Potential has not been fully utilised
Statistics from the Ministry of Industry and Trade (MOIT) show that the EU is one of the largest markets for agricultural products, such as coffee, pepper, fruit, nuts and spices. For example, Vietnam is one of the two largest suppliers of pepper to the EU with an average export volume of 40,000 tonnes a year, accounting for 23% of Vietnam's pepper exports and meeting 53% of the EU market’s demand.
However, the general picture of the export turnover of Vietnamese agricultural products to the EU shows they are not living up to their potential. According to Tran Ngoc Quan, Deputy Head of the MOIT’s European-American Market Department, looking at output, it can be seen that Vietnam has great agricultural output with a long tradition of production and export to the EU. However, when looking at specific commodity structures, Vietnamese agricultural products focus on seasonal crops rather than year-round sales. Therefore, aside from seafood and rice, most of the items only concentrate on a certain time, such as vegetables. Therefore, in terms of supply, Vietnam's agricultural products are only temporarily available and this is a great constraint for regular exports.
In addition, the EU market’s demand is selective with agricultural products, resulting in a limited export turnover to this market. For example, Vietnamese fruit and vegetable exports to the EU account for less than 1% of the market’s total imports. Even pepper — a commodity that Vietnam has strength in in the EU — has faced difficulties recently when the EU has warned about pesticide residues.
“The EU is not an open agricultural market and has very strong protection in this area. It has also introduced a number of strict conditions for food hygiene and safety, as well as applying various measures for plant safety, animal quarantine and quality control that makes it relatively difficult for Vietnam to enter the market. There are some products that the EU implies limits on residual antibiotics and pesticides to the level of nearly 0%, which means it closes the door for such goods," said Quan.
On the side of businesses, Hoang Thi Minh Tam, manager of the Export-Import Department of IDD Vietnam Co., Ltd., said that with the aim of exporting Vietnamese roasted coffee to the EU market, IDD Vietnam has invested in modern coffee processing technologies and has tried to control the quality of coffee right from planting to the finished process. However, the export of coffee to the EU market is still on a rocky road. Tam emphasised: "The EU is a very fastidious market. The export of agricultural products to this market requires a lot of standards to be met, while the company has just achieved very basic certifications like ISO. In addition, EU importers still tend to import cheap raw materials and coffee roasting and grinding technologies in European countries are very good."
Which solutions for Vietnamese agricultural products?
Vietnam has advantages in terms of production and export of tropical agricultural products to the EU but they need to meet high requirements from this fastidious market.
Vietnam has advantages in terms of the production and export of tropical agricultural products to the EU market, as Europe does not have the climate to produce these commodities. Especially, in the near future time, the EU-Vietnam Free Trade Agreement (EVFTA) is expected to open up opportunities for Vietnam's agricultural products as the import tax is sharply reduced to 0-5%.
However, in order to gain access to this market, special attention should be paid to product quality. According to Quan, at present, Vietnam is mainly exporting preliminarily processed agricultural products with a low investment advantage and exporting right after harvesting, which is brings low value and profits which are mainly collected in the farming and catching processes. For high export value with high value, the focus should be put on the processing stage.
"Moreover, when investing in processing agricultural products, enterprises will enjoy a large tax difference compared to competing countries, while improving competitiveness and gaining higher value added, from which it will be possible to boost export turnover and achieve higher and more sustainable growth," Quan added.
In particular, to increase both the export quantity and value, the requirements related to chain and promoting export chains must be met. The current agricultural products to be provided to small-scale retailing shops should seek to be sold directly to distribution systems such as supermarkets for greater stability and sustainability. However, in order to enter the supermarket chain, both EU standards and the distributors’ requirements on the chain must be met.
Domestic enterprises should pay special attention to the quality of their products, not only in the transportation stage, but throughout the whole process of production, along with a transparency of origin to facilitate importers in the distribution of food safety.
The MOIT has pledged to continue supporting producers and farmers through training programs on standardised production and promoting brand building so that businesses can take full advantage of identifiable brands to reach the global market. In particular, the ministry will continue negotiating free trade agreements to create favourable opportunities for Vietnamese agricultural products to easily access markets with a better competitive position.
