|
Enterprises, farmers in distress, coffee industry may fall into foreigners’ hands
Experts have warned that foreign invested enterprises (FIEs) would monopolize the coffee growing areas, sooner or later. Meanwhile, domestic enterprises remain weak in financial capability and corporate governance.
Vietnam has been well-known as a coffee export power. However, a lot of problems have been left unsettled, thus raising worries about the prospect of the coffee industry.
Farmers make modest profits
In the profit distribution chain, coffee growers only can enjoy a small proportion of profits in comparison with processing enterprises and exporters. This explains why farmers do not feel secure to gather their strength in production.
Doan Xuan Hoa, a senior official of the Ministry of Agriculture and Rural Development, has pointed out that a reasonable profit sharing mechanism among growers, preliminary processors, brokers, and industrial processors is now the most important thing for now. He emphasized that this is the decisive factor in the plan to maintain the coffee industry and improve product quality.
Coffee growers always have to “rob Peter to pay Paul” to earn their living with coffee plants, while they usually have to face big challenges – epidemics, capital shortage.
Nguyen Van Sy, a farmer in Dak Lak, said that his family is growing coffee plants on an area of two hectares. Every year, he has to spend 60-80 million dong to take care of the coffee area.
Since Sy does not have much capital, he has to purchase pesticide and fertilizer on credit. After the harvesting, Sy would pay debts to the pesticide and fertilizer suppliers in coffee. In general, the coffee prices are usually defined at low levels, because Sy has to sell coffee right at the beginning of the crops.
As a result, after deducting all the expenses, the profit that Sy and his family can pocket is very modest.
Domestic enterprises dragging out their miserable existence
Every year, Vietnam exports more than 1.2 million tons of coffee. However, processed products such as powder coffee or soluble coffee just account for 10 percent of the total coffee output.
In an effort to heighten the value of Vietnam’s coffee, the government released the Decree No. 23, encouraging FIEs to invest in the coffee processing projects which allow making out high added value products.
The local authorities in the Central Highlands have been attracting foreign investment by offering a lot of incentives. However, the existence of FIEs in the coffee industry, in the eyes of domestic enterprises, has brought misfortune.
According to the Vietnam Cocoa and Coffee Association (Vicofa), FIEs now make up 50 percent of the total coffee output in Vietnam, or 600,000 tons a year. With the big advantages, the risk of FIEs controlling the coffee growing areas is believed to take place soon. If so, the coffee industry would fall into the hands of foreigners, not domestic enterprises.
There are 150 Vietnamese coffee exporters, and most of whom are not financially capable enough to store coffee and sell when the prices are good. In always happens that at the beginning of the crop, enterprises rush to sell coffee (sometimes the sale reached 200,000 tons of Robusta a month) at low prices because of the low demand (80,000-100,000 tons a month). Meanwhile, later, when the coffee price reaches its peak, enterprises have no more coffee to sell.
In order to settle the problem, according to Le Duc Thong, General Director of 2-9 Coffee Company in Dak Lak province, enterprises need to borrow capital for 6-7 months. Meanwhile, banks only lend for 1-3 months. As a result, enterprises have no money to store coffee.
Meanwhile, the thing that domestic enterprises cannot do is absolutely within the reach of FIEs.
vietnamnet
|
