HOANG THI THOM, a coffee grower in no. 2 producer Vietnam, isn’t keen to sell this year’s harvest.

With prices for the robusta coffee she grows down 18% in 2017, Thom has sold just a tiny fraction of the 6 to 7 metric tons she expects to gather this season. The rest she plans to hold back until after the Tet holidays that celebrate the Lunar New Year in mid-February.

“We would suffer a big loss if we sold coffee beans at this dirt-cheap price,” said Thom, who farms in Dak Lak, Vietnam’s top growing province. “The remainder of my harvest I think I would sell in February, after Tet.”

And Thom is not alone. Eleven thousand miles away in top producer Brazil, grower Joao Luis Carneiro Vianna is holding back half of this year’s harvest, more than the usual 30%. The price of the milder-tasting, more-expensive arabica beans he produces is down 8% this year.

Such reticence to sell too cheaply by well-capitalized farmers in Brazil and Vietnam could upset speculators’ bets that a glut will weaken the market further. Prospects of a bigger Vietnamese crop this year, a bumper Brazilian harvest in 2018 and a resulting surplus have helped drive down prices.

Export Trading Group sees a surplus of 5.5 million bags in 2018-2019, said Eric Llull, a coffee research manager at the company in Switzerland.

“These are two of the countries where farmers are more sophisticated,” Jose Sette, executive director at the International Coffee Organization, said in an interview in Ho Chi Minh City. “At current prices levels, it’s not so attractive to farmers. There’s no enthusiasm for selling quickly.”

Vietnamese production is expected to rise 5% to 10%, rebounding from last year’s rain-hit harvest, according to Intimex Group, the nation’s largest exporter. In Brazil, traders expect production to expand as arabica trees enter the higher-yielding half of a two-year cycle. Some are even betting on a monster crop, with output at a record.

While increases in both countries could reverse a shortage ETG estimates at 3.1 million bags in the season that started in most countries on Oct. 1, hoarding may temporarily withdraw excess from the market. Some will also be used to replenish carry-over stockpiles that have fallen in both Brazil and Vietnam.

“What the world ignores is that the carry in this year is small, so total availability is the same” in Vietnam, Alex Gruber, a director at RCMA Commodities in the nation, said in an interview in Ho Chi Minh City Monday. “In Brazil, the carry in is very low so the pipeline needs to be built out again.”

Coffee inventories in Brazil will fall 61% to 1.04 million bags by June 2018, according to Santos, Brazil-based exporter Comexim Ltda. In Vietnam, stockpiles fell 69% to 1.18 million bags at the end of last season, the lowest since 2011-2012, the US Department of Agriculture estimates.

The market is also counting on a large crop in Brazil when there’s still a lot of time before the harvest starts, said Judith Ganes, president of J. Ganes Consulting LLC. Brazil’s crop may not be as “massive” as some traders expect as weather conditions haven’t been ideal and there’s also pressure from disease including coffee-berry borer, she said.

“I’m not 100% sure that it’s going to be this massive, massive crop,” she said in an interview in Ho Chi Minh City. “This crop that everyone is talking about needed perfect conditions and we didn’t get it.”

Any unfavorable turn in the weather is also a threat as 66% of global production now comes from Brazil, Vietnam, Colombia and Indonesia, Nicholas Strychalski, head strategist at Cofco International, the trading unit of China’s largest food company, said at the Asia International Coffee Conference in Ho Chi Minh City. That concentration leaves the market much more vulnerable to weather shocks, according to the ICO’s Sette.

“Any weather hiccups in any of these big procures would cause a supply shortage,” Strychalski said.

While Vietnamese farmers are selling more than previously expected partly due to rising wages, that will ease as soon as they manage to cover their costs, RCMA’s Gruber said. They will continue to hold back if prices fall below $35,000 dong ($1.54) a kilogram, said Do Ha Nam, chairman of Intimex.

“We know the farmers have the coffee but obviously the market has come lower,” Jonathan Clark, general manager of Dakman, a joint venture of commodities trader ED&F Man Holdings Ltd. in Vietnam, said at the conference. “Farmers don’t like the price because obviously they got higher prices last year, so it takes time for them to adjust.”

Vietnamese speculators who typically invest in assets like property have become more involved in the coffee market in the past five years, Nguyen Chi Cuong, chief executive officer at trader NC Group Ltd., said in an interview in Ho Chi Minh City Tuesday. They are able to hold large quantities of stocks to profit from rising prices later, he said.

