(Luận văn) financial policies solutions to promote vietnams coffee export to the us market

Solutions and recommendations about financial policies to promote Vietnam’s coffee export to the US market luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van tha

In the trend of opening the world economic integration today, in the light of the Party's and the State's policies of opening the door to integrate into the world economy, the market of general goods and Vietnam's coffee are constantly expanding Including the US market, this is one of the biggest customers of Vietnamese coffee However, it should be noted that the market share of Vietnam's exported coffee in the US market is very small and the prestige and position of Vietnamese coffee in this market is not high While Vietnam has a great coffee production capacity, we have a climate and soil that is very suitable for growing coffee On the other hand, Vietnam and the United States have signed bilateral trade agreements, but the volume and export turnover of Vietnam to the US market in recent years have grown slowly and unstable Although the whole industry, coffee businesses and the Government have had many solutions and policies to support, promote coffee production, processing and export However, the solutions are not synchronized and used effectively Financial policies are also limited and face many difficulties in the context of integration Therefore, accelerating Vietnam's coffee export to the US market is an important task of Vietnam's coffee industry, aiming to contribute to the successful implementation of the coffee industry's mission as well as national import and export strategy

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From the reasons mentioned above, I decided to choose the topic:

“Financial policies solutions to promote Vietnam's coffee export to the

US market.”

2 Research purposes and objectives

- Generalizing a number of coffee export theories and financial policies promoting export in the context of international trade integration

- Studying and assessing the current situation of exporting coffee to the

US market and financial policies to support this activity

- Proposing a number of financial solutions to promote Vietnam's coffee export to the US market in the coming time

3 Research object and area

- The object of the dissertation is the activities of exporting Vietnamese coffee to the US market and the financial policies supporting Vietnam's coffee export activities

- The area of the research is the State's macro-level financial policies affecting Vietnam's coffee exports to the US market

4 Research methods

- Methods of collecting data from reference materials: Based on primary and secondary information collected to build theoretical basis and prove the hypothesis

- Methods of analysis and summarizing experience: Combining reasoning with reality, bringing reasoning for practical analysis combined with a review of past

activities to draw conclusions for the hypothesis

- Methods of observation: Collect data, specific events that characterize the course of events, phenomena to discover research and bring to study specific documents, intuitive feelings but has great scientific significance

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5 Contents and structure of the thesis

In addition to the introduction, conclusion and list of references, the research topic consists of three chapters:

Chapter 1 Theoretical basis of goods export and financial policies

to promote coffee export Chapter 2 Current situation of Vietnam’s coffee export and financial policies to promote coffee export to the US market

Chapter 3 Solutions and recommendations about financial policies

to promote Vietnam’s coffee export to the US market

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Trade integration is one of the key points of international economic integration Therefore, it is necessary to mention the integration of economies, markets of each country, or between economic sectors

In addition, integration is always associated with the process of commitment to market opening and trade liberalization The international integration efforts of countries show on many different levels and levels such

as unilateral opening of markets for trade liberalization, bilateral or multilateral cooperation, which are reflected in the signing of Bilateral trade agreements, participation in regional and global fora, institutions

1.1.1.2 Content of integration

Firstly, signing and participating in international economic institutions

and organizations, together with the negotiating members, to formulate common rules and implement commitments and regulations to the members

of the agreement and organization

Secondly, it is necessary to carry out necessary work in the country to

ensure the achievement of the objectives of the integration process as well as the implementation of international integration regulations and commitments That is:

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- Adjust policies in the direction of liberalization and opening, reduce and proceed to remove tariff, especially non-tariff barriers, to make trade activities between member countries more effective This we can see very clearly for countries that are members of the World Trade Organization (WTO) Vietnam is one of the WTO members, and the important thing we are doing is adjusting policies to conform to WTO rules and for successful integration

- Besides, countries also have to adjust the economic structure from production, business, goods and investment structure to suit the process of liberalization and opening up In this way, new countries can make the most

of their domestic resources and advantages to improve their national competitiveness At the same time, it also helps countries integrate successfully and effectively This adjustment is not the same among countries and between different periods in the same country Depending on the different conditions and purposes, countries have the most appropriate, optimal and effective adjustments

- In addition, countries must conduct reorganization and renewal of domestic enterprises Innovating technologies, ways of managing and training human resources to achieve skilled workers and good managers to ensure successful integration

1.1.1.3 Opportunities and challenges

a Opportunities

- Through integration, countries will participate in world labor division Thereby helping countries to exploit the resources and advantages that they have for economic development and international trade of the country

