Brazil is set to surpass Vietnam as the world's largest producer of Robusta coffee if the current production trends continue. Faced with this imminent threat, it is crucial for us to quickly address existing obstacles to maintain our current position.

Vietnam's Position as the World's Number One is Gradually Eroding

Vietnam is currently the largest producer and exporter of Robusta coffee globally. According to data from the U.S. Department of Agriculture (USDA), we produce approximately 27 - 30 million bags of Robusta coffee annually, contributing about 40% of the world's total output.

However, this dominant position is gradually fading from the global coffee map. Since the 2021-2022 crop year, Vietnam's share of the coffee market has continuously declined, from 40% of the global total to 36% in the current crop year.

This decline is due to a combination of both objective and subjective factors.

Firstly, climate change is raising global temperatures, causing some coffee-growing regions in Vietnam to become unsuitable and leading to a downward trend in production. The Vietnam Coffee-Cacao Association (VICOFA) forecasts that coffee production for the 2023-2024 crop year in Vietnam will decrease by an additional 10% compared to the previous crop, to around 1.6 million tons (equivalent to 26 million 60kg bags).

Secondly, farmers are prioritizing the cultivation of more economically beneficial crops such as durian and passion fruit. As of March 2024, the price of durian has risen to 200,000 VND/kg, double the price before the export agreement with China was signed.

Thirdly, expanding the cultivation area to increase production is no longer a top priority in the coffee industry development plan. According to the plan to restructure the agricultural processing sector to enhance processing capacity and market development by 2030, the national coffee area is targeted to remain stable at about 600,000 hectares. Given the challenges of adverse weather conditions, the cultivation area cannot be expanded, making it difficult to maintain coffee production levels.

Commenting on the coffee production situation in recent years, Mr. Nguyễn Ngọc Quỳnh, Deputy General Director of the Vietnam Commodity Exchange (MXV), said: “It is undeniable that improving quality is a necessary path towards the long-term development of Vietnam's coffee industry. However, if we focus solely on new directions and neglect our existing advantage in production, maintaining our position as the world's number one coffee producer will be a significant challenge.”

Brazil’s Ambition to Dominate the Market

In contrast to the declining coffee production in Vietnam, Brazil, our leading competitor, is focusing on expanding Robusta production.

Looking closely at the supply situation, Brazil’s Robusta production has steadily evolved over the past decade. According to USDA statistics, in the 23/24 crop year, Brazil's Robusta production reached 21.4 million bags, an increase of 26% compared to the 2014-2015 crop year. Meanwhile, Brazil's share of global Robusta coffee has increased from 24% over the past decade to 29% in the current crop year. The data indicates that the gap in Robusta production between Brazil and Vietnam is gradually narrowing.

In addition to improving production, Brazil's coffee exports have also seen significant growth. Specifically, Robusta exports from the South American country have surged in the 2023-2024 crop year. From July 2023 to the end of February 2024, Brazil exported about 5 million bags of Robusta beans, five times more than the same period last year.

One prominent reason for Brazil’s increased Robusta production is the changing weather conditions in recent years. Previously, Brazilian farmers prioritized growing Arabica, but the major drawback of this variety is its sensitivity to weather. As weather conditions become more extreme, Robusta, with its superior resilience, is becoming increasingly favored. For example, the area planted with Robusta in Brazil, which accounted for less than 20% of the total coffee-growing area a decade ago, has now expanded to nearly 22%.

What Path for Vietnam's Coffee Industry?

“If coffee production in Vietnam and Brazil continues along the current trends, it is entirely possible that Brazil will surpass us as the world’s largest Robusta producer in the coming years. Therefore, finding solutions to help Vietnam maintain its leading position in the Robusta market is crucial at this moment,” Mr. Quỳnh emphasized regarding the coffee production shift.

In response to this urgent situation, MXV proposes three main solutions to ensure Vietnam retains its status as the world’s leading Robusta producer.

Firstly, the ongoing rise in global and Vietnamese Robusta prices at historical highs is a significant advantage to retain farmers in the coffee industry. However, to ensure long-term farmer commitment, it is essential to promote cooperation between farmers and businesses to guarantee reasonable prices and stable market supply. By maintaining economic incentives for coffee cultivation, farmers will be less likely to switch to other crops.

Secondly, in the face of climate change threats, continuous improvement of crops to adapt to new conditions is necessary. Improvement should not only focus on adapting to new conditions but also on enhancing crop yields to achieve better production levels amidst the difficulty of expanding cultivation areas.

Currently, Vietnam is still known for having the highest coffee yield in the world, but there has been no significant improvement in recent years. Since the 2018-2019 crop year, our coffee yield has remained around 2.9 – 3.0 tons per hectare.

Finally, the government should create opportunities for the coffee industry to develop more comprehensively. Development plans for the industry need to balance quality and quantity factors. Additionally, trade agreements and international cooperation should be further promoted to create an open space for the coffee industry to develop sustainably and long-term.

Source: MXV