El Nino hits Vietnam's coffee output; exports run out of steam

Vietnam’s coffee exports are likely to be hit this year due to changes in the weather, with output forecast to fall by 20%.

Vietnam’s Association of Coffee and Cacao (Vicofa) said that coffee output will hit 1.3 million tons for the 2016-2017 season (from the start of October 2015 till the end of September 2016) following the worst El Nino in the last 20 years.

October is traditionally the start of the coffee harvest, but this year many plantations in the Central Highlands province of Dak Lak, one of the biggest producers in the country, are still in blossom due to the lack of water.

According to incomplete statistics from Vicofa, 115,000 hectares (284,000 acres) of coffee, equivalent to nearly a fifth of Vietnam’s total plantations, have been damaged by water shortages.

Rain and flooding that hit the Central Highlands in November also made it difficult to harvest and dry the beans.

Apart from the weather, farmers have also been cutting down their coffee plants to make room for other industrial crops, and a large area of coffee is entering an "aging" period with reduced output.

To increase the value of coffee exports, Vicofa has called on businesses to step into the processing industry rather than focusing on exporting raw materials.

The association has set a target of increasing the proportion of processed coffee exports to 30% of the total by 2020 from the current rate of 10%.

Data from Vicofa revealed that Vietnam’s coffee exports jumped by 34.8% on-year to 1.75 million tons during the 2015-2016 season.

Export value also surged by 17.2% to reach US$3.16 billion.

However, this growth has been attributed to a large inventory of around 300,000 tons carried over from the previous season.