- On the one hand, country's international trade will be promoted through integration Products of that country will be expanded to the consumer market, so this will encourage investors to expand production luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

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investment On the other hand, goods of that country will be more fiercely competitive in the world market and in the domestic market, forcing companies to invest in technological innovation and management to improve productivity and efficiency and increase the competitiveness of their products

In addition, integration also helps countries and manufacturers to select products that they have advantages to produce Thus integration promotes the development of domestic manufacturing industry

- Integration helps countries, especially developing countries, achieve the technology, capital, science and technology transfer as well as economic management experience and international business experience of advanced countries in the world

- Integration will also help developing and underdeveloped countries, such as Vietnam, have the opportunity to resolve trade disputes more equally with developed countries

b Challenges

- The competition takes place increasingly fierce in the world market and even in the domestic market For commodity countries that are not yet highly competitive, this is a great challenge Without appropriate measures and policies to enhance competitiveness, there will be no foothold in the world market, even it will destroy domestic production

- Economic interdependence among countries, underdeveloped countries are often at a disadvantage position and often treated unfairly by developed countries In addition, multinational corporations easily dominate business in an integrated economy, even dominate the Government

- When participating in the integration, the exchange between countries

in the world will become more and more open and thus foreign cultures as well as new society's vices will enter the country If the domestic culture is not strong enough to resist toxic alien culture, it will disrupt domestic culture luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

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The pragmatic lifestyle of following money will make people farther apart, traditional culture will be broken, especially with Asian countries with time-honored traditional culture That culture has lost, integration will fail and it will lose everything

- Integration between the rich and the poor, between countries and between different levels within the same country, causes many complex social problems that are difficult for countries to solve soon Integration also exhausted domestic resources, causing environmental pollution

1.1.2 Coffee export for socio-economic development 1.1.2.1 Characteristics of coffee production and trading

a The origin of coffee tree

The original domesticated coffee plant is said to have been from Harar, and the native population is thought to be derived from Ethiopia with distinct nearby populations in Sudan and Kenya Coffee was primarily consumed in the Islamic world where it originated and was directly related to religious practices For example, coffee helped its consumers fast in the day and stay awake at night, during the Muslim celebration of Ramadan (Wikipedia, 2016)

b Characteristics of coffee production and trading

- Coffee is highly seasonal, this is the feature that most affects coffee business Even the major coffee producing and trading countries like Brazil and Colombia are affected by this feature In the harvest season, the price of coffee is usually low, while in the middle of the crop the price of coffee usually increases due to scarcity It is for this reason that coffee exporting countries in general and coffee exporting enterprises in particular will have more advantages when they have enough financial resources to serve the coffee reserve

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- Coffee is a long-term industrial tree, with a time from investment to exploitation of 3 to 5 years It is this characteristic that greatly affects the producers, especially the majority of farmers in coffee producing countries with limited financial resources, the initial investment for their coffee production mostly borrowed from banks On the other hand, due to the long time of exploitation and business, when the coffee market has fluctuations in the favorable direction, it is difficult for coffee growers to seize the opportunity right away When being put into business, the coffee market has other adverse changes

- Coffee production is heavily influenced by natural and weather conditions In the years due to drought, flood, the crop failures greatly affected the world coffee market and upset many experts' predictions, as well

as the plans of the countries and coffee trading companies, especially for the largest coffee producing countries in the world such as Brazil and Vietnam

- Trading in coffee is highly risky, especially in the form of futures contracts, discounted prices, etc

1.1.2.2 Role of coffee exports to Vietnam’s economy and society

a For economy, society and environment

Exporting coffee each year brings to our economy a large amount of foreign currency, about 2 billion USD Coffee exports contributed significantly to the implementation of the goals of the import-export strategy

in particular and the goal of developing the socio-economic strategy in general of the country Besides, coffee exports also contribute to creating capital for investing in machinery and equipment for the cause of industrialization and modernization of the economy

As a labor-intensive industry, coffee exports contribute to creating more jobs and help solve unemployment problems for the economy According to the Vietnam Cocoa Coffee Association (Vicofa), the coffee luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

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industry attracts about 600,000 to 700,000 workers annually, even in three months of harvest, the number of employees can reach 800,000 Labor in the coffee industry accounts for 2.93% of the total labor in the agriculture sector and accounts for 1.83% of the total employment in the national economy

