Agro-forestry Export 2006: Growing but Unsustainable

 

Woodwork: In 2006, wood products brought in a record export turnover of US$2 billion to Vietnam, up 27.5 per cent. This amount was nearly 10 folds higher than US$219 million in 2000. Vietnam is forecast to earn US$4 billion from the export of wood products. The admirable growth of this sector since 2000 was attributable to the assistance from the Ministry of Trade and the Ministry of Agriculture and Rural Development. The penetration into the US, Japan, France, Germany, the Netherlands, China and South Korea opened great prospects for the Vietnamese wood products.

 

Rice: This commodity ranked second in export revenues of the agricultural sector although the yield in the country’s largest paddy Mekong Delta dropped approximately one million tonnes because of diseases. Meanwhile, the increase in northern region was only 800,000 tonnes. However, the rice export in 2006 still surpassed 4.7 million tonnes. With the higher price of rice, the export value exceeded US$1 billion benchmark for the first time. According to forecast, the increasing price of rice on the global market will lead to a higher price in the country as it already augmented 11.5 per cent compared with late 2005. This will enrich farmers. Professor Pham Tat Thang, Director of Information Centre under the Ministry of Trade, said the price of Vietnamese rice was always high in 2006, which was attributed to the export regulation and coordination of the government, especially the cooperation with the Government of Thailand – the two rice export superpowers. In spite of price rise, there was no big change in the domestic market.

 

Rubber: Another commodity with export revenue of more than US$1 billion was rubber. “In 2006, the rubber export market had a lot of advantages. With the high price in the early months and lower price in the late months of the year, the average price was still higher than that of 2005. The export of 550,000 tonnes of rubber generated US$1.3 billion for Vietnam,” Ms Tran Thi Thuy Hoa, Secretary General of the Vietnam Rubber Association, said. In addition, the rubber wood export also brought in US$180 million, accounting for nearly 10 per cent of the country’s wood product export revenues.

 

Coffee: Vietnam exported 867,000 tonnes of coffee valued US$1.1 billion in 2006. The golden age of the coffee cultivation has returned. The global price peaked at US$1,600 a tonne – the seven-year highest, up 46.8 per cent on average.

Pepper: In 2006, the price of pepper had wide changes. If the export revenues of pepper were US$1,200 a tonne on average in the first and second quarters of 2006, it jumped to US$3,000 a tonne in the third quarter. Currently, the price is fluctuating around US$2,200-2,300 a tonne. The price soar led to the fulfilment of the yearly export target set for the pepper sector. Mr. Do Ha Nam, Chairman of Vietnam Pepper Association, said the pepper ranked fifth in value among top exported agricultural commodities. Another record in 2006 was the export output of pepper which accounted for more than 60 per cent of the world’s total, 120,000 tonnes versus 197,000 tonnes. .

 

In fact, the high export values of agro-forestry commodities resulted from the soaring price on the global market. There was a little enhancement in export quantity as well as product grade and quality. This proved the instability of the Vietnamese export of agro-forestry products.

 

According to many economic experts, the woodwork export increase was strong but unstable. The export turnover of US$2 billion offset more than US$1 billion on imported material, accessories, machines etc. The domestic supply of timber could support only 20 per cent of the demand. Although the number of wood-exporting companies reached 300, most of them had medium and small business scales. Furthermore, the competitiveness of Vietnamese companies was very weak as they could not take the mandate in export markets. The reliance on the imported timbers was the weakest point of the Vietnamese wood industry.

 

Besides, the over-export of rice following the price rise in 2006 will lead to a shrinking supply in 2007. Moreover, the diseases continue destroying rice crops in the Mekong Delta region.

 

It was time to review the sustainable factors of export. In the past three years, the rice price increased 45 per cent in aggregate. The attractive profit triggered farmers, plant protectors and local authorities to ignore expertise warnings in varieties and diseases. The current important issue is to seek methods for addressing the epidemic and better managing the export of rice.

 

According to expert forecasts, Vietnam will have more advantages than disadvantages in the export of agricultural commodities. Increasing the productivity and promoting competitive advantages are the core matters in developing export strategies for agricultural commodities.

 

As for the wood industry, Vietnamese companies will see advantage in competing with foreign rivals with stronger financial capacities, more advanced technologies and more modern machinery. Hence, domestic companies should team up to compete with foreign rivals, said Professor Pham Tat Thang, Director of Information Centre under the Ministry of Trade.

 

In the coming time, Vietnam will accelerate the forestation with more productive and higher quality wood trees. Especially, it will have policies to encourage companies using local timbers and growing woods to process for export. Besides, the wood industry must have policies on tax and transportation of forestry products and provide market information for wood processing companies.

 

“To resolve this lesson, the Government advocated two positive tendencies of growing forests (with a programme for the period from now until 2020) and protecting natural forests to supply more than 20 million cubic metres of timbers for the wood industry in the coming time. In addition, in 2007, Vietnam will build three wood transaction centres in the northern, central and southern regions to facilitate transaction, material study, selling and buying, etc,” Nguyen Ton Quyen, deputy director of Viet Nam Association of Timber and Forest Products (Vifores) said.