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Last updated: Friday, October 19, 2018

 

Fruits and Vegetable Exports Strive for US$4 Billion

Posted: Thursday, August 02, 2018

Vietnam's fruit and vegetable exports have been growing steadily for many straight years to date. In July, the fruit and vegetable export value was estimated at US$290 million, totalling US$2.29 billion in the first seven months of 2018, or 57.25 per cent of the full-year target. There remains 5 months’ time for Vietnam to realise the goal of US$4 billion export value of fruits and vegetables in 2018.

Despite good growth, the fruit and vegetable sector is still prone to high risks because of its heavy dependence on the Chinese market. To reduce its excessive reliance on one market, local companies must make maximum use of free trade agreements (FTAs) to which Vietnam is signatory.

Towards a 10 -15 per cent growth
In 2017, the fruit and vegetable sector earned more than US$3.5 billion in exports and expected to have a growth of 10 - 15 per cent in 2018 to get US$4 billion. In the first seven months of 2017, the value already reached US$2.29 billion and the sector’s job is to earn US$1.7 billion in the last five months of the year.

However, an industry expert warned that Vietnam may find it a bit harder to increase its exports in the last months of this year because it is the rainy season in Vietnam from July to September, resulting in a decline in output.

For that reason, exports may be affected by input shortages in the last months of the year. And, the trade war between the United States and China will cast more or less impacts on Vietnam's fruit and vegetable exports.

Vietnam earned on average US$340 million a month from January to June, but the value fell to just US$290 million in July. This decline cemented the ground of the above argument. And, if the drop continues in all months of the third quarter, it will be hard to reach the target.

In the first six months of 2018, fruit and vegetable shipments to main markets looked up significantly. China took the lead with 74.6 per cent of the market share, followed by the US with 3.1 per cent.

Making good use of FTAs
China has constantly been a top importer of Vietnamese agricultural products as it has geographical advantages and similar consumer needs, habits and tastes as Vietnamese. The neighbour accounted for 74.6 per cent of Vietnam’s fruit and vegetable export of US$2 billion in the first half of 2018.

Being too dependent on a market will cause the fruit and vegetable industry to react passively when the market fluctuates, especially when the US-China trade war escalates. China may adjust import policies on potential export shrinkage.

This will affect Vietnam's agricultural products. Then, Vietnam will have to compete with two powerhouses, the US and China, to seek new agricultural export markets .Their import needs may fall in the late months of 2018.

An official from the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade said, Vietnam signed many FTAs, enabling the fruit and vegetable sector to open up new markets. Therefore, to avoid over-reliance on a market, fruit and vegetable businesses should make good use of FTAs ​​as this is the country’s advantage.

And, through the first free trade agreement with the Eurasian Economic Union (VN-EAEU FTA) that Vietnam signed, Vietnamese businesses have opened the Russian market and now Russia is among the top 10 importers of Vietnamese vegetables and fruits.

Russia is considered a very potential market for the Vietnamese horticulture as it has a temperate and benthic climate. Thus, it cannot grow and cultivate tropical fruits and vegetables and must import a lot of fresh and frozen vegetables, roots and fruits, with many varieties wholly imported.

As Vietnam is a partner to VN-EAEU FTA, the opportunity for Vietnamese businesses is really enormous. With nearly 90 per cent of tariff lines reduced and 59.3 per cent eliminated as soon as VN-EAEU FTA takes effect, this is a great advantage for Vietnamese companies to compete with those from other countries in exporting to the Russian market.

According to statistics from the International Trade Centre, Russia spent US$2.3 billion on importing vegetables and fruits in the first three months of 2018, a year on year increase of 19.6 per cent. Russia increased the import of fruits and vegetables from China, Turkey, Egypt, the Netherlands and Vietnam, among others.

Remarkably, Russia’s import value from Vietnam remained low but posted the highest growth thanks to the latter’s abundant supply sources and small market share. Hence, Vietnamese companies will have many opportunities to boost fruit and vegetable exports to the largest nation on the globe.

PV








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