Report Highlights: 

Post’s initial MY2014/15 coffee production forecast is 29.2 million 60-kg bags, or 1.75 MMT of green coffee beans. Favorable weather and timely rainfall in major coffee growing areas has promoted above average cherry development this MY. Additional output from newly productive planting and replanted areas continue to push yields higher than the five year average. Record exportable supplies and high prices, relative to the start of previous MYs, will lead to record exports in MY2014/15, which Post forecasts at 28 million bags (1.68 MMT GBE). 

Post maintains its coffee production estimate in marketing year (MY) 2013/14 at about 29 million 60 kg-bags (bags), or 1.74 million metric tons (MMT) of green coffee, due to significant additional output from newly productive and replanted areas, and higher yield, attributed to very suitable weather. Total coffee export forecast for MY 2013/14 is 25.9 million bags, or 1.56 MMT Green Bean Equivalent (GBE) due to record exportable supply, high prices, and an increase in soluble coffee exports.

Executive Summary: 

Vietnam’s coffee cultivated area continues to expand in major coffee growing areas, despite the Government of Vietnam (GOV)’s recommendation to maintain at 500,000 ha of coffee area in Vietnam. The Ministry of Agriculture and Rural Development (MARD), Provincial Departments of Agriculture and Rural Development, and the local coffee industry estimate Vietnam’s total coffee area at 653 thousand hectare (tha) in 2014, about 2 percent rise from 633 tha in 2013. Actual coffee area likely exceeds 660 tha. Vietnam’s coffee production has tracked the increase in area, steadily increasing over the past three marketing years. In addition to the increase in area, favorable weather conditions; better investment from farmers, including proper cultivation techniques, irrigation practices, and better fertilizer application; the usage of high yielding and rust resistant varieties; and stable farm-gate and export prices, creating a strong incentive for coffee growers to expand area and replace aging trees. 

Post’s initial forecast of MY2014/15 production is 29.2 million bags, or 1.75 MMT, a slight increase from the previous MY. Post’s initial total export forecast for MY2014/15 is 28 million bags, or 1.68 MMT GBE, about an 8 percent increase over the previous year due to high exportable supplies, forecast high international prices at the start of the MY, and the continued development of the soluble coffee industry in Vietnam. 

Post maintains its estimate of coffee production for MY 2013/14 at 29 million bags or 1.74 MMT. The total export estimate for MY2013/14 is raised slightly to 25.9 million bags, or 1.56 MMT GBE due to greater exportable volume and larger than anticipated soluble coffee exports. 

Given the strong growth of domestic coffee consumption supported by local producers’, the Vietnamese coffee industry association, and traders’, Post maintains its estimate of MY 2013/14 domestic consumption is 2 million bags, or 120 thousand metric tons (TMT) GBE. Post’s initial forecast for MY2014/15 domestic consumption is 2.08 million bags, or 125 TMT GBE with a growth rate of about 4 percent. 


According to local exporters and traders, coffee cultivated area continues to expand in the major coffee growing areas in Vietnam. Based on estimates from MARD, Provincial Departments of Agriculture and Rural Development, and local coffee industry, Vietnam’s coffee area is estimated at 653 thousand hectare (tha) in 2014, about a 3 percent rise from 636 tha in 2013. Dak Lak, Gia Lai, and Lam Dong provinces continue to expand coffee area (mainly Robusta coffee). In 2014, Arabica cultivation, mainly in Lam Dong, Son La, Quang Tri provinces is estimated at about 45000 ha, accounting for about 7 percent of total coffee area. 

According to local growers and exporters, the weather has been quite favorable for the development of coffee trees for the 2014/15 coffee crop as the Central Highlands (Dak Lak, Gia Lai and Kontum provinces) continue to receive good rains since the start of the wet season in mid-April. The local coffee industry’s surveys and observations indicate that the trees are under normal conditions and that there is fairly good cherry development at this stage. Coffee trees, in general, have produced more cherries per branch with more productive branches per tree than in previous MYs. Some farmers also express concerns of lower production due to trees overproducing last MY. Farmers have shown more willingness to use more inputs and agronomic care on the coffee farms over the last three to four MYs as coffee prices have remained high, pushing yield even higher. 

