Recently, there has been a lot of curiosity regarding the reports issued by foreign organizations such as Reuters, USDA, or even some foreign companies, all discussing the coffee crop season and the related information about Vietnam’s coffee production.
There has been a growing concern about what foreign representatives, such as domestic trade offices or the USDA, have been saying about this. Let’s dive into how they carry out their crop surveys and gather relevant information.
Understanding How They Collect Data
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Firstly, it’s important to note that the coffee crop year in Vietnam starts in October of one year and ends in September of the following year. One of the first differences to consider is how statistics are reported. Foreign companies report based on the coffee crop year (e.g., the 2010-2011 crop year), while Vietnamese agencies report according to the calendar year (from January to December). This creates a mismatch in data, which can be confusing for non-industry readers when comparing domestic and international reports.
Key Information Foreign Companies Focus On
Foreign companies typically pay attention to several factors when conducting their surveys. They have a highly efficient way of using this information to drive business decisions:
1. Weather Data
Foreign companies create detailed spreadsheets to track monthly rainfall, number of sunny days, sunlight intensity, and the duration of sunny days. Some companies even break this data down on a weekly basis.
2. Yield Estimation
Although foreign companies can’t determine the exact yield, the numbers they provide are typically very close and highly reliable. The process is quite simple—by interviewing farmers and using test samples. For example, in Vietnam, there are around 560,000 hectares of coffee land (data from 2011). In key growing regions, they interview 2 farmers per area, aggregate the results, correct any errors, and reach a conclusion.
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Test Samples: This involves taking samples to “double-check” the data collected from farmers. By using these test samples, they can determine the relative “yield” and “quality” while the coffee cherries are still on the tree and green.
3. Cost of Production
Foreign companies also calculate the production cost per kilogram of coffee that farmers actually produce. This is crucial because, in trading, knowing the break-even cost for the seller can help prevent overpricing.
How do they calculate the cost? It’s straightforward—they calculate the types of fertilizers the farmers use, how often they apply them, the amount used, their irrigation methods, whether there are rivers or if wells are dug, etc. This helps them establish a production cost. However, what sets foreign companies apart is that they also factor in Live Cost (the living expenses of farmers) into the total cost of production.
4. Creating Scenarios for Buying and Selling
After collecting the relevant data, foreign experts use it to compare with the seasonal patterns and customs of local farmers to estimate scenarios for buying and selling. They forecast how much coffee the farmers will sell at certain times based on these insights.
5. Credit Information
This might sound odd, but it’s quite important. In the past, Vietnamese farmers often “sold early” to get money to purchase agricultural supplies or even just to buy rice for their daily meals. While fewer farmers do this today, trading agents and warehouses still operate this way. This is another crucial piece of information for market forecasting.
Conclusion: The Importance of Data in Coffee Trading
These foreign companies rely on thorough surveys and effective data analysis to forecast coffee production and trading trends. They gather a mix of environmental, economic, and social data that helps them better understand the market and plan their buying and selling strategies accordingly.
This is just part one of the series. Part two will focus on the companies and processing facilities. If you would like to know more, feel free to provide feedback, and I’ll continue writing!