Exports of coffee in the first six months fell by around 20 per cent year-on-year. — VNA Photo Vu Sinh

Viet Nam’s coffee exports dropped by around 20 per cent in the first half of the year.

According to the Agricultural Products Processing and Market Development Department under the Ministry of Agriculture and Rural Development (MARD), coffee export value was worth US$1.6 billion in the first six months as most markets except the Philippines reduced purchases.

Most countries are sitting on large stocks.

Viet Nam’s export volumes were 943,000 tonnes during the reviewed period, 9.2 per cent lower than in the same period last year, while the export value was down 19.9 per cent year-on-year.

The sharp fall in export earnings was caused by the price of robusta coffee falling in London due to a global glut, with Viet Nam getting the lowest rates of all exporters.

Around 80 per cent of Viet Nam’s exports comprise of raw beans, which do not always meet ripeness requirements and are occasionally contaminated by impurities.

Exporters said around 80 per cent of coffee exports are done using a method in which they sign a sales contract, receive a certain proportion of the contract value beforehand, and deliver the products after harvest (also called differential).

The price is decided by rates fixed on global coffee trading floors at the time of delivery.

But Vietnamese exporters are often forced to sell at cheaper prices because of this differential business model in addition to the unstable quality of their products when compared with international benchmarks.

Experts have suggested businesses to move away from this business model to reduce the reliance on global prices. — VNS