Viet Nam’s Coffee Industry to Face More Losses in Q2
on: April 17 ,2020 In: Developing News
Viet Nam’s Coffee industry to face more losses in Q2 due to the novel coronavirus (COVID-19) pandemic.
Due social distancing measures and lockdowns implemented in many countries, restaurants and coffee shops, the largest channels of coffee consumption, have been forced shut, which has led to a large decrease in coffee demand. Global consumption of coffee has decreased to about 20 per cent of pre-pandemic volumes.
Coffee processors have been using their inventories resulting in Vietnamese enterprises signing fewer export contracts. This is expected to result in negative effects on the coffee production in Vietnam and export activities in Q2.
The cancellation of large scale sports and cultural events, including the 20202 Summer Olympics, also would have a negative effect on the industry, as these events increase the demand for coffee.
Although the demand for consumer goods increased due to the spread of COVID-19, coffee was not considered an essential product. Strong fluctuations in coffee prices are expected in the second quarter due to lower consumption during the pandemic. Due to drought and lower prices, some farmers had switched to growing other crops, which had decreased the supply of coffee and would impact increases in coffee prices next year.
The Ministry of Agriculture and Rural Development of Vi?t Nam reported that the country had exported 474,000 tonnes of coffee, earning $801 million, during the first quarter of this year, showing a 3% decline in volume and a 5.6% decline in value year on year. Of which, the coffee exports in March reached 154,000 tonnes worth $261 million. In particular, the value of coffee exported to the UK in the first quarter, $13.5 million, was half of the value exported during the same period last year.
The industry is hopeful that the demand for coffee would increase next year as global sport and cultural events resume once the pandemic ends. That would be a big opportunity for the domestic coffee industry to resume exports in 2021.
Source: Vi?t Nam News – 17th April 2020
Image by Alexas_Fotos from Pixabay