Vicofa Chairman: Looking to Stockpile 300,000 Tons of Coffee

Vu Trong Khanh

  HANOI--Vietnam's Ministry of Agriculture and Rural Development is seeking

financial assistance from the government for coffee exporters to stockpile up

to 300,000 metric tons of coffee to support prices, an official with the

Vietnam Cocoa and Coffee Association, or Vicofa, said Wednesday.

  Vietnam is the world's largest grower of robusta coffee beans used primarily

to make instant coffee blends.

  The Agriculture Minister, Cao Duc Phat, said Tuesday his ministry had sent a

request to the government.

  Coffee exporters are seeking soft loans from the government to purchase the

coffee beans of the 2013-14 crop year for stockpiling, Vicofa Chairman Luong

Van Tu told The Wall Street Journal, adding that the purchases would take place

in the first half of 2014.

  "We have approached the State Bank of Vietnam for this issue, and the central

bank governor has said he supported the plan to stockpile coffee," Mr. Tu said.

  Mr. Tu said the move is necessary to help exporters hold the beans for a

longer period of time to wait for better prices, given that the current prices

are too low for exporters and farmers to make profits.

  "If prices stay low for a long time, farmers will stop watering and

fertilizing their coffee trees and ultimately cutting them off for growing

other crops," Mr. Tu said.

  He said Vietnam's coffee exports in the 2013-14 crop year is expected to be

around 23.5 million 60-kg bags, equivalent to the previous crop year.

  Data from the Vietnam General Customs Department showed the country's coffee

exports in the 2012-13 crop year that ended September 30 totaled 1.42 million

metric tons, down from 1.56 million tons a year earlier.

  Mr. Tu said the recent floods triggered by the Podul storm that hit Vietnam

last week will delay the harvest of the new crop year, adding that harvest will

peak from December, instead of mid-November as in the previous crop years.

  "The floods have also caused severe damages to coffee trees in south central

provinces," Mr. Tu said.

  He said the increase in the processing capacity of domestic coffee plants

will eat into the overall coffee beans available for exports this crop year.

  "Local coffee processing plants, including those of Nestle, Olam, Vinacafe,

Me Trang and Phuong Vi, will take a proportion of 6%-7% of Vietnam's total

coffee output in the 2013-14 crop year, up from 5% in the previous crop year.