Agricultural Products Need to Turn back to Domestic Market

Exports shows signs of going down
Statistics from MARD show that export value of agriculture, forestry and fishery in October is estimated to exceed US$1.39 billion, up by 25.6 percent against that of October 2007, but 7 percent lower than that of the previous month. Of the mentioned export value mentioned above, export turn-over of agricultural products is estimated to reach US$646 million, rising by 40 percent over the same period last year but down 12 percent over the last month; fishery export, US$470 million, remaining unchanged compared to that of September; and forestry export, US$238 million, down by 2 percent. The total export turn-over of the three sectors during the first ten months of 2008 is estimated to reach US$13.6

 

As of October 2008, the agricultural sector has had five commodities out of eleven across the country with export turnover exceeding US$1 billion per each, including aquatic products, rice, wood and wooden products, coffee and rubber. These are commodities accounting for a large proportion of the total export turn-over during the last ten months (aquatic products make up 27 percent; rice, 20 percent; wood and wooden products, 17 percent and coffee, 13 percent). Though wood and wooden products have a large export value, their import value is not small at all, accounting for 15 percent of the export value of the whole agricultural sector in the last ten months.

 

However, Mr Truong Dinh Tuyen, member of the National Consulting Council for Monetary Policies, states that it is not necessary to wait until 2009 to see Vietnam’s export slow down. It has been showing signs of going down since October 2008. In seeking a solution to spark the growth of Vietnamese enterprises, Mr Tuyen and many other economic experts believe that returning to the domestic market with a population of over 80 million people, which is being left idle due to Vietnam’s high efforts to export their goods, is a good solution for them not only in the current situation but in the long term as well.

 

Domestic market is fastidious
Vietnam is the world’s second largest coffee producer. Coffee consumption, however, is mainly dependent on overseas market while the domestic market, rich with potential for growth, is being left untouched. Specifically, 2006 witnessed Vietnam export nearly 900,000 tonnes of coffee, bringing an income of approximately US$1.5 billion. Meanwhile, the domestic market consumed too low an amount of coffee. Strategists for coffee consumption seem to “forget” the domestic market. Market economy analysts think that the reason for low consumption is partly due to the lack of modern coffee making technology, which links to the fact that Vietnamese consumers are fastidious, being fond of high quality products but on condition that such products are instant ones. Thus, if Vietnamese enterprises do not invest more care and capital into the processing phase, it will be difficult for their products to compete with imported products leaving them to suffer a loss in the domestic market.

 

Deputy Chairman of Vietnam Coffee and Cacao Association reveals that on average, member countries of the International Coffee Organisation (ICO) see their domestic consumption amount up to 25.16 percent of their annual production. Meanwhile, Vietnam, which is already a member of ICO, only see consumption as 5 percent of the annual yield.

 

Many households, who specialize in producing and trading coffee in the red basalt Dak Lak area, the area known as a kingdom of coffee, still does not favour coffee drinking. It is simply due to the fact that coffee drinking habit still fails to replace other daily drinking habits in which tea, green tea or water are substitutes. Coffee is produced for export only. In fact, a vast majority of domestic consumers consider this product a “luxurious” one.

 

In 2003, Trung Nguyen Coffee launched its G7 product, inviting people for free cups of coffee at the Independence Palace in Ho Chi Minh City. And in 2005, Dak Lak organized Buon Ma Thuot coffee festival. Thanks to the festival and its advertising effects, coffee consumption in the domestic market started to increase significantly.

In Dak Lak, there used to be only a handful of centers for roasting and grinding coffee. Now, it is home to 140 centers dedicated to roasting, grinding and processing coffee powder. Such famous instant coffee brand names like Trung Nguyen, An Thai, Mehico, Nam Nguyen and 2/9, etc have their coffee produced and processed in this region. Nearly 10,000 tonnes of coffee bean are consumed every year. The popularity of coffee has skyrocketed and coffee shops now flourish in Buon Ma Thuot. There are streets specified in coffee trade. Not only Dak Lak but many other provinces and cities nationwide are seeing coffee become a drink favoured by many people from the urban and rural areas.