The Central Highland province of Gia Lai yields more than 120,000 tonnes of coffee a year. A minimum price is urged to ensure farmers earn at least 30 per cent profit. — VNA/VNS Photo Sy Huynh
HA NOI — The Government should create some support policies to ensure coffee growers earn a profit of at least 30 per cent, deputy director of the Department of Agriculture, Forestry and Fishery Products Processing and Salt Industry, under the Ministry of Agriculture and Rural Development, Doan Xuan Hoa, said yesterday.
In a meeting to discuss ways to boost coffee production and consumption, Hoa said that before harvesting crops, provincial authorities must publicise a minimum price at which enterprises could buy coffee from farmers, based on production costs and yields, to ensure that they would see profits of 30 per cent.
When receiving loans from credit institutions to buy machines and production equipment that have a localisation rate of at least 60 per cent, households and individuals should enjoy a 100 per cent subsidy of interest rates for the first two years and 50 per cent subsidies for the following years, Hoa suggested.
Enterprises investing in the construction of coffee warehouses should be exempt from land use taxes for five years after the projects come into operation, and supported by the State for 20 per cent of land clearance costs, he said.
Enterprises were encouraged to invest in advanced technologies and equipment, Hoa added.
Currently, many coffee-processing factories had large capacities, while supplies of input were limited, which was a waste in productivity. Thus, it was necessary to have a new plan for the coffee-processing system to ensure the conformity of technical standards, he said.
Luong Van Tu, chairman of the Viet Nam Coffee and Cocoa Association, said that buying and stockpiling coffee would regulate the market, limiting coffee exports while world coffee prices were declining, Tu said.
In the first month of the year, domestic coffee prices went down from VND24,500 per kilo to VND23,000—the lowest level since 2008.
To help farmers overcome difficulties while prices were declining, the Prime Minister asked 13 enterprises to buy and reserve coffee for the 2009-10 crop.
These companies had to buy 200,000 tonnes of coffee from April 15 to July 15, and they would enjoy an interest rate subsidy of 6 per cent per year for loans with terms under or equal to six months.
However, after two months, enterprises had only bought 10,000 tonnes of coffee, according to the department.
Tu attributed the figure to difficulties in accessing loans, because only the Viet Nam Bank for Investment and Development had been tasked to grant loans for such companies.
Nguyen Van An, General Director of the Thai Hoa Coffee Company, said that exporters, production factories and farmers must co-operate with each other to buy and stockpile coffee.
Although Viet Nam's coffee yields accounted for 14.3 per cent of the world market share, the sector did not have any decisive role in the market performance, former chairman of the association Doan Trieu Nhan said.
The reasons were that the sector had not established a professional processing, exporting or consuming system, and competitiveness was poor among exporters, he said.
All large coffee-producing countries in the world had supporting funds to help companies respond to market fluctuations, he added.
In the first six months of this year, Viet Nam exported 600,000 tonnes of coffee worth US$800 million, a decline of 11 per cent in quantity and 17 per cent in value compared to the same period last year.
It is estimated that coffee export value will reach $1.1 billion this year, a drop of 40 per cent from last year's figure. — VNS