Local traders buy Indonesian coffee for export

Several coffee processors and exporters told the Daily that such a decision is inevitable, saying if they did not do so, they would incur a loss of $40 with each tonne of coffee.

“The crop is over, there is not much coffee inventory left, yet farmers tend to hoard their products to wait for high prices. This makes local prices $21-per tonne higher than export prices, then how can we compete?”

“On the other hand, Indonesia supply is abundant and cheap,” explained Pham Ngoc Bang, deputy director of Dakman Coffee Joint Venture Co.

“Farmers have lost confidence in traders and processors. They now harvest and process on their own, then stockpile their products waiting for good prices, resulting in dwindling supply,” said Nguyen Nam Hai, general director of Vietnam Superintendence and Inspection Company of Coffee and Agricultural Products for Export and Import Co. Ltd.

Hai expressed his concern over this situation, especially when farmers’ awareness is still limited. “They keep the products themselves rather than making deposits, but they do not know the right time to sell at good prices,” he said.

Doan Van Ha, head of the coffee trade department under Hanoi Trade Corporation, said exporters with long-term contracts would face the most difficulties.

“When they signed contracts, local coffee prices were still low, but now they have to buy at higher prices for delivery on schedule,” Ha stressed.

To deal with this problem, a number of sustainable solutions, albeit not new, are brought forward. In particular, it is necessary to mend the ties between businesses and farmers, but in an “extensive” way.

“Coffee exporters can develop stable material zones in many ways, such as growing coffee by themselves, or hiring farmers to do so, or both. In terms of management, it is a must to have agricultural planning and process coffee in accordance with the international standards. Farmers are free to quote prices and select buyers,” said Hai.

In the year’s first half, there were times when prices of Vietnamese coffee plunged to a very low level compared to the global prices. This stimulated the demand of Indonesian companies for Vietnamese coffee, leading to a jump in export volume to this country.

In fact, Vietnam Coffee and Cocoa Association calculated that Vietnam shipped as much as 50,000 tonnes of coffee in this year’s first half.

However, local coffee prices are now higher than the world’s prices and prices of Indonesian products. The situation is reversed and now Vietnamese firms have to buy coffee from Indonesia for export.