14:32 | 07/07/2016 Trade
Since late 2015 and the first months of 2016, Vietnam’s agricultural sector has continuously faced woes, including damaging cold in the north, drought and saltwater intrusion in the Mekong Delta provinces and unfavorable factors in the market.
Lychees are checked before being exported to the US and Australia - (Credit: NDO)
During the first five months of 2016, the agricultural sector, particularly exports, has faced numerous difficulties. The El Nino extreme weather phenomenon has negatively impacted key agricultural areas; in addition, drought and saltwater intrusion have reduced the winter–spring crop by 1.13 million tonnes of rice. The severe saline intrusion with saltwater encroaching up to 10-25km further inland compared with seasonal averages has resulted in a decrease of 12% in the output of prawn and 14% of whiteleg shrimp. In addition, drought has caused the death of a large number of coffee trees as well as strong decrease in productivity of citrus, coconut and pepper.
In 2016, Vietnam’s agricultural commodity market is forecasted to face significant challenges as some European importers have warned about pepper contaminated with pesticide residues, Indonesia has required plant quarantine and China has set out strict regulations on imported natural rubber. Moreover, the international market has suffered from strong impacts of currency devaluation of the large exporters. Vietnam’s agricultural exports also faced devaluation of domestic currency in some countries in order to increase their own exports, which made the price of Vietnamese agricultural products higher than other countries and reduced their competitiveness.
However, export turnover of Vietnam's agro-forestry-fishery products reached US$12.18 billion in the first five months of this year, a year-on-year increase of 4.9%. Of the turnover, the export value of major agricultural commodities was estimated at US$6.05 billion, up 6.6% over the same period last year. Facing a crushing calamity in recent months, the growth that the Vietnam’s agricultural sector made was actually a feat.
Notably, some agricultural commodities, particularly exported vegetables and fruit, achieved spectacular growth. The exports of vegetables and fruits have brought US$1.8 billion in 2015 and US$900 million in the first five months of 2016. In addition, numerous kinds of Vietnam’s fruits have met all imported requirements of highly regulated markets like the US, including dragon fruit, rambutan, longan and lychee. Over the past five months, Vietnam has exported nearly 2,000 tonnes of fruits to the US.
Selecting key items, attracting more enterprises
Numerous policy makers, economic experts and the business community have said that the development of markets for Vietnam’s agricultural commodities is necessary to promote agricultural exports. Firstly, Vietnam should continue to develop business with traditional partners including Philippines and Indonesia for rice exports, EU for pepper and cashew nut and the US for aquatic products as well as expand its trade and business with potentials markets such as Africa and EU for rice exports, and India, Malaysia and the US for rubber.
In addition, relevant agencies should make policies on the exchange rate more flexible and tighten their management of smuggling, trade fraud, livestock products and agricultural materials as well as better control implementation of food safety and hygiene and output quality of fruits, vegetables, livestock products and aquatic products.
It is essential to select and invest in key exported agricultural commodities posting strong growth including aquatic products, fruits and vegetables. Despite being considered one of the commodities with strength in exports, breeding and catching aquatic products have faced numerous hurdles including weak infrastructure, irrigation, water supply and drainage systems, causing difficulties in controlling diseases.
According to Chairman of the board of directors cum General Director of Minh Phu Seafood Corporation Le Van Quang, currently there are several enterprises cheating in processing exported shrimp by injecting impurities into shrimp, reducing the size and weight of shrimp and lowering prices. Japan has put Vietnam’s exported agricultural products on a list of commodities in need of controlling antibiotics and microbiology. He also emphasised that in order to ensure stable growth and maintain the brand for this exported commodity, State management agencies should check shrimp before they are harvested. In addition, enterprises working in this field must adhere to international food safety standards, such as BAP.
As agricultural exports are facing numerous difficulties, the spectacular growth of the exports of fruits and vegetables is a promising highlight. This growth is partly due to negotiations for expanding both easy-going and strict markets such as Eastern Europe, the EU, Southeast Asia, Japan, Australia and the US. However, Vietnam’s aquatic sector needs to make more efforts to maintain this high growth rate. The signing of new-generation free trade agreements (FTA) reduced the tariffs by up to 95% and all countries made solutions to lift technical barriers to protect domestic production. As such, Vietnam should always update quarantines and resolve all technical barriers in different markets.
In addition, managers should pay attention to developing that business community, which is considered an important factor for sustainable growth. Enterprises can guide farmers in applying science and technology achievements in agricultural production, contributing to enhancing the competitiveness of Vietnamese agricultural products./.