09:18 | 25/10/2018 Economy- Society
(VEN) - Vietnam has huge potential for development of its tea cultivation and exports but it needs to develop tea-processing technology, branding, marketing and value chain access.
Export to easy-to-please markets
Vietnam has become the world’s seventh and fifth largest tea producer and exporter with 124,000 hectares of tea and more than 500 tea processing establishments totaling more than 500,000 tonnes of dried tea in annual capacity.
A report by the Ministry of Agriculture and Rural Development’s Department of Agro-product Processing and Market Development showed that tea exports hit an estimated 10,000 tonnes worth US$18 million in July, taking the total to 67,000 tonnes worth US$109 million in the first seven months of 2018, down 12.9 percent in volume and 9.3 percent in value compared to the same period of 2017. The main buyers of Vietnamese tea in the seven months included Pakistan (US$29.9 million, accounting for 32.8 percent of the total), Chinese Taipei (US$12.6 million, 13.8 percent), Russia (US$11.1 million, 12.1 percent), China (US$7.2 million, 7.9 percent), Indonesia (US$4.4 million, 4.8 percent), and the US (US$3.8 million, 4.1 percent).
Chu Xuan Ai, Director of the Ton Vinh Technology and Trade Development Company Limited said new businesses mainly exported tea to Russia and Afghanistan. Vietnamese enterprises have mainly exported tea to easy-to-please markets and haven’t approached such discerning markets as Europe and the US, Ai said.
Nguyen Thi Anh Hong, General Secretary of the Vietnam Tea Association said the growing areas of Vietnamese tea are limited. Small tea processing facilities have mushroomed, scrambling for raw materials and causing difficulties for major tea processing plants, Hong said. In Russia, Vietnamese tea is sold at a higher price than Chinese tea, and consumers prefer Vietnamese tea to Chinese one, leading some Chinese traders to use Vietnamese tea labels to attract buyers, she said.
Improving production chains
Associate Professor Dr. Nguyen Van Nam, former Director of the Ministry of Industry and Trade’s Institute for Trade Research said tea preservation and processing technology in the country remains outdated. Vietnamese enterprises have been able to get rid of tannin in tea leaves so they mainly export raw or semi-processed tea that is then refined by importers, Nam said.
Vietnam maintained a big-scale state-owned tea industry for a long time, Nam said. The country is well suited for tea cultivation, but has focused on tea plantation rather than tea processing, market approach and value chain development, Nam added.
Nam suggested that the Ministry of Agriculture and Rural Development set up a steering committee to restructure the entire tea production and processing chain according to export standards. He also proposed that the ministry devise other solutions to improve the quality of Vietnamese tea products to foreign market standards.
In general, Vietnamese tea is sold at a price 60-70 percent of that of products of the same kind in foreign markets.
Vietnamese tea enterprises need to improve their product quality to reach discerning markets.