Seafood, agro-forestry exports drop Impact of changes in foreign exchange rate

08:03 | 02/05/2015 Trade

(VEN) - In the first quarter of 2015, the export value of agricultural, forestry and seafood products hit US$6.13 billion, a decrease of 13.2 percent compared with the same period last year. Economists have cited the changes in the foreign exchange rate as the main factor affecting export activities.

Seafood, agro-forestry exports drop Impact of changes in foreign exchange rate

Rice topped the list of products which saw a decline in their export value. In the first three months, Vietnam exported an estimated 1.01 million tonnes of rice worth US$440 million, down 28.1 percent in volume and 32 percent in value compared with the same period last year. China remained the largest importer of Vietnamese rice, followed by Africa and Southeast Asia.

Seafood ranked second in the list, recording an export value of US$1.27 billion. Vietnam Association of Seafood Exporters and Producers (VASEP) Secretary General Truong Dinh Hoe said that the export value of Vietnamese seafood decreased by 23 percent due to changes in the value of foreign currencies such as the USD, EUR, and JPY, three of the major export markets for Vietnam.

In 2014, most Vietnamese businesses chose to export to the US due to its high consumer demand, and in order to benefit from the high prices in this market. This year, however, the situation has changed completely. The value of the USD has changed, however the USD/VND exchange rate has remained unchanged. This situation has directly affected the profits of businesses.

Song Tien Seafood Corporation (SOTICO) Director Nguyen Thi Anh said that the depreciation of the EUR relative to the USD had made a strong impact on their export activities. Afraid that unfavorable changes in the foreign exchange rate would continue to adversely affect its export activities, SOTICO did not dare to negotiate new orders. Some partners also requested that the corporation reduce its prices. For these reasons, SOTICO saw a considerable decrease in its first-quarter sales.

In the first three months, wood exports dropped by about six percent compared with the same period last year, falling to US$1.5 billion. Vietnam Timber and Forest Product Association (VIFORES) Secretary General Nguyen Ton Quyen predicted that the wood sector would encounter difficulties this year due to input price rises and unfavorable changes in the value of the EUR. The export price of wood products has decreased by about 20 percent, translating directly to a 20 percent drop in the profits of wood businesses.

Despite a decline in the export value of many agricultural products, economists are not overly alarmed as exports often fall in the first quarter due to an interruption during Tet holidays.

Central Institute for Economic Management (CIEM) Deputy Director, Dr. Vo Tri Thanh, said that compared with other economic sectors, agriculture suffered the most from foreign exchange rate changes. Most agricultural product exporters like Vietnam often carry out transactions in USD, so when the USD rises in value, agricultural exports will become expensive, requiring exporters to reduce their prices, he explained./.

By Thuy Duong