In Brazil, many growers are organized in large cooperatives and own bigger farms, which allows them to hold back sales if prices don’t reach desired levels. The drop in the local currency also means farmers have made more money in past years.

In the country’s top arabica region of Minas Gerais, grower Vianna has gathered 1,300 bags this year but now says he only plans to sell the rest of his beans when prices reach 500 reais ($154.55) a bag, about 50 reais higher than current levels.

“I’m selling only what’s necessary to maintain cash flow,” he said. “I’m watching to see if there’s a window of better prices to sell my coffee.” — Bloomberg

MOVE OVER, taxes on carbon and sugar: the global levy that may be next is meat.

Some investors are betting governments around the world will find a way to start taxing meat production as they aim to improve public health and hit emissions targets set in the Paris Climate Agreement. Socially focused investors are starting to push companies to diversify into plant protein, or even suggest livestock producers use a “shadow price” of meat — similar to an internal carbon price — to estimate future costs.

Meat could encounter the same fate as tobacco, carbon and sugar, which are currently taxed in 180, 60, and 25 jurisdictions around the world, respectively, according to a report Monday from investor group the FAIRR (Farm Animal Investment Risk & Return) Initiative. Lawmakers in Denmark, Germany, China and Sweden have discussed creating livestock-related taxes in the past two years, though the idea has encountered strong resistance.

Greenhouse gas emissions from livestock are about 14.5% of the world’s total, according to the Food & Agriculture Organization, which projects global meat consumption to increase 73% by mid-century, amid growing demand from economies like India and China. That could result in as much as $1.6 trillion in health and environmental costs for the global economy by 2050, according to FAIRR, a London-based initiative created by Coller Capital. 

“Investors are starting to consider this in a similar way to how they have considered climate risk,” said Rosie Wardle, who manages investor engagements at FAIRR. “It’s kind of accepted now that we need to address livestock production and consumption to meet that 2-degree global warming limit.”

The Guardian newspaper reported on the FAIRR report earlier Monday.

FAIRR’s sustainable protein engagement plan, currently supported by 57 investors with $2.3 trillion under management, plans to ask 16 major food multinationals this year to “future proof” their supply chains by diversifying their protein sources.

The possible impact of a meat tax could be similar to sugar taxes. While sugar taxes aimed at fighting obesity in the US have faced some resistance, similar levies have been implemented in 18 countries and six US cities, according to data compiled by Bloomberg Intelligence. When Mexico imposed a special tax in 2014 on sugary drinks, it lowered per capita consumption of those beverages by 6% in 2014, 8% in 2015 and 11% in the first half of 2016, according to Mexico’s National Institute of Public Health.

The idea of taxing meat has been hamstrung by fears of creating a political backlash by taxing farmers, FAIRR said in the report.

Plant protein, however, is already capturing a sizable amount of demand for protein, pushed partially by millennials and a trend toward incorporating more vegetarian food into Western diets. About 4 in 10 Americans and Canadians are actively trying to incorporate more plant-based food into their diets, according to a Nielsen Co. global survey.

A venture capital fund owned by Tyson Foods, Inc., made its second investment last week in Beyond Meat, which creates a plant-based burger that’s also backed by billionaire Bill Gates and Leonardo DiCaprio and sold in thousands of US grocery stores and restaurants. Tyson took an initial 5% stake in the burger creator last year. Green Century Capital Management asked the poultry powerhouse in an August 2016 shareholder proposal to explore more plant-based protein opportunities.

Tyson started work on the Beyond Meat deal several months before receiving the proposal amid growing“consumer interest in all forms of protein,” said Gary Mickelson, a spokesman for the Springdale, Arkansas-based company.

“Besides all of the risks that are in the meat industry, where you are talking about huge amounts of emissions and water pollution, this is about diversifying and figuring out what areas can lead to growth,” Marissa LaFave, shareholder advocate at Boston-based Green Century, said in an interview.

The firm, which oversees about $500 million, plans to introduce more plant-based proposals at food companies this year, according to LaFave, who said companies including General Mills, Inc., Campbell Soup Co., Unilever NV, Kraft Heinz Co., Kellogg Co. and Chipotle Mexican Grill, Inc. are already introducing more plant-based food. Danone SA agreed to acquire WhiteWave Foods, a top maker of nut and soy milks, for a 23% premium last year, and said in July that the acquisition is expected to help sales.

Tyson, which described itself for years as a producer and marketer of chicken, beef and pork, is quickly recasting its image. The company now calls itself “one of the world’s largest food companies and a recognized leader in protein.” — Bloomberg