(Bloomberg) -- The world may get even less coffee from Vietnam, the biggest grower of the robusta variety used in instant drinks and espressos, as a smaller crop and growing local demand squeeze supplies.
The country is likely to produce 1.6 million to 1.7 million tons of beans from the current harvest, down from 1.78 million tons a year earlier, Do Ha Nam, deputy chairman of the Vietnam Coffee Cocoa Association, said at a conference in Ho Chi Minh City. Stockpiles from the last crop were almost depleted, he said.
The supply outlook is further unwelcome news for consumers, who are already facing increased prices for their daily brew. Robusta futures in London climbed to the highest level since at least 2008 earlier this year on supply shortages. They jumped more than 10% last month alone, the biggest gain since January.
Global consumption of robusta beans rose 10% in the 2022-23 season as lower output of the high-end arabica beans, combined with higher prices, contributed to the shift in consumption. Top robusta producers have however, struggled to meet the growing demand.
Farming areas in Vietnam are shrinking, especially in the major provinces of Dak Lak and Dak Nong, while yields are also dropping in some areas, according to Nam, who is also chairman of top exporter Intimex Group.
Total coffee acreage in the country is probably about 600,000 hectares, Nam said, compared with the last estimate from the agriculture ministry of 700,000 hectares, as farmers cut down coffee trees for more profitable crops such as durians and avocados.
Vietnam’s exports may fall 15% in the 2023-24 season from 1.66 million tons a year earlier, Nguyen Nam Hai, chairman of the association, said at the same conference, adding harvesting had been 50% completed by the end of November. Local prices are up more than 40% from a year earlier.
Local consumption of beans may surge to 350,000-400,000 tons a year from the current 260,000 tons once instant coffee plants reach full capacity, Nam said, without giving a time frame.
--With assistance from Mumbi Gitau.
(Updates to add chart, comments in third and fourth paragraph)
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