Coffee export prices take a dive
Posted by Bao Viet Nam on October 18, 2008
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| Farmers harvest coffee in Ia Sao New Economic Zone in Gia Lai Highland Province. The export price of coffee fell this year due to the impact of the global crisis. —VNA/VNS Photo Sy Huynh |
HA NOI — The export price of coffee this week fell to between US$1,600-1,700 per tonne, a reduction of $1,000 per tonne compared with the beginning of the year, said the Viet Nam Coffee and Cocoa Association (VICOFA).
VICOFA consultant, Doan Trieu Nhan, said the decrease was not caused by an imbalance in supply and demand, but was due to the global financial crisis.
Coffee traders are finding it difficult to re-negotiate credit lines with commodities focused banks due to the global credit crunch.
In February, a tonne of coffee sold for $2,500, and the price remained stable until last month.
Coffee export volumes have also been falling as key importers Germany, Italy and the United States have bought less coffee in the last few months.
In August, coffee exports to the United States dropped 48 per cent, exports to Germany and Italy fell 23 and 22 per cent, respectively.
Coffee growers in the central highlands provinces of Dak Lak and Lam Dong are facing difficulty. At the beginning of the year, coffee growers earned around VND42,000 ($2.5) per kilogram of coffee. The price dove to VND26,000 ($1.5) per kilo on Tuesday. This means coffee growers will lose around VND14 million ($800) per tonne of coffee.
Dak Lak coffee growers are finding this a bitter pill to swallow as they expect the next harvest to be a bumper crop of about 400,000 tonnes, representing a loss of approximately VND6.4 trillion ($400 million).
The sector as a whole will lose around $1 billion assuming a countrywide harvest of 1.2 million tonnes.
Production costs are also on the increase, putting growers under further pressure. Fertiliser – accounting for around 60 per cent of production costs – in particular has become increasingly expensive.
Doan Trieu Nhan, however, said there was still some hope on the horizon. Brazil will set aside 12 million 60kg bags of the 51 million bags expected to be produced in the 2008-9 period, an increase of nearly 150 per cent from the 5 million bags stored last period, in an effort to stabilise prices by reducing supply. This would hopefully help coffee farmers worldwide, he said.
Global coffee production is estimated to be 131 million bags a year, while consumption is said to be 128 million bags per year. —
