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Vietnam’s coffee production: caffeinated aspirations

From the March 2011 issue.

Vietnam’s economy is booming along with its coffee industry, so the question now arises: how will the world’s second largest coffee producer make the most of the latest price advantage?

Vietnam has established itself as a force in the global coffee trade through quantity more than quality, growing into the world’s leading producer of the potent, workhorse Robusta beans that are widely processed into instant beverages and espressos. Only Brazil, with its ample crop of the smoother Arabica bean, exports more coffee overall.

With coffee consumption and prices at historic levels, Vietnam is operating from a position of strength. The question is: How does Vietnam aim to press its advantage? How does a country that has banked heavily on coffee in its transition from a planned economy to freer markets envision its strategy over the long haul?

Part of the near-term answer may be found on the prosperous Le Ngoc family farm in the Dac Nong province of the Central Highlands – and on decisions informed by data that Son Le Ngoc reads on his computer screen in Hanoi. Anticipating the price to continue to rise, the Le Ngoc family has become more than a grower.

Happy to help neighbouring farms that have bills to pay, the Le Ngoc family has been buying and stockpiling beans. “When we think we have a fair play on the market, we can sell for more,” explains Son, a journalist who on a daily basis relays market information and news to his father and cousins down on the farm.

Vietnam, which once aggressively focused on building its market share, is now playing hard to get despite a crop that produced smaller beans because of unfavourable weather. Reports of stockpiling and speculation abound. Domestic prices for Robusta recently soared above $2,000 per tonne, up by more than 50 per cent over the past year. Vietnam has also benefited from the rising price of Arabica as more processing companies turn to the less expensive Robusta as a substitute.

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