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2015-12-15
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Vietnam - Round up of 2015

While the average rainfall in 2015 has been higher than usual with the cropping conditions in the primary growing regions having been almost ideal, the total crop has not registered any significant increase and is estimated to close at 120/125 M.Kgs.  A primary reason for this is attributed to a most unscientific use of harvesting machines which have definitely added up to a loss of crop on the bush.  With labour shortages being reflected at field, factory and trading level, costs are being driven up squeezing margins which, going forward, would mean no capital expenditure at factory level.
 
Market conditions, on the back of VN teas not being perceived as value for money even though overall quality has improved a shade, remain depressing with almost all the regular buyers continuing to be circumspect in their activity.  Added to this is the affect which are being felt from stricter MRL requirements.  Only the lower end of the market has weathered the conditions thanks to continuing demand from the US and Indonesia.
 
Regardless of the fact that a number of factories are moving towards RA certification, unless the market situation changes dramatically all signs for now point to 2016 being a difficult year for the industry.

Updated:2015-12-15