HO CHI MINH CITY, Vietnam – Heavy rains that hit swamped Vietnam’s 2016/2017 coffee harvest has raised the ratio of low-quality beans and defects, traders said on Wednesday, with one major exporter saying quality is at its worst in nine years.
Unseasonal rain that fell from October-December last year in Vietnam’s Central Highlands coffee belt delayed the 2016/2017 crop harvest, resulting in more black and broken beans. The rainy season normally ends in early October.
The harvest was completed in January as usual, but a higher ratio of black and broken beans – counted as defects in export standards – has emerged.
These defects, coupled with India’s ban on Vietnamese coffee imports from March 7, have made it more difficult for the world’s top robusta exporter to find buyers for the low-quality commodity this year.
“The ratio of defects this year has risen by 50 percent from 2016,” said Le Duc Huy, deputy general director of Simexco, a major export firm based in the Central Highlands province of Dak Lak. “The quality is the worst since 2008.”
Downpours cut Vietnam’s 2007/2008 coffee output by 15 percent to 1.08 million tons.
Traders say India often buys Vietnam’s low-quality robusta grade 3, with 25 percent black and broken beans and 3 percent foreign matter, to produce instant coffee.
Vietnam’s benchmark coffee for export is robusta grade 2 (5 percent black and broken), which is priced at a premium of $120-$180 a ton compared to the grade 3 beans.
The harvest usually starts in late October and ends in January. Rain during the blossoming period reduces yields, while the wet weather disrupts the outdoor drying process, necessitating the use of electric dryers that turn the beans black and worsen the taste. The exportable volume is therefore lowered.
Two traders at foreign firms in Ho Chi Minh City, Vietnam’s largest coffee trading market, estimated that low-quality beans made up 10-20 percent of the country’s output this year, which is projected to ease 8 percent from last year to 26.7 million bags, or 1.6 million tons, the U.S. Department of Agriculture has said.
Vietnamese trade experts say India’s ban is a tit-for-tat action after Hanoi announced it was going to suspend the import of five Indian commodities from late April to prevent peanut beetle from spreading.
Officials at the Indian Embassy in Hanoi did not immediately comment on the matter when contacted by VnExpress International.
The impact of the ban on Vietnam’s overall coffee exports is minimal, Vietnam Coffee and Cocoa Association Chairman Luong Van Tu said.
India imported 6,900 tons of Vietnamese coffee from January-February this year, down 17 percent from the same period in 2016, based on Vietnam Customs data.
Last year it spent $79.4 million to import 46,000 tons of coffee from Vietnam, a tiny fraction of the Southeast Asian nation’s total shipments of 1.78 million tons.
India has the world’s third fastest growing retail coffee market behind Indonesia and Turkey, global market intelligence agency Mintel said in its latest report earlier this month.
Robusta with high ratios of black and broken beans has also been sold to Vietnamese firms to produce instant coffee, traders said.
But the ban has affected Indian roasters who had been sourcing their raw material from Vietnam, traders said.
“Since the ban has been in place, several shipments have been held up and importers do not know how to solve the situation,” said a Vietnamese dealer at a Ho Chi Minh City-based firm which ships coffee to India.
The ban has also made it difficult for Indian roasters after back-to-back droughts in the past two years damaged various crops, including coffee.
“Indian roasters may have to switch to other sources, such as the Ivory Coast and other African nations,” a second trader at a European firm in Ho Chi Minh City said.
Ho Binh Minh
