A farmer water coffee trees at the Lam Dong province. The lending period for coffee export activities would be extended from 12 months to 36 months for enterprises with financial troubles. — VNA/VNS Photo Tran Viet

HA NOI (Biz Hub) — The Ministry of Finance submitted a proposal to the Prime Minister to help troubled coffee exporters by extending the period when they could receive loans.

 

Under the proposal, the lending period for export activities would be extended from 12 months to 36 months for enterprises that had financial difficulties as determined by the Ministry of Agriculture and Rural Development.

Declining coffee prices in both domestic and export markets have caused losses to many coffee traders, according to the ministry. In Central Highlands provinces, the price fell from VND46,000 per kilo in March to VND39,000-40,000 at present.

The export price for Robusta coffee dropped from US$2,200 per tonne in March to $1,850 now. For Arabica coffee, the price tumbled from $6,800 per tonne in 2011 to $2,800 now.

Farmers and coffee sale agencies expected the Robusta price to stand at VND44,000-45,000 per kilo in the domestic market and $2,200 per tonne in the world market. These rates would ensure profits, the ministry said.

By the end of May, Viet Nam Development Bank loans for coffee export activities totalled VND696 billion, according to the Ministry of Finance. The total bad debt of the coffee industry stands at VND6.33 trillion, including debt owed to both commercial banks and Viet Nam Development Bank.

The finance ministry said the Prime Minister should also ask the State Bank of Viet Nam to direct credit institutions to help solve the financial difficulties of export traders, as high lending interest rates of 17 per cent per year were a major challenge for them.

Another problem affecting the coffee industry is the inability of coffee growers to invest in buying seed and planting new trees. As a result, many growers rely on old trees, which have a low output.

According to the General Statistics Office, coffee exports in June had a year-on-year decline of 29 per cent in volume to 100,000 tonnes and 31 per cent in value to $210 million.

In the first half of this year, exports fell 23.4 per cent in volume to 804,000 tonnes and 21.9 per cent in value to $1.72 billion. — VNS