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Trouble brews as Lao coffee growers request government help

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A worker picks coffee cherries in a Dao-Heuang Group-owned coffee farm in Laos’ Champassak province in 2017. VIENTIANE TIMES

Trouble brews as Lao coffee growers request government help

COFFEE growers in southern Laos are asking for government assistance to create a fund to support coffee bean processing and provide technical advice to local growers following the recent slump in the market price.

Lao Coffee Association head Sivixay Xayyaseng told Vientiane Times: “The price of green coffee has fallen due to increasing supply on the global market. Especially increased green coffee bean production from Indonesia which is one of the biggest exporters.”

Export Grade A green coffee beans, the highest quality grown in Laos, are currently shipping to Japan for $2,200 per tonne while Grade D green coffee beans fetch $1,300 per tonne in Vietnam. Grade A beans hit a peak of $4,800 per tonne in the past.

About 6kg of coffee cherries are needed to produce 1kg of green coffee beans. The grade is dependent on many factors such as the quality of the coffee cherries as well as the processing.

The recent fall in the coffee price has also adversely affected local processers.

“Some coffee processing companies have stopped operating because they do not have enough turnover. This then affects the coffee growers because coffee fruits must be peeled within 18 hours after harvest or their quality will decline,” Sivixay said.

Processing companies cannot process all the harvest from farmers quickly enough so much of the crop is sold as the cheapest Grade D.

“It would be better if the government could support coffee processing companies by creating a fund to support their businesses or provide low interest loans so they can continue and buy all the harvest from coffee growers,” he added.

Local growers need 2,700 kip ($0.32) per kg for their coffee to remain viable but many have only been receiving about 2,000 kip per kg recently.

Growers are also calling on the government to lower and standardise various coffee bean export taxes.

“For example, in Pakxong district, Champassak province, and in Xekong province companies pay a tax of 200 kip per kg on green coffee beans plus another 0.012 per cent of the total export value to the district before they can export. But growers in Saravan province only have to pay 200 kip per kg,” Sivixay said. VIENTIANE TIMES/ANN