Lacking experience, coffee exporters lose in international trade

Lacking experience, coffee exporters lose in international trade

Lacking experience in dealing with futures contract and making transactions on the coffee trading floors of the world is believed to be the main reason that has pushed Vietnamese coffee exporters into default.

Luong Van Tu, Chair of the Vietnam Coffee and Cocoa Association, said though Vietnam is the second biggest coffee exporter in the world, it is not powerful enough to control the world’s prices which have been fluctuating all the time.

It’s estimated that 97 percent of coffee transactions are carried out on paper. Meanwhile, a lot of Vietnamese enterprises do not have legal consultants. A lot of businessmen do not have experiences in making international trade, whole some big bosses, who get some experiences after some years of struggling on the market, have shifted to other types of business.

Pham Khanh Hiep, a coffee expert, said that most of the businessmen, who make transactions on the two big trading floors in London and New York, are always put at a disadvantage. Foreign partners always try to lower the grades of Vietnam’s coffee products, and deduct money, because Vietnamese businessmen do not understand the rules and the price fluctuations of the trading floors very well.

Nguyen Nam Hai, General Director of Cafecontrol, a coffee inspection company, keeps more optimistic about the ability of Vietnamese coffee exporters.

He said that Vietnamese enterprises have been approaching the international market in a professional way. Intimex HCM City and Simexco have the staff well trained enough to be able to directly export coffee roasters in the world, no need to go through intermediaries. This allows them to go for better prices and reduce the reliance of Vietnamese enterprises on the world’s price fluctuations.

“However, the problem is that there are not many such enterprises. To date, most of the enterprises still have been making trade with futures contracts, therefore, they usually have to face risks,” he noted.

Le Duc Thong, General Director of Simexco, which now exports coffee directly to coffee roasters, said that in order to approach international roasters, Vietnamese businessmen need to satisfy many requirements. Especially, enterprises have to keep their prestige.

“During the cooperation, foreign roasters would continuously challenge Vietnamese enterprises,” he said.

“Nestle, for example, buys coffee directly from Simexco, but the two sides have only found a common voice after six years of cooperation. I myself had to fly to Europe to meet Nestle’s General Director to negotiate about the cooperation,” Thong said.

He went on to say that thanks to the direct export contracts signed with foreign roasters, Simexco can make the profit higher by 50-100 dollars per ton than the exports through intermediaries.

Other enterprises, which have to export through third parties, always face risks and they would fall into insolvency when the market prices fluctuate heavily.

Nguyen Viet Vinh, Secretary General of Vicofa, said that in order to minimize risks, businesses should hire qualified specialists on foreign trade and legal issues who work right at the businesses.

He also thinks that there’s a thing that needs to be done immediately--to build up a contract form for coffee exporters to refer to when making trade with foreign businessmen.

Brazil, a big coffee exporter, also has form contracts, and so does the US.

At present, according to Nguyen Huu Chi, Member of the Competition Council, Vietnamese exporters accept the contracts compiled by importers, which, of course, just ensure the benefits of the buyers, thus causing loss to exporters.

vietnamnet