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Đắk Lắk to shift coffee strategy
Source: VNS - 2/10/2017 10:00:00 AM
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The Central Highlands province of Đắk Lắk plans to increase the proportion of  processed coffee such as instant coffee and powdered coffee from less than 10 per cent to 15 per cent in total coffee output by 2020 and up to 30 per cent by 2030.

Phạm Ngọc Nghị, chairman of the province’s People’s Committee, said the province’s policies were being adjusted to attract more domestic and foreign enterprises to invest in coffee processing.

He said that most locally based processing companies were private firms whose market access and product advertising capacity were modest.

Đắk Lắk, which has the largest coffee area and output in Việt Nam, has more than 200,000ha and an annual coffee bean output of 450,000 tonnes.

However, the province only has 145 coffee processing facilities with a total capacity of 32,100 tonnes, accounting for 5.55 per cent of the province’s total coffee bean output.

To achieve the targets, the province has created a more favourable investment environment for both domestic and foreign enterprises, particularly those specialising in roasting and grinding.

The province has also helped coffee enterprises improve their corporate governance, promoted the use of advanced post-harvest and processing techniques and expanded market access for local companies.

Coffee farmers, producers and businesses are being encouraged to produce beans that can be certified by the coffee global certification programme (UTZ), the fair-trade labelling organisation (FLO), Rainforest Alliance (RFA) and 4C (Common Code for the Coffee Community).

The province, which has helped organisations, enterprises and co-operatives build brands, has offered assistance to companies to acquire rights to the geographical indication for processed coffee products.

Last year, Đắk Lắk produced 28,000 tonnes of processed coffee, including 23,000 tonnes of powdered coffee and 5,000 tonnes of instant coffee.

It exported 4,520 tonnes of instant coffee worth nearly US$27 million, accounting for 7.5 per cent of the province’s coffee export revenue.

In the 2016-17 coffee season, Đắk Lắk estimates it will export 230,000 tonnes of coffee to 75 countries and territories.

Export potential

Việt Nam’s processed coffee exports are predicted to increase in the coming years due to more investment from domestic and foreign enterprises, according to experts.

Many coffee companies, including Trung Nguyên, Mê Trang and Vinacafe, for instance, are expanding the scale of their production.

In addition, Việt Nam’s free trade agreements with the EU, Europe-Asian Economic Union and Korea will create opportunities to boost Việt Nam’s processed coffee exports.

Under free trade agreements, exports of Việt Nam’s processed coffee are taxed at only 0-5 per cent compared to 15-20 per cent in the past.

The country’s coffee industry is raising the value of coffee beans by speeding up the processing of powdered and instant coffee and other products.

Processed coffee products from Việt Nam are sold in many international markets.

The G7 instant coffee of Trung Nguyên, for example, has passed the requirements of Walmart Stores, Inc and is now sold at Walmart stores in many countries such as Chile, Brazil, Mexico and China.

Lương Văn Tự, chairman of the Việt Nam Coffee and Cocoa Association, said China is one of the most important markets for Việt Nam’s processed coffee.

Coffee consumption in China is rising rapidly, particularly among younger consumers exposed to Western coffee drinking habits, he said.  

Việt Nam targets producing about 50,000 tonnes of powdered coffee and 255,000 tonnes of instant coffee by 2020, according to the Ministry of Agriculture and Rural Development’s Department of Processing and Trade for Agro-Forestry-Fisheries Production and Salt Production.

Last year, Việt Nam exported 1.79 million tonnes of coffee products with total value of $3.36 billion, up 33.6 percent in volume and 25.6 per cent in value compared to 2015.

Of the total exports, processed coffee accounted for $350 million.
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