Vietnam’s coffee sector has just wrapped up a record-breaking export season, setting new highs in both export volume and revenue. As the industry celebrates this success, it now faces a historic decision from the European Union (EU), which could have a major impact on the $48 billion coffee market.
Record Exports and Revenue Growth
Preliminary data from Vietnam’s General Department of Customs shows that coffee exports in October 2024 reached 50,000 tons, valued at $292.7 million. This brought the total export volume for the first ten months of 2024 to almost 1.2 million tons, generating $4.6 billion in revenue. While export volume dipped by 10.8% compared to the same period in 2023, the value surged by 40.1%.
The average price for Vietnamese coffee during this period hit $3,981 per ton—an increase of 57% from 2023, marking the highest price point in the past 30 years since Vietnam entered the global coffee market.
The Vietnam Coffee and Cocoa Association (VICOFA) reports that in the 2023-2024 coffee season, Vietnam exported around 1.46 million tons of coffee, a 12.1% drop from the previous season. However, due to record-high prices, revenue jumped by 33%, reaching over $5.4 billion—an all-time high.
Do Ha Nam, Vice President of VICOFA, described 2024 as an extraordinary year for Vietnam’s coffee sector. For the first time, Vietnam’s coffee prices have surpassed global standards, with Robusta coffee, Vietnam’s main export, even outpacing Arabica coffee prices.
Unprecedented Price Rises
Both export and domestic prices have hit record levels. In January, Vietnamese coffee was priced at $3,054 per ton, but by October, it surged to $5,855 per ton, marking a 91.7% increase over ten months. Domestically, raw coffee bean prices, which were VND 58-59 million per ton last October, reached an all-time high of VND 131 million per ton by the end of April 2024.
Farmers in Vietnam’s Central Highlands, where coffee is a key crop, affectionately refer to coffee as the “ATM tree” due to its profitability.
As Vietnam’s coffee industry moves into the next harvest season, VICOFA forecasts a continued uptick in exports in the final months of 2024 due to seasonal increases in both supply and demand.
EU’s Anti-Deforestation Regulation Could Impact Prices
Vietnam’s coffee industry is now waiting for a critical decision related to the European Union’s Anti-Deforestation Regulation (EUDR), which could affect the price and demand for Vietnamese coffee.
The EU is the world’s largest coffee importer, responsible for around 33-35% of global coffee imports. In 2024, coffee consumption in the EU is expected to reach nearly $48 billion, with projections to increase to over $58 billion by 2029. As such, any major policy changes in the EU can have an immediate impact on coffee prices worldwide.
The EUDR, set to take effect on December 30, 2024, will ban exports of certain agricultural products—including coffee—unless companies can prove their products are not linked to deforestation. This regulation has already sparked concerns over possible shifts in supply and demand in both domestic and international markets.
In anticipation of the rule, EU countries have been importing large quantities of coffee to secure supply before the December 30 deadline. This rush, combined with falling coffee production in other major producing countries, has led to a temporary imbalance in global supply and demand, pushing up prices.
EU Decision on EUDR Pending
In October, the European Commission (EC) proposed delaying the EUDR implementation by one year. While the European Council (EUCO) supported the delay, environmental groups opposed it. The final decision on the regulation will be voted on by the European Parliament on November 13-14, 2024.
If the EUDR remains on schedule, the demand for coffee will likely increase in the final months of 2024 as importing countries stock up. This boost in demand could sustain high coffee prices through the end of the year.
On the other hand, if the EU delays the implementation, the market could temporarily stabilize, supported by Vietnam’s new coffee harvest for the 2024-2025 season. In this case, global coffee prices would likely drop below $4,700 per ton, and domestic prices would fall to around VND 100,000-110,000 per kilogram.
Vietnam Poised for Continued Success
Vietnam is leading the way in preparing for the EUDR. Most Vietnamese coffee exporters are already aligning with the new regulations, positioning the country as one of the few able to guarantee compliance with EUDR standards.
In the months leading up to the regulation’s expected start date, European buyers have been focused on securing Vietnamese coffee, contributing to the record-high prices. If the EUDR is enforced as scheduled, Vietnamese coffee is set to benefit even more from higher prices, with exports projected to exceed 1 million tons in the new season.
As the coffee market braces for the EU’s decision, Vietnam’s coffee sector is poised to continue its remarkable growth, with both price and demand likely to remain strong in the coming months.
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