Is the target of 17.5 billion USD in wood and forestry product exports by 2024 feasible?

2023 marks the first time that wood and forestry product exports have not grown.

According to the Ministry of Agriculture and Rural Development, in 2023, wood and wood products exports will reach 13.37 billion USD, down 16.5%. 2023 is a difficult year for the wood industry as consumer demand in major export markets such as the United States and the EU has dropped sharply, leading to a drop in orders, forcing many businesses to scale down production or even close.

Exports of wood and wood products and forestry products in 2023 will only earn 13.37 billion USD

In 2023, Binh Duong's wood industry will account for 42 - 45% of the country's export turnover, with export revenue of about 5 billion USD. Lam Viet Joint Stock Company (Binh Duong) alone is one of the relatively good export enterprises in 2023, but its turnover will only reach 80% compared to 2022, while most other enterprises in Binh Duong will only reach 50 - 60%.

Mr. Nguyen Liem - Chairman of the Board of Directors of Lam Viet Joint Stock Company - shared that in the third and fourth quarters of 2023, orders increased, but these were orders to compensate for inventory reduction in the US and EU and to serve the Christmas and New Year holidays, not sustainable orders. "The outlook for wood exports is unclear, orders for early 2024 are available but the factory is not running at full capacity yet ," Mr. Nguyen Liem shared.

Regarding the export results of wood and forestry products in 2023, Mr. Nguyen Quoc Tri - Deputy Minister of Agriculture and Rural Development - said that the plan for 2023 was to export wood and forestry products to reach 16-17 billion USD, but by the end of December, the turnover had only reached nearly 14 billion USD. It can be affirmed that over the past 20 years, the export target of the forestry industry has continuously reached peaks, but this year it has decreased. This is a signal that the industry must quickly restructure products from raw materials, products, markets, etc.

Is the target of 17.5 billion USD by 2024 feasible?

Entering 2024, the forestry industry aims to achieve an export turnover of 17.5 billion USD. Mr. Nguyen Quoc Tri said that these targets are quite high, especially in the context of prolonged and unpredictable political conflicts, both output and input factors of exports are difficult.

Commenting on the export market for wood and wood products in 2024, Mr. Do Xuan Lap - Chairman of the Vietnam Timber and Forest Products Association - said that although the market has shown some signs of recovery, 2024 still poses some potential difficulties for the industry. In addition to difficulties in market output, the industry is facing a number of current issues that directly affect sustainability.

“In 2024, the wood industry will still be in a state of great instability, so overall, it is forecasted that the wood industry will grow but slowly, growing about 10-12% compared to the last quarters of 2023,” said Mr. Do Xuan Lap.

Currently, the United States is the largest export market for wood and wood products of Vietnam. Mr. Pham Quang Huy - Vietnam's Agricultural Counselor in the United States - assessed that inflation in the US market is cooling down, employment is increasing, especially construction and real estate trading have positive signals, this shows that wooden furniture exports to the US market are expected to grow again.

However, it is difficult to predict because inflation has decreased but is still high, consumption is weak and most wood products exported here have decreased sharply. The consumption habits of Americans are only used for a few years and then replaced, but due to the high cost of living, income is spent on necessities, not on replacing new interior and exterior furniture.

However, there are still positive factors. Mr. Pham Quang Huy analyzed that the low-priced segment is selling poorly, while the high-priced segment is still stable. The US market has decreased construction but has not frozen, and wealthy households continue to build and replace furniture.

The inventory ratio in the United States is forecast to gradually decrease by the end of 2023. This is an opportunity for Vietnam to boost exports of wood and wood products to the United States in the coming time. Importers will import again, but orders will not be as large as before.

Mr. Pham Quang Huy also noted that the US legal environment requires imported wood products to ensure environmental protection, safety, revenue and fair trade. Therefore, businesses must comply with Decree 102 on the Vietnamese legal timber system and the 301 agreement between the two countries on illegal logging and trade. At the same time, they must monitor trade prevention cases in the industry, develop new products with high technical content, creativity, and environmental friendliness, etc. to increase competitiveness in the world's largest wood furniture consumer market.

For the EU market, on June 29, 2023, the European Commission's Anti-Deforestation Regulation (EUDR) officially came into effect. The new regulations of this market will have a significant impact on the export turnover of Vietnamese products to this market. Mr. Nguyen Chanh Phuong - Vice President and General Secretary of the Handicraft and Wood Processing Association of Ho Chi Minh City (HAWA) - said that the specific requirements of the EUDR pose great challenges for Vietnam's wood processing and export industry.

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