The year 2017 in review: Agricultural products enter difficult markets

Tuesday, 2017-12-19 10:39:31
 Font Size:     |        Print
 

Vietnam's litchi was allowed to be exported to Australia.
 Font Size:     |  

NDO – In 2017, the Vietnamese agricultural sector continued to face various difficulties and challenges, particularly the complicated and strict trade barriers, as well as cutthroat competition for agricultural exports.

However, in this context, the total export turnover of the sector this year still saw an increase of over 10% compared to last year, with the entrance to major markets of key commodities including fruits, vegetables, wooden furniture, seafood and aquatic products.

‘Tripod’ promotes exports

Inheriting the experience gained from 2016, when export turnover reached a record of US$32.1 billion, since the beginning of 2017, many experts and policy makers anticipated the issues that affected the trade of Vietnamese agricultural products. They were the enhancement of the interdependence among emerging and developing economies in global trade and their increasingly attention to the domestic markets, as well as the saturation and increased protection for developed markets. This context has affected the maintenance of the growth and competitiveness of Vietnamese agricultural products, the business efficiency of agricultural enterprises and sustainable livelihoods for people in rural areas.

The sector should identify three key issues which were considered as a ‘tripod’ for its growth, including improving productivity and quality, the position of each commodities in the global market, and restructuring the market for each key agricultural commodity such as rice, aquatic products, fruits and vegetables, cashew nuts, tea and rubber.

The emergence of global protectionism, climate change, value chain management capacity and brand building will pose challenges for the Vietnamese fishery industry in the short and long term. With the strong integration in global trade, as well as the centralisation of added value in processing, trading and branding activities, the fishery sector has asked all actors (including policy makers, enterprises, farmers and researchers) to change their minds.

In recent years, fruit and vegetables have become a commodity with rich potential for Vietnamese agriculture as its export turnover has continuously increased. Notably, Vietnamese exporters has successfully ‘opened the door’ to several developed markets with high prices, contributing to diversifying markets and reducing the risks. However, Vietnamese fruit and vegetables have remained fragmented and immature in the international market.

According to statistics by the Ministry of Agriculture and Rural Development, Vietnamese agricultural products are available in more than 180 countries and territories around the world by the end of 2017. As of late November, agricultural export turnover reached US$33.14 billion, an annual increase of 13.8%. The key exported commodities, including aquatic products, fruit and vegetables, rice and rubber, have significantly contributed to this record growth.

Specifically, fruit and vegetables recorded the highest export growth rate. The total value of fruit and vegetable exports was estimated at US$3.16 billion in the first eleven months of this year, up 43.2% over the same period in 2016. China, Japan, the US and the Republic of Korea are the four leading importers of Vietnamese fruit and vegetables, with market shares of 75.6%, 3.6%, 2.9% and 2.6% respectively. Many other difficult markets have gradually accepted Vietnamese fruit and vegetables. For example, fresh dragon fruit was officially allowed to enter Australia in August and the US has agreed to import milk fruit from Vietnam.

Towards sustainable development

In addition to the efforts and successes in developing and expanding the export market, the exports of Vietnam’s key agricultural products face numerous difficulties. The processing enterprises and facilities are still scattered and operate on a small scale; and their management and business capacity is limited. In addition, their technologies are backward and simplistic and only 25%-30% of them use modern processing lines.

The main agricultural products are less competitive and do not have brand names in the international market. Their exports are mainly in the form of raw products without much added value.

Technical barriers are a great difficult for Vietnamese enterprises when exporting agricultural products.

For example, when exporting catfish to the US, Vietnam faced difficulties as the US side not only inspected all of the shipments at border gates but also checked the origin of the products. Specifically, according to new regulations, since September 1, 2017, 100% of the shipments of catfish imported from Vietnam will be checked in full by the US Department of Agriculture (USDA). After that, standard products will be labelled with regulation conformity before being sold to the market.

In early May 2017, the EU appointed a delegation to inspect the fishing activities in Vietnam and issued five warnings about the illegal exploitation of the Vietnamese side. Seeing no progress after the warnings, the EU decided to issue the ‘yellow card’ warning to the country on October 23. If Vietnam cannot fulfill the recommendations over the illegal fishery exploitation, the EU will then issue a ‘red card’ which could make Vietnamese aquatic products unable to enter the EU market.

According to economic experts, in order to promote the exports of the key agricultural products to international markets, it is essential to synchronously implement measures. The Government should enhance their investment in building and developing an information system on agricultural products in the world to support domestic enterprises in their production and export activities, avoiding losses and reducing risks for both enterprises and farmers. The Government also needs to adjust its policies towards attracting more investment for agriculture, while improving the quality of products, meeting technical requirements, and improving the position of the brand of Vietnamese agricultural products within the international market.

In the long run, the State should plan suitable production and cultivation areas and set rational coordination in accordance with the export demand of the market. It is necessary to pay great attention to the application of high technology and advanced techniques from production to processing and the preservation of agricultural products to meet the high demand of the markets, particularly those with strict protectionism and technical barriers.

Production and export enterprises should focus on improving their products’ quality, meeting the international standards. The requirements of VietGAP and Global GAP should be applied for most products, because they will become the requirements of import markets in the future. The enterprises need to set out strategies on their product development and market penetration in accordance with the demand and actual situation of each market and their ability, as well as to promote synchronous solutions to effectively implement the strategic orientation of agricultural exports, and maximise the added value of exported agricultural products by advanced and modern processing technology.

The relevant agencies should continue to modernise their forms of trade promotion for agricultural products, particularly key commodities. The exchanges and cooperation opportunities between Vietnamese enterprises and foreign investors from large import markets, including China, Japan and the US, are essential to form a global value chain. In 2017, the work of seeking and expanding the market for agricultural products has been enhanced. On May 26, 2017, Minister of Agriculture and Rural Development Nguyen Xuan Cuong directly met and exchanged with 34 Vietnamese ambassadors and consul generals before taking missions in foreign countries during the 2017-2020 period. He hoped that the ambassadors and consuls generals would continue to help the agricultural sector to maintain and expand its export market, as well as gaining access to new technologies, particularly the varieties and processing technology. The ambassadors appreciated the sector’s actions and said that one of the issues that the Ministry and Foreign Affairs paid much attention in the coming time would be the maintenance and breakthrough to both traditional and new markets.

In early October, after nearly 10 years of negotiations, the US allowed to import milk fruit from Vietnam. Along with litchi, longan, rambutan and dragon fruit, milk fruit was the fifth kind of fruit exported to the US market, creating more incentives for domestic enterprises to promote their exports to large and difficult markets.