In addition, when identifying coffee as a key export, it will help the State to plan policies such as investment, regional planning in a key, reasonable, economical and highly effective manner in economic development

Coffee is not only a tree of high economic value, but also helps to green the bare hills and mountains, protect the ecological environment Because coffee trees are suitable for hilly areas, especially Robusta coffee trees

b For coffee producing and processing enterprises

Exporting coffee helps businesses earn foreign currencies to invest in expanding machinery and equipment, and improve production, thereby increasing profits and efficiency in their operations

Participating in coffee export business helps companies, especially specialized enterprises in coffee, enhance their public images and reputation

in the eyes of their customers and in the world market, thereby creating enterprises a competitive advantage to improve operating efficiency, expand markets and increase market share and profits

c For coffee producers

Coffee is a domestic product with low demand due to the consumption habits of Asians in general and Vietnamese in particular who prefer to drink tea over coffee Therefore, coffee exports will find outlets for coffee farmers' products, helping them to sell their products and earn income

Coffee is a very suitable crop with weather and soil conditions of Vietnam, especially in the Central Highlands and the Southeast Coffee is a luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

of labor, crops and quantity of products thereby increasing their own income

1.1.2.3 Advantages and disadvantages of Vietnam’s coffee export

a Advantages

- Vietnamese coffee has a specific flavor and is cheaper than coffee of the same kind in other countries Besides, Vietnamese coffee is highly appreciated by roasters in the world for being easy to process, especially processing instant coffee

- As a strategic export product, coffee is encouraged by the Governement to adopt policies on investment credit, export credit, trade promotion as well as other research and development supports

- The world demand for coffee is constantly increasing, especially changes in Asian customs and consumption habits, including Japanese and Chinese consumers, the two countries close to Vietnam and have a large market Besides, the demand for coffee in Europe and North America is constantly increasing

- The US's lifting of the economic embargo against Vietnam and the signing of bilateral trade agreements are an advantage for Vietnam's coffee exports, especially to the market that the world’s share of coffee as big as the United States During this time, as Vietnam officially became a member of WTO, our export coffee will have more and more advantages

b Disadvantages

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- The quality of our exported coffee is low and uneven, which is a major disadvantage of Vietnamese export coffee This is also the reason why Vietnam's coffee export volume is low and there is a big difference with world coffee prices and with Indonesia

- The oversupply situation in the world coffee market in recent years has also made Vietnamese coffee exports face many difficulties

- Our complex purchasing patterns also contribute to disadvantages for Vietnamese coffee Importers complain about the way they buy coffee in Vietnam is time consuming They must go to the exporter to negotiate and review the quality, and commitments, which is too time-consuming Whereas the trading method on the exchanges, they only take a few hours

1.2 Financial policies to promote coffee export

1.2.1 Factors affecting coffee export

There are many factors influencing coffee export activities But overall, these factors are the followings

1.2.1.1 Demand and market of importing countries

Like other commodities, export coffee is also affected by the demand

of the importing country If the importing country has high demand for coffee, our coffee export will grow well and vice versa, it will reduce the quantity and export turnover of coffee On the other hand, the demand of the importing country for the type of coffee is also a great influence on our coffee export activities If the importing country has high demand for coffee but their preferred type of coffee is Arabica, while we mainly export Robusta coffee, our Robusta will also reduce our coffee exports and vice versa, if they have demand for Robusta coffee, our coffee exports will increase

In addition to demand, the market of the importing country also has a significant impact on our coffee export activities If they have a need but the market capacity is small, it will not increase the export of coffee, or the luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

1.2.1.2 Price and quality

Regardless of the goods, if the quality is good, it will be more competitive and sell better It is also true to coffee, if the quality of coffee is not good, not only will the coffee be poorly consumed, but if the export is also possible, the price is low, the export value is not high In contrast, good quality coffee not only increases export turnover much but the price is still high, so the export value will be increased

Price always affects supply and demand relationship If the price is low, the export volume will increase but the value will not increase significantly or even decrease Conversely, when the price of coffee is high, the export volume may not increase, but the export value may increase sharply

1.2.1.3 Channels and distribution services

A reasonable distribution channel will not only reduce the costs of improving the competitiveness of export coffee but also help the process of exporting coffee happens quickly and capture good feedback from the market

of importing countries as well as of suppliers

Good distribution service will make customers more satisfied when buying our coffee Distribution services are also effective weapons of luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

