Coffee price drop impacts Lao entrepreneurs

Lao coffee entrepreneurs are seeing negative impacts on their export product after coffee prices on world markets have continued to decrease.

The price of Robusta coffee on the world market on July 24 was between US$1,661 and US$1,677 a tonne.

By June 27 this had decreased to between US$1,658 and US$1,641, while Arabica coffee price remained stable at between US$2,687 and US$2,755 in the same period, according to the Lao Coffee Association.

This price is a reduction on the March figure and coffee prices continued to drop until this month because of the increased supply of coffee on the world market.

The Arabica coffee price for export at the beginning of this year was about US$4,100 (33 million kip) a tonne but by last month had dropped to less than US$3,000 (24 million kip).

Different domestic and foreign entrepreneurs in Laos, especially the companies operating businesses in Champassak province, have to export their product despite suffering the effects of low prices.

Some entrepreneurs have to spend money to repay the bank, the association’s Office Head, Mr Sivixay Xayaseng, told Vientiane Times yesterday.

However growers who planted the crop many years ago are still operating. In the last few years, coffee has led the way as the top commercial export crop in Laos, according to the Ministry of Agriculture and Forestry.

Last year, the crop dropped to the second rank of export crops after the value of rubber products exported reached higher than that of coffee.

The value of rubber exports last year was US$96.7 million, while coffee product was around US$70.7 million. Coffee is mostly grown on the Bolaven plateau in Champassak province and in Saravan, Attapeu and Xekong provinces.

Pakxong district, Champassak province is also known as the Lao Coffee Capital and is located on the Bolaven Plateau at an altitude of 1,300 metres above sea level.

The government especially the Ministry of Agriculture and Forestry last year encouraged farmers and entrepreneurs to grow more than 80,000 hectares of coffee, aiming for a yield of 98,000 tonnes.

As the low price impacts on growers, the ministry believes that coffee exports will remain stable and are not likely to grow. The prices that farmers shall receive are much lower than in previous years.

In times of very low prices, the government should cancel the export tax as well as supply some funds to solve the crisis, Lao coffee entrepreneurs recommended. However, the numbers of foreign tourist arriving in country on a   Laos tour packages also shown interest to buy the Lao Coffee.

The highest price of coffee was seen in 2004, when Arabica coffee was fetching US$ 5,000 per tonne while Robusta was selling for US$2,500 a tonne, Mr Sivixay said.

News: vientianetimes.org.la