Vietnamese coffee growers have faced significant challenges this year due to the worst drought in nearly a decade, raising concerns about rising espresso prices globally. Despite some farmers implementing effective countermeasures to maintain yields, the overall outlook remains uncertain.
Grim Harvest Forecasts
Vietnam, the world’s second-largest coffee producer, is expected to see a decline in next season’s harvest. The Mercantile Exchange of Vietnam (MVX) predicts a 10-16% drop in output due to the extreme heat that hit the Central Highlands between March and early May, according to Deputy Head Nguyen Ngoc Quynh.
Optimism Amidst Challenges
Recent rains have brought some relief, boosting confidence among farmers and officials. However, it remains to be seen whether this improved weather will significantly enhance the output of robusta beans, which are essential for espressos and instant coffees. Vietnam is the leading producer of this variety.
“I expect the country’s output to fall by 10-15%, but my farm will increase production,” said Nguyen Huu Long, who manages a 50-hectare coffee plantation in Gia Lai, a top coffee-producing province.
Innovative Farming Techniques
Long and his team employed several innovative techniques to combat the drought. By keeping the soil moist with leaf cover and maintaining older trees with deeper roots, they ensured better access to underground water. They also softened the soil to enhance rainwater and fertilizer absorption.
Doan Van Thang, a farmer at Long’s plantation, highlighted these methods, while Tran Thi Huong, another farmer in Gia Lai, utilized abundant canal water to irrigate her crops during the heatwave. Despite smaller coffee cherries, she expects her overall output to remain stable thanks to timely interventions with biopesticides.
USDA vs. Local Projections
The United States Department of Agriculture (USDA) has a more optimistic forecast, predicting Vietnam’s next harvest will be roughly steady compared to the current season, contrasting with the more pessimistic domestic projections.
Impact on Global Coffee Prices
Regardless of the actual harvest outcome, global coffee prices are likely to increase. Wholesale prices in Vietnam and London-traded robusta futures reached record highs earlier this year due to an underwhelming harvest and concerns over future output following the drought.
While consumer coffee prices have seen limited increases so far, with only a 1.6% rise in the European Union and 2.5% in Italy in April, the trend indicates that roasters may begin passing higher costs to consumers. Future weather conditions and potential further disruptions could exacerbate this trend.
Market Dynamics and Farmer Leverage
Farmers are also leveraging current circumstances. Many have replaced coffee plants with durian, a fruit in high demand in China, enhancing their financial stability and ability to hold onto their coffee stock until prices are favorable.
“They have the financial ability to hoard and hold on goods, so they will not be in a hurry to sell,” said Le Thanh Son of Simexco, one of Vietnam’s largest coffee exporters.
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