Vietnam’s coffee exports jump to a new record

November 12, 2012 | 11:00

(0) user say

Vietnam’s booming coffee exports have hit a new record value of $3.3 billion for the 2011/2012 crop, confirming the country’s standing as the world’s second biggest coffee exporter after Brazil.

But the country’s coffee exporters are now worried that a looming deadline to prohibit foreign-currency financing could impose a competitive handicap in the global market. A petition is being circulated seeking to scrap the new rule.

Vietnam’s exports of coffee beans from the 2011/2012 crop was estimated to hit a record volume of 1.5 million tonnes or over $3.3 billion. That is an increase of 23 per cent and 24 per cent in quantity and value compared to crop year 2010/2011 respectively, stated the Vietnam Coffee Cocoa Association (Vicofa). For the first 10 months of 2012, the figures are 1.4 million tonnes and over $3.1 billion, respectively.

According to coffee industry insiders, in addition to bumper crops, local exporters have benefited from the relatively low-interest loans in foreign currencies from local banks. Previously, the high interest on VND loans put Vietnam’s exporters at a disadvantage on the global market.

According to Intimex Nha Trang Company, a member of Vicofa, the company has achieved export turnover of $700 million in crop year of 2011/2012 benefiting from loans in foreign currency.

Le Duc Thong, director of Daklak Import-Export 2/9 Company, said loans in foreign currency from banks were very useful for local coffee exporters to compete with foreign players. “In the last two years, local exporters have suffered loans in VND with interest rate 5 times higher than foreign companies’ rate of loans in foreign currency, which led to many difficulties in competing with foreign companies.”

However, according to Decision No. 857.NHNN of the State Bank, the deadline for loans in foreign currency is the end of 2012. Many coffee exporters worry that the situation of a “loss at home” will return. An urgent petition has been sent by most of members of Vicofa to the State Bank seeking a continuation of the policy allowing loans in foreign currency.

According to Vicofa, Vietnam’s average coffee export price is $2,000 per tonne, which is only $30-40 cheaper than international prices in London and New York compared to the previous difference of $100 per tonne.