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Vietnam coffee production to drop, association says
Coffee production in Vietnam, the world's biggest grower after Brazil, will be less than expected because of dry weather and rising fertilizer costs, according to the Vietnam Coffee and Cocoa Association.
Output for the year ending September 30, 2009, would be 950,000 tons, below a previous estimate of 1 million tons, Luong Van Tu, chairman of the association, said in an interview Thursday. Vietnam may produce 1.3 million tons, Fortis, a Belgian financial services firm, said in a report June.
“Production can't be that high since the crop was hurt by unseasonable rains earlier this year, dry weather and high fertilizer prices,” Tu said in Hanoi.
A drop in production in Vietnam, mostly a grower of the bitter-tasting robusta variety used in espresso and instant coffee, may boost bean prices in London. Robusta has climbed 30 percent in the past year.
“The dry period in July with much less rain than previous years meant some trees shed fruit, but I don't think the damage will be that much,” said Hoang Tuan Khai, chairman and chief executive officer of Vietnam General Import Export No.1 Joint-Stock Co., known as Generalexim. Khai, whose main business is exporting coffee, said the harvest would be 1 million tons.
Lower rainfall
Rainfall fell last month in the provinces of Dak Lak, Lam Dong and Dak Nong, which grow three-quarters of Vietnam's coffee.
In Dak Lak, the largest growing area, rainfall was 16 percent lower from a year earlier at 1,436 millimeters, the Dak Lak Hydrology and Meteorology Office said.
Neighboring Lam Dong province, the second-biggest grower, got 2,180 millimeters of rain last month, 27 percent below July 2007, according to the local weather office. Rainfall in Dak Nong declined 28 percent to 2,856 millimeters.
“The region is not yet seeing any dramatic reduction in crop potential,'' said Joel Widenor, meteorologist for MDA EarthSat Weather Services in Rockville, Maryland. “But good August rains will be important to ensure recent drier trends don't become a more dramatic issue.”
Vietnam's Coffee and Cocoa Association estimates production at 900,000 tons in the crop year ending next month, said Tu, a former deputy trade minister responsible for negotiating Vietnam's entry into the World Trade Organization last year.
Dry weather, fertilizer
Fortis said in June output may total 19.5 million bags, or 1.17 million tons, while the International Coffee Organization and the agricultural attaché’s office at the U.S. embassy in Hanoi expect 2007-08 production to total 17.5 million bags.
A report last May from the U.S. agriculture office forecast an increase in production to 21.5 million bags in 2008-09, citing higher yields and an increase in growing areas.
The dryness and high fertilizer costs have hurt production in Vietnam, Nguyen Xuan Thai, director of Dak Lak-based Thang Loi Coffee Co., the largest grower, said. Output from his plantations dropped by as much 30 percent because of trees shedding their fruit, Thai said.
Huu Thanh Hong, business manager of Dak Lak-based September 2nd Import-Export Co., Vietnam's third-biggest exporter, said the amount of coffee fruit in some areas of Dak Lak and neighboring provinces has dropped by about a quarter.
Beans shed
“The dry weather was part of the reason the beans shed,” Cao Van Tu, director of Dak Lak-based Ea Pok Coffee Co. “In addition, when there is no rain, you can't put fertilizer on the trees. If you do, the chemical will burn the tree.”
Ha Dac Thuy, Hanoi-based vice chairman of the Vietnam Fertilizer Association, said the costs of fertilizer in Vietnam have doubled this year because of a three-fold increase in international prices. The country imports about 40 percent of its annual fertilizer needs of 1.7 million tons, he said.
An increase in bank lending rates to as much as 21 percent also means the country's fertilizer producers and importers raised prices, Thuy said.
Thanhnien
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