By I. Hansana, Jadetimes News
Vietnam Coffee Farms Adapt Amid Severe Drought, But Espresso Prices May Still Increase
Vietnamese coffee growers have faced severe challenges this year due to the worst drought in nearly a decade, prompting concerns about rising espresso prices globally. Despite some farmers maintaining healthy yields through innovative techniques, the overall outlook remains concerning.
Grim Domestic Harvest Forecasts
As the world's second largest coffee producer, Vietnam's future harvest prospects appear bleak. The Mercantile Exchange of Vietnam (MVX) projects a 10:16% decrease in output due to extreme heat affecting the Central Highlands coffee region between March and early May, as stated by deputy head Nguyen Ngoc Quynh.
However, recent rains have improved the situation, increasing optimism among farmers and officials. Yet, it remains uncertain if the better weather will significantly boost robusta bean output, the key variety for espressos and instant coffees, and help reduce prices.
Innovative Farming Practices
"I expect the country's output to fall by 10:15%, but my farm will increase production," said Nguyen Huu Long, a coffee grower with a 50 hectare plantation in Gia Lai, a leading coffee producing province. To combat the heatwave, Long kept the soil around his plants moist by covering it with leaves. Unlike the local practice of cutting trees after a few years to enhance soil quality, he allows his trees to grow for decades, leading to deeper roots and better access to underground water.
Doan Van Thang, 39, noted that farmers on Long's plantation also soften the soil around plants to improve water and fertilizer absorption. Tran Thi Huong, a tenant farmer in another plantation 20 km from Pleiku, Gia Lai's capital, used more water than usual, thanks to ample reserves from local canal systems. Her timely use of biopesticides also helped mitigate the increased bug population caused by the extreme weather. Although coffee cherries are smaller this year, she expects overall output to remain steady.
This aligns with the United States Department of Agriculture's (USDA) forecast, which predicts Vietnam's next harvest will be roughly equivalent to the current season's output, a less pessimistic view than domestic projections.
Potential Price Increases
Regardless of the harvest outcome, coffee prices for consumers worldwide are likely to rise. Wholesale prices in Vietnam and London traded robusta futures hit record highs earlier this year, driven by a disappointing harvest and fears over future output following the drought, according to various traders and analysts.
So far, record wholesale prices have had a limited impact on consumer prices, with coffee inflation rising by only 1.6% in the 27 country European Union in April, according to Eurostat data, and 2.5% in robusta preferring Italy. Although these increases are lower than those seen a year earlier, they surpass the 1% rise in the EU’s March reading, indicating that roasters may begin passing higher costs onto consumers.
Concerns about Vietnam’s coffee output persist, as insufficient rains post drought or excessive rainfall before the October harvest could further reduce production, warned a Vietnam based trader.