Great potential
This is the content presented at the Workshop "Bringing Vietnamese agricultural products and processed foods into foreign distribution systems" within the framework of the series of events connecting international goods supply in 2023 (Vietnam Sourcing 2023) organized by the Ministry of Industry and Trade in coordination with the People's Committee of Ho Chi Minh City.
Speaking at the workshop, Ms. Nguyen Thao Hien, Deputy Director of the European - American Market Department, said that despite the general difficulties of the market and disruptions in the supply chain, Vietnam's agricultural and food exports have still made many breakthroughs in recent years.
With advantages in geographical location, natural conditions, favorable soil and incentives from 15 bilateral and regional free trade agreements being implemented with many partners around the world, especially the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Vietnam - EU Free Trade Agreement (EVFTA), continuously in recent years, the export turnover of agricultural, aquatic and food products has maintained a double-digit growth rate. In 2022, Vietnam's agricultural, forestry and fishery exports reached 53.2 billion USD, an increase of nearly 10% compared to 2021. Of which, many groups of goods have a turnover of over 2 billion USD such as wood, aquatic products, coffee, rubber, rice, vegetables, and cashews.
Especially in 2022, many agricultural products of our country such as fresh bananas, sweet potatoes, bird's nests, grapefruit, longan, passion fruit, durian... will be licensed for export to developed markets with high standards in the world such as the US, Japan, China, New Zealand. This creates great opportunities for fruit exports.
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| Overview of the workshop |
In 2023, in the context of many market difficulties, especially high inflation in all key export markets, the export turnover of Vietnam's agricultural, forestry and fishery products is forecast to still exceed 50 billion USD. Currently, Vietnam is the world's top 3 supplier of coffee, the largest in cashew nuts, the largest in pepper, the third largest in rice, ...
Among agricultural products, fruits and vegetables are one of the bright spots in our country's export groups. It is forecasted that in 2023, fruit and vegetable exports will likely reach the historic milestone of 5 billion USD. Experts believe that in the context of global inflation, in 2023, China will still be an attractive market for Vietnamese agricultural products thanks to the booming demand after Covid-19, combined with the advantage of geographical proximity, making logistics costs and time risks lower than other markets.
Despite great potential, according to Ms. Hien, agricultural exports are facing many challenges as countries not only adjust their legal frameworks with a series of new laws and regulations. Typically, in mid-May, the EU also issued a law on the Carbon Border Adjustment Mechanism (CBAM). This regulation requires importers into the EU to report the amount of carbon emissions in goods. At the end of June 2023, the EU issued the Anti-Degradation Regulation (EUDR). Accordingly, companies trading in timber, coffee, cocoa, rubber, soybeans, cattle, palm oil and derivative products in the EU must prove that the goods they sell are not related to deforestation activities from 2021. Violations will be fined at least 4% of annual sales earned across the EU.
Environmental protection regulations in Vietnam's major export markets such as the EU, North America and Northeast Asian markets are becoming increasingly stringent. The US and Canadian governments are also considering mechanisms similar to the EU's CBAM and EUDR. The EU also stated that the product groups covered by CBAM and EUDR will be expanded in the future.
Respond to environmental factors
Mr. Paul Le - Vice President of Central Retail Vietnam Group said that over the years, Central Retail has coordinated with the Ministry of Industry and Trade to organize "Vietnamese Goods Week in Thailand" to help businesses promote their brands and increase sales opportunities in Thailand's distribution channels. And to export and bring goods into distribution systems, businesses must have a good understanding of market information. When participating in trade promotion and export connection programs, businesses should bring product stories instead of regular products.
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| The quality of Vietnamese agricultural products is increasingly improved. |
Citing a specific example, Mr. Paul Le said that at the Vietnamese goods week in Thailand in 2022, a Vietnamese seafood enterprise in Ca Mau attracted the attention of customers with its proactive approach to the market.
Accordingly, this enterprise brought two products to the fair, including shrimp crackers and dried shrimp. After setting up a booth at the fair, this enterprise proactively went to markets and supermarkets in Thailand to learn about the demand for similar products before participating in the B2B connection session.
According to the company representative, after surveying the market, the company found that in Thailand, shrimp chips and shrimp products only account for 25% of the ingredients, while the company's similar products have up to 40% shrimp. Notably, these shrimp products are ecological shrimp... This proactive research has helped the company achieve success after the fair because many customers are interested and sign contracts.
“When participating in a fair, businesses must research the market as well as prepare their goods. In addition to hard skills such as paperwork, businesses must have soft skills to find markets,” Mr. Paul Le emphasized.
Assessing Vietnam's agricultural export potential, Mr. Vincent Gothknecht, Chief Representative of I.Schroeder Company (Germany), said that Vietnam has a great advantage in exporting agricultural products to the EU market thanks to the EVFTA Agreement.
According to Mr. Vincent, Europe is a demanding market with many strict standards on food safety and hygiene. Products exported to this market must have traceability. Along with that, it is necessary to ensure requirements on environmental and labor standards.
Regarding the quality of Vietnamese agricultural products, Mr. Vincent Gothknecht said that there are currently about 50 suppliers in Vietnam providing agricultural products such as lychee, pineapple, passion fruit, etc. and seafood to the company. Accordingly, product quality is no longer a problem with Vietnamese agricultural products. However, the main bottlenecks that Vietnamese enterprises face are environmental requirements, emission reduction, carbon neutrality, etc.
“Many buyers want their suppliers to be carbon neutral in their supply chains. Therefore, if Vietnamese businesses do not meet this standard, they will lose opportunities,” Mr. Vincent emphasized.
Along with that is the Government's support for industries. For example, in the Mekong Delta, Vietnam's exported tra fish, shrimp... products have met many food safety standards of importing countries, including the ASC (Aquaculture Stewardship Council) standard, which is an international certification for responsibly farmed seafood, minimizing negative impacts on the environment, ecosystems, communities and ensuring good labor regulations. However, Vietnam is still facing difficulties with caught seafood products. Meanwhile, in many other countries such as the Philippines... caught seafood products have been certified by MSC (Marine Stewardship Council - MSC) for sustainable exploitation of seafood resources. Therefore, many seafood businesses have lost the opportunity to export to this market.
According to Mr. Vincent Gothknecht, to export to the EU, products must have food safety certification, environmental and labor standards certification, etc. To do this, businesses must invest a large amount of resources because this is a mandatory requirement to penetrate the market.
“The long-term strategy may lose in the short term, but in the long term the business will definitely win,” Vincent Gothknecht emphasized.
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