Vietnamese robusta bean production declining, hiking up price of instant coffee
Instant coffee could become even more expensive as Vietnamese producers fear farming land in the country could be halved by 2050 due to climate change.
The leading producer and exporter of the robusta bean, the variety used for instant coffee, Vietnam has been battling drought, causing yields to drop and prices to soar.
Researchers forecast the country's coffee exports to drop by 20 per cent this year alone.
Climate change has presented several challenges to farmers, such as inconsistent rainfall patterns and rising temperatures.
Behind Brazil, Vietnam is the second largest coffee producer in the world, sparking concerns for global supply, as export demands remain high.
Climate change impact
An Nguyen is the co-founder and chief executive officer of Helena Coffee, a coffee processing and export company based in Lam Dong province, in Vietnam's central highland region.
Last year the company exported more than 1,000 tonnes of coffee across the globe, including to Australia.
He fears climate change-related issues are hurting the industry.
"I just [went] to a conference in Vietnam. They reported to me that by 2050 the robusta coffee area could be reduced by up to 50 per cent, due to climate change," he said.
According to NGO World Coffee Research, the world may face a robusta coffee shortage of up to 35 million (60kg) bags by 2040.
Mr Nguyen said too much, and too little rainfall during El Nino and La Nina events caused the coffee flower to rot, and lower production.
His business has employed a few strategies to minimise the impact of climate change.
It has introduced new AI technology from enfarm, a Singapore-based company, to its five farms, allowing it to make smarter choices and save on valuable resources including water.
The technology uses a soil sensor, which feeds real-time information about the quality of the land back to an app.
The farmer can then use the AI software from the app to get recommendations, like an agronomist in their pocket.
"For our coffee farmer cooperative, we are trying to … protect the coffee plant and improve soil health," Mr Nguyen said.
"We try to educate the coffee farmer."
His team will also establish a replanting project to replace old coffee trees – a practice he said is neglected by other growers.
He hopes to improve export production this year through his sustainable approach to farming, as global demand is incredibly high.
High market price
Consumer trends and reduced yields will contribute to the high price customers can expect to see.
When looking at market trends, the price of robusta coffee a kilogram has nearly doubled since the start of 2023.
Mr Nguyen fears there is not enough coffee production area to meet global demand, which will push the price up further.
Flow on effects
Genevieve Donnellon-May is a Policy Institute Research associate with the Asia Society, and recently wrote a research article about the state of global coffee production.
She said at this rate, the price is likely to continue to skyrocket, resulting in consumers and importers paying higher prices.
"[This] is bad news, if you like me, and you're surviving on instant coffee to get through your work … [it's] a bit of a doom and gloom scenario," she said.
"Vietnam is very important in the coffee industry, particularly for instant coffee."
The industry is so large, that it contributes 3 per cent to the country's GDP.
She said this could be an opportunity for other countries to step up and expand their own coffee production.
"I think that there are other countries which are looking at what's happening in terms of coffee demand and supply, and perhaps are trying to help bridge that gap and support their own local economies."