Vietnamese coffee is currently exported to over 80 countries and territories worldwide with an export turnover of over 3 billion USD, accounting for 14% of the market share and 10.4% of
Quality of exporting coffee 4 1 i i i 2 Quality of exporting coffee im 2019 ssscsssssssssssssessssssers
Quality of exporting coffee in 2020 nen seee 4 1.1.3.1 Coffee exporting prices in 2018 sa 5 1.1.3.2 Coffee exporting prices im 2019 sua 5 1.1.3.3 Coffee exporting prices in 2020 sua 5 1.1.3.4 The changing of coffee exporting prices from 2018 to 2020
Over a span of two years (2018-2020), the national project aimed at developing high-quality Vietnamese coffee successfully established a traceability system and designed a production line featuring spray dryers for instant coffee, achieving a capacity of 250 kg/hour.
The Institute has developed comprehensive technical packages for producing high-quality coffee through mechanized farming processes and improved pre-harvest and post-harvest treatment methods Research indicates that these advancements have resulted in a yield and quality increase of approximately 10% compared to control areas, primarily attributed to the use of higher-yielding coffee varieties.
The quality of coffee has significantly improved, with an average yield of nearly 2.8 tons per hectare By 2020, the rate of deep-processed coffee reached 12%, marking a 5% increase over the past five years Additionally, the diversification of processed coffee products has successfully met export demands, even in highly selective global markets.
In 2018, the average coffee export price was 1,876.167 USD per ton, reflecting a downward trend despite an increase in export volume Phan Xuan Thang, Vice Chairman of the Vietnam Coffee and Cocoa Association (Vifoca), noted that the coffee price crisis that year inflicted damages of approximately 2,500 to 3,000 billion VND on the entire coffee industry.
According to the International Coffee Organization (ICO), global coffee production is projected at 164.81 million bags, while consumption stands at 162.23 million bags, resulting in a surplus of 2.58 million bags that has negatively impacted global coffee prices In early September 2018, coffee prices fell to a 12-year low of 98.65 cents per pound.
In 2019, the average coffee export price was $1,732.33 per ton, marking the third consecutive year of a price crisis driven by oversupply in the global coffee market The Vietnam Coffee and Cocoa Association reported that coffee export prices hit a decade low, with Robusta coffee dropping to $1,207 per ton and Arabica at 88 cents per pound This decline has contributed to a significant drop in Vietnam's coffee export revenues, which fell by $3 billion compared to previous years.
The price of Vietnamese coffee for export is ranked near the bottom of the list, much cheaper than the price of coffee of the same type in other countries
In 2020, the average coffee export price was 1,790.33 USD per ton, reflecting the challenges faced by the coffee market during a four-year crisis exacerbated by the global COVID-19 pandemic This crisis led to a significant decline in coffee demand and prices during the first half of the year However, starting in July 2020, the rise in home consumption due to social distancing measures resulted in a slight recovery in coffee prices.
This year's focus on improved harvesting techniques and post-harvest processing has significantly boosted coffee prices Trade agreements offer advantages such as tax incentives, expanded market access, and increased foreign investment in coffee production and processing These factors have collectively contributed to a notable rise in coffee prices during the latter months of 2020.
11.3.4 The changing of coffee exporting prices from 2018 to 2020
S Average exporting price of coffee from 2018 to 2020 g 2500
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From 2018 to 2020, Vietnam's average export coffee price declined from $1,876.17 per ton to $1,790.33 per ton, primarily due to quality issues and the global price crisis in 2019 However, a shift towards improved farming methods and an emphasis on quality, alongside the growth of the deep processing market and favorable tariffs, began to drive an increase in coffee prices starting in mid-2020.
Mode of coffee exporting payment se 6 1 Cash against documents (CAD) .:sssssssssssssssssssesssssssssssnsssen sssensssessnsess 6 2 Letter of Credit (L/C) and Telegraphic Transfer Reimbursemen (TTR) 7 1.1.5 Customs procedures of exporting CofÍee che 7
Mr Luong Van Tu, Chairman of the Vietnam Coffee and Cocoa Association (VICOFA) said: The contracts are all according to current popular payment methods such as CAD and L/C
The CAD payment method is only beneficial for exporters when they choose a reputable bank and a set of documents that can be obtained.
