Vietnam Coffee Faces Price Surge Due to El Niño, Quality Improvement Key to Sustained Growth

Vietnam's coffee industry is facing an opportunity for export price recovery due to global supply concerns stemming from the El Niño phenomenon. However, to translate this short-term benefit into long-term growth, improving quality and establishing sustainable production systems are pressing priorities. Currently, global coffee prices are rising amid fears of reduced supply. Adverse weather in Brazil and the risk of drought in Robusta-producing regions in Southeast Asia, including Vietnam and Indonesia, due to El Niño are exacerbating supply anxieties. Low inventory levels on international exchanges are also contributing to the price surge. Domestically, coffee prices in mid-June reached approximately 93,000 VND per kilogram, an increase from the previous month. Some farmers are holding back shipments, anticipating further price hikes, which could lead to continued price volatility. Consequently, Vietnam's coffee exports are expected to grow in the latter half of the year. From the beginning of the year to June 15, Vietnam's coffee exports exceeded 985,000 tons, valued at nearly $4.5 billion. While the volume increased by 11.8% year-on-year, the value decreased by 10.7%. However, many businesses argue that price increases solely driven by short-term supply-demand dynamics and weather conditions are unsustainable. To achieve sustained growth in export value, enhancing competitiveness through quality is essential. This is becoming increasingly evident as major importing markets introduce new regulations. Notably, the European Union (EU) is proceeding with the implementation of its Deforestation-free Products Regulation (EUDR). This is significant as Vietnam's processed coffee accounts for 17.9% of its export structure and is on an upward trend. Key markets like the United States and Japan are also increasingly prioritizing high-quality, organic, and processed coffee, along with criteria for sustainability and product traceability. In response to this "greening" trend, many Vietnamese coffee companies are transforming their production systems. Vĩnh Hiệp Co., Ltd. exports about 10% of Vietnam's coffee output, with approximately 45% going to the European market. The company collaborates with over 10,000 farmers, and about 70% of its production meets international certifications such as 4C, Rainforest Alliance, and organic standards. Vĩnh Hiệp was the first enterprise in Vietnam to achieve ISO 14067 verification (a key standard for greenhouse gas emissions inventory and carbon footprint development) and is integrating ESG reporting, EUDR requirements, and certification standards like RA into a unified management system. Alongside corporate transformation, farmers are also adopting new cultivation practices to improve coffee quality. Nestle Vietnam, through its NESCAFÉ Plan program, has supported over 23,000 farming households, providing more than 492,000 training sessions on regenerative agriculture and farm economics management. They have also supported the replanting of over 100,000 hectares with more than 100 million high-quality seedlings. The adoption of regenerative agriculture models has helped reduce irrigation water use by 40-60%, increase productivity, and improve income for many farming households. The adaptation of businesses and farmers to market demands indicates that Vietnam's coffee industry is gradually shifting from a volume-driven advantage to a quality-driven one. This will form the basis for the industry to enhance its resilience to climate change and global price cycles.