Coffee business’ bitter after taste

May 25, 2012 | 11:24

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A dearth of international trade experience is pushing local coffee firms into the corner.

Pham Khanh Hiep, a senior coffee expert, said Vietnamese coffee often incurred disadvantages during transactions in London and New York coffee trading floors since local exporters could not grasp trading rules.

Luong Van Tu, Vietnam Coffee-Cocoa Association (Vicofa) chairman, said many exporters did not opt for legal advice when signing export contracts or resolving disputes and they need to redress this situation.

To limit risks when making transactions with futures contracts, Vicofa secretary Nguyen Viet Vinh suggested firms get support from legal and international trade experts.

“Establishing model contracts and doing trade as per international practices are urgent needs for Vietnam’s coffee industry,” Vinh said.

Cafecontrol general director Nguyen Nam Hai said Vietnamese firms had made their mark in the global market.

For instance, Intimex Ho Chi Minh City or Dak Lak-based Simexco made deals directly with world coffee roasting and grinding companies without going through intermediaries. These firms, therefore, could sell products at good rates and are less dependent on market situations.

“But, not many firms do so. Most are doing futures contracts which are risky,” said Hai.

Simexco director Le Duc Thong said prestige was important to directly sell products to world coffee roasting and grinding firms.

Through selling directly to foreign coffee firms, Simexco earns $50-100 per tonne of export coffee more compared to exporting through middlemen and takes the initiative in output market.

Meanwhile scores of firms, doing transactions with futures contracts via middlemen, face going bust due to strong market fluctuations, said Thong.

In 2011-2012 coffee season (from September 2011 to March 2012) Vietnam shipped abroad 700,00 tonnes of coffee of which 13 foreign-invested firms exported 200,000 tonnes.

By Thanh Vu

vir.com.vn

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