Vietnam coffee output hit by low prices: Hiang Kie<\/p>\n
SINGAPORE (Reuters); International coffee prices have fallen
\nso low that some Vietnam farmers are leaving cherries unpicked,
\nhead of Singapore coffee trader Hiang Kie Pte said on Monday. \"I
\nsaw cherries virtually dying on plants...There could be 5-10
\npercent losses, or even more,\" said managing director Ong Sing
\nKai, who toured Vietnam's coffee producing regions of Daklak and
\nLam Dong late in December.<\/p>\n
The two regions produce most coffee in Vietnam, which has
\ndoubled robusta production in the last two years.<\/p>\n
\"The quality could also suffer, if not already...The reason
\nyou don't see it is because the production is so big,\" Ong told
\nReuters in an interview.<\/p>\n
Vietnam's 2000\/2001 crop, just harvested, is expected to reach
\n750,000 tons or more and has helped slash international robusta
\ncoffee futures prices to near 30-year lows.<\/p>\n
The futures fell below US$600 per ton in December, down from
\n$1,200 a year ago and a peak of around $2,700 two years ago.<\/p>\n
\"In a way this decline...is good for them. They tell them the
\nreality of things,\" said Ong. \"If prices had been reasonable --
\nsay around $700 or $800 (per ton, FOB), it would continue to
\nproduce and grow the output.\"<\/p>\n
Vietnamese benchmark robusta prices are around $450. The
\nVietnam Coffee and Cocoa Association (VICOFA) froze prices in
\nDecember when it saw them sliding to below $400.<\/p>\n
Hiang Kie, set up in 1936 by Ong's father, trades green coffee
\naround the world, roasts some beans and runs 31 gourmet outlets
\nin the region, including 21 in Singapore, with 2000 turnover of
\naround 35,000 tons.<\/p>\n
Vietnam's growth in robusta production has particularly hit
\nIndonesia, which has lost a lot of market share and influence
\nover determining prices.<\/p>\n
Ong, who also chairs the Singapore Coffee Association, said
\nhowever that Indonesia's arabica market, which has enjoyed
\nincreasing popularity in the U.S. specialty coffee market, would
\nbe more difficult to attack.<\/p>\n
\"It's hard to beat Vietnam in terms of robusta...but Indonesia
\nwill continue to play an important role, especially when the
\npolitical situation stabilizes. They could easily increase the
\nproduction,\" Ong said.<\/p>\n
He said Indonesia's main arabica -- Mandheling -- had a strong
\nposition on which to build.<\/p>\n
\"It's a unique coffee... It has a heavy body and an intense
\nflavor you don't normally get from washed coffees from Central
\nAmerica.\"<\/p>\n
Asked about Vietnam's efforts to grow arabica, Ong said:
\n\"We're looking into roasting Vietnamese coffee. But it's not so
\neasy. They have not yet standardized arabicas.\"<\/p>\n
Ong expressed his doubt that Vietnam would be able to carry
\nout a plan to retain as much as 170,000 tons of exportable coffee
\nas part of an international scheme to rescue the ailing coffee
\nprices.<\/p>\n
\"They do not have the capacity to fulfill the plan,\" he said,
\nreferring to financial costs as well as storing facilities.<\/p>\n
\"The temptation to sell by farms and collectors (is large),
\nespecially when you have a big crop,\" he said.<\/p>\n
In addition to the first Hanoi scheme to retain 60,000 tons
\nfor six months, the Hanoi government is considering withholding
\nanother 90,000 tons. Separately the Daklak province is discussing
\nholding back 20,000 tons.<\/p>\n
\"They may want to look at alternative crops,\" Ong said. \"They
\ncan be quite quick in switching economic activities...I'm quite
\nsure some of them have already re-planted something else.\"<\/p>",
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