Vietnam COVID-19 Lockdown Causing Major Disruptions In Global Coffee Supply

The recent lockdown imposed in Vietnam is expected to result in significant disruptions to the global coffee supply. Several cities, including Binh Duong, Ho Chi Minh City, Long An, Dong Nai, and Tay Ninh, have been kept under strict movement restrictions as cases continue to rise throughout the country.

Activity in the exporting hub of Ho Chi Minh has all but ceased since the imposition of the nationwide lockdowns. Authorities have implemented stay-at-home orders for all residents until Sept. 5.

As of Monday, Vietnam has confirmed a total of 435,265 COVID-19 cases and 10,794 COVID-related deaths. The nation's health ministry said community transmission cases are now being reported in almost all major cities.  

The country is a major supplier of Robusta beans, scientifically known as coffee canephora, which is mostly used in espresso blends and instant coffee. Since the start of the year, prices for the bitter-tasting bean have surged by more than 50% due to global supply chain disruptions.

With the lockdown in place, Robusta bean producers in Ho Chi Minh and other parts of Vietnam are unable to transport their goods to ports for shipment abroad. The movement restrictions also exacerbate existing issues that exporters are already struggling with such as shipping container shortages and skyrocketing freight costs.

The Vietnam Coffee-Cocoa Association has repeatedly urged the Vietnamese government to ease restrictions or to at least allow coffee bean producers to ship their products. Vietnam is a key part of the global shipping network and with the country in lockdown; a lot of goods are not reaching their destinations in time.

Last week, Vietnam's transport minister assured trade organizations that the country will do everything it can to ease unnecessary burdens related to the transport of goods.

Apart from the lockdown in Vietnam, the coffee industry is also facing major supply issues due to other factors. In Brazil, the world's largest producer of Arabica coffee beans, production had greatly diminished as farms were hit by severe drought and frost.

According to reports, severe frost not seen since 1994 has destroyed hundreds of farms across Brazil, sending unroasted coffee bean prices to new highs. Some farmers, reportedly, had to throw away their crops and replant trees, which means that it could take up to three years to replenish supplies.