After signing the contract, the importer, and the bank sign Memorandum included: ® Means of payment: CAD e Pledged Amount is worth 100% of the deal
Then the importer transfers the full amount of the deposit, a Trust Account will be opened And the exporter presents the documents required by Memorandum to receive the payment
1.1.4.2 Letter of Credit (L/C) and Telegraphic Transfer Reimbursement (TTR)
A Letter of Credit (L/C) is a crucial financial instrument that provides strong assurance for both parties involved in large value contracts, particularly benefiting coffee exporters Once the contract is signed, the importer issues an irrevocable letter of credit through a bank, ensuring immediate payment to the exporter upon presentation of the complete set of delivery documents, including the original full set of 3/3 of the perfect sea bill of lading.
> 03 original certificates of quantity and quality certified by several reputable Inspection agencies in Vietnam
> 03 certificates of origin issued by VCCI ¢ Telegraphic Transfer Reimbursement (TTR):
If the Letter of Credit (L/C) accepts the Teletransmission of Receipt (TTR), individuals in the import and export sector are only required to submit a complete set of legally compliant documents The settlement process will then be completed within 36 working hours (3 days) after the issuing bank receives the telegraphic notification of the goods.
If the Letter of Credit (L/C) does not permit TTR, the exporter must wait for the documents to be forwarded to the issuing bank, followed by an additional wait of 7 working days to determine the payment status.
1.1.5, Customs procedures of exporting coffee
When exporting coffee, it is essential to fulfill additional requirements such as obtaining a Certificate of Origin (C/O) through the ICO form or form B, as well as ensuring plant quarantine procedures are followed Additionally, goods packed on pallets must undergo fumigation and receive certification for this process to comply with export regulations.
The Circular stipulates that the mandatory documents are the customs declaration and the commercial invoice (from June 5, 2015), but to have an export customs declaration, it is necessary to have:
Booking note to have information about the ship, transfer number, sailing date, port of loading, port of discharge, etc
Packing list to have information about number of parcels, net weight, gross weight, ete
Commercial invoice (case 5/6/2018 and earlier) for information on quantity, unit price, shipment value, commercial conditions, etc
After transmitting the export customs declaration on the VNACCS system, the system returns the results of the channeling:
Green Channel: customs clearance declaration Receive the field officer to liquidate the declaration
The Yellow Channel process involves attaching documents to the VNACCS system, after which field staff print the declaration and submit the documents to the customs sub-department for inspection If the documents are valid, the customs clearance declaration is processed However, due to the impact of the Covid epidemic, the General Department of Customs issued Official Letter 3980/TCHQ-GSQL, allowing customs declarants to delay submitting paper documents or exempting them from submitting specific documents when using the electronic system If customs officials have concerns, the declaration may be transferred to the Red Channel for further scrutiny.
In the Red Channel process, field staff are responsible for printing the declaration and submitting the necessary documents to the customs sub-department for verification of both the documents and the actual goods Once the verification is complete, the customs clearance declaration is finalized by the field officer This clearance process involves entering the ship's register after obtaining a list of eligible containers, marked by a barcode, that can pass through the customs supervision area, typically applicable for FCL goods exported to Vietnam For LCL goods, the field staff must complete procedures for importing goods into the CFS warehouse, following the same eligibility criteria for customs clearance.