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competition for exporters to increase competitiveness and export coffee If there is no better distribution service than a competitor, customers will buy from competitors without buying it even if our coffee is cheaper Therefore, the distribution services greatly affect the coffee export activities

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1.2.1.4 Competitive environment

Competitive environment such as institutions, regulations, barriers of coffee importing countries, and number of competitors in the market of coffee importing countries

The more intense the competitive environment, the easier it is to reduce our export of coffee, especially when our Robusta coffee has lower value than Arabica coffee The quality of our coffee is lower than that of other countries like Brazil, Colombia, Indonesia, making our coffee export more difficult In contrast, when the world coffee market is not highly competitive, it will make our coffee export activities more convenient

1.2.1.5 Factors of manufacturing and processing

Proper planning of coffee growing areas will help us to exploit the regional advantages in coffee production Improving the quality and productivity of coffee, thereby creating favorable conditions for coffee processing and export

Processing technology also greatly affects the export of coffee If we have modern coffee processing technology with a large capacity, we will improve the value of exported coffee, creating strong competition for our exported coffee compared to other coffee exporting countries

The reasonable distribution of processing factories, coffee trading enterprises as well as coffee production areas will create favorable conditions for the process of transporting, processing and exporting coffee Thereby it will reduce operating costs, increase the competitiveness of export coffee on the world coffee market

In addition, infrastructure factors also have a significant impact on the export of coffee If there is good infrastructure, it helps to transport coffee from production to processing and export of coffee conveniently Good infrastructure also facilitates the processing and export activities, contribute to luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

In addition, even though we have a high quality and competitive coffee product, there are few people who are armed with in-dept knowledge of import and export business to participate in the management of the business, then our coffee export activities cannot achieve good results either

The people who work in macro management and planning also play a crucial role in coffee export activities These people will advise the Government on regulating and managing coffee exports, building strategies for the development of the domestic coffee industry

1.2.2 Financial policies to promote coffee export 1.2.2.1 Import and export tax policy

a The role of tax

Tax is the statutory obligations of the government to individuals and business organizations to contribute to government expenditures Thus, tax has a major role for each country, which is:

Firstly, tax is the main revenue source for the State budget to serve

social needs, as a form of redistribution of a part of society's wealth

Secondly, tax is also a tool for the State to regulate prices, change

supply and demand relations, thereby helping the State regulate production and consumption orientation

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Thirdly, taxes affect the country's international trade activities, thereby

regulating import and export activities, international investment as well as the movement of international capital flows Thereby contributing to changing the structure of production and business, reasonable investment, improving the efficiency of the economy

In the current period, when the trend of globalization, regionalization and international trade integration is taking place strongly in the world, the renewal and completion of tax policy is an important task to integrate into the implementation of commitments on the reduction of tax lines in accordance with the institutions and trade organizations in which we participate The participation in the common tariff reduction roadmap (CEPT) and participation in AFTA implementation are an example Besides, the development of tax policy requires consistency in line with international law standards such as the General Agreement on Tariffs and Trade (GATT)

Tax is not only a major revenue source of the State budget, but also a policy for the State to regulate as well as showing an attitude of encouraging

or limiting the development of certain industries, thereby helping to regulate the economy follows the orbit set by the Party and the State In addition, it is also a tool for the State to express its attitude in relations with partner countries, contributing to the successful integration of the economy with the world economy, as well as building other political diplomatic relations

b Content of tax policy

Import tax is one of our taxes It has a great influence and directly affects the nation's import and export activities Import and export taxes are used in foreign trade relations between countries around the world

In Vietnam, the Import and Export Taxes were passed by the National Assembly on December 26, 1991 This tax law provides for all forms of trade, luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

is to encourage domestic enterprises to export and create a competitive advantage for the nation's exports on the world market, except for some goods that the State restricts export such as natural resources and precious materials

- Import tax: is a tax imposed on foreign goods when being imported into the Vietnamese customs territory The import tax not only increases revenues for the State budget, but also contributes to the protection of domestic production However, by participating in the process of international economic integration and implementing the roadmap of tariff reduction, import tax tends to decrease Currently, we have to gradually reduce import duties according to a specific schedule when participating in RCEPT Especially when we become a WTO member, our import tax must be reduced Gradually we have to reduce the rate of import taxes in the revenue share of the State budget Currently, in our country, there are three import tax rates: normal import tax, preferential tax and special preferential tax

