Coconut prices skyrocket, will exports be affected?

Compared to the same period last year, the price of fresh coconut has increased by 110-120%, while that of dried coconut has increased by 150%. How does the strong fluctuation in coconut prices affect export businesses?

Mr. Cao Ba Dang Khoa - Vice President and General Secretary of Vietnam Coconut Association had an interview with reporters of Industry and Trade Newspaper about this issue.

Coconut prices increased from 110-150% depending on the type

- Coconut prices have increased in the past few days, what is the reason, sir?

Mr. Cao Ba Dang Khoa: In the raw coconut industry, there are currently two types. The first type is fresh coconut (whole water coconut) with prices increasing by about 110-120% compared to the same period last year (purchased at the garden). The reason is that we have opened the export market to China and the US. This creates a domino effect on many other markets, for example, when the US market opens, EU countries also open, many retailers increase their search for Vietnamese coconuts. This shifts consumer demand, including Chinese consumers. If before, they used Philippine and Thai coconuts, now they have switched to trying Vietnamese coconuts and prioritize using Vietnamese coconuts more.

In 2024, fresh coconut and coconut products exports will reach nearly 1.1 billion USD, an increase of over 20% compared to 2023.

The second type is dry coconut (raw coconut), the price has increased by 150% compared to the same period last year. This coconut is used for deep processing. The high price is due to many factors.

Firstly, in previous years, the price of raw coconut was unstable, with good harvests and low prices, and the export market mainly exported raw products through unofficial channels. But this year, the price has increased sharply because many Chinese investors, instead of buying raw materials, have returned to invest in deep processing in Vietnam, processing coconut milk, frozen coconut water, etc. and many other semi-raw products, from which they export to the Chinese market. Currently, Vietnam has about 16 foreign factories and 35 Vietnamese factories that deeply process raw coconut products.

Second , Indonesia – the world’s largest coconut producer – has recently begun imposing taxes on raw coconut exports. According to the roadmap, they will ban the export of raw coconuts this year to give priority to domestic factories in Indonesia to promote deep processing. This information makes deep processing investors move, looking for markets with potential and sustainable raw material areas, such as Vietnam, Thailand, etc.

Currently, Vietnam still has open tax policies for exported raw coconuts. Therefore, markets such as India, Pakistan, Sri Lanka, China and especially Thailand buy a lot of Vietnamese raw coconuts.

The question is why a country that grows a lot of coconuts like Thailand is increasing its purchase of raw coconuts from Vietnam? The reason is that in the past 2 years, the Thai coconut industry has been applying measures to shift the crop structure, reducing raw coconuts because they take a long time to grow (4 years to produce fruit) and they have switched to growing fresh coconuts that only take about 2 and a half years to produce fruit. This fresh coconut growing is to compete with Vietnam.

The scarcity of raw coconuts has forced factories in Thailand to increase the import of raw coconuts from Vietnam through unofficial channels. This makes it difficult for domestic factories to purchase and pushes up the price of raw coconuts.

Domestic factories that set prices within a week will not be sensitive and keep up with traders. The cost of production of the enterprise's products is also predetermined, so changing prices is not easy, this is a process and they have to change their competitiveness in the international market. When coconut prices increase, farmers benefit first. However, deep processing factories are facing difficulties.

Support to enhance competitiveness for the coconut industry

- You just shared that after trying fresh coconut from Vietnam, Chinese customers prefer to use fresh coconut from the Philippines or Thailand instead. What is the reason, sir?

Mr. Cao Ba Dang Khoa: Vietnam's advantage is that it is a pure, natural coconut variety, self-cultivated, self-bred, not a genetically modified or crossbred coconut variety. Thailand is very strong in hybrid and genetically modified coconut varieties, so they can produce large coconuts with a lot of water, but the taste is not as delicious as fresh coconuts from Vietnam.

Mr. Cao Ba Dang Khoa, Vice President and General Secretary of Vietnam Coconut Association

Nowadays, the demand of people around the world is very high, they will not use or limit the use of hybrid and genetically modified products.

The traditional coconut varieties of Vietnam and the Philippines are also different. The traditional coconut variety of the Philippines is crossbred from raw coconut varieties to make a short coconut variety (drinking coconut). In Vietnam, the coconut varieties are very clear, whichever is raw coconut has very thick coconut meat, lots of coconut oil. As for the drinking coconut, the coconut meat is very thin, even without coconut meat. Drinking coconut is also very diverse with 16 types.

Regarding disadvantages, Vietnam currently has no planning for coconut growing areas. Whoever wants to grow any type of coconut can grow it, which leads to inconsistent purchasing, while exporting requires consistent products, which leads to a weak competitiveness for Vietnam.

- With the current high price of coconut, are fresh coconut exporting businesses affected and what support does the association provide, sir?

Mr. Cao Ba Dang Khoa: Large coconut export orders, businesses are also very "nervous" because the purchase of fresh coconut raw materials is unstable. There are places where they grow Siamese coconut, some places grow fire coconut, some places grow pineapple coconut, etc., making export difficult. The fact that 1 export container has 2-3 types of coconut in it makes the taste, touch, and smell different, this reduces the competitiveness of fresh Vietnamese coconut in the world market.

If enterprises invest in raw material areas themselves, the capital is too large, and if they cooperate with farmers, they are worried about the situation of "breaking the contract". Therefore, to improve the competitiveness of the coconut industry, the Vietnam Coconut Association is coordinating with other parties to provide preferential credit packages and special utilities for farmers, cooperatives, purchasing facilities and the coconut industry and coconut-related business community (more than 600 enterprises)... The program is expected to be piloted in 5 provinces including Tien Giang, Ben Tre, Vinh Long, Tra Vinh and Soc Trang, then expanded to the Eastern, Western and Central provinces.

This is to meet the stable domestic source of coconut materials for businesses that are producing and processing coconut. Exploiting potential raw material areas to ensure stable livelihoods for coconut growers across the country. Exploiting the potential value of craft villages and cooperatives to act as a bridge to provide stable raw materials and pre-processed materials for manufacturing businesses. Contributing to maintaining raw material areas (based on financial support from banks) and businesses can rest assured to produce high-value products. Thereby, limiting the export of raw materials with low value; at the same time, limiting the situation of good harvest but low price, good price but bad harvest.

Thank you!

Vietnam has about 25 provinces with coconuts, mainly concentrated in the provinces of the Mekong Delta. With a planting area of ​​up to 200,000 hectares, the Vietnamese coconut industry has risen to rank 5th in the world in terms of area. In 2024, the total export turnover of the industry will reach 1.089 billion USD with more than 600 coconut-related production and trading enterprises.

Source: https://congthuong.vn/gia-dua-tang-phi-ma-xuat-khau-co-chiu-anh-huong-379616.html