including 45 hectares of high quality coffee according to the standards of the US Department of Agriculture. Vinh Hiep has also invested in high quality German coffee production lines to produce the product line branded L’amant coffee to promote the export of processed coffee.

Higher value

According to the Department of Trade Promotion under the Ministry of Industry and Trade, Vietnam has exported coffee to more than 80 markets around the world with a total annual export output of about 11.6 - 11.8 million tons, turnover is about US$2.6 - 2.8 billion. However, Vietnam's coffee export value is still low because green coffee still accounts for a large proportion.

The coffee industry is striving to reach an export turnover ofUS$6 billionby 2030 according to the Government's target. Roasted and instant coffee exports increased by 30%. This goal is set in the context of roasted and instant coffee being favored by countries around the world. In particular, during the Covid-19 pandemic, when the global economy was heavily affected, the demand for coffee still increased.

This is evidenced by the coffee export results in 2020 of the Nestlé Vietnam Company. According to Mr. William Mackereth, Supply Chain Director of Nestlé Vietnam, Nestlé Vietnam's exports in 2020 will grow by 20% and all of the company's products are deeply processed coffee products.

The investment in quality and processing also helps many Vietnamese enterprises export coffee at very high prices. Typically, Arabica coffee roasted by PhucSinh Company is being sold to foreign customers for US$28 / kg (equivalent to over VND600,000 / kg).

According to Mr. Phan Minh Thong, General Director of Phuc Company Sinh, the company has invested heavily in processing and creating value-added products aimed at the high-end market. Currently, 70-80% of PhucSinh's coffee exports are deep processed instead of regular green coffee.

Mr. Luong Van Tu said, from now to the end of the year, the coffee industry will try to export equal to last year with 1.6 million tons of coffee, reaching an export turnover of US$2.8 billion. If there is a decrease, it willbe a small decrease, but the export volume of roasted and instant coffee must increase.