Coffee Prices Surge, Impacting Businesses
On April 19, Trần Trọng Lưu, Head of the Trade Management Department of Đắk Lắk Province’s Department of Industry and Trade, stated that despite high coffee prices, farmers are inclined to hold onto their produce, affecting the ability of businesses to meet delivery commitments.
Price Surge Attributed to Future Supply and Speculation
According to Lưu, coffee prices have reached over 120,000 VND/kg, triple their previous value, necessitating significant capital investments by businesses in the industry.
“Businesses are borrowing and paying interest to purchase inventory but still struggle to acquire sufficient supplies,” Lưu explained. “The surge in coffee prices has posed immense challenges for the industry.”
Trịnh Đức Minh, Chairman of the Buôn Ma Thuột Coffee Association (Đắk Lắk), attributed the price surge to anticipated future supply and demand imbalances, coupled with speculation by investors.
“Predictions suggest that climate variations will lead to reduced coffee supply from Vietnam in the future,” Minh said. “Additionally, the accumulation of inventory by speculators has contributed to the price increase.”
Mixed Reactions from Industry Stakeholders
The rise in coffee prices has drawn both positive and negative reactions. Some argue that it benefits farmers and compensates for years of low prices that have eroded their profitability.
However, Minh expressed concern that the current surge in prices exceeds forecasts and could have detrimental long-term effects on the industry.
“The current coffee prices are unsustainable,” Minh warned. “Such volatility is not beneficial as it affects businesses involved in trading coffee. If businesses fail, coffee prices may drop back to unsustainably low levels.”
Businesses Face Challenges Amidst Supply Shortages
On April 19, PV visited a coffee purchasing company in Hòa Thuận Ward, Buôn Ma Thuột City, to assess the situation. A representative of the company, Mr. T, revealed a substantial backlog of orders.
T explained that his company typically relies on advances from partners to purchase large quantities of coffee. However, with the rapid escalation of prices, the company has been unable to secure enough inventory to fulfill its commitments.
“The surge in durian prices has led to a decline in coffee production,” T said. “The reduction in acreage and yield has also contributed to the current high prices.”
Lê Đức Huy, General Director of 2/9 Đắk Lắk Coffee Import-Export Co., Ltd., one of the leading coffee exporters in Đắk Lắk, acknowledged the supply challenges caused by the price increase.
Y Pốt Niê, Director of ÊĐê Café Co., Ltd. (Buôn Ma Thuột City), indicated that his company is experiencing a virtual absence of raw coffee bean supplies.
“With high coffee prices and a shortage of supply, we can only fulfill orders for instant coffee products,” Niê said. “For roasted coffee bean orders, we struggle to secure the necessary quantities.”
Businesses Face Dilemma in Balancing Prices and Competitiveness
Lê Văn Vương, Director of Vương Thành Công Production and Trading Co., Ltd. (Buôn Ma Thuột City), emphasized that the price surge not only hinders supply but also threatens businesses with the loss of customers.
Vương described the situation as a crucial test for coffee-related businesses, where it amounts to “survive or perish.”
“The increased cost of coffee beans requires a reevaluation of output prices to prevent losses,” Vương said. “Businesses need to collaborate and support each other to overcome these challenges. Unilateral efforts will likely result in partners choosing alternative suppliers.”
