After falling several months behind in payments for raw beans, one of the largest firms in Laos, Dao-Heuang Group, has racked up an estimated 27 billion kip in debt owed to 2000 of the country’s coffee farmers.
According to the Champassak provincial Industry and Commerce Department, after paying off other significant debts, representatives for the company have vowed to pay off coffee growers next.
At a meeting called by the department last week, the company’s representatives were invited to join a discussion with farmers to identify solutions to the problem.
After receiving a letter of petition from the representative for coffee growers in Champassak province, the Ministry of Industry and Commerce announced that the provincial Industry and Commerce Department would cooperate with the relevant sector in attempt to resolve the issue.
Dao-Heuang Group remains the dominant coffee buyer in Laos, leaving many coffee growers with very few alternatives to sell their product as demands from other companies remain limited. The company assures debts will be paid, however has not presented a timeline as to when.
Coffee continues to be an essential commercial export crop in Laos, and the nation’s product remains popular among people domestically, while increasingly seeing demand from the international market as well. It is exported to China, Taiwan, Italy, Japan, Spain, Poland, Germany, the US, France, Belgium, Sweden, Thailand and Vietnam.
However, challenges for the industry linger as the world price for coffee has dropped considerably over the past few months.
According to the Lao Coffee Association, robusta beans are down from US$2,100 in March to US$2,014 in June.
The higher grade Arabica have been seeing an even more dramatic dip, previously selling at US$ 3,100 in March before falling to US$2,500 a tonne in June.
The value of coffee exports through the Lao Coffee Association has reached 21,000 tonnes, evaluating at more than US$50 million.
More and more investors from several countries are investing in coffee farms across the country including those from Vietnam, Thailand, the Republic of Korea, Chinese Taiwan, Singapore and India.