Agricultural export revenue sets new record of US$30.8 billion

Wednesday, 2014-12-31 07:50:00
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A cashew processing factory of Ninh Thuan Agricultural Export Company
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NDO - Export revenue from the agricultural sector has surpassed US$30 billion for the first time, reaching US$30.8 billion in 2014, up 11.2% from the previous year with many commodities posting strong growth compared with 2013.

Year of records

Coffee was up 32.2%, cashew nut 21.1%, pepper 34.1% and vegetables 34.9%, to name a few. Ten agricultural commodities in total saw revenues exceeding US$1 billion in 2014. In addition to growth of traditional exports such as seafood, timber, coffee and cashew, the sector saw many new goods joining the US$1 billion club for the first time such as vegetables and pepper. In 2014 Vietnam’s agricultural exports continued to face technical barriers from strict markets. Two lots of Vietnamese fruit and vegetable bound for the EU were found to contain worms, risking a ban on Vietnamese exporters. At the same time, tuna exported to the United States were returned after they were found to contain bacteria such as E. Coli and Salmonella. But in the fourth quarter of 2014, there was good news when Russia decided to lift the ban on seafood from seven Vietnamese exporters. Later the US Department of Agriculture allowed the import of Vietnam’s longan and lychee. And in December, the first lot of shipment of longan was exported to the US while negotiations are underway for more lychee exports in 2015.

With these positive signs, the agricultural sector has set a growth target of between 3% and 3.5% for 2015, to reach around US$32 billion. The difference between US$30.8 billion and US$32 billion is not large but if this target is to be met, it will require a drastic change in market regulation, export regulation and greater efforts from agricultural enterprises.

The lesson from lychee

It is generally agreed that Vietnam’s agricultural sector must focus on the most important market if it wants to maintain growth in 2015. Recently some have said that Vietnam’s agricultural export market was shrinking because the Chinese market was closing. This opinion is partially correct as China accounts for more than 40% of Vietnam’s rice exports and 85% of cassava exports. The figures are also high for a number of agricultural commodities. However a more in-depth analysis shows that in many cases, the market was already shrinking, not because of the reliance on certain markets, but because of shortcomings in the approach of exports.

As economic experts have emphasised, Vietnam must take synchronous and complementary measures, and maintain traditional and large markets while endeavouring to find new markets in order to eliminate reliance on certain markets in a passive way. The search for new markets is the duty of not only businesses but also the Government and relevant agencies. The story of Luc Ngan lychee demonstrates the successful combination of both Government and private enterprise. In May this year when China illegally placed the Haiyang Shiyou-981 oil rig within Vietnamese waters, it was predicted that tensions between the country would affect lychee exports to China, Vietnam’s main market. The Ministry of Agriculture and Rural Development quickly co-ordinated with the Ministry of Industry and Trade, Ministry of Science and Technology and other relevant agencies to organise trade promotion conferences, in a move to foster the consumption of Luc Ngan lychee, in Lao Cai, Lang Son, Quang Ninh and Ho Chi Minh City.

These activities made a positive impact—the volume of lychee sold to domestic consumers rose to more than 50% compared with the 20-30% in the previous years and the total number of lychee sold was maintained. Lychee was also exported to Laos, Cambodia, Singapore and Thailand, along with China. Most notably, 20 tonnes of VietGAP-certified lychee was exported to Japan, one of the strictest markets in the world. The success of the 2014 lychee season is expected to open new options for managing agricultural exports in the future.

2014 also saw the role of enterprises in agricultural development recognised and promoted. The focus is a positive step for Vietnam—if the country wants to have a developed agricultural sector, enterprises must be at the centre of all policies. Currently Vietnam has around 3,500 enterprises operating in agriculture and rural development, accounting for a tiny 1.6% of total enterprises throughout the country, the majority of them small and medium sized businesses. In 2013, the number of newly established enterprises was just over 1,000, down 14% from the previous year, while the number of closures was 1,330. Amid these difficulties, the Ministry of Agriculture and Rural Development has introduced a broad range of measures including restructuring agricultural production, simplifying unnecessary administrative procedures, easing access to loans and formulating incentive policies to encourage the use of science and technology in agriculture.

At a conference on December 25, deputy head of the Central Economic Commission Nguyen Xuan Cuong stressed that although the agricultural sector saw high revenue in 2014, the number of enterprises operating in the sector is still very small, despite being the main force for implementing agricultural restructuring. Without policy to support these enterprises, Vietnam cannot have a large-scale agricultural production sector.

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