Post’s initial forecast for MY2014/2015 is 1.75 TMT or 29.2 million 60-kg bags of coffee beans due to additional output from newly productive and replanted coffee areas, which is only partially offset by a productivity drop from low yielding and aged coffee trees, and from some Arabica coffee areas affected by severe cold during the end of 2013 and early 2014 in the north of Vietnam. 

Post maintains its estimate of total coffee production in MY 2013/14 at 29 million bags or 1.74 MMT of green coffee beans, and its estimate for Arabica coffee production at 70 TMT of green coffee. 

According to local coffee exporters, farmers in major coffee growing areas have been replacing aging and low yielding coffee trees at a rate of 10 to 15 percent of their total coffee area a year in order to sustain their coffee production and income annually.

Certified sustainable coffee production continues to be very popular with growers with 4C, Utz, and Rain Forest certified coffee being the most popular. More farmers are interested in certification as they are able to capture a small premium for their certified beans. Some farmers recognize the benefit of certified production to the environment. Many companies, such as Nestle, Nedcoffee, and Mondelez International, etc. are committed to buying certified coffee from Vietnam. During the recent MY, farmers have begun to complain about the premium they receive for their certified sustainable beans, citing that the premium is too low and does not cover the additional costs attributed to receiving the certification. 


Post forecasts Vietnamese domestic consumption continues to grow. Café culture and retail coffee shops continue to spread in coffee growing areas as well as in Vietnam in general with presence of many giant players such as Starbucks, Gloria Jeans, Illy Café, and The Coffee Bean & Tea Leaf, McCafe (McDonald’s), Dunkin Donuts. Although using only small volumes of Vietnam origin ground coffee in their sales, the existence of these brand names has boosted competition and service standards for local roaster/manufacturers such as Trung Nguyen, Highlands, and Vinacafe. International brand names have also introduced the new style of fast service and take-away coffee in Vietnam. Additionally, the selling cake with coffee model is developing in Vietnam. Many existing baked goods chains have developed cake-and-coffee shops in Vietnam, such as Paris Baguette Café, Tour les Jours, and Givral. 

Vicofa and its members continued to organize coffee tasting events in Hanoi in early 2014 in Vicofa’s Headquarters, in order to promote a variety of coffee brands from different local coffee manufacturers and to increase local coffee consumption. 

According to local industry, roughly two-thirds of domestic coffee consumption are roast and ground coffee products and one-third is instant, soluble coffee products. Instant coffee consumption continues to grow significantly fueling overall coffee consumption in Vietnam as the young, urban population prefers coffee on-the-go, rather than the traditional Vietnamese drip coffee experience.

Post’s initial forecast for coffee domestic consumption in MY2014/15 at 2.1 million bags, or 125 TMT GBE, a 4 percent increase over the previous year. Post maintains its estimate for domestic consumption at 2 million bags, or 120 TMT GBE in MY 2013/2014. 



Post’s initial MY2014/2015 total green coffee export forecast is 28 million 60-kg bags, or 1.68 MMT GBE, a year-on-year increase of 8 percent. This increase is attributed to the high available supply from bumper crop production and high carry-in stock from the previous year. 

According to data from MARD, Global Trade Atlas (GTA), and local traders, Vietnam exported 14.5 million bags, or 870 TMT of green coffee in the first seven months of MY 2013/14, a drop of about 5.6 percent from the previous MY. Low export prices during the first three months of the MY is the main reason for this year-on-year decline. Export volume has increased significantly since February as farmers began to sell their crops when export prices increased. 

Beginning in April 2014, the government began strictly enforcing truck weight limits for cross provincial movements citing the deterioration of roadways caused by overloaded trucks. As a result, transportation costs from Central Highlands mills to the HCMC ports and warehouses reportedly tripled and truck availability also became an issue. This may affect farm gate coffee prices and exports during the April and May months as upcountry traders and exporters get used to the new transportation situation. 

