Tighter regulations are being considered in order to improve the coffee export industry, said the Deputy Minister of Agriculture and Rural Development.
 |
| Deputy Minister of Agriculture and Rural Development Diep Kinh Tan |
“There should be regulations placed on businesses involved in the export of coffee to improve standard practices in the industry and ensure quality. The Ministry of Industry and Trade (MoIT), Ministry of Agriculture and Rural Development (MARD), and Vietnam Coffee and Cocoa Association (VICOFA) are all in agreement with this initiative,” said the deputy minister, Diep Kinh Tan.
If we are able obtain these goals, it would greatly improve brand perception of Vietnamese coffee, he said.
Even though Vietnam is second only to Brazil in coffee exports, nearly 70% out of its 160 coffee exporters were unprofitable.
He added that such regulations would also discourage bad business practices, such as scrambles on buying and selling.
Currently Vietnamese coffee trading companies are losing market share to foreign-invested exporters, who have been expanding their businesses in this country.
VICOFA’s statistics show that as many as 13 foreign exporters have purchasing agents and branches in Vietnam. The total purchases of these companies has reached around 377,000 tonnes per year, or 30% of the coffee grown in the country.
Their success would seem to indicate that those businesses are run more efficiently.
Tan commented, "It\'s not true that foreign exporters have more access to capital than Vietnamese firms. They have to borrow in USD, at rates of between 8% and 9% per annum, then convert the money into VND to complete any transactions here. Upon exporting their products, they have to reconvert back into USD."
According to him, this puts Vietnamese companies, who can borrow directly in VND, at an advantage. After these firms sell their products for USD, they sell the currency at black market rates, he said.
VICOFA has held talks with the MoIT, MARD, the State Bank of Vietnam (SBV), and commercial banks in order to ensure that exporters will have enough access to credit for purchases on this year\'s crop.
SBV has made a pledge to this effect, and MARD has committed VND5 trillion (USD238.8 million) for the same purpose.
Vietnamese coffee exporters are estimated to need VND32 trillion (USD1.52 billion) for coffee purchases this crop.
70% of Vietnamese cofee exporters were unprofitable