Vietnam facilitates new ways for trade promotion to boost agricultural exports

Bring traders to the fields

“Paper trading” is probably no longer suitable in the current business context, especially in the trading of agricultural products. Therefore, in 2017, the Department of Domestic Market (Ministry of Industry and Trade) updated some stages of the trade promotion process, bringing delegations of foreign traders to the raw material sites of mangoes, dragon fruit, and pineapples so they can witness the production process and directly discuss business with farmers. Specialists from the ministry or from the local Departments of Trade and Industry only play as facilitators.

Deputy Head of the department, Hoang Anh Tuan, said that this visual method helps to reduce costs from organising meetings and raises efficiency thanks to the direct discussion of supply - demand between the sellers and the buyers.

For example, in the past, dragon fruit farmers in Binh Thuan often had headaches because of their unstable output. However, in recent years, thanks to improvements in marketing, local dragon fruit has been traded at a stable rate and at a higher price. Director of the Department of Industry and Trade of Binh Thuan province Do Minh Kinh said that the province has more than 27,000 ha of dragon fruit, with output reaching about 600,000 tonnes per year. The amount of local dragon fruit for domestic consumption is 15%, while 85% is exported to 16 markets, of which 70% are in Asia.

Binh Thuan is concentrating on dragon fruit exports via official channels for a more transparent, safe, and sustainable market. The Binh Thuan Industry and Trade Department has invited foreign traders to farms to enjoy the flavours of local dragon fruit cultivated in the new way, while discussing business directly with farmers.

Similarly, in 2017, the Department of Industry and Trade of Ho Chi Minh City implemented a range of solutions to connect the city's businesses with other localities through bringing the city’s products to other provinces and enabling local businesses to connect and expand the market for consumption. At present, there are 75 investment projects between the city and other localities with a total investment of more than VND27.4 trillion, including farming and food processing projects and building factories and farms. Of this, the linkage providing capital for farmers to run bio-farm produce reaches VND2.5 trillion per year.

Deputy Head of the Ho Chi Minh City Department of Industry and Trade, Nguyen Phuong Dong, said that his department has organised field trips to introduce traders to producers and farmers in the fields. In such face-to-face meetings, the business cooperation procedure has been quicker and easier with reduced complications from third parties, and reduced risks in the commodity production chain. Moreover, it also helps improve product quality, reduce production costs, and increase products’ value and competitiveness.

Intensive processing is expected to improve the value of Vietnamese agricultural products. (Photo: Nam Anh)

Conquering fastidious markets

According to statistics from the General Department of Vietnam Customs, the export turnovers of fruits and vegetables reached US$383.7 million in January, up 18.3% over the previous month and up 63.6% over the same period in 2017. Vietnam's exports of fruits and vegetables to major markets increased sharply. In addition to the main market of China, in January 2018, Vietnam also exported fruit and vegetables to other big markets, such as the US, Japan, Thailand, the Republic of Korea, and Malaysia. Notably, export turnover of this agricultural product to Japan reached US$10.6 million, up slightly from last month and up 77.5% over the same period of 2017.

Statistics from the International Trade Center’s Trade Map showed that in 2017, the import value of vegetables and fruits in Japan reached US$9.5 billion, up 2% over 2016. To date, Vietnam has exported red dragon fruit, mango, lychee, and shiso leaves to the Japanese market. However, Japan is a market with strict requirements on the standards and quality of goods, as well as food hygiene and safety. The import value of vegetables and fruits from Vietnam only accounts for a very small proportion of Japan’s import demand, reaching US$132.5 million in 2017, up 5.2% compared to 2016.

Experts suggested that to increase exports of fruits and vegetables to Japan, Vietnamese exporters must meet the strict requirements on plant quarantine and food hygiene, or during the production process, enterprises must have their raw material areas inspected and recognised by the Plant Protection Department with plant protection codes and meet the food hygiene and safety requirements.

Commercial Counsellor of the Vietnamese Embassy in Japan Ta Duc Minh said that the Japanese market highly values agricultural products from Vietnam. The first batch of chicken exported to Japan in 2017 proves that Vietnamese agricultural products have passed the test to gain access to this fastidious market. Along with that, there is even greater potential in Vietnam’s bananas and mangoes. However, export prices of these products are still high, making it difficult to compete with Thai products as the products are easy to damage and transportation costs are quite high.

Ensuring Vietnamese agricultural products stand firm and gain a foothold in selective markets is not an easy task. The Vietnam Institute for Economic and Policy Research recommended that the core factor is to increase the quality of products and trade promotion activities, providing regularly updated information on demand and the standards of imported products for each market.

In addition, Vietnam is heading towards sustainable agricultural exports, which requires a restructuring of the agricultural sector. Exporters should adjust towards focusing on quality rather than quantity. This task requires the right strategy on the material source. Previous raw material areas that help earn stable exports to middle and high-end markets need to be continuously invested in to improve the quality of their products. It also needs a roadmap from the business community in an effort to reduce unnecessary costs. On the part of the State, there should be more practical support in reducing the quantity and increasing the quality of agricultural products.