The risk of default in the coffee series

► Many businesses buy goods at high prices, now to the repayment period should force banks to export cheaply ...

 

Under the leadership of the School of Banking Company, is now faced with this situation is due to the high interest rates in the last year.

Domestic coffee prices and strong exports fell nearly 3 months that many businesses coffee exporters risk losing trot collected for coffee at high prices earlier this term pressure to repay bank forced to lower export prices.

Therefore, the Ministry of Agriculture and Rural Development has submitted a written proposal to the Prime Minister reschedule loans for export credit of coffee.

In the domestic market, the price of coffee in the Central Highlands bucket from 46 million price / ton in the first half 3/2013 to last week fell 39800-40200 VND / kg. Coffee export price of R2, 5% black and broken at $ 1,923 / tonne (FOB), with a plus 60 USD in London.

On the floor London last week, Robusta coffee prices down 45 USD / ton, equivalent to 2.38%. According to the Ministry of Agriculture and Rural Development, the volume of coffee exported only 109 tons in May, earned 226 million USD.

Cumulative coffee exports in 5 months is 697 thousand tons, turnover of nearly U.S. $ 1.49 billion, down 23.2% in volume and 21.7% in value compared to the same period in 2012.

Farmers and coffee dealers in our country is limiting the amount of coffee sold, mostly to domestic price expectations at 44-45 thousand dollars / kg, the new sell and export prices to reach 2,100- $ 2,200 / ton to have any interest.

According Volcafe, sources in Vietnam is very difficult to buy because domestic prices were falling unexpectedly. Recently, Vietnam Coffee Association (Vicofa) has aligned known for coffee production in Vietnam from 2011 to 2012 crop year decreased by 25% and crop harvest in October 10/2013, but decreased to 30-35% coffee prices have slumped. Besides, although farmers and coffee dealer sales down, but prices still falling.

According to experts, the global financial markets continue swinging on the rumor, hit the psychological blow to market fluctuations. Is showing signs of financial speculators withdraw gradually from the 3 floor of the world largest coffee is Arabica Ice New York, London and Liffe Robusta Brazil's BM & F.

Arabica coffee futures on ICE New York depreciation during 2 consecutive years, from $ 6,800 / ton peak in 2011, now only $ 2,800 / ton. Robusta coffee prices on the London Liffe floor is poured continuously from a high of $ 2,200 / ton last quarter 1/2013, up to now less than $ 1,850 / ton.

Many agents now trot buy coffee at prices rose sharply to 46 million / ton in the first months of the year, export prices fell this already suffered losses. 7 Department of Banking and Bank Foreclosed School Company, a large coffee companies in Binh Duong Province last week with loans totaling nearly a thousand billion, showed a round mass defaults to continue in the block the coffee business enterprise.

Under the leadership of the School of Banking Company, is now faced with this situation is due to the high interest rates in the last year.

"There are times we are faced with interest rates over 20% and 4 years ago we started miserable," Director of Schools Bank share.

In fact, state insolvency coffee business is not a new problem, almost every year happen. Vicofa statistics, in 2012 more than 100 corporate, dealer, small business coffee in the Central Highlands region has been insolvent trillion. Damage of this bankruptcy case have always belonged to the people, because most of the coffee deposit, cash loan debt handwritten paper only.

In Dak Lak Department of Trade and Industry, this particular area in 2012 had 43 businesses, coffee dealers insolvency, inability to pay debts of 300 billion and 3,000 tons of coffee farmers who deposit. More than a thousand farmers in Dak Lak lost property deposited for coffee for the purchasing agent.

During recent days, the Central Highlands was shaken for further information occurs many defaults of coffee purchasing agent. Typically in Gia Lai, with defaults of up to 69 billion of Ms. Dang Thi Huong, the restaurant owner Phuc Vinh Phuc in business.

Before that, earlier this month 4/2013, 2 base purchasing other products also claims bankruptcy nearly 30 billion. The wave of defaults which appear in Dak Lak, Dak Nong few years before this started back in Gia Lai.

Ministry of Agriculture and Rural Development has submitted a written proposal to the Prime Minister reschedule loans for export credit of coffee. Earlier, the Government issued Resolution 02/2013/NQ-CP about some solutions to remove difficulties for production, sales, marketing assistance, resolve bad debt. In particular, consider extending the maximum loan period from 12 months to 36 months for capital loans export credit of the State for horticulture export sector, fisheries, but does not specify the items coffee.

While today, the business acquisition and domestic coffee exporters face many difficulties, especially in terms of capital, it is difficult to compete with foreign firms. Many businesses purchase goods at high prices, now to the repayment period should force banks to export cheaply will loss, leading to the risk of insolvency.

Therefore, the Ministry of Agriculture and Rural Development recommended to the Prime Minister for consideration and additional items coffee may be extended subject to a maximum loan term from 12 months to 36 months for credits exports. Expectations if the loan is extended, the coffee industry businesses can keep waiting unanimously to export at higher prices, prevent price squeeze partners.