Vietnam falls short of coffee stockpile target

Aug 3, 2010, 4:51 GMT

Hanoi - Vietnamese coffee companies failed to stockpile 200,000 tons of beans in a government plan to counter a fall in global prices, government officials said Tuesday.

The plan, approved in early April, was due to be implemented from April 15 to July 17. The government undertook to subsidize the interest on loans taken out by companies to buy coffee for stockpiling.

But the subsidies were not enough. The eight companies authorized to implement the plan bought only 55,000 tons of coffee beans worth 1.4 trillion dong (75 million dollars) out of a total 200,000 tons, Deputy Minister of Agriculture and Rural Development Bui Ba Bong said.

'Despite failure in volume, companies have helped to rally domestic coffee prices,' said Doan Trieu Nhan, a senior adviser at the Vietnam Coffee Association.

Nhan said the plan helped to raise coffee prices to between 25 million dong and 26 million dong (1,348 - 1,402 dollars) a ton on average during the stockpiling period.

On the domestic market, coffee prices rose to 28 million dong a ton in July, after falling to the lowest level in three years at 22 million dong a ton in March, he added.

Do Van Nam, general director of the Vietnam Coffee Corporation, said the government compensated companies for 6 percentage points of their loan interest, but that commercial banks were charging between 15 and 18 per cent.

After deducting the 6 per cent, companies still had to pay between 8 and 12 per cent interest and found it hard to make enough money to make this worthwhile.

The Vietnam Coffee and Cocoa Association have proposed another plan to stabilize the coffee price for early October when the 2010-2011 harvest starts, Nhan said.