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Coffee prices at high as supplies plummet

Update: June, 06/2005 - 00:00

Business Beat

(06-06-2005)

Coffee prices at high as supplies plummet

by Nguyen Van Cam

It’s a vicious circle – coffee growers are watching the prices of coffee beans rise (a kilogram now sells for VND16,200 (over US$1), the highest in five years) with regret, as they don’t have much coffee left to sell. When prices hit bottom last year, many of them gave up coffee for other crops, and the prolonged drought in the Tay Nguyen (Central Highlands), where most of Vietnamese coffee is grown, has destroyed thousands of hectares of coffee plants.

The Vietnam Coffee and Cocoa Association (Vicofa) forecasted 720,000-750,000 tonnes of coffee as the total output for this crop, far below the 900,000-950,000 tonnes predicted by foreign buyers. Rising coffee prices on the world market prove that Vicofa’s assessment is more accurate, as Viet Nam is now the largest robusta exporter and any changes in output would certainly affect world prices.

The prolonged drought is also affecting the output of future crops because it takes several crops for the planting areas to overcome the drought’s consequences. Coffee prices are expected to rise further, and some coffee exporters are talking about the possibility of importing coffee from other countries to meet their orders. However, growers said this was just a threat from exporters to discourage them from hoarding their stock and waiting for higher prices.

This is a good time to consider the long-term development of Viet Nam’s coffee industry. The country was accused of destroying the balance between supply and demand several years ago when it exported a large quantity of coffee, causing a steep fall in prices. Now, planners should discourage the expansion of coffee farms and ask farmers to focus instead on improving the quality of their harvest in order to keep prices sustainable.

Football finance

Le Hung Dung, the new vice chairman of the Viet Nam Football Federation, was elected to oversee finance and marketing for the VFF, after delivering a convincing campaign speech—the first of its kind in Viet Nam. In his speech, Dung outlined his strategy for attracting sponsors for the VFF, promising that he would be able to collect VND8-10 billion ($630,000) to encourage national footballers to win in the upcoming 23rd Southeast Asian Games. If the national team takes the gold medal, each player will receive $20,000, promised Dung. He also outlined another program to find funding for the federation by cooperating with foreign partners to organise sports’ lotteries and betting systems.

The VFF meeting is held every four years to elect its leadership, but this year’s meeting attracted a lot of publicity because few seemed interested in leading. Even the newly elected chairman Nguyen Trong Hy said it would be incorrect to say he was glad to win the position. The VFF receives only 60 per cent of its funding from the Government, and the rest comes from sponsoring and advertising activities. That’s why Dung’s promises won him 82 out of 110 votes in the second round.

Organised strikes hit

During the first five months of 2005, there have been more than 40 organised strikes throughout the country involving more workers than ever before. The strike of Keyhinge Toys’ workers in Da Nang city in mid-May was the biggest so far, as it attracted the participation of 10,000 workers. Most strikes are now happening outside HCM City, in areas that attract more investment, such as Dong Nai, Binh Duong, Da Nang, and Tay Ninh. The reason behind the shift is that wages are more competitive in HCM City and workers have more openings than in other cities and provinces.

Workers strike mainly to demand better compensation and treatment. They might accept low wages but not delayed payment, or too much overtime without adequate compensation. Some are willing to endure a harsh working environment but not physical or verbal abuse.

The long-term solution to labour disputes should be to create more jobs in the area. By balancing the supply and demand of the labour market, workers will learn to adapt themselves to a professional environment, and company management will learn to respect the value of human resources. In HCM City, garment, footwear and woodwork industries face a severe shortage of labour, as similar jobs are now available in provinces, leading to less migration of workers than before. In such a situation, companies in those industries must train workers thoroughly and pay them decent wages to cut down on turnover. Thus strikes now happen less in HCM City.

Sort out that rubbish

HCM City has been piloting a garbage sorting project at the household level, which involves separating organic and inorganic garbage into different bags, making it easier for garbage collectors to treat. In theory, this project would help produce fertiliser from organic garbage and reduce pollution. HCM City residents now produce some 6,000 tonnes of garbage every day, most of which has to be transported to dumps. Meanwhile, researchers found that up to 90 per cent of the garbage can be recycled into fertiliser or used to generate electricity, and only a very small percentage actually needs to be dumped.

However, treatment plants for recycling garbage or for turning it into fertiliser are not ready. Most of them are either under construction or still in the planning stages. People said they would be willing to participate in the garbage sorting program but feel it would be a waste of time as all sorted garbage would still be dumped in the same place. — VNS

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