Vietnam May Have 400,000 Tons of Unsold Coffee as Stockpiling Plan Starts

Coffee growers in Vietnam may hold as much as 400,000 metric tons of unsold beans, equivalent to about a third of the nation’s latest crop, as the government starts its first stockpiling program to counter falling prices.

The volume of unsold coffee of “between 300,000 and 400,000 tons is pretty high compared with 100,000 to 200,000 tons at the same time in previous years,” said Pham Dinh Khai, director of An Giang Coffee Co.’s Buon Ma Thuot branch. “This program is good in general, but a bit late in terms of timing.”

Prime Minister Nguyen Tan Dung last week told the central bank to oversee a 200,000 ton program to boost robusta prices that have lost 12 percent over the past year. The beans from the world’s largest robusta producer will be held for six months at most, potentially overlapping with the arrival in the global market of output from Brazil and Indonesia.

“We should have this program undertaken at the peak of the harvest in November, December,” An Giang Coffee’s Khai said from Buon Ma Thuot City in Dak Lak, the country’s main coffee- growing area. Khai spoke by phone late yesterday.

The volume of unsold beans remains high, representing about 30 percent of the most recent harvest, according to Bui Hung Manh, head of the business department at Tay Nguyen Coffee Investment, Import and Export Co.

Farmers have accumulated their beans because of falling prices, said Manh from the country’s biggest coffee exporter, also known as Vinacafe Buon Ma Thuot. Their holdings come from carryovers from the 2008-2009 harvest as well as the latest crop.

Falling Prices

Local coffee traded at 23,700 dong ($1.25) a kilo yesterday compared with about 25,000 dong last year, according to figures on the Dak Lak government Web site. Robusta, the bitter-tasting coffee variety, rose 1.9 percent to $1,323 a ton in London yesterday, according to data compiled by Bloomberg.

Under the new, state-led program, banks are required to offer exporters low-interest loans of 6 percent to buy and store beans, the State Bank of Vietnam said in an April 14 statement on its Web site. The companies will buy the coffee from April 15 to July 15 and hold it for a maximum of six months, it said.

Sumatran Crop

The main harvest this year from southern Sumatra, Indonesia’s key coffee-producing area, will be delayed to late April or early May due to wet weather, Herve Touraine, executive director of SW Commodities Ltd. in Hong Kong, wrote in a report on April 19. The crop is normally ready in March, Touraine wrote.

Vietnam’s coffee output in 2010-2011 may decline because of insufficient rain, Huynh Quoc Thich, head of the cultivation office in Dak Lak’s agricultural department, said on March 30. Local authorities sought financial assistance from the central government to help growers with added costs, Thich said.

Rainfall in Buon Ma Thuot totaled 23.1 millimeters between April 11 and 20, compared with 62.3 millimeter in the same period last year, according to figures yesterday from the Dak Lak Hydrology and Meteorology Office.

“The dry weather is still our concern,” Thich said by phone yesterday. “Even though there were some rains earlier this week, it’s not enough.”

To contact the reporter on this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net

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