- In addition to import and export taxes, our country now has a tax refund policy There are two types of tax reimbursement, that is, when businesses import materials, machinery and equipment for processing goods

to export, the previous import tax amount will be reimbursed by the State, the enterprises have certified that these goods have been exported and processed and have invoices and vouchers In addition, export businesses also receive VAT refunds According to the law of domestically produced goods that are luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

Through the credit policy, the State will support enterprises and industries facing difficulties in import and export business Enterprises and industries are in the development strategy of the State

1.2.2.2.2 Content of credit policy

a Bank credit policy

Commercial banks are a channel to provide capital for export businesses Enterprises that borrow money from commercial banks must bear

a certain interest rate

The bank's interest rates are influenced by many factors such as deposit interest rates, money supply-demand relation, the State Bank's policies such

as compulsory reserve ratio, discount rate In addition, the bank's interest rates are sometimes influenced by the State's adjustment to different borrowers, depending on the State's strategy and policies

For businesses, bank interest is a kind of input cost, so this will make business costs of that enterprise increased When interest rates rise, business costs increase the impact of their export activities Therefore, it will restrict companies to expand production and export activities When interest rates are low, companies will be encouraged to invest in expanding production and export activities But this will make banks' money mobilization limited and luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

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banks will not do business effectively Developing financial policies with appropriate and flexible interest rates is an essential requirement for the State This will encourage import and export businesses to boost their export activities, banks will operate effectively and the economy will mobilize healthily and effectively

b Credit policy from Development Assistance Fund

In order to support export enterprises, the Government has established

an Export Support Fund through Decision No 195/2000/QD-TTg The Export Support Fund was officially put into operation in 2001, and the Support Fund was established to support export enterprises in case of objective difficulties

in export production and business

When facing difficulties in production and export business, enterprises shall be provided with interest-free loans or preferential interest rates by the Fund, lower than the common interest rates at the same time During 5 years

of operation, the Support Fund has greatly helped export businesses It is this support that helps businesses overcome many difficulties in the operation process and encourages businesses to promote export activities through investing in seeking new markets and new commodities

In addition, the credit interest rates that the enterprise support fund has helped businesses have more capital to operate at low cost, helping them increase the efficiency of their export operations Thereby contributing to the implementation of import-export strategy task of Vietnam in the 2001-2010 period

1.2.2.3 Exchange rate policy

a Definition

“An exchange rate is the value of one nation's currency versus the currency of another nation or economic zone” (Chen, 2020) Thus, there are luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

b Impact of exchange rate policy on export

If the exchange rate increases, then it makes domestic goods relatively cheap compared to goods on the world market, so it will increase the competitiveness of domestic goods and thus encourage export By contrast, if the exchange rate is high, it will restrict export

If the exchange rate is not stable, enterprises involved in export business will face many risks Therefore, this makes them afraid to participate

in the implementation of contracts, especially future contracts

Also, through the exchange rate, countries may have preferences for each other when accepting payment in that country's currency instead of paying a strong foreign currency in international trade transactions between two sides, thereby promoting export activities of a country to a certain market

Because exchange rates have great impacts on the import and export of such nations, many countries in the world have adjusted and built an exchange rate policy that is in their best interest to boost exports Like China, with the weak RMB policy or the past year, the US has adjusted and followed the policy to make the dollar weaker than other currencies such as Euro, Japanese Yen, etc and thus China is a strong export nation in the world, trade balance is always positive, and the US thanks to the weak Dollar policy, which in the past year they have promoted exports and created high competition compared to EU countries and Japan

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In Vietnam, the exchange rate between VND and USD has been relatively stable for many years With a small change, the Central Bank always responds promptly and flexibly, helping the exchange rate be beneficial for Vietnam's export activities, thereby contributing to stabilizing and developing a lasting economy

1.2.2.4 Export credit insurance policy

a Definition

Insurance is a form of sharing the risks encountered in the life and operation of each individual organization by paying an amount to the insurance organization called a premium

“Export credit insurance is a policy offered by both government export credit agencies and private entities to businesses that want to protect assets from the credit risks of importers These risks include non-payment, currency issues and political unrest Not knowing where an exporter is sending their merchandise is a risk that can potentially bankrupt a company This insurance covers some of the possible losses.” (Bass, 2017)

b Impact of export credit insurance policy on export

When exporting, enterprises may face risks such as risks on goods transport, payment risks and other operational risks Without insurance, when these risks occur, businesses will have to bear the full burden Some enterprises have limited financial resources, so it will make them suffer heavy losses, even bankruptcy If there is insurance, businesses will be partly compensated by insurance organizations to help them operate normally

