Coffee farmers on verge of going broke after stashing beans at local buying agent

By Nhat Ha   May 14, 2016 | 04:36 pm GMT+7

When Vietnamese coffee growers in the central highland province of Gia Lai heard that a local buying agent had gone broke, they were completely taken aback. These farmers knew that they might have just lost almost everything they had taken years to build after being tricked into depositing coffee beans at the buying agent’s warehouse.

After harvesting and drying coffee beans, small farmers in Krai commune, La Grai district, Gia Lai province prefer stashing the beans away at a warehouse of a trusted middleman or buying agent and fix the selling price only when they see gains in the world market.

This is much more risky than selling coffee to buying agents at a fixed lower price before the harvest starts to get some advance cash. However, most coffee farmers still go for it because they think a greater profit is worth the wait.

“We don’t have a warehouse, and we trust Niem (the buying agent). We deposited 9 tons of coffee beans from the previous harvest at her warehouse. The stock is worth VND324 million ($15,000). Our family has put up a few red books (land use certificates) as collateral for bank loans so we could have enough funds to invest in farming,” said farmer Pham Van Khiem.

“Just few days ago, Niem came and entreated to me to lend her a few tons of coffee beans to mix them with lower-quality beans. Because she is an acquaintance of mine, and she has a long-standing reputation as a trusted local buying agent, I agreed to lend her some,” said farmer Nguyen Van Thiem with a faint hope that he could recoup some of his losses.

coffee-farmers-on-verge-of-going-broke-after-stashing-beans-at-local-buying-agent

Farmers gather in front of local buying agent's house Doan Thi Niem with a faint hope that they can recoup some of their losses. Photo by Nhat Ha

Farmer Nguyen Thi Mat has been caught up in the same situation. Mat gathered up to 11 tons of coffee beans from two harvests in a row, stocked them all at Niem’s warehouse and has been waiting for the day to realize the profit.

“[Our family] is having a house built, and it will be finished soon. But some payments for builders and construction materials haven’t been made yet. When I heard about the bankruptcy, I was so shocked,” said Mat, adding that her family went deeply into debt including a $7,000 bank loan which would come due soon.

Local farmers said that they had been deceived into depositing coffee beans with the local buying agent and they didn’t believe that Doan Thi Niem filed for bankruptcy due to financial difficulties.

On Wednesday afternoon, Doan Thi Niem and her husband Truong Cong Ky filed for bankruptcy with the local authorities, said Nguyen Ngoc Doai, deputy chief police in Krai commune. He added that 44 farmers had deposited 48 tons of coffee beans worth more than VND7.5 billion at Niem’s warehouse.

Initial investigation shows that the case was a civil wrong, not a criminal fraud, said Grai district’s senior police officer Pham Chinh Nghia.

He explained that Niem had to file for bankruptcy due mainly to business losses, and she didn’t intentionally cheat the farmers for personal gain.

The case is under further investigation.

Gia Lai is the smallest coffee growing province in the five-province central highland region, which supplies 80 percent of Vietnam's coffee.

 
 
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