According to the latest annual report from the USDA Foreign Agriculture Service, Vietnam’s coffee production for the market year 2024/25 is anticipated to remain steady, hovering around 29 million 60-kilogram bags, comprising both robusta and arabica varieties.
While favorable global prices for green coffee have spurred production efforts, the sector grapples with persistent challenges. The report underscores the adverse impacts of high temperatures, increased drought, aging farms, and elevated prices of alternative crops, all contributing to fluctuating production and export potentials.
Production Projections
Projections for the upcoming market year maintain stability, with estimated production mirroring that of the previous year. Robusta production is forecasted at 27.85 million bags, while arabica production is expected to reach 1.15 million bags. The report credits higher coffee prices for mitigating production decline trends, helping sustain overall output.
Investments in labor and inputs have notably boosted estimated production by 6% during the 2023/24 period, resulting in 29.1 million bags, according to the analysis.
Crop Management
Despite efforts to maintain stability, challenges persist. Vietnam’s coffee area is projected to remain static at approximately 600,000 hectares, although farmers in the Central Highlands are diversifying to higher-value crops such as durian and passion fruit. Climate change-induced high temperatures and droughts have adversely affected coffee production, particularly in 2023/24, with environmental factors posing long-term concerns.
Policy Initiatives and Land Use
Government agencies and research institutes have devised strategies for sustainable coffee production, including tree replacements, promoting intercropping, adopting water-saving irrigation systems, and facilitating farm certifications. Notably, the central government’s re-cultivation program has seen the replanting of 130,000 hectares of old coffee farms, with plans to extend this initiative further.
Export Trends
Despite challenges, Vietnam remains a significant player in the global coffee market. Exports totaled 15.94 million bags in the first half of 2023/24, witnessing a slight decline from the previous year. Notably, the EU’s forthcoming deforestation-free regulation poses concerns for small-scale producers, who rely on existing certification programs to comply with evolving standards.
Consumption Patterns
While Vietnam’s economy continues to grow, consumption growth has slightly lagged behind. Coffee consumption is estimated to reach 3.6 million bags in MY 2024/25, with a strong emphasis on budget-friendly options and a burgeoning market for high-end arabica varieties.
Conclusion
While Vietnam’s coffee sector grapples with challenges, proactive policy measures and market adaptability underscore its resilience amidst fluctuating global conditions.