HANOI - Coffee exporters in Vietnam, the world's second largest producer of the commodity, are trying to raise funds via stock listings or share auctions ahead of a major robusta crop as banks tighten lending to avoid bad debt.
Coffee output from the 2010/2011 harvest due to start late this month could rise 2.3 percent to 19.77 million bags, or 1.19 million tons, a Reuters poll showed on Tuesday.
Exporters and domestic processors would need $1.76 billion to buy all the beans from the harvest, based on Thursday's domestic market price of 28.9 million dong a ton.
Bankers and coffee exporters say corporate demand for cash for bean purchases often stays high in the fourth quarter, especially in November or December, when the harvest peaks.
Daklak Investment Export-Import Corp, or Inexim Daklak, one of the country's top coffee exporters, hoped to raise at least $1.2 million by auctioning 1.65 million shares early next month on the Hanoi stock market, the exchange said on Thursday.
Harvest starts next month
The company is based in Daklak, Vietnam's largest coffee growing province, where the harvest will start next month. Inexim often buys half of its annual coffee exports in December.
Another arabica exporter, Thai Hoa Vietnam Group Co, planned a listing on the Hanoi stock market to raise funds for expansion after arabica prices hit a 13-year high recently, its chairman and chief executive Nguyen Van An said.
Share auctions and listing on the stock market are separate processes in Vietnam and many companies often choose to sell shares via auction before making their debut on the exchange.
"Banks have limits this year in using short-term deposits for medium- and long-term loans, meaning investment in agricultural businesses is limited, so we have to look for another way to get funds," An told Reuters.
From Jan. 1, 2010, the central bank cut the ratio of short-term deposits banks could use for medium- and long-term loans to 30 percent from 40 percent.
Exporters in the red
Banks have also become more cautious after many Vietnamese coffee firms made losses in the first quarter of 2010, as they signed export contracts late last year with forward shipments, then failed to buy beans locally after prices rose.
"Lending now has to be selective as banks want to avoid bad debt and risks," said a bank executive in Ho Chi Minh City, Vietnam's largest coffee trading market.
Several major banks which announced lending packages for coffee business last year have yet to renew their offers, even though the new coffee crop year has begun this month, she noted.
Only a small lender, Ho Chi Minh City-based HD Bank, said it would extend credit worth 2 trillion dong from next month to coffee companies and farmers.
In February the central bank told Agribank, Vietnam's largest lender dealing mostly in agriculture, to slow lending this year to a rate of at least 20 percent, after its loans jumped 24.4 percent in 2009, as the country tried to rein in inflation.
Vietnam, the world's second largest coffee producer after Brazil, has nearly 150 companies that export coffee, but 80 percent of shipments are handled by 20 companies, led by Vinacafe, Intimex, Thai Hoa Vietnam, Simexco and Inexim Daklak.
In the 2009/2010 season, its coffee export rose 5.3 percent from the previous year to an estimated 1.19 million tons, or 19.87 million 60-kg bags, government data showed.
Most of the ten richest people on the Vietnamese stock market are real estate moguls.
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