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Coffee traders secure credit, hold back beans
Coffee growers in Vietnam, the world’s second-largest producer, are getting easier access to credit, helping them hold on to beans until prices improve.
“Banks have given more and cheaper loans to coffee traders and farmers,” said Ho Sy Trung, head of the import-export department at Phuoc An Coffee Dak Lak Co., one of the largest growers in Dak Lak in the central region.
Lenders have extended VND158 trillion (US$8.9 billion) in loans since Feb. 1 as part of the government’s stimulus package to mitigate the economic slowdown, the State Bank of Vietnam said on March 24. Coffee is Vietnam’s second-most valuable crop, and a key foreign-exchange earner.
With “more than 70 percent of the 2008-2009 production contracted to sell,” growers are waiting for prices to improve, and the credit extension is helping, Trung said Wednesday by phone. Farmers want to “hold their beans longer,” he said from Dak Lak, the nation’s main coffee-growing area.
Robusta coffee, the bitter-tasting variety cultivated in Vietnam and priced in London, has dropped 30 percent in the past year to $1,569 a ton Wednesday.
Economic growth slowed to 6.2 percent last year, the weakest pace since 1999. The government in January offered VND17 trillion to lenders to cut borrowing costs.
“Farmers are still holding back their sales because prices are still low,” said Nguyen Xuan Thai, a director at Thang Loi Coffee Co. Growers are saddled by higher costs such as fertilizers bought last year, and watering, said Thai.
The International Coffee Organization and the Vietnam Coffee and Cocoa Association have both forecast 16 million bags of Vietnamese output this year, a 2.8 percent decline. A bag weighs 60 kilograms.
The central bank on March 23 widened the dong’s trading band for the first time since November, weakening the currency. Still, devaluation alone would not spur sales, Trung said. While the dong’s decline is an advantage, what exporters “really look at when deciding to sell more or not is prices,” he said.
Bloomberg, Thanh nien
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