India, Vietnam lift import bans on coffee, pepper and other agro-products

A woman sorts coffee beans at a coffee factor. India and Vietnam have removed their back-to-back bans issued earlier this month on the imports of several key agricultural commodities, including coffee beans and pepper, the Vietnamese government said on Wednesday. Photo by Reuters

The back-to-back bans have prevented Indian roasters from securing coffee beans while pepper prices in Vietnam have dropped to multi-year lows.

India and Vietnam have removed bans issued earlier this month on imports of several key agricultural commodities, including coffee and pepper, the Vietnamese government said on Wednesday, in line with market expectations.

The Indian ban, which had been in place since March 7, has prevented coffee roasters in India from securing raw material to meet fast growing demand at home, while pepper prices in Vietnam have dropped to multi-year lows due, in part, to the restriction. Vietnam is the world's largest exporter of robusta coffee and black pepper.

The Indian Embassy in Hanoi advised Vietnam's Industry and Trade Ministry late Tuesday that India has lifted its ban on six commodities from Vietnam, namely coffee beans, bamboo and bamboo toothpicks, black pepper, cinnamon, cassia and dragon fruit, the ministry said in a statement.

The move follows a request made last week by the Vietnamese government. 

The Indian Embassy also said related Vietnamese agencies had advised that Vietnam has abolished a decision to suspend imports of five agro-products from India, the ministry statement said. It did not say when the ban will be lifted.

Traders and Vietnamese industry officials had predicted the bans would be short-lived and that India's ban was only a "tit-for-tat action" against Vietnam's ruling on suspending the import of Indian peanuts, cassia alata seeds, cocoa beans, French bean seeds and tamarind, citing peanut beetle contamination.

Vietnam's domestic market had mixed reactions on Wednesday after news the bans were being lifted emerged.

Robusta beans retreated to VND46,500-47,000 ($2.02-$2.07) per kilogram in Dak Lak, Vietnam's biggest growing province, due mainly to a drop in futures prices, from VND46,900-47,500 the previous day. London's May robusta contract closed 1.1 percent lower at $2,171 per ton on Tuesday. 

Prices hit their highest level since late 2011 on Monday due to a shortage of good beans, traders said. 

India often buys Vietnam's low-quality robusta grade 3, 25 percent black and broken beans for processing instant coffee. The South Asian nation is home to the world's third-fastest growing retail coffee market after Indonesia and Turkey, according to Mintel, a global market intelligence agency.

Pepper prices in Vietnam headed north, rising to VND109,000-110,000 per kg on Wednesday, a jump of around 15 percent from March 10, when news of India's decision spread to the domestic markets. India ranked the third-largest importer of Vietnamese pepper last year after the U.S. and the United Arab Emirates.

During a visit to Hanoi last September by India's Prime Minister Narenda Modi, leaders of the two countries expressed hopes of developing ties into a comprehensive strategic relationship, while nearly doubling trade to $15 billion by 2020.