Some Vietnam Coffee Farms Thrive Despite Drought, but May Not Stop Espresso Price Hikes

Vietnamese coffee growers have been severely impacted by the worst drought in nearly a decade, leading to concerns about pricier espressos worldwide. Domestic forecasts for next season’s harvest in Vietnam remain grim, with the Mercantile Exchange of Vietnam (MVX) expecting a 10-16% fall in output due to extreme heat in the Central Highlands coffee region between March and early May. However, a return of rains in recent weeks has improved the outlook, boosting confidence among farmers and officials.

Some farmers, such as Nguyen Huu Long, who grows coffee in Gia Lai, one of the top coffee-producing provinces in Vietnam, are keeping their plants moist by covering them with leaves and using more water than usual. Tran Thi Huong, a tenant farmer in another plantation, also uses more water than usual and timely intervenes with biopesticides against bugs that were more numerous than usual due to the extreme weather.

The United States Department of Agriculture (USDA) estimates Vietnam’s next harvest would be roughly steady versus the current season’s output, far less pessimistic than domestic projections. Coffee prices for drinkers around the world are likely to rise, with wholesale prices in Vietnam and London-traded robusta futures rising to record highs earlier this year.

Record wholesale prices have had a limited impact on consumer prices, with coffee inflation up by only 1.6% in the 27-country European Union in April and 2.5% in robusta-loving Italy. Worries about Vietnam are far from over, as insufficient rains after the drought or excessive downpours before the upcoming October harvest season could further reduce output. High wholesale prices may also be there to stay, as robusta demand is growing globally and farmers have boosted their leverage in the current circumstances.

Read Moe @ Yahoo