Thai farms warned over coffee trend

Thai farms warned over coffee trend

Despite an increase in coffee consumption and growing interest among southern farmers to convert rubber plantations to grow coffee, competition from neighbouring countries is too fierce, according to a leader of community enterprises.

Pong-udom Chanthong, president of the assembly for community enterprises, said coffee has become a popular drink and the local coffee market is growing but it does not justify supporting more farmers to cultivate the crop.

He said Thai farmers will not be able to compete with Laos and Vietnam, which have favourable locations for coffee growing.

Mr Pong-udom noted the recent trend of farmers in southern provinces such as Chumphon, Ranong, Surat Thani, Krabi and Phatthalung turning to coffee.

However, Mr Pong-udom urged farmers to be cautious because competition from neighbouring countries might be too strong.

“Laos and Vietnam are the region’s major coffee producers and they are part of the AEC [Asean Economic Community],” he said.

“Not only do they have relatively low production costs, they also produce quality coffee beans.

“If we encourage our farmers to grow more coffee, it will lead to oversupply and we can’t afford to compete,” he said adding, that Indonesia has also recently promoted coffee growing.

Mr Pong-udom, who runs an instant coffee business, said a sound option for Thailand is to remain a coffee importer.

Nat Duangsai, vice-president of the Agricultural Cooperative Federation of Thailand, said coffee production is becoming a new trend here.

“Coffee plantations are growing but farmers proceed slowly and cautiously,” he said.

In the southern region where there are about 200,000 rai of coffee plantations, farmers grow robusta beans due to the favourablel location and weather conditions.

Coffee plantations are scattered mostly in Chumphon and Ranong, he said, noting that some rubber growers in Surat Thani, Krabi and Phatthalung have switched to coffee with about 2,000 rai devoted to the crop.

Rubber and palm growers in the South have turned to coffee because rubber and palm oil prices are low. The region is suitable for robusta, while arabica is common in mountainous areas in the North.

As for crop prices, Mr Nat said the situation for coffee remains largely unchanged. While prices vary between 69 baht and 70 baht per kg, some of the country’s major buyers offer 60.5 baht per kg.

According to Mr Nat, while demand for coffee has risen and the market has increased by 30% overall, the price of coffee has not followed. In short, coffee growers do not quite benefit from the growth.

He said certain major companies reportedly try to keep the prices low, deterring others from buying at higher prices. When there is a dearth of local supply, they resort to imports.

Mr Nat said the price of imported coffee, most of which comes from Vietnam, is lower than local output. He added that even though Vietnam faces natural disasters like flooding, damage to its coffee plantations is minimal and coffee production in the country increases every year.

A source in the coffee trade said fresh coffee berries in Laos are priced at 30 baht per kg while green beans are priced at 40-50 baht per kg. Instant coffee costs no more than 100 baht per kg.

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