Agricultural exports see many bright spots
Wednesday, 2016-12-21 08:25:48
NDO - Vietnam’s farming exports in the first eleven months of 2016 reached US$29.1 billion, up 5.9% over the same period of last year, with eight commodities each earning more than US$1 billion.
This is a remarkable result given the fact that 2016 was a tempestuous year in terms of weather, production and market forces, which had a significant impact on export revenues from many products.
Fruit booms, seafood beats expectations
According to the General Department of Customs, exports of fruit and vegetables reached nearly US$2 billion in the first ten months of 2016, up more than 30% over the same period of last year. Total revenue figures for the whole year are expected to reach US$2.3-2.4 billion.
Fruit accounted for nearly 74% of revenues in this export category, with 29 kinds of fruits shipped to many markets around the world, including demanding ones such as Japan, the US, the Netherlands, Belgium, Australia and the Republic of Korea. Dragon fruit, longan, watermelon and mango are among the highest-earning. According to the Department for Plant Protection, there is still much room for fruit and vegetable exports, which are currently shipped mainly to China. Therefore, revenues are bound to increase further if trade promotion activities are more effective.
Although it has not experienced a breakthrough, seafood has still proved to be one of the leading farming exports with the largest contribution to export revenues in the sector. The first eleven months of the year saw seafood exports up 6.9% from a year earlier to US$6.4 billion. The US, Japan, China and the Republic of Korea were the largest buyers of Vietnamese seafood with a combined market share of 54.1%. In the aftermath of the environmental incident affecting the four central provinces of Ha Tinh, Quang Binh, Quang Tri and Thua Thien–Hue, such results demonstrated the strenuous efforts of the entire sector.
Shrimp and catfish were the main seafood exports, with catfish expected to generate US$1.67 billion in all of 2016, up 6.6% from the previous year, and shrimp US$3.1 billion, a year-on-year rise of 5%. Tran Van Pham, General Director of Soc Trang Seafood Company says there are plenty of opportunities for Vietnamese seafood, but what is concerning is quality and food safety, adding that if this stage is properly handled, revenues can exceed US$7 billion a year.
While fruit exports saw a phenomenal boom and seafood surpassed the target, rice was experiencing an unstoppable slowdown. The grain’s export volume in the eleven months through November was estimated at US$4.54 billion, earning US$2 billion, meaning reductions of 25% and 20.3% in volume and value respectively, despite the fact that average rice export prices in the first ten months of 2016 rose 5.6% over the same period of last year.
Shipments to China remained the largest, but exports to established markets such as the Philippines, Malaysia and Singapore fell sharply between 34.1% and 61.6%. The Vietnam Food Association (VFA) attributed this contraction to the considerable success of the governments in those countries in implementing policies of autarchy in agriculture, meaning shrinking rice imports. In addition, Vietnam’s rice exports to the US fell by 28.3% because many shipments were returned, as Vietnam’s rice failed to meet the market’s strict requirements.
Identifying key products
A look at the agricultural export picture in 2016 clearly reveals which goods should receive more attention in 2017. Let’s take rice as an example. There has been much debate in recent years over whether Vietnam should retain its rice growing area and boost output when revenues from rice exports are becoming smaller than other goods and rice growers cannot get rich from their paddies. But the sharp reductions in both export volume and export value in 2016 have sounded an alarm bell. And if Vietnam continues to produce low-quality rice and export to traditional markets, such contraction cannot be averted.
At a recent workshop, a VFA representative suggested that Vietnam should review its rice export strategy by scaling back volume from the current 7-8 million tonnes to around 2-3 million tonnes a year and increase the share of premium rice to increase the export prices and compete more effectively with other exporters in demanding markets. Nguyen Dinh Bich, a rice expert, says a shift to a smaller volume and higher quality has been suggested for years, but so far little effort has been put into this transition, making Vietnamese rice virtually invisible on the world market despite its volume being among the largest in the world. The fall in both volume and value in 2016 is definitely the most convincing evidence of this, forcing concerned parties to redraw the sector’s growth path in the future.
One of the goods that needs large investment to increase revenues is coffee, which is expected to hit 1.75 million tonnes with revenues of US$3 billion in all of 2016. The Vietnam Cocoa and Coffee Association is aiming to raise the ratio of processed coffee to 30% from the current 10%; instant and roasted coffee from current 11% to 25% and revenues to between US$3.8 billion and US$4.2 billion by 2020.
But in order for key agricultural exports to fully realise their potential, it is necessary to pay attention to processing and exporting companies, the core force that determines the success of these products in the context of global integration. Aware of that, Minister of Agriculture and Rural Development Nguyen Xuan Cuong held a dialogue with enterprises investing agriculture for the first time in early December. Many questions revolved around what the ministry’s strategy for high-earning exports would be, from land and capital access to science and technology.
Enterprises all know that increasing the proportion of highly processed agricultural products requires a great deal of capital and technology, which not every enterprise is capable of meeting, while access to bank loans is not easy at all. It is hoped that after the dialogue, the Ministry of Agriculture and Rural Development will introduce appropriate policy measures to support agribusinesses and make agricultural export activities more professional and effective.