For agricultural products such as coffee, in addition to the risks of transportation and payment, the coffee production and business has a great risk of production Coffee, like other cashew crops, is heavily influenced by natural factors such as drought and flood, which are unpredictable Therefore, participating in insurance will help coffee producers avoid risks In addition, luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

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coffee is a commodity traded by futures through exchanges, so it is highly risky in the future So participating in insurance helps businesses minimize risks in coffee business

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2.1 Current situation of Vietnam’s coffee export in recent years

2.1.1 Overview of Vietnam’s coffee industry

The history of Vietnamese coffee began by the French since 1857, up

to now the coffee cultivation has been entrenched in Vietnamese culture for over a century Strengthened by government support, Vietnam's coffee production increased from a very low level in the early 1990s (at that time the country had only a mere 5900 hectares of coffee), so far the coffee area of The whole country has reached half a million hectares with an annual output

of more than 25 million bags in 2010 and has maintained up to now, making Vietnam the second largest producer in the world

Two main types of coffee (Robusta and Arabica) are in production, while Robusta accounts for 92.9% of the total coffee area (and 97% of total production), Arabica varieties are only responsible for a few percent left The total area covered by coffee cultivation is estimated at about 600,000 ha, with the main coffee growing provinces located in the Central Highlands, including Dak Lak (190,000 ha), Lam Dong (162,000 ha), Dak Nong (135,000 ha), Gia Lai (82,000 ha) and Kon Tum (13,500 ha)

In response to challenges, Vietnamese policymakers have introduced long-term reforms of the country's industry In 2014, the Government outlined

a sustainable coffee development plan to 2020 and a Vision to 2030, an overall agenda for the sustainable management of economic and environmental resources for the coffee industry, increasing export earnings and ensuring stable production

This plan includes specific economic goals for the sector's performance, such as strengthening in-depth processing for added value to luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

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achieve export revenue of 6 billion USD over the next decade At the same time, the Government also sets specific environmental goals, including limiting coffee cultivation nationwide to 600,000 hectares, replacing old low-yield coffee plants with new varieties for higher yield, better pest resistance, repartition of coffee and water saving irrigation methods, as well as setting new safety and environmental standards for fertilizers and pesticides

Currently, the main coffee in Vietnam is Robusta coffee and the processing is mostly by dry method so the quality and value are not high Vietnam's coffee industry now has Vietnam Cocoa Association (Vicofa) with

78 members In particular, Vietnam National Coffee Corporation is the largest member and also the current Vietnamese coffee industry

The whole Vietnamese coffee industry now has nearly 200 units participating in coffee exports, of which 78 units are members of Vicofa Every year, the whole coffee industry exports about 1.8 million tons with a value of about 3.5 billion USD and attracts an average of 600,000 employees each year

2.1.2 Export market of Vietnamese coffee

Along with the opening of the country's economic development, the market of Vietnamese coffee exports has also expanded As of 2020, Vietnamese coffee has been exported to about 80 countries in the world But the main market of Vietnam's export coffee concentrates mainly on ten major markets In which the EU is the largest market of Vietnamese coffee, then Asian countries and the United States

Generally, in 2019, the country exported 1.65 million tons of coffee, earning nearly 2.9 billion USD, the average price of 1,718 USD/ton, declining 11.92% in quantity, 19.28% in turnover

Vietnam's coffee exported the most to German market, reached 209,697 tons, equivalent to 325.7 million USD, priced at 1,561.5 USD/ton, accounting luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

Exports to the US market accounted for nearly 9% of the country's total coffee export and turnover, reaching 131,721 tons, worth 220.1 million USD, priced at 1,671.1 USD/ton

Table 2.1 Some export markets of Vietnamese coffee

(Source: General Department of Customs)

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Table 2.2 Coffee export situation of Vietnam from 2015 to 2019

Year Output (ton) Average price (USD/ton) Value (USD)

(Source: Ministry of Agriculture and Rural Development)

Through the data table above, we see that Vietnam's coffee exports in this period have increased Average increase of 7.47%/year in quantity and 9.66%/year in value However, we also see that the growth rate is not stable in terms of both the quantity of exports and the value of exports over the years The main reason is due to the strong fluctuations of world coffee prices, especially in 2016, the price of coffee dropped to the “bottom” On the other hand, in the 2015/2016 crop year, Vietnamese coffee lost its crop, so this year both the quantity and value of exported coffee dropped sharply

