Coffee exports need to consider the 'long term'

In 2024, coffee exports will earn 5.48 billion USD

The Import-Export Department (Ministry of Industry and Trade) cited preliminary statistics from the General Department of Customs, saying that Vietnam's coffee exports in the fourth quarter of 2024 are estimated at 208.4 thousand tons, worth 1.16 billion USD, down 2.1% in volume, but up 3.1% in value compared to the third quarter of 2024; down 43.7% in volume, but up 3.9% in value compared to the fourth quarter of 2023.

Vietnam's coffee exports to hit record $5.48 billion in 2024. Illustrative photo

In 2024, Vietnam's coffee exports are estimated to reach 1.32 million tons, worth 5.48 billion USD, down 18.8% in volume but up 29.1% in value compared to 2023. 2024 is a successful year for the Vietnamese coffee industry, when the export value exceeds the 5 billion USD mark thanks to strong price increases.

2024 is also a special year for the coffee industry and for the first time, Vietnamese coffee prices are the highest in the world. Robusta coffee export prices are higher than Arabica coffee prices, which has never happened before. In December 2024, the average export price of Vietnamese coffee is estimated at 5,450 USD/ton, down slightly by 2.3% compared to November 2024, but up sharply by 88.8% compared to December 2023. Overall, in 2024, the average export price of coffee is estimated at 4,158 USD/ton, up 59.1% compared to 2023.

In 2024, domestic coffee prices will increase sharply following the increase in the world market. Coffee prices on December 27, 2024 increased from 54,000 - 54,300 VND/kg compared to December 27, 2023, ranging from 121,500 - 123,300 VND/kg (depending on the surveyed area).

Domestic coffee prices are supported by world coffee prices. In 2024, world coffee prices continued to set new records, mainly due to concerns about supply shortages from major exporting countries such as Vietnam and Brazil due to unfavorable weather.

In addition, increased buying by hedge funds and rising tensions in the Red Sea, which have led to higher shipping costs, are also factors that have pushed coffee prices up sharply. In addition, coffee prices have also been supported by countries increasing their stockpiling due to concerns that Europe will implement the EUDR after December 30, 2024.

In 2024, the leading enterprise exporting Vietnamese coffee is Vinh Hiep Company Limited (Gia Lai). Specifically, Vinh Hiep's export turnover increased rapidly from 244 million USD in the 2022-2023 crop year to 520 million USD in the 2023-2024 crop year.

Mr. Thai Nhu Hiep - General Director of Vinh Hiep Company Limited - said that in 2024, the company has coordinated with the locality to address challenges in developing the coffee industry, complying with the European Deforestation Reduction Regulation (EUDR), reducing greenhouse gas emissions, and producing sustainable coffee to adapt to climate change. Therefore, foreign partners always affirm that Gia Lai's green coffee bean brand is of good quality. Currently, the company's coffee products have been exported to 57 countries around the world.

Need to aim for sustainable growth

Vietnam’s coffee exports are forecast to continue to grow in 2025 as supply increases and consumer demand from countries around the world increases. According to the latest forecast from the US Department of Agriculture (USDA), global coffee production is expected to recover in the 2024-2025 crop year, mainly due to increased output in Vietnam and Indonesia.

Meanwhile, with consumption rising, global coffee inventories will decline further at the end of 2024, to 20.9 million bags. Global coffee exports in 2025 will increase only modestly as increased shipments from Vietnam and Indonesia offset an expected decline in Brazilian exports.

Specifically, Vietnam's coffee exports are expected to increase by 1.8 million bags in 2025, to 24.4 million bags, thanks to improved supply. Meanwhile, global coffee consumption in 2025 is expected to increase by 5.1 million bags, reaching 168.1 million bags. Most of the increase will come from the European Union (EU), the United States and China. As supply recovers, world coffee prices are forecast to decline in 2025.

However, according to industry experts, in 2025, the world and domestic coffee markets are forecast to remain volatile, requiring the coffee industry to make early adjustments to stay on track and maintain sustainable growth.

Because in the past year, despite the big win in export turnover and high profits for coffee growers, this was also the year that witnessed many coffee exporting and processing enterprises struggling from the "chase" in purchasing and export prices.

The disruption of the raw coffee supply chain makes purchasing domestic coffee increasingly difficult and risky. Therefore, although always prioritizing the purchase and consumption of Vietnamese coffee, some businesses have had to consider importing coffee to ensure the continuous production of processing factories. This means that the market share of Vietnamese coffee is shrinking, the consequences of which will last for years to come.

On the other hand, the world market still expects Brazil’s coffee output in the 2025-2026 crop year to recover as rainfall in major coffee growing regions improves. At the same time, demand for coffee imports from European countries will also temporarily subside as the EUDR regulation is postponed to the end of 2025.

Mr. Nguyen Quang Binh - coffee market expert - recommends that the task of the Vietnamese coffee industry is to quickly resolve the loopholes in the supply chain, regaining prestige from export partners. On the side of coffee growers, it is necessary to prioritize improving the quality of coffee, avoiding massive expansion of acreage, causing supply to exceed demand. In addition to purchasing and exporting raw materials, businesses need to actively invest in processing and deep processing of value-added products to ensure sustainable growth in the long term.

From a business perspective, Mr. Phan Minh Thong - General Director of Phuc Sinh Joint Stock Company - said that world consumers increasingly prioritize using high-quality coffee and specialty coffee. If we only rely on the supply and demand of raw materials, the value of coffee in the whole chain will not change much. Therefore, Vietnam must focus on improving quality and creating more unique and valuable products than raw coffee. This is not only a suggestion of opportunity, but also a trend that needs to be caught up with to increase value and build a brand for Vietnamese coffee.

In addition, sustainable development or production practices that meet environmental, social and governance (ESG) criteria have become an irreversible global trend. Therefore, in order to sell products to the world and to important markets such as the EU, there is no other way but for businesses to cooperate with farmers to build a production and processing chain that meets standards.

Currently, the 2024-2025 coffee harvest in Vietnam is progressing rapidly with a completion rate of over 40%.

Source: https://congthuong.vn/xuat-khau-ca-phe-can-tinh-chuyen-duong-dai-368299.html