Agricultural logistics costs in Vietnam are 300% higher than in Singapore

Need to complete the national logistics system for agricultural products to reduce logistics costs and increase competitiveness for the economy

This is the figure given at the Scientific Workshop on orientations for perfecting and improving the efficiency of the logistics service supply system in the agricultural value chain organized by the Institute of Policy and Strategy for Agricultural and Rural Development ( Ministry of Agriculture and Rural Development ) on the morning of November 2, in Hanoi.

Logistics costs High prices reduce the competitiveness of Vietnamese agricultural products.

Speaking at the opening of the workshop, Dr. Nguyen Anh Phong - Deputy Director of the Institute of Policy and Strategy for Agricultural and Rural Development said that the logistics industry is playing an increasingly important role in the entire process of social activities, especially in the production, circulation and distribution of products and services. Logistics services for agricultural production and business are a major service sector in the logistics supply chain.

In recent times, logistics services in general and logistics for agricultural production and trading in Vietnam in particular have had significant developments. Infrastructure, logistics services, and suppliers have continuously grown and developed, providing good support for the provision of inputs to ensure production, and for the production and trade of agricultural products.

Chi phí logistics nông nghiệp ở Việt Nam cao hơn Singapore 300%

However, logistics services in general and agricultural logistics in particular still have many limitations. The shortcomings of the logistics system have a significant impact on the efficiency of the agricultural supply chain.

The rate of loss and damage in the agricultural product chain is high, from 25 to 30%, of which seafood accounts for 35%, vegetables and fruits can be up to 45%. Logistics costs account for 12% of the cost of seafood products, 23% of the cost of wooden furniture, 29% of the cost of vegetables and fruits, and 30% of the cost of rice.

"Agricultural logistics costs in Vietnam are 6% higher than in Thailand, 12% higher than in Malaysia and 300% higher than in Singapore. Overall, Vietnam's logistics costs account for more than 20% of GDP; meanwhile, the average logistics cost in the world is only about 11% of GDP," Dr. Nguyen Anh Phong emphasized.

Explaining this, according to Ms. Ta Thu Trang - Head of Trade and Investment Consulting Department - Center for Information on Rural Agriculture Development - Institute of Policy and Strategy for Rural Agriculture Development, the transport infrastructure has not developed proportionally and there is an imbalance in the volume of transportation. Value-added services such as plant inspection and processing are still lacking and weak. The cold supply chain is limited and has not met export demand.

There is no logistics information system with full services to support production and satellites connecting raw material areas to larger centers; the border trade logistics system has not developed to its potential and practical needs, and there are no bonded warehouses. Agricultural logistics suppliers are still small and unevenly distributed by region.

Although, the law regulating logistics activities in Vietnam is currently relatively complete. Policies and regulations have been issued to create a legal corridor and a transparent, healthy business environment to promote sustainable development of logistics activities. Vietnam is increasingly interested in forming logistics centers/agricultural hubs and agricultural product collection centers. However, there is no overall integrated strategy for agricultural logistics development, nor is there a long-term vision for agricultural logistics development strategy and planning.

Support policies for logistics development to serve agricultural production and business areas are still lacking, and there are no priorities for investors in logistics services. Policies for developing agricultural product linkage centers and agricultural hubs are only in the pilot phase or proposed for construction without guidance.

Building a project to develop logistics associated with agricultural production and business areas

In the context that the agricultural sector will have to shift from agricultural production thinking to agricultural economic thinking; focusing on increasing value, efficiency, and diversification along the value chain to meet market demands. At the same time, shifting from single-sector development to multi-sector integration, from “single value” to “multi-value integration”. The logistics system serving agricultural production and business becomes more important than ever.

Agricultural logistics costs in Vietnam are 300% higher than in Singapore

Developing an agricultural logistics service system to build sustainable agricultural supply chains, improve the quality, value, competitiveness and reputation of Vietnamese agricultural products in domestic and international markets, the Institute of Policy and Strategy for Agricultural and Rural Development (Ministry of Agriculture and Rural Development) is currently drafting a Project on developing logistics associated with agricultural production and business areas nationwide for the period 2023 - 2030.

Dr. Nguyen Anh Phong said that the draft project aims to reduce an average of 0.5 - 1% per year in post-harvest losses and 30% in agricultural logistics costs when distributed through the agricultural logistics service center system. Ensure that 100% of agricultural products through the agricultural logistics center system are traceable and ensure quality and food safety.

In raw material production areas, there are agricultural product logistics service centers, 70% of cooperatives, traders, and enterprises use logistics services, and 100% of cooperatives, traders, and enterprises are trained to improve their capacity and skills related to agricultural product logistics services. Basically, a system of agricultural product logistics service centers is formed in key production and business areas and some key agricultural product supply chains to the international market.

The draft project also sets out tasks such as: Building and forming an agricultural logistics service system in key areas; building and upgrading the infrastructure of agricultural logistics service centers and traffic infrastructure connecting the centers;...

Promote the application of information technology and electronic connection in the agricultural logistics service center system. Promote trade promotion and international cooperation. Train human resources for the agricultural logistics system. Effectively implement mechanisms and policies to serve the agricultural logistics system.

Proposing solutions and policies to promote the development of logistics services in agriculture, Ms. Dinh Thi Bao Linh - Deputy Director of the Center for Industry and Trade Information (Ministry of Industry and Trade) said that international experience and trends show that the Government has a great role in helping to solve logistics challenges in the agricultural sector of the whole country. Therefore, there should be policies to encourage the development of logistics in agriculture in a sustainable manner and make the best use of comparative advantages.

“Although there have been some initiatives and participation of the private sector in the agricultural logistics sector, it is still not commensurate with its potential. The Government should consider developing PPP models to accelerate investment in agricultural logistics infrastructure in the coming time. In addition, it is necessary to encourage the private sector to participate in this industry through more practical incentives on taxes, fees, access to capital and international cooperation on market development and technology application,” Ms. Dinh Thi Bao Linh recommended.

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