A special crop of Vietnamese coffee

The market has many unexpected factors.

The 2023-2024 coffee crop year was extended from October last year to September this year. The global coffee industry has experienced many difficulties and challenges due to climate change, which has greatly affected productivity, output and quality. Drought and heat waves have lasted since the beginning of the season, followed by storms at the end of the season. Political instability, war, and local embargoes between Russia and Ukraine, Israel and the Gaza Strip, and many other places in the world with prolonged developments continue to impact the difficulties of the global economy in the medium and long term.

Vietnam has exported nearly 1.45 million tons of coffee, expected to earn 5.32 billion USD

In Vietnam, according to the Vietnam Coffee and Cocoa Association (VICOFA), at the end of this crop year, Vietnam exported nearly 1.45 million tons of coffee, expected to earn 5.32 billion USD - down 12.7% in output but up 30.4% in turnover. Coffee export turnover last crop year also reached a record level for the industry so far.

Looking at each type of exported coffee, it can be seen that the main export is still Robusta coffee with an estimated volume of nearly 1.23 million tons, with a turnover of 4.32 billion USD - a decrease of nearly 18% in output but an increase of 24% in value thanks to increased export prices.

Notably, processed coffee (roasted and instant) exported about 130,150 tons (not converted to green coffee), with a turnover of 898 million USD - an increase of 44.6% in volume and 76% in value. This shows that the coffee industry has increased deeply processed products, increasing export value in addition to exporting raw materials.

In addition to the record export figures, the coffee market this crop year also saw many unprecedented surprises. Mr. Do Ha Nam – Vice President of VICOFA – said that this was the first time Vietnamese coffee prices were the most expensive in the world; Robusta coffee export prices were higher than Arabica coffee prices; coffee futures prices on the London exchange exceeded 5,000 USD/ton and at some points exceeded 5,500 USD/ton.

Mr. Nguyen Quang Binh - coffee market expert - commented that 2024 is considered a magical year for the coffee industry. The Vietnamese and world coffee markets witnessed an unprecedented price storm, with coffee prices increasing 1.5 times compared to last year.

And the story of re-enforcing the supply chain

The European Union Deforestation Regulation (EUDR) is considered an important plus for coffee exports because the Vietnamese coffee industry has been prepared to implement this regulation. According to Mr. Do Ha Nam, if this regulation is implemented as originally planned, Vietnamese coffee prices will continue to be the most expensive in the world, because Vietnam is the best supplier in implementing this regulation.

However, the market is not all “rosy”. The increase in coffee prices helps farmers to win, but many businesses also face difficulties. Mr. Do Ha Nam analyzed that the coffee price increased too quickly while the supply was limited, causing the supply chain to be interrupted. Exporting businesses could not deliver goods on time, and partners, buyers, and roasters reacted negatively.

According to export businesses in the industry, last crop year when Vietnamese coffee prices increased and purchasing businesses did not have enough goods to deliver to roasters, some partners sought other sources of supply to maintain production. This means that Vietnamese coffee lost a part of the market.

Of course, buyers do not want coffee prices to fall, but it is necessary to maintain a price level that farmers can make good profits and that commercial enterprises and processors can also balance their costs. In addition, links in the purchasing and exporting chain also need solutions to maintain stability and ensure that goods can circulate continuously.

The coffee market in 2025 is expected to experience strong fluctuations due to concerns about supply, geopolitical fluctuations and strict requirements from the import market. Notably, some coffee importers said that they will look for other sources to replace Vietnamese coffee if prices increase too high and suppliers are not reputable. This requires the coffee industry to make early adjustments to get on track and maintain sustainable growth.

Vietnamese coffee is increasingly playing an important role in the world market demand. Currently, up to 40% of the area and output have achieved sustainable and organic production certifications, which is a major competitive advantage. In addition, Vietnam is also a pioneer in implementing EUDR. However, according to Mr. Nguyen Nam Hai - Chairman of VICOFA, in the next few years, whether the world will fall into a coffee surplus crisis, causing prices to plummet like before, this is something that needs to be carefully considered. Vietnam also needs to continue to focus on improving the quality of coffee and harmonizing the interests of the parties participating in the value chain of this industry.

Experts also believe that the immediate task of the Vietnamese coffee industry is to quickly resolve gaps in the supply chain and regain prestige from export partners. For farmers, priority should be given to improving coffee quality and avoiding massive expansion of acreage, which would cause supply to exceed demand. In addition to purchasing and exporting raw materials, businesses should actively invest in processing and deep processing of value-added products to ensure sustainable growth in the long term.