Vietnam's Q1 coffee exports to India cool after brief trade row over pests

By Ho Binh Minh   April 10, 2017 | 11:52 pm PT
The first-quarter slowdown follows an annual surge of 67 percent for the whole of last year.

Vietnam, the world's largest robusta exporter, shipped 7,700 tons of the commodity to India in the first quarter of this year, a drop of 35 percent from the same period last year, following a brief trade row last month, Vietnam Customs data shows.

On March 1, the Vietnamese government gave a warning saying it would suspend imports of five Indian agricultural commodities in 60 days, citing a peanut beetle problem. On March 7, India slapped an immediate ban on imports of six commodities from Vietnam, including coffee, citing pest infestations.

Traders and Vietnamese industry officials said India's reaction was only a 'tit-for-tat action' and that the restrictions would be short-lived.

But the back-to-back bans have prevented Indian roasters from securing coffee beans while pepper prices in Vietnam have dropped to multi-year lows. The bitter coffee variety from Vietnam is used mainly for making instant coffee.

In late March both sides removed the bans following talks between government officials, but Vietnam's coffee exports to the South Asian nation with a fast expanding coffee demand have suffered.

India is home to the world's third-fastest growing retail coffee market after Indonesia and Turkey, while Vietnam ranks fourth, according to Mintel, a global market intelligence agency.

In the first three months of last year alone, Vietnam exported 11,900 tons of coffee to India, a surge of 43 percent from the same period in 2015, while shipments in the whole of 2016 soared 67 percent to 45,800 tons, based on Vietnam Customs data released on Monday.

India produced an estimated 5.33 million bags (320,000 tons) of coffee in the 2016/2017 crop year, down 8 percent from a year ago, according to the International Coffee Organization's estimates as of January 2017.

India's coffee consumption in the current season ending September 2017 is forecast to edge up 2 percent from the previous 2015/2016 season to 1.4 million bags, the U.S. Department of Agriculture said.

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