Global coffee supplies suffer fresh setback amid virus surge

Exporting hub Ho Chi Minh city in Vietnam under strict lockdown

A view shows light traffic on a street in Ho Chi Minh city amid the Covid-19 outbreak. Reuters / Stringer

World coffee supplies are suffering a fresh setback due to stringent travel curbs in Vietnam – the second-largest coffee producer – to control the spread of the delta variant of Covid-19.

The government is keeping the city of Ho Chi Minh, the exporting hub, under lockdown because of a surge in virus infections and has tight movement controls in some key producing areas of the Central Highlands.

Exporters are struggling to transport beans to the ports for shipment, according to traders and suppliers. That’s adding to a raft of other logistical problems such as a dire shortage of containers and soaring freight rates.

Trade groups, including the Vietnam Coffee-Cocoa Association, have petitioned the government to ease the curbs, which they say cause delays, raise costs and put shippers at risk of having to compensate buyers for late delivery.

In response, Transport Minister Nguyen Van this week ordered authorities in the south of the country to do everything possible to facilitate the transport of farm products, such as coffee and rice. He told local governments they must avoid all unnecessary requirements and burdensome paperwork.

Global coffee prices have been on a tear amid mounting threats to supplies from South America to Asia. Drought and frost ravaged crops this year in top grower Brazil, which produces the premium arabica variety, adding to the widespread logistics issues in Vietnam and Indonesia.

While some roasters decided to switch to cheaper supplies of robusta beans from Vietnam after the frost destroyed production in Brazil, soaring prices and shipment woes now make that option far less appealing.