Coffee prices may take years to rise
BUON MA THUOT - World coffee prices may take
up to two years to recover from their current lows, an executive of a leading state-run
firm in Vietnam's key growing province said on Thursday.
Nguyen Xuan Thai, director of Thang Loi Coffee Daklak Co, told reporters the
current low prices would last even though Vietnam, the world's number one robusta
producer, has taking part in a global retention plan.
"It will take another one or two years for coffee prices to improve," he told a briefing
for foreign correspondents on the outskirts of Buon Ma Thuot, the capital of Daklak.
Thai was speaking during the first trip permitted to Daklak by foreign journalists since
unrest among ethnic minority hill farmers last month which, combined with protests in
neighbouring Gia Lai province, represented the worst anti-government upheaval in
Vietnam for years.
Vietnam has announced it plans to retain another 90,000 tonnes of beans from the last
2000/2001 crop for six months, on top of the 60,000 tonnes it has been stockpiling
since last November as part of a global attempt to arrest falling prices.
Vietnam's massive increase in production over the past decade, especially in Daklak,
has been blamed for contributing to weak world prices.
On Thursday, Thai put local prices for a kg of beans in Daklak at 5,800 dong, slightly
higher than 5,600 dong on Wednesday and against more than 6,000 dong last week.
Earlier this week, coffee traders blamed the recent price falls on the failure of
exporters assigned to retain beans to start doing so.
Export prices for Vietnamese robusta grade two, five percent black and broken were
put on Thursday at $400-$430 a tonne, FOB Saigon Port on Thursday, from around
$440 a tonne earlier this week and about $900 at the same time last year.
Thai added that coffee growers could make a profit only when market prices reached
$800.
However, coffee traders say many Vietnamese producers can be profitable at lower
prices than this.
Thai did not say what the production costs of his firm was but traders have said these
range from 8,000 dong per kg at private farms to 12,000 dong at state firms.
Vietnam, the world's biggest robusta grower and exporter, exported 377,000 tonnes
of beans since last October, the beginning of the 2000/2001 crop. The Vietnam
Coffee and Cocoa Association estimates the crop at more than 700,000 tonnes.
Reuters - March 15, 2001.
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