However, local exporters forecast export pace through the rest of MY2013/14 will be strong, bolstered by high world prices, and Vietnam should surpass the MY2012/13 green coffee export levels. 

Post maintains the MY 2013/14 estimate of total green coffee bean export at 25.9 million bags, or 1.56 MMT GBE, due to the increase in exports of processed coffee products, especially of instant coffee products and the anticipated pace of green coffee exports during the last five months of the MY.

In the first seven months of MY 2013/14, Vietnam exported coffee beans to 70 countries worldwide. The top fourteen markets accounted for about 80 percent of total green coffee bean exports. Germany replaced the United States as the largest importer of Vietnamese green coffee beans, with the United States dropping to the second largest market.

According to official data from Vietnam’s General Customs Office (GCO) and MARD, in the first seven months of MY 2013/14, Vietnam exported about 1.1 MMT (all types of coffee products, including green bean coffee, roast and ground coffee, and instant coffee) valued at about $2.2 billion. This is an increase of 12 percent in volume and 4 percent in value over the same period of the previous marketing year 2012/13.

Vietnam’s processed coffee products, roasted and ground, and instant coffee exports have significantly increased in recent years. Post revises its MY 2013/14 forecast for processed coffee product exports (including roast and ground, and instant coffee) up to 920 thousand bags, or 55 TMT of GBE, a 21 percent increase over the previous year due to increasing instant coffee product exports. In recent years, China, Russia, Hong Kong, South Korea, Japan, and the United States have become important export markets for Vietnam’s instant and roasted and ground coffee. 

Vietnam exports to the United States totaled 99 TMT of all type coffee products with a total value of $192 million in the first six months of MY2013/14, a drop of 32 percent in value and 22 percent in volume compared with the same period the previous marketing year ($282 million and 126 TMT, respectively). This decline is attributed to a decrease in green coffee bean exports to the United States, which fell in value from $272 million in the same period of MY 2012/13 to $182 million in MY 2013/14; and in volume from 221 TMT in the same period of MY 2012/13 to 97 TMT in MY2013/14. This drop in Vietnamese Robusta exports to the United States is likely due to the narrowing of the Arabica / Robusta premium which provided incentives for importers to buy discounted Brazilian Arabica or Conilon beans rather than Vietnamese Robusta beans.


Vietnam continues to import small quantities of green coffee, as well as roasted and instant coffee, from countries such as Laos, Indonesia, and China. According to available data from local traders, GCO, and GTA, Vietnam total green coffee imports in seven months of MY2013/14 account for one third of the total green coffee imports of the same period the previous year. Post’s revises its estimate for MY 2013/14 total coffee imports at 322 thousand bags, or about 19 TMT GBE, down from MY 2012/13, due to record production limiting import needs. 


Export prices: 

The average export prices of Vietnam’s Robusta coffee in the first seven months of MY 2013/14 was $1,796/MT (FOB HCMC), a drop of 8 percent from the same period of the previous MY ($1,952/MT). The decline can be attributed to a significant drop in prices in the first four months of the MY. Coffee prices started increasing in February and crossed the $2000 / mt mark in February.

Beginning in January, the high international prices prompted farmers to sell their harvests and caused Vietnam’s exports in March and April to increase significantly. Local exporters forecast that Vietnam’s coffee export volume will continue flourishing in the coming months if the prices remain at recent high levels (above $2,000/mt). 

Domestic prices: 

Vietnam’s average domestic coffee price for Robusta common ungraded coffee beans in the first seven months of MY2013/14 was VND 35,957/kg ($1.71) in Dak Lak province, and VND 39,545/kg ($1.88) in Lam Dong province, the largest coffee growing areas in Vietnam. Local prices have been linked with international coffee market trends. In March and April 2014, prices spiked in all four major growing provinces due to the increase of international coffee prices caused by the deterioration of the Brazilian coffee crop. 