Exported coffee is not on the list of goods imported or exported under a license, according to the conditions in Appendix III of Decree 69/2018/ND-CP, so the procedure 1s simplified
Customs always strives to facilitate the circulation of goods, especially in the context
Assessment of exporting coffee in Viet Nam from 2018 to 2020 000000 9 1 Strengths of exporting coffee sess 9 2 Weaknesses of exporting coffee 10 2.1 Weaknesses of exporting coffee in 2018 0.sssessse0ssersssssssessesen esses 10 2.2 Weaknesses of exporting coffee in 2019 cĂSSSSSeeses II 2.3 Weaknesses of exporting coffee in 2020
In 2018, Vietnam experienced significant growth in both coffee production and export value, with nearly 680,000 hectares dedicated to coffee cultivation by 2020, predominantly in the Tay Nguyen provinces The key coffee-producing provinces—Dak Lak, Lam Dong, Dak Nong, and Gia Lai—account for approximately 530,000 hectares, ensuring a reliable supply for export Dak Lak alone maintains 190,000 hectares, while Lam Dong and Dak Nong contribute 150,000 and 190,000 hectares, respectively The coffee industry plays a vital role in the economy, contributing 3% to the national GDP and providing stable incomes for over 600,000 farming households, thereby fostering socio-economic development and aiding in poverty alleviation.
In the 2019-2020 crop year, Vietnam's coffee exports reached over 80 countries, securing a 14.2% share of the global green coffee market, second only to Brazil Notably, roasted and ground coffee exports accounted for 9.1% of the market, ranking fifth globally The European Union remains Vietnam's largest coffee market, representing 40% of total export volume and 38% of export turnover, followed by Southeast Asia at 13% Brands like Trung Nguyen and Vinacafe dominate both local and international markets, providing a strong foundation for the coffee industry to leverage growth opportunities and expand export markets.
Vietnam's diverse natural conditions make it an ideal location for coffee cultivation, with distinct climates suited for both Arabica and Robusta varieties Arabica thrives in the cooler, high-altitude northern regions, while Robusta flourishes in the hot, humid tropical climate of Tay Nguyen in the south, which encompasses 72% of the country's coffee-growing territory The fertile basalt red soil contributes to Vietnam's high coffee yields and unique flavors Abundant water and soil resources provide a competitive edge, complemented by a labor force that relies minimally on machinery in production and processing Public investments help reduce production costs, enhancing Vietnam's pricing competitiveness in the global market Additionally, preferential tariffs from Free Trade Agreements encourage businesses to focus on deep processing, increasing product value and export turnover With strong support from government ministries and proactive enterprise marketing efforts, Vietnamese coffee has secured a notable presence in the international market.
1.2.2.1, Weaknesses of exporting coffee in 2018
In 2018, the Vietnamese coffee industry faced challenges as production increased but prices declined significantly Coffee exports were estimated at 1.73 million tons, generating 3.3 billion USD in the first 11 months, marking a 23.4% rise in volume yet only a 3.2% increase in value compared to 2017 The average export price during this period dropped to 1,894 USD/ton, reflecting a 16.7% decrease from the previous year In November, coffee prices in the Tay Nguyen provinces fell by 700-900 VND/kg, averaging between 34,600 and 35,200 VND/kg, primarily due to the downturn in global coffee prices.
In 2018, while Vietnam's coffee exports saw growth compared to 2017, the industry faced significant challenges such as increased competition, fluctuating transportation costs, and export restrictions Notably, 90% of Vietnam's coffee production consists of raw coffee, contributing little added value, with only 10% being deep-processed, high-value-added coffee Experts indicate that the current export price at Vietnamese ports is around VND 40 million per ton, but with proper processing, this could rise to VND 70 million to 100 million per ton Additionally, a lack of focus on preservation, processing, market consumption, packaging, and branding has hindered Vietnamese corporations, putting them at a disadvantage in the global coffee market.
1.2.2.2 Weaknesses of exporting coffee in 2019
In 2019, the local coffee industry in Vietnam faced a significant pricing crisis, leading to a considerable drop in export turnover Beyond this pricing issue, the industry is grappling with numerous challenges, including the deterioration of aged coffee plants Despite efforts to promote coffee re-cultivation in the Tay Nguyen region, a substantial area of old coffee remains Additionally, adverse weather and climate conditions have negatively impacted coffee production across the country, further contributing to the decline in output during 2018.
In 2019, coffee export output declined by approximately 20%, with a significant drop in prices—13.9% in volume and 21.2% in value—due to adverse weather conditions like droughts and floods in Tay Nguyen's key coffee production areas The August 2019 floods devastated nearly 1,000 hectares of coffee, while prolonged heavy rains led to a substantial loss of coffee berries, adversely affecting future crops The domestic coffee market remained bleak, largely influenced by the challenges faced by the world's two largest coffee producers, and the industry's struggles are expected to continue as supply surpasses demand.
