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Coffee traders struggle to take on foreign rivals

Mar 03. 2017
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By VIENTIANE TIMES
ASIA NEWS NETWORK
LAOS

LOCAL COFFEE traders are struggling to make headway against foreign competition as a result of poor management of industry regulations by the authorities.

The issue has impacted the quality of Lao coffee and sustainable markets here because foreign traders are giving higher prices for coffee beans with no attention being paid to quality standards, a Lao Coffee Association official, Sivilay Xayaseng, told Vientiane Times yesterday.

Local traders pay reasonable prices and take the quality of their products into account in order to ensure quality Lao coffee is exported to international markets, he added.

The problem is especially acute in the four southern provinces of Champassak, Xekong, Saravan and Attapeu, where competition with foreign traders, especially those from Vietnam, is leading to losses.

The price of coffee beans in Laos is currently good for growers due to rising prices in the world market, said Sivilay.

Arabica coffee in the world market currently sells for about US$3,000 per tonne and Robusta for US$1,800, while last year Arabica was only fetching between US$2,500-2,700, with the sale |price of Robusta being much the same.

The price of coffee beans sold on the domestic market, especially in the four southern provinces, is about 17,000 kip per kilogramme for Arabica and 15,000 Laotian kip for Robusta, Sivilay reported.

“It’s simple, foreign traders can often pay more than their competitors in Laos,” Sivilay said.

To resolve this issue a provincial committee has directed the relevant sectors, notably industry and commerce officials, the Lao Coffee Association, and agriculture and forestry officials to try to better regulate the quality of coffee being sold, the actions of foreign traders, and the export market.

Foreign traders tend to operate only temporarily and in direct competition with local operators without any concern for sincerity or sustainability, Sivilay explained.

Government authorities should carefully consider the repercussions before approving and formulating measures to manage regulations that have been set, he said.

Some companies have established markets but the standard of their coffee manufacturing is poor and lacks proper investment and quality controls.

Sivilay says the government should also be looking at tax payments because some people are paying more taxes than others, depending on the area.

This can be a major issue for companies that have to move their business and investments to a location where lower taxes are imposed.

The government, through local authorities, is currently improving the quality of Lao coffee to meet organic standards to create sustainable domestic supply and exports, and has been advised to pursue this vision.

Lao coffee products continue to be popular both with local people and visitors and have been accepted in the international market.

Several countries are currently investing in coffee farms across the country, such as Vietnam, Thailand, the Republic of Korea, Chinese Taiwan, Singapore, and India.

Most Lao coffee is exported to Chinese Taiwan, Italy, Japan, Spain, Poland, Germany, the US, France, Belgium, Sweden, Thailand and Vietnam.

However, there have been no reported figures on coffee exported last year by the Lao Coffee Association.

In 2013 Laos exported 30,000 tonnes of coffee valued at US$72 million. In 2014 coffee exports dropped to 26,000 tonnes worth US$60 million and fell further to 23,000 tonnes valued at US$50 million over the next year, according to the association.

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