Sustainability critical to success of Vietnamese coffee industry

Vietnam had 710,000 hectares of coffee with a yield of 2.7 tonnes per hectare in 2021, three times higher than the average global yield.

HANOI: Vietnam's coffee industry is making steady headway in the international competitiveness rankings with a processing capacity of 2.36 million tonnes per year, according to Agriculture and Rural Development Deputy Minister Phung Duc Tien.

Speaking at the international conference on coffee on Sunday, the deputy minister said Vietnam had 710,000 hectares of coffee with a yield of 2.7 tonnes per hectare in 2021, three times higher than the average global yield. Between 2021 and 2022, the country produced 1.7 million tonnes and exported US$3.9bil (RM17bil) worth of coffee, up 31.3% year-by-year.

“With farmers of great industry and firms of great adaptability, Vietnam has moved up to the top of the world’s largest robusta coffee producers,” said Tien.

Amid unfavourable global conditions, he urged the Vietnam Coffee Cocoa Association (Vicofa) to push ahead with sustainable development, focus on intensive processing methods, and promote Vietnamese coffee culture to expand its global footprint.

Le Van Duc, deputy director of the Plant Cultivation Department, Ministry of Agriculture and Rural Development, said Vietnam is among the countries with the highest coffee yield in the world. It also secures the 6th position in terms of coffee-growing areas.

The European Union is its largest importer, consuming 42% of its coffee exports. Asian countries come in second, and the United States comes in third with 10%. Robusta coffee accounts for 75% of total exports, with processed coffee accounting for 20%.

“We hope that processed coffee will take a bigger share of the pie in the shortterm,” said Duc.

He called on the Vietnamese coffee industry to shift its focus to intensive processing methods to improve its position on the international scene.

He also suggested integrating digital technology into coffee production to enhance the links among players along the supply chain.

Do Ha Nam, vice-president of Vicofa, said that Vietnamese coffee exports normally reach a peak between December and March and fall off afterwards. In the first six months of 2022, the figure topped one million tonnes, the highest in the past several years.

Out of 10 large coffee exporters in Vietnam, six are Vietnamese companies and four are foreign-direct investment-financed ones, indicating that the latter are well positioned to expand domestically.

“Foreign manufacturers are relocating their processing factories to Vietnam for reasons of free trade agreements and low labour costs,” said Nam.

Nam called for more favourable bank loans to coffee farmers to help them improve their yield. He also called for a complete ban on the use of glyphosate agents in coffee farming to prevent water contamination.

As urban migration is expected to cause a labour shortage on coffee farms in the long term, mechanisation is the only option for coffee producers to pick up the slack and keep output stable.

Vanusia Nogueira, executive director of the International Coffee Organisation, stated that over the last 20 years, global coffee prices have risen and fallen in a two to three-year cycle.

“When prices are high, producers become excited and cultivate more coffee plants. Consequently, they will have huge production in about two to three years, leading to falling prices afterwards,” said Nogueira.

The executive director suggested three likely scenarios for global coffee consumption by 2030. One of the scenarios was that consumption would grow by 2.5% annually, reaching 48 million 60kg bags in 2030.

Victor Mah, president of the Asean Coffee Federation and Asean Coffee Institute, claimed that the two organisations are committed to giving full support to all their members in promoting domestic coffee consumption as well as trade activities for Asean coffee. — Viet Nam News/ANN