Tay Nguyen, a significant coffee export region, has over 86,000 hectares of coffee older than 20 years, representing about 16% of the area, while coffee aged 15-20 years covers approximately 140,000 hectares, accounting for 26% However, replanting efforts face challenges, with a failure rate of up to 38% due to farmers not adhering to proper procedures, as reported by the Tay Nguyen and Forestry Science and Technology Institute Despite Vietnam's strong coffee export market, global oversupply has led to a decline in coffee exports and prices, with a notable drop in the first half of 2019 Consequently, coffee prices in Tay Nguyen fell by 700-1,200 VND/kg, reaching 32,000-33,200 VND/kg, mirroring the downward trend in the global market.
800 VND/kg in the first six months of 2019
Vietnamese coffee, primarily produced for export, is significantly impacted by the futures trading environment, which influences domestic prices In early May, coffee prices dropped to approximately 29,000 VND/kg, causing substantial losses for producers Despite being the second-largest coffee exporter globally, Vietnam's export prices remain the lowest due to the fact that 80% of its coffee is shipped raw Additionally, the harvested coffee often fails to meet ripeness standards and is contaminated, leading to poor overall quality.
1.2.2.3 Weaknesses of exporting coffee in 2020
In 2020, Vietnam's coffee exports demonstrated significant growth in quality and productivity compared to the challenging seasons of 2018 and 2019 Despite uncertainties in the exchange rate, coffee exports reached 813 thousand tons valued at 1.367 billion USD in the first five months, marking a 4.7% increase in volume and a 2.9% rise in value compared to the same period in 2019 However, the Covid-19 pandemic cast a shadow over the global commodity market, leading to fluctuations in coffee prices and a decline in consumer demand This drastic fall in coffee consumption, coupled with an abundant supply, resulted in significant price drops on the global market, presenting additional challenges for both the global coffee industry and the Vietnamese coffee market moving forward.
The 2019-2020 coffee crop year marked the third consecutive year of a pricing crisis for the coffee industry, causing significant challenges for growers as selling prices remained low Many farmers resorted to cutting down their coffee gardens in favor of more profitable crops This year's Vietnamese coffee crop faced losses and slow harvesting, which did not exert much pressure on the market However, there is a glimmer of hope as coffee prices have shown a slight increase in the latter half of the year, driven by efforts to improve harvesting and drying processes.
Overall, the value and output of coffee production climbed in 2018 but declined in
Between 2019 and 2020, global coffee exporters faced challenges such as adverse weather, crop failures, and fluctuating prices, leading to a decline in coffee prices over three years Vietnam, in particular, struggled with significant price issues from 2018 to 2020, largely due to a surplus in the international coffee market, exacerbated by economic disruptions caused by the pandemic during that period.
To enhance the export of coffee, it is crucial to address the inconsistency in the quality of Vietnamese coffee, which currently limits our country's position in the global market Implementing strict quality control measures and investing in advanced processing techniques can significantly improve the overall standard of our coffee exports Additionally, fostering partnerships with international buyers and promoting the unique qualities of Vietnamese coffee can further boost its appeal on the global stage.
2.1.1 Make active use of quality management systems
The coffee-growing and processing industry today largely lacks adherence to established standards While the previous TCVN 4193:93 standard was in place, it is no longer relevant, leading to unregulated coffee quality In 2005, Vietnam introduced the Export Coffee Standard TCVN 4193:2005, which employed error calculation techniques to align with World Coffee Council categorization; however, this standard is voluntary, resulting in only 10% of businesses complying, representing just 1-1.5% of total export volume.
On October 1, 2007, the Ministry of Industry and Trade called for the implementation of a new standard aimed at improving the quality of exported coffee In response, establishments are adjusting their machinery and refining their purchase and processing procedures This comprehensive strategy is essential for enhancing the overall quality of coffee exports.