09:54 | 25/10/2016 Trade
(VEN) - Since a number of free trade agreements (FTAs) took effect, Vietnam has seen the growing inflow of high-value imported meat to the domestic market. This trend is expected to continue as tariff barriers have been gradually reduced and will be entirely eliminated in the future
Meat imports increase strongly
Data from the European Commission show that meat exports from the EU to Vietnam have grown continuously in both volume and value in recent years. The export value rose from nearly €7.37 million in 2013 to €15.7 million in 2014, €23.3 million in 2015, and is expected to exceed €25 million this year.
According to the Union of Producers and Employers of the Meat Industry (UPEMI), European meat exports to Vietnam grew 7.5 times in volume within three years from 2013-2016 and are expected to continue increasing thanks to the EU-Vietnam FTA (EVFTA). About 100 European businesses, including 45 Polish companies, have been licensed to export meat to Vietnam, a representative of UPEMI said.
As committed in the EVFTA, taxes applied to meat imports from the EU into Vietnam will be reduced within 3-7 years and then removed entirely, UPEMI Managing Director Agnieszka Rozanska said. This will reduce European pork, beef, and chicken prices in the Vietnamese market.
Maxim Basov, General Director at Rusagro, one of the largest Russian agricultural groups, said Rusagro has received a license to export pork to Vietnam and they will start their first container next year.
Imported beef is sold at most supermarkets in Ho Chi Minh City such as Metro, Emart, Lotte Mart, Big C, and Giant. Some supermarkets, Giant for example, sell in large volume pork, beef, and chicken imported from Japan, Australia, and Europe.
The inflow of imported meat has created pressure for domestic producers. According to Southeastern Livestock Association President Nguyen Van Ngoc, each kg of chicken imported from the US costs less than VND20,000, including taxes (25 percent) and transportation costs, which is VND6,000 lower than the domestic production cost. Similarly, imported pork from European countries such as Poland costs from US$2-2.2 per kg, excluding taxes (15 percent). Hence, if they use imported meat, food processing companies will be able to save at least 15-20 percent of production costs in comparison with using domestic meat. Clearly, domestic meat cannot compete on price with imported meat.
From a business point of view, Vissan General Director Van Duc Muoi admitted the increasing presence of imported meat in the Vietnamese market, and that imported meat is about 15 percent cheaper than domestic meat. This will be a big challenge to the domestic livestock sector as well as food processing companies. However, most Vietnamese consumers still have the habit of buying fresh meat from supermarkets and traditional-style markets - this is a competitive advantage of domestic meat.
Vissan General Director VAN DUC MUOI:
In the context of growing competition, domestic businesses need to give top priority to food quality management and improve technology to create the best products.