Vietnam coffee production costs up 25 percent

Vietnam, the world's second-largest coffee producer after Brazil, said higher global oil prices this year have pushed up its production cost by 20-25 percent to around 10,000 dong (63 US cents) per kilograms of beans.
Besides an increase in fertiliser prices, farmers in the central highlands province of Daklak were having to pay more for fuel used to pump water for coffee trees, said Lye Thanh Tung, director of Daklak's Trade Department.
"Production costs have come up to around 10,000 dong, with farmers spending a little less and state-run farms paying more than that," he told Reuters on Tuesday.
In previous years, private farmers spent 8,000 dong producing a kilogram of coffee, while state-run farms spent 10,000 dong, which include investment in roads and warehouses and administration costs in their expenses calculations.
Daklak has 164,000 hectares (405,200 acres) of coffee under plantation and produces a third of Vietnam's total output.
The country is the world's biggest exporter of robusta beans, widely used for making soluble coffee. However, due to a lack of major refineries, it has to import most of its oil products whose prices have risen by around 30 percent since January.
Nguyen Van Lang., chairman of Daklak People's Committee, said coffee farmers whose trees suffered a drought this year were still making money, selling coffee at 13,350-13,500 Dong (84.1-85 US cent) per kg.
"The cost has been 20-22 percent higher after the increases in input material price," he said.
A private dealer in Buon Ma Thuot, Daklak's capital, and several traders at foreign firms in Ho Chi Minh City estimated production costs this year at around 12,000 dong per kg.
More fuel was used between February and April for irrigation due to a drought. The coffee crop year runs from October through September.
"The drought had some impact on cutting the output but the area remained largely intact," Tung said.
While Daklak's officials say the drought will reduce the province's output by 25 to 30 percent, traders disputed the estimate.
Vietnam's Coffee and Cocoa Association said the harvest, which started last month in the Central Highlands, would produce 10.0-10.5 million 60-kg bags from 12.5 million bags in the previous harvest, that ended in January.
Output estimates by traders vary widely between 600,000 tonnes and 840,000 tonnes, or 10 million to 14 million bags, with foreign traders giving figures closer to the higher end.