Vietnamese Coffee Faces Early Harvest Hoarding

December 21, 2011

Less than half of this year’s Vietnamese coffee harvest has been picked and the farmers are unhappy. It’s not the coffee that’s causing their dissatisfaction, but the coffee prices. They consider them too low, so they’ve decided to hoard the beans. According to the Vietnam News, this has put the traders in a bind, as they can’t find enough coffee to buy for export. The prices are already up from last month, and are higher than the global prices. Still the coffee farmers want to wait until the prices go up further. From past experience, it seems that in Vietnam, anyway, if the farmers don’t hoard the coffee, the government will stockpile it.





Vietnamese coffee producers aren’t considering the hoarding a risk, because forecasts of global production are low. Demand isn’t going down, so there will always be buyers even as the price increases. The only way this coffee price manipulation will backfire on the farmers is if their stored coffee deteriorates or if the global supply would be greater than the predictions. That’s not too likely in today’s global market where daily reports on coffee are posted on the internet and farmers can see who’s harvesting where and how much is coming to market.





Because the green beans can be stored for months – some say even two years – the farmers are clearly not worried about the beans deteriorating. As long as they are stored in a well-managed environment that is neither too hot nor too cold, too damp nor too dry, where there’s no danger of mold or other deteriorating factors, the farmers should be safe. Vietnam is one of the world’s largest coffee producers, with Robusta being the main coffee grown. There are also some specialty Arabica coffees exported, but the coffee prices to be most affected at the consumer end will be those of instant coffee.





What has happened to the days of simple demand vs. supply economics? Consumers are now at the mercy of not only the farmer, the exporter, the transporter and the roaster, but the commodities market and the global interplay created by all these forces mixed with the quest for wealth. It’s a mind-boggling brew. Thankfully, the heavenly taste and aroma of the end product makes it all worth it.



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