Vietnamese producers refuse to provide coffee and seek to renegotiate contracts

Recently, after the global price of robusta coffee soared to a 28-year high, some Vietnamese farmers and producers refused to sell their coffee unless contracts were renegotiated, Reuters reported.

Vietnam is the world's largest supplier of robusta coffee, and the price of robusta coffee has soared as supplies in Europe have become very tight. At present, according to the Vietnam Coffee and Cocoa Association, the price of raw coffee in Central Highland is 80 million-81 million / ton recently, another sudden all-time high.

In addition, the coffee harvest in Vietnam is also the worst in six years during the 2022x23 season, and some contracts have been raised for the 24th year on the island, which means the farmer needs a lot of crops to fulfill the contract, but the harvest is below standard.

As a result, prices have risen and producers and farmers have found it difficult to deliver the goods at the previously agreed prices and are now trying to renegotiate contracts with traders. According to a Vietnamese farmer who spoke on condition of anonymity, the contract will not be broken, and when the price of coffee rises, the price can be renegotiated with the buyer. And we will hand over the coffee beans only when the buyer can reach the perfect offer.

Initially, this affected local dealers, but now it has affected the wider market, tightening global supply. Traders estimate that the delivery of Vietnamese coffee pre-sold in the previous season was delayed when the harvest was poor in the 2022 / 23 season. Although most of the coffee has been delivered, there is less and less coffee available for sale this season, exacerbating the price rise. In addition, some traders said that although they had written contracts, it was difficult to find suppliers who owed low-cost coffee, and it was not worthwhile for them to sue local suppliers because of the costs involved.

One European trader said he received only 20 per cent of the Vietnamese coffee he was supposed to receive in November and December and that the contract was signed in August last year, where the price of coffee was about 20 per cent lower than the local price. In addition, experts say that almost all global traders operating in Vietnam have been affected by the situation. Including a number of well-known trading brands, because of their large scale, can often affect the world price of coffee.

In addition, the Red Sea crisis has also increased the transportation cost of purchased coffee beans. As a result, traders are starting to buy less Vietnamese coffee and set their sights on Brazil's Robusta, otherwise the price of robusta coffee has remained high and is expected to improve in mid-2024.