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.
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