Improve processing capacity, increase value for coffee exports

Processed coffee exports increase

Recently, Phuc Sinh Consumer Joint Stock Company (Phuc Sinh Consumer) signed a cooperation agreement with LNS International Corporation to promote the distribution of coffee products under the K COFFEE brand in the US, Europe, Australia - New Zealand and Japan markets.

Phuc Sinh brings the K COFFEE brand to the US, Europe, Australia - New Zealand and Japan markets.

This cooperation event between Phuc Sinh Consumer and LNS International Corporation marks a further development of the Vietnamese coffee brand on the world map. From here, many international consumers will easily access pure, premium coffee products from Vietnam and produced by Vietnamese enterprises using modern technology lines, not under the label of foreign companies.

This is just one of the efforts of Vietnamese enterprises in increasing the value of coffee beans - one of the bright spots of agricultural exports since the beginning of the year.

According to the Vietnam Coffee and Cocoa Association (VICOFA), at the end of the 2022-2023 crop year (from October 2022 to September 2023), Vietnam's coffee exports reached 1.66 million tons (more than 27.7 million bags, 60kg/bag), down 4.5% compared to the previous crop year.

However, the revenue increased by 3.4% to 4.08 billion USD (this is the highest turnover ever). Thus, the average export price of coffee in Vietnam reached 2,451 USD/ton.

By type of exported coffee, Robusta coffee accounted for the highest proportion with 1.49 million tons, turnover of 3.25 billion USD; Arabica coffee beans were only exported 41,500 tons, turnover of 169 million USD; decaffeinated coffee beans were 36,000 tons, turnover of 136 million USD.

Notably, roasted and instant coffee exports were about 90,000 tons (not converted to green coffee), with a turnover of about 510 million USD (volume accounting for about 5.4% and turnover accounting for about 12.5% ​​of total coffee exports in the 2022-2023 coffee crop year).

In the first 10 months of 2023, the total volume of coffee exports reached nearly 1.3 million tons, with a turnover of nearly 3.3 billion USD; down nearly 11% in quantity and 1.2% in turnover.

Mr. Do Ha Nam - Vice President of VICOFA informed that the high export price of coffee has created conditions for increasing domestic coffee prices. In recent months, the domestic price of coffee beans has fluctuated between 60,000 - 68,000 VND/kg (a record high in decades), helping the value of the last crop increase sharply.

" Many coffee producing countries have reduced production, while world demand is still at a good level, especially from China. Therefore, coffee prices in the coming time are likely to remain at a good level compared to previous years ," said Mr. Nam.

Enterprises proactively improve processing capacity

VICOFA forecasts that the 2023-2024 coffee crop will be harvested later than the previous crop. Some localities such as Gia Lai, Kon Tum, Son La will harvest coffee earlier in late October, early November and harvest at the end of December 2023.

Improving processing capacity will help increase coffee export value (Photo: VNA)

Although coffee prices are high, many experts believe that this industry will face certain difficulties such as: decreasing acreage, being affected by anti-deforestation and forest degradation regulations from Europe...

According to this regulation, 7 items including: Coffee, cocoa, palm oil, soybeans, livestock, wood, rubber and related processed products such as: Wooden furniture, tires, frozen meat, printed products... will not be allowed to be imported into the EU market if the products are grown on deforested land from December 31, 2020 onwards. From December 2024, it will be officially applied to large corporations and from June 2025, it will be officially applied to small and medium enterprises. This regulation is considered a barrier for imported goods into the EU, including Vietnamese coffee.

In addition, although the amount of processed coffee for export has increased, VICOFA leaders also acknowledged that the coffee industry, like other agricultural products, mainly produces and exports raw products. Deeply processed coffee accounts for less than 10% of total output and is mainly consumed domestically.

To increase the value of exported coffee, many businesses have invested more in coffee processing. Mr. Phan Minh Thong - Chairman of Phuc Sinh Group said that after exporting raw coffee, Phuc Sinh exported its own brand coffee (K COFFEE) instead of processing.

To help the brand penetrate foreign distribution channels, Phuc Sinh has signed a deal with a partner to bring K Coffee to supermarkets and food chains in the US from 2022. In addition, the product is also sold on e-commerce platforms Amazon, Walmart, Faire. In the near future, K Coffee will also be exported by this partner to the EU, Australia, New Zealand and Japan from December.

Mr. Vuong Van Hai - Chairman of Son La Coffee Association - said that due to the small area, only 20,000 hectares, farmers have to focus on specialty coffee. Although it is not the most economically efficient crop, coffee has the advantage of stability, so farmers still maintain the area.

" Notably, in the past, 80% of Son La coffee processing facilities were small and therefore could not increase the value of their products. Recently, the province has had a policy to attract investment in large, high-tech processing factories to improve the quality of Son La coffee," Mr. Hai informed.

Mr. Do Ha Nam shared that Indonesia always sells raw coffee at the highest price in the world because their mainstay is the coffee processing industry, which accounts for 50% of production output. Vietnam has a harder time because its coffee output is 3-4 times higher than Indonesia's but domestic consumption is only half. "Investing in processing requires large capital, technology, brands... The positive signal is that since the EU - Vietnam Free Trade Agreement (EVFTA) was signed, not only Vietnamese enterprises but also foreign enterprises have invested a lot in coffee processing and are gradually increasing the proportion of processed coffee for export, " Mr. Nam cited.

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