Vietnam Coffee Farmers Seek To Renegotiate Deals After Price Surge

Vietnam, the world’s largest supplier of robusta coffee, is facing a standoff with its farmers, who are refusing to deliver their coffee unless contracts are renegotiated. The poor crop in Vietnam in the 2022/23 season led to higher prices and farmers feeling they could not afford to deliver at agreed prices. This has resulted in a price rally in robusta prices, with supplies in Europe becoming very tight.

Traders estimate that the delivery of between 1-2 million bags of last season’s pre-sold Vietnamese coffee, or up to 8.5% of the country’s total exports, was delayed following the harvesting of a poor crop in the 2022/23 season. Although much of that coffee has since been delivered, it has left less coffee available for sale this season, exacerbating the price rally. Two more farmers in Dak Lak, also speaking on condition of anonymity, said they were delivering pre-sold beans but had to renegotiate the price because of the rallying spot market.

Traders who baulk at paying up are left short of supply of robusta, which is mainly used in instant coffee, espresso, and blends of ground coffee. A Vietnam-based trader said in December and January, there were still some deliveries of pre-sold coffee, but he expects these will fall sharply in the months ahead as he now cannot even get hold of suppliers who owe him this low-priced coffee.

Global traders say it is not worthwhile for them to sue local suppliers because of the expense involved. One Europe-based trader said he received just 20% of the Vietnamese coffee he was meant to get last November and December. Instead, he is trying to convince his suppliers to deliver a small portion of the low-priced coffee in return for large volumes of orders for coffee priced at current spot rates.

All traders Reuters spoke to declined to name their problem suppliers due to’sensitive’ talks currently underway with them. An industry expert said all global traders operating in Vietnam have been impacted by the situation.

Read More @ ESM

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