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2.1.3.2 Price

The price of coffee in the world market is very complicated, especially Robusta and Arabica coffee with much more stable prices Previously, the price of Arabica coffee was only 0.5 times higher than Robusta coffee, but now it is 2 times higher While the price of Robusta coffee plummeted, Arabica price increased to USD 1800 - 2000/ton The main reason is that Robusta coffee producing countries do not have a sustainable development strategy, which Vietnam is a proof

Table 2.3 Vietnam's export coffee price

(Unit: USD/ton)

Coffee export price of

(Source: Vietnam National Coffee Corporation)

Table 2.4 Price movements on LIFFE London exchange in 2019

32,800-32,700

32,500-32,500

32,500

32,300-33,000

32,700-32,300

31,800-31,700

31,300-31,700

31,200-30.800- 31.300

(Source: Giacaphe.com)

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Through the price table of coffee on the world market compared with the FOB price of Vietnam, we can see that the price of our exported coffee was quite large Especially in 2016, the difference was more than 100 USD/ton The reason for not only the quality of our coffee is low, but also due

to our high coffee production, especially in the harvest There is also another important reason for Vietnam's low coffee prices and often being forced to price because of the competition in trading especially in the harvest Therefore, in the coming time, the requirement for Vietnam's coffee industry

is to strictly organize the business activities of the companies, as well as develop a long-term strategy for sustainable development of coffee trees in order to contribute to improving the operation of the industry and interacting with its position in the Vietnamese economy

2.3.1.3 Structure category

As mentioned above, Vietnam's coffee is mainly Robusta coffee However, we export mainly green coffee and processed coffee at only about 0.5%/year of the total export value of Vietnamese coffee

Table 2.5 Structure of Vietnam's exported coffee category

Finished

(Source: Vietnam National Coffee Corporation)

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The export volume of finished coffee accounts for less than 0.5% of the total export volume of Vietnamese coffee However, it has a higher value, so the selling price is also much higher than that of green coffee so its value makes up nearly 2% of Vietnam's total coffee export turnover Through this

we can see that increasing the proportion of processed coffee in the structure

of Vietnam's coffee export is essential However, at present, there are only a few production facilities processing coffee for export in the whole country, of which only significant are Bien Hoa Coffee Processing Plant of Vinacafe and Trung Nguyen Coffee and Nestle factory

2.3.1.4 Contribution of coffee exportation to Vietnamese export and growth

The coffee sector that annually earned 2.5-3 billion USD in export revenue has provided nearly 2.5 million jobs and made a contribution of three percent to the country’s gross domestic product (GDP) Vietnam currently tops Asia and ranks second worldwide in terms of coffee exports

Since 1975, the Vietnamese coffee industry has developed rapidly in terms of cultivation area, yield and output, and has succeeded in forming coffee growing areas in the Central Highlands and Arabica coffee growing areas in the northwestern region Since 2000, Vietnam has become the world’s second biggest coffee producer and exporter and the world’s biggest Robusta coffee producer and exporter

Vietnam’s coffee output has increased from a mere 10,000 tonnes in

1975 to millions of tonnes Output increased to 1.702-1.889 million tonnes per year in 2016-2018 Vietnamese coffee has been present around the world and become an important input material for leading roasted coffee brands like Nestle, Lovazza, Tchibo, Modelez, and Folgers

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2.2 Current situation of coffee export to the US market

2.2.1 Characteristics of coffee in the US market 2.2.1.1 Consumption situation

The United States is one of the largest consumers and importers of coffee in the world Coffee is the most favorite beverage in the United States, having a very important role in the economy According to statistics, in 2015, the economic impact of the coffee industry on the United States was 225.2 billion USD, of which consumers spent 74.2 billion USD on coffee, the industry also created nearly 1, 7 million jobs and contributed up to 28 billion dollars in taxes According to the US Department of Agriculture, the United States is the second largest importer of coffee in the world, after the EU, with

2019 turnover forecast to increase 2.1 million bags to 26.5 million bags Leading suppliers include Brazil (23%), Colombia (22%), Vietnam (15%) and Honduras (6%)

According to the National Coffee Association of America (NCA), up to 63% of adults consume coffee daily, of which 59% are specialty coffee, a strong growth from 9% in 1999, and expected to increase to 61% in 2020, the target audience for this increase is young people

According to the Specialty Specialty Coffee Association of America (SCAA), the number of specialty coffee retailers has increased 10-fold in 20 years from 1993-2013, from 2,850 to 29,200 of which 45% are retail chains and 55% are independent stores (operate in fewer than 3 locations) The development of small coffee shops has had a strong influence in boosting the demand for specialty coffee

