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4187 views April 11, 2016 posted by Maja Wallengren

BREAKING NEWS: El Niño Hits Vietnam’s Main Coffee Region With Worst Drought In 90 Years

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APR 20–May Arabica prices surge 1.80 cent per pound to $1.2765 c/lb in mid-session at the ICE futures exchange in New York on Apr 20 on continuing DRYNESS in Brazil’s coffee regions and stronger Real.

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APR 11, 2016 (SpillingTheBeans)–Coffee farms across Vietnam’s key producing regions of the Central Highlands have been severely hit by the worst drought in 90 years to hit the country, local producers and news said Monday.

“We are not joking here, this is very very serious and a huge amount of coffee farms have literally died. There is going to be very little flowering here for the next harvest,” one coffee grower told SpillingTheBeans by telephone from Vietnam’s Central Highlands coffee region.

Over 20,000 hectares of farm land in the Central highlands around the coffee capital of Buon Ma Thuot in Dak Lak province have been hit by the severe water shortage and most of the land is dominated by coffee, local growers and exporters told SpillingTheBeans in reports sent from Vietnam.

Based on Vietnam’s average yields in coffee a loss of 20,000 hectares of land could result in losses of over 1 million 60-kilogram bags alone from that region.

Pictures taken in the last 2 weeks show entire farms completely wilted after the massive dry spell, that already has affected part of the current 2015-16 harvest and comes just as trees were supposed to start flowering for the next 2016-17 crop.

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Pictures of the drought in Vietnam’s key coffee regions taken in late March

“Owners of coffee plantations in the Central Highlands region are bemoaning their dying plants, the dry season and dams built by the Hoang Anh Gia Lai Corporation have been blamed for the situation. The growers said they often used water from Ia Cham Stream but had recently found the stream is drying out. Families living close to Ia Cham Stream have been able to save part of their coffee plantations, but families further away face severe drought,” reads a part from the local paper the Mekong Witness.

“Grower Le Van Viet said he had struggled to find water in the past two weeks and feared his entire coffee plantation was at threat,” the paper said.

*Don’t miss our LATEST analysis on Vietnam’s 2015-16 crop that suffers from lowest yields in years: http://spilling-the-beans.net/market-insight-vietnams-2015-16-coffee-harvest-size-cut-short-by-old-coffee-trees/

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Unseasonably warm weather has been blamed for the drought, and made worse by the extended impact of climate change that has provoked an unusually powerful El Niño effect. The last six months have seen only half of the average rainfall recorded in previous years, according to Tran Trung Thanh, vice director of Center for Hydro‑Meteorological Forecasting in Central Highlands, who warned that drought conditions are expected to worsen this year and ahead.

*TO see more on the Vietnam drought;
*http://www.mekongwitness.com/2016/02/vietnam-hagl-blamed-for-coffee-plant.html
*http://english.vietnamnet.vn/fms/vietnam-in-photos/154329/vietnam-s-central-highlands-struggles-with-historic-drought.html
*http://www.channelnewsasia.com/news/asiapacific/vietnam-hit-by-worst/2562802.html

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5 Comments

  • Hi MAJA,
    In view that you have been to Vietnam several times and have some good contacts can you shed some light on the following! Any information you have would be much appreciated!

    Authorities cannot agree on the amount of cropland that is irrigated and previously flowered with estimates varying from 80-95% of the region irrigated. Conflicting reports have suggested that some areas in Vietnam are so limited on irrigation that crops are struggling and others have stated that up to 20% of crop is not irrigated and suffering from lack of moisture.
    Everyone does agree that any unirrigated crop that is late with flowering could still produce adequately if seasonal rainfall occurs soon and continues routinely thereafter. All authorities do agree that the bulk of flowering was induced in February and March, but the debate is over how much crop is not irrigated and is still waiting on rain to begin flowering.

    • Hello Morris, you ask a very interesting question and one that is often entirely ignored by the trade when it comes to provide accurate forecasts and crop estimates, but ever since Vietnam consolidated its position as the world’s 2nd largest producer since about 10-12 years ago the idea that anyone will agree on figures, even within the trade, has become obsolete. But basic maths leads us a long way; First of all, that a vast majority of coffee regions has the POTENTIAL to get some level of irrigation, does — as we all know — not mean much, because potential is a wonderful possibility in the few cases where it materialize — in the case of coffee in Vietnam it is far from the case. I have travelled extensively across all the coffee growing regions regularly with 24 visits since 1993 and was just back there last October/November, and the only region where you see some actual commercial-style irrigation is in the Central Highlands, which combined accounts for between 430K and 450,000 hectares, or 65-68 percent of the cultivated area. Even in the Central Highlands it’s not even close to half of the producers who is even remotely close to posses the possibility of irrigation, with the vast majority of at least 90% having less than 1 hectare of land. So IF we are generous in our figures — I always love to play it safe in order to show even the most bulls of the bulls in the market how their wildly optimistic figures just won’t materialize — that means that a maximum of 25-30% of producers/productive land in the Central Highlands have some level of irrigation, which in return mean that an ABSOLUTE maximum of 20 percent of Vietnam’s total national coffee park is within the possibility of receiving some level of irrigation. Add to that the crucial issue of how severe the current drought is, and you can cut that figure in half as to those who HAS the opportunity for at least partial irrigation being able to find any water sources available to actual USE for irrigation. I.e. the end conclusion is, the share of the current coffee crop with a potential for seeing the flowering being saved thanks to irrigation is extremely limited and close to statistical irrelevance. Many of the big trading houses and multinational traders/exporters will say that at least 40-50% of the land is irrigated — it’s not, and not even close to, but with heavily vested interests they will only show visitors the very minimal areas of pilot farms that have had replanting and irrigation installed over the last 5-6 years, but the conveniently forget to tell the market that these pilot areas represent less than 5% of Vietnam’s total coffee area. How does this analysis sounds to you?

  • Oh, to make a very simply summary to the question, and based on my above analysis and what I actually see in Vietnam, a maximum of between 20 and 30 percent of the total coffee area receives some level or irrigation. It’s correct that at big farms, mostly state or semi-state owned, more or the less regular irrigation is provided, but these farms only represent 5-8% of the total national coffee area, max. And any irrigation is depending on water being AVAILABLE which it has not been since December.

    Sure, as far as the flowering for the new 2016-17 crop is concerned, a lateflowering COULD still happening, but in Vietnam the flowering is primarily in February and March, so at this point it’s becoming extremely wishful thinking to talk about a late flowering happening. Even for the regions and farms where flowering, thanks to irrigation, was induced in Feb and March, the flowering still need at least a week of rains or water within a maximum of 3 weeks after the flowering occured, or the flowers will start to turn pink as they are drying up on branches. There was no reports or other indication of the moisture or rain/water access improving within that very narrow window of opportunity and hence a lot of that flowering that was induced thanks to irrigation will at this point my most counts have been lost. Once a flower is lost, the branch will not be able to produce a NEW flower on that same spot, hence the saying in Latin America “Early flowering produces a small crop” because early, or provoked flowering, more often than not only have limited opportunity for developing into fruit as the conditions surrounding such types of flowerings don’t support crop developments. That mean the flowering induced in February is entirely lost, while up to 50% of the flowering from the last half of March still have a small chance of producing crop within the next week. At 6 weeks from flowering without rains there is ZERO chance of that flower developing into cherries.

  • Thank You for your very detailed response! Looking forward to your continued reports!
    Morris

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