Vietnam may cut robustas, eyes arabicas: Sources

Vietnam may cut robustas, eyes arabicas: Sources

SINGAPORE (Reuters): Vietnam, the world's largest robusta coffee producer, may destroy some plantations to reduce oversupply and promote the aromatic and higher quality arabica variety, industry sources said on Thursday.

Indonesia is also seeking to boost arabica output, but so far it is growing at a snail's pace because of high maintenance costs, soil, altitude and climate requirements.

Both Vietnam and Indonesia have some mountainous areas suitable for arabicas. Robusta is usually grown in very hot and humid climates, while Arabicas are grown in cooler climates either further from the equator or at higher altitudes.

"There's too much robusta production," Doan Trieu Nhan, chairman of state-affiliated Vietnam Coffee and Cocoa Association (Vicofa), told Reuters by telephone.

"According to our program, we have to change the ratio between robusta and arabica areas. Maybe, we have to decrease (or) destroy some robusta plantations," he added.

Nhan said the Vietnamese government had agreed with Vicofa's proposal to cut robusta plantation areas to 300,000-400,000 hectares from more than 450,000 hectares.

"I have to decrease (plantation areas)...we have to grow new arabica plantations," said Nhan, adding that plantations under arabica in Vietnam totaled only 20,000 hectares.

Nhan said arabica plantations could be expanded to some 100,000 hectares in the near future.

Online analyst Commodityexpert.com urged Vietnam and Brazil this week to lead a global effort to produce less coffee as London futures touched a 30-year low on Monday at US$516 a ton (basis September).

Vietnam has been widely blamed by the coffee world for expanding output and flooding the market over the past two years.

But the country's 2001/2002 coffee crop output is forecast to drop between 20 and 30 percent from some 840,000 tons in 2000/2001 due to lower use of fertilizer. Industry sources said arabicas now accounted for about 8,000 tons a year.

Vicofa's Nhan said a reduction in robusta plantation areas would surely cut production, but he gave no details.

Vicofa said earlier that Vietnam, with a population of around 70 million, also aimed to increase internal consumption to one kg per capita annually from just 0.2-0.3 kg currently in an effort to restructure its coffee industry.

Indonesia

Traders in Indonesia said the country planned to boost arabica output to some 35 percent of its total production in the coming years from about 12 percent now, but high growing costs and difficulties in finding suitable areas restricted growth.

Indonesia's coffee production is expected to reach 340,000 tons in 2000/2001 from 380,000 tons in 1999/2000 due to bad weather.

Some traders in Indonesia said arabica farmers managed to collect money even though the aromatic variety was also suffering from a glut in supply.

"There are plenty of arabica grades and each grade has different prices. So I guess, there's always a benefit to grow arabica," said one trader in Medan, on Sumatra.

Robusta coffee ex Lampung on Sumatra only fetched up to Rp 3,200 ($0.33) a kg compared with Java Arabica, which was offered at up to Rp 14,500 ($1.43) a kg.

Mandheling Arabica, also from Sumatra, was around Rp 13,900 ($1.42) a kg.