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Table 2.6 Coffee consumption situation in the United States

Year Output (1000 ton) Compare to the last

(Source: Ministry of Agriculture and Rural Development)

Coffee consumption demand of the US market has increased in recent years If compared with the consumption of other markets such as the EU and Asia, we can see that in 2001, the EU coffee consumption was 23,400,000 tons and Asia was 63,000 tons, in 2003 respectively 2,505,000 tons and 756,000 tons Thus the United States is still a major consumer market of coffee in the world Along with the population and economy growth, the demand of the US people for goods in general and for coffee in particular will increase

2.2.1.2 Supply of coffee on the US market

The United States is an attractive market for any country It can be said that the US market accepts all types of goods Therefore, all countries promote the export of their goods into this market if possible Coffee is a drink that is widely used by Americans and it's like a popular drink like tea in Japan However, in the US, there is also one of the world's largest coffee trading centers, the New York coffee trading center Therefore, many countries export coffee to the US market, including countries such as Colombia 17%, Vietnam, Brazil 15%, Guatemala 11%, Mexico 10%, Indonesia 9%, ect Therefore, Vietnamese coffee has a significant role in the luan van tot nghiep download luanvanfull moi nhat z z @gmail.com Luan van thac si

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US coffee market While many countries export coffee to the United States, not all of them compete with each other, but often these countries compete with similar products Like Vietnam, we do not have to compete with all of these countries, but mainly against Indonesia, Brazil and some other African countries

2.2.2 Current situation of coffee export to the US market

2.2.2.1 Export volume

Previously, Vietnamese coffee exported to the US market had to go through intermediaries such as Singapore or Hong Kong, especially Singapore However, since the US lifted the economic embargo against Vietnam, more and more American customers come to Vietnam This has led

to a rapid development of Vietnam's coffee export, after only one year they became the largest customer of Vietnamese coffee with an annual purchase of about 25% of Vietnam's coffee

Table 2.7 Export turnover of Vietnamese coffee to the US market

Year Output

(1000 ton)

Output change (%)

Average price (USD/ton)

Value (million USD)

Growth rate (%)

(Source: Ministry of Agriculture and Rural Development)

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Through the statistics table above we can see that Vietnam's coffee export turnover to the US market during this period generally increased but not high On average, during this period, the export growth rate was 4.36%/year, while the value increased 9.5%/year However, in 2016 the export value plummeted The main reason is due to the sharp fall in the world coffee price and the loss of Vietnamese coffee In 2020, according to initial estimates, world coffee production was still higher than demand However, by early 2021, drought occurred in Asian countries and Brazil made world coffee production decrease This is the reason for the sharp increase in the world coffee price, the price of Robusta coffee reaches over 1,500 USD/ton, while the domestic price of coffee increases to over 32,000 VND/kg, sometimes even up to 34,000 VND/kg But Vietnamese coffee exporters signed contracts from the previous season with US coffee importers, so when it comes time for delivery, domestic exporters do not have enough goods to deliver, or have to buy goods with high prices to deliver to customers Therefore, exporting Vietnamese coffee to the US market in 2020 still faces many difficulties

2.2.2.2 Quality and price

Not only are our coffee exports mainly raw, but our exported coffee is not good quality The division of coffee quality is based on standards of moisture, impurities, broken beans and grain size Based on this standard, R (Robusta) coffee is of the highest quality, then R2A and R2B types Previously, Vietnam's export coffee was only R2B coffee, so far this coffee is almost no longer in our export structure, but now we export mainly R1 and R2A types However, the rate of R-type coffee is still not high, Vietnam's export coffee has a high percentage of broken beans and impurities, and the quality is not uniform Even our exported Arabica quality is not high This is shown through the following table

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Table 2.8 Quality of Vietnamese exported coffee

Criteria Robusta coffee Arabica coffee

Shape

Uneven, most of the grain size is small, mixed with branches, rocks and bark

Uneven, greyish green, many seeds are still green, often too dry or not dry enough Moisture (12.5%

Characteristic Light to strong taste Light taste

Problem

There is a bad smell, the smell of smoke, being fermented, musty

Unripe, lack of aroma

(Source: Self-edited)

The reason is that the quality of their exported coffee is considered low and uneven by US importers, causing Vietnamese coffee exports to be pressured by US importers Threfore, Vietnam's exporting price to this market