Average local farm gate prices in Dak Lak and Lam Dong provinces in May 2014 were quoted at VND 40,100/kg ($1.90) – 40,200/kg ($1.91), a slight drop from the previous month. Local exporters indicate that farm gate prices higher than VND 40,000 would continue to motivate farmers to sell their coffee beans into the export channel.


According to exporters, as of the end April 2014, the stocks are estimated at about 26-29 percent of total coffee production (about 450-500 TMT) held by farmers, traders and processors. Farmers are reportedly holding about 20 percent of their production (about 350 TMT). Although there is no official data for coffee stocks available, Post’s initial forecast of MY 2014/15 carry-in stocks is 3.25 million 60-kg bags, or about 195 TMT GBE, which is higher than previous years as higher MY exportable supplies and limited exports during the first quarter of MY 2013/14 push stocks higher. Industry reports that farmers continue to hold higher stocks than in previous years due to low interest rates limiting the pressure they feel from financial institutions to repay loans with the proceeds of selling their coffee beans. 

Post forecasts that ending stocks for MY 2014/15 will be about 2.66 million bags or about 158 TMT GBE, a drop of 19 percent as export potential and high robusta prices prompt a faster paced export quarter during the first three months of MY 2014/15, leading to record exports and a drawdown in ending stocks. 


Since April 2014, the Government boosted enforcement of truck weight limits in different areas by installing mobile scales on highway routes to crack down on overloaded trucks which caused the rapid deterioration of vital infrastructure. The Government asked the Ministry of Transportation to collaborate with the Ministry of Public Security and localities to supervise and crack down on overloaded vehicles. As a result, transport costs have tripled and truck availability is now reported to be an issue. Although this development will likely raise the cost of moving coffee from collecting stations and warehouses in the Central Highlands to Port for export it should not impact Vietnam’s ability to export this MY.


Vietnamese coffee on offer at the McCafe – McDonald’s first outlet in Vietnam 

Vietnam's first McDonald's restaurant officially opened for business in Ho Chi Minh City in February 2014 with two major additions – a range of pork products and the famous Vietnamese Robusta coffee to satisfy local tastes. A second location opened in May 2014. 

NAEC conducts sustainable coffee activities in the Central Highlands 

Since 2012, the Ministry of Agriculture and Rural Development’s National Agricultural Extension Center (NAEC) in cooperation with the Community Development Center (CDC) in Buon Ma Thuot, Dak Lak has been conducting a three year, VND 9 billion government funded sustainable coffee production project in five provinces in the Central Highlands. In 2013, NAEC organized 12 training courses for farmers on certified sustainable production, (2 training courses in Dak Nong, 2 in Dak Lak, 3 in Kontum, and 3 in Lam Dong Provinces). In 2013, 300 households participated in the program to establish 10 demonstration models of about 150 ha, of which 90 ha have obtained 4C Certification, and 60 ha have obtained Utz Certification. The average yield of the demonstrations is reported to be 3.5-4.3 MT/ha, which is higher than the goal yield of 2.5-3 MT/ha set at the beginning of the project.

Credit squeeze forces exporting firms to contract and consolidate 

Since the end of 2012, the number of Vietnamese exporting firms have consolidated, downscaled their operations, or simply collapsed in the face of mounting debts, and evaporating credit availability. Approximately, 40 percent of the firms operating in the coffee industry have stopped trading and shifted to other businesses. In July 2013, the Ministry of Agriculture and Rural Development reported that the non-performing loans in the coffee sector may represent as much as 60 percent of all coffee sector loans. High interest rates during the 2010-11 period when Vietnam suffered high inflation is cited as the main reason for current consolidation in the industry. To address the non-performing loans, the Government has extended the repayment period on some loans from 12 to 36 months, in an attempt to stabilize the domestic industry. In addition to non-performing loans, banks are reportedly offering new loans to the coffee sector at interest rates higher than the prevailing rates extended to other industries, highlighting how sensitive the banking sector views the coffee sector