Due to weather factors and an increased demand in Asia, the international market has switched to buying low-priced coffee beans due to rising costs, coupled with a clammer by Vietnamese farmers to rush to plant durian to meet the lucrative demand form China.
Even the relatively cheap variety “Robusta,” which is among the two major mainstream coffee beans in the world, cannot escape the situation of soaring prices.
Nikkei Asia reported that the London futures price of Robusta coffee beans exceeded US$4,500 (about RM21,200) per ton at the end of April, setting a new high.
The price has since dropped slightly, but it is still much higher than the end of last year, causing the cost of ordering goods for Vietnamese coffee shop operators to continue to rise, but they dare not adjust the selling price accordingly.
Cafe Giang, the birthplace of “egg coffee” in Hanoi’s Old Town, is famous for its Robusta coffee beans and raw egg strips. Due to the rising prices of coffee beans and eggs, the rising costs have brought the outlet great financial pressure.
In addition, more Starbucks stores are opening closeby but the third-generation owner said that he has no intention of raising prices for the time being, and the selling price remains at 35,000 Vietnamese dong (about RM6.50) per cup.
Vietnam is the world’s second largest coffee bean producer and the largest producer of Robusta coffee beans, but the number of Vietnamese farmers who have and are switching to durian planting continues to increase, resulting in a continuous decline in coffee production, which seriously affects the supply and market price performance.
Durian trees now stand where coffee plantations once
Durian or the “king of fruits” and has been very popular in China in recent years. According to Vietnamese media reports, Vietnam’s exports to China last year exceeded USD2 billion, more than five times that of 2022, and it is expected to grow further this year.
The report pointed out that tropical regions are most suitable for growing coffee, but Vietnamese farmers have switched to growing durian, and the area for growing coffee trees has decreased, resulting in less supply, and it is becoming increasingly difficult to find new farmland to grow coffee.
In addition, the reason for the reduction in the supply of Robusta coffee beans is not only that Vietnamese farmers are rushing to grow durian, but also that the drought in Southeast Asia caused by the El Niño phenomenon has seriously affected the harvest.
According to statistics from the International Coffee Organization, from October 2022 to September 2023, Vietnam’s coffee production will be 29.2 million bags (60 kilograms per bag), a 9.8% decrease in annual production.
A coffee bean seller in Ho Chi Minh City, Vietnam, said that the weather is too hot and the rainfall is insufficient, and the coffee growth is not good. The contract coffee farmers are located in Dak Nong Province, which is higher in the central region, but the long-term drought in the area has caused crops to wither, greatly affecting the coffee bean harvest.
Japanese trader Marubeni said there were other factors, including rising transportation and fuel costs. Large European and American companies have gradually shifted their purchase targets from the high-priced Arabica beans mainly produced in Central and South America to the relatively cheap Robusta beans.
In recent years, the surge in demand in Southeast Asia and China has also led to a surge in the price of Robusta coffee beans. From October 2022 to September 2023, the Asia-Pacific region consumed 44.5 million bags of coffee beans, accounting for more than 25% of the global total. During this period, sales in the Asia-Pacific region increased by 12% compared with four years ago, while global sales only increased by 1%.
