Vietnam coffee output hit by low prices: Hiang Kie
Vietnam coffee output hit by low prices: Hiang Kie
SINGAPORE (Reuters); International coffee prices have fallen
so low that some Vietnam farmers are leaving cherries unpicked,
head of Singapore coffee trader Hiang Kie Pte said on Monday. "I
saw cherries virtually dying on plants...There could be 5-10
percent losses, or even more," said managing director Ong Sing
Kai, who toured Vietnam's coffee producing regions of Daklak and
Lam Dong late in December.
The two regions produce most coffee in Vietnam, which has
doubled robusta production in the last two years.
"The quality could also suffer, if not already...The reason
you don't see it is because the production is so big," Ong told
Reuters in an interview.
Vietnam's 2000/2001 crop, just harvested, is expected to reach
750,000 tons or more and has helped slash international robusta
coffee futures prices to near 30-year lows.
The futures fell below US$600 per ton in December, down from
$1,200 a year ago and a peak of around $2,700 two years ago.
"In a way this decline...is good for them. They tell them the
reality of things," said Ong. "If prices had been reasonable --
say around $700 or $800 (per ton, FOB), it would continue to
produce and grow the output."
Vietnamese benchmark robusta prices are around $450. The
Vietnam Coffee and Cocoa Association (VICOFA) froze prices in
December when it saw them sliding to below $400.
Hiang Kie, set up in 1936 by Ong's father, trades green coffee
around the world, roasts some beans and runs 31 gourmet outlets
in the region, including 21 in Singapore, with 2000 turnover of
around 35,000 tons.
Vietnam's growth in robusta production has particularly hit
Indonesia, which has lost a lot of market share and influence
over determining prices.
Ong, who also chairs the Singapore Coffee Association, said
however that Indonesia's arabica market, which has enjoyed
increasing popularity in the U.S. specialty coffee market, would
be more difficult to attack.
"It's hard to beat Vietnam in terms of robusta...but Indonesia
will continue to play an important role, especially when the
political situation stabilizes. They could easily increase the
production," Ong said.
He said Indonesia's main arabica -- Mandheling -- had a strong
position on which to build.
"It's a unique coffee... It has a heavy body and an intense
flavor you don't normally get from washed coffees from Central
America."
Asked about Vietnam's efforts to grow arabica, Ong said:
"We're looking into roasting Vietnamese coffee. But it's not so
easy. They have not yet standardized arabicas."
Ong expressed his doubt that Vietnam would be able to carry
out a plan to retain as much as 170,000 tons of exportable coffee
as part of an international scheme to rescue the ailing coffee
prices.
"They do not have the capacity to fulfill the plan," he said,
referring to financial costs as well as storing facilities.
"The temptation to sell by farms and collectors (is large),
especially when you have a big crop," he said.
In addition to the first Hanoi scheme to retain 60,000 tons
for six months, the Hanoi government is considering withholding
another 90,000 tons. Separately the Daklak province is discussing
holding back 20,000 tons.
"They may want to look at alternative crops," Ong said. "They
can be quite quick in switching economic activities...I'm quite
sure some of them have already re-planted something else."