Vietnam enjoyed a trade surplus of US$500 million in agriculture and seafood with the United States in 2013, said Mark Dries, Agricultural Counsellor for the United States Embassy in Vietnam. “The value is expected to rise to US$700 - 800 million in 2014,” he said.
Acceleration
The US is the largest economy, the largest importer, and the second largest exporter in the world. It has a population of nearly 317 million and GDP per capita is US$49,601.41.
The US is also the biggest importer of agricultural countries in the world. Annually, it spends over US$10 billion importing vegetables and fruits, US$3.5 billion on coffee, US$9 billion on rubber, over US$2.5 billion on meat, and US$1.5 billion on cereal-sourced products. It imports a variety of agricultural products in different grades, with many Vietnam is strong at.
The developed agriculture can satisfy its huge market demand but the US still has to import some agricultural products because of short supply, including coffee, tea, pepper, rubber and cashew nut.
Vietnam has huge potential for agricultural production. Favourale climate, good soil, farming techniques, crop varieties and livestock species enable Vietnam to produce a variety of agricultural products. Incentives for domestic and foreign agricultural investors are creating new development momentums for this sector. Quickening application of scientific and technical advances to production also creates breakthroughs and enhances the competitiveness of Vietnam’s agricultural products on international markets.
The Vietnam - US Bilateral Trade Agreement (BTA) signed in 2000 has opened up opportunities for Vietnamese exports to enter the US market, including agriculture agricultural goods. The two-way trade turnover increased from US$50.4 million in 1994 - the year the US lifted economic embargo against Vietnam - to US$1.4 billion in 2001 - the year before the BTA came into effect to nearly US$24 billion in 2013, an increase of 23 percent over 2012. For many consecutive years, the US has been the largest trading partner of Vietnam.
In 2013, Vietnam exported US$2.64 billion worth of agricultural exports to the US, up 15.1 percent year on year and equal to 13.3 percent of the country’s total agricultural exports. Growth was seen in most items, specifically seafood (up 25.3 percent), vegetables (29.1 percent), cashew nuts (32.8 percent), tea (31.5 percent) and rubber (1.9 percent). However, coffee plunged 34.2 percent.
In the first sixth months of 2014, Vietnam earned US$14.67 billion from exporting agricultural, forest and seafood products to the US, up 11.2 percent year on year. The US was one of the two biggest coffee consumers of Vietnam with 9.76 percent of market in the first five months of 2014 and one of three biggest cashew nut consumers of Vietnam with 30.13 percent of the market share. The US’s black pepper import from Vietnam rose 25.58 percent in volume and 31.56 percent in value. Vietnam's wood exports to the US surged 16.52 percent year on year in the first five months of 2014.
Specially, the US remained the biggest buyer of Vietnam’s seafood with 23 percent of the share. Seafood exports to this market valued US$671.86 million from January to May, up 45.83 percent over the same period in 2013.
In recent years, the US is always the biggest importer of Vietnam’s agricultural products. However, the value is equal to only about 1 percent of US’s total imports. This market still has a lot of opportunities and potential for Vietnamese agricultural companies to tap.
Speeding up PPP
Agriculture contributes 18 percent to Vietnam’s GDP, uses 80 percent of natural land area, feeds 67 percent of people living in rural areas, and employs 47 percent of labour force but this sector is disregarded by foreign investors. In 2013, FDI for this sector accounted for less than 0.6 percent of the total FDI capital invested in the country. Among all economic sectors, agriculture is the most vulnerable and among all careers, farmers are the most vulnerable. A recent pilot study on rice and tra fish by the Institute of Policy and Strategy in Agriculture and Rural Development (Ipsard) and Oxfam showed that hardworking farmers face a risk ratio of 70-80 percent but their profitability ratio is just 20 percent.
To have a strong foothold in the US market in particular and in the world as the whole, Vietnam needs to apply intensive agricultural development policies.
While many countries in the world achieved great progress in agricultural development thanks to the application of advanced science and technology to agricultural production, Vietnam should promote policy supports to encourage innovation, sharpen competition and increase agricultural investment. It also needs an effective regulatory process to protect intellectual property and provide wider access to most advanced technologies and products for Vietnamese farmers. Then, farmers will be shared more deserved benefits and the competitiveness of Vietnamese products will be enhanced - the foundation for sustainable agricultural development.
To do so, public private partnership (PPP) investment is considered an effective solution. Dr Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management (CIEM), said PPP investment means combining State and private resources to attract companies to invest in agriculture to increase the value.
Natalie Dinicola, Director of Global Sustainable Cooperation and Development at Monsanto Group (US), said that PPP plays an important role in agricultural development today. Necessarily, farmers must be put at the centre of this chain link. In her company’s project to transform unproductive rice field into maize field in Mekong Delta, Monsanto contacted 5,000 farmers and helped them increase profits by US$1 million compared with their previous rice crop while time, cost and labour required was reduced by 80 percent. "Agriculture is the opportunity of Vietnam and also the opportunity of investors. We are committed to expanding cooperation in line with the objectives of the Ministry of Agriculture and Rural Development,” said Jesus Madrazo, Vice Chairman of Monsanto Group.
Thanh Yen
Vietnamese
