Agriculture overview: Increasing exports but insufficient GDP growth

Despite difficulties in domestic and foreign markets, Vietnam was still able to record a US$41.3 billion turnover of agricultural, forestry and fishery exports in 2019, an increase of 3.2 percent compared to a year ago. However, the whole sector only achieved gross domestic product (GDP) growth of 2.2 percent, lower than the set target of three percent.

Wood and wood products were among the commodity groups earning more than US$3 billion in 2019

Fresh fruit, aquatic products and milk

Nguyen Quoc Toan, director of the Agro Processing and Market Development Authority under the Ministry of Agriculture and Rural Development, said that over the past year, the ministry directed units to negotiate for more high-value fresh fruits to be exported to markets, such as the US, Australia, Japan and China, while promoting exports of processed chicken to Japan, suckling pigs to Malaysia and Hong Kong (China), and honey to the US and the EU.

Vietnam exported its first shipment of milk to China in October 2019 and completed negotiations with Hong Kong (China) to export frozen pork, processed chicken and bird’s nest to that market. In addition, the US Department of Agriculture recognized Vietnam’s food safety control system on catfish as equivalent to American regulations, while China’s General Administration of Customs authorized imports of three more species of Vietnamese aquatic products, bringing to 48 the number of aquatic products Vietnam exports to China.

According to the Vietnam Timber and Forest Product Association, Vietnam’s wood exports reached an estimated US$11.3 billion in 2019, exceeding the industry’s own target of US$10.5 billion. In addition to market development, the implementation of a Voluntary Partnership Agreement (VPA) on Forest Law Enforcement, Governance and Trade (FLEGT) sent a strong signal of the commitment by Vietnam and the EU to sustainable forest management and trade in forest products.

Over the past year, eight commodities recorded export turnover of more than US$1 billion, maintaining the achievement of 2018, including four product groups earning more than US$3 billion - wood and wood products; shrimp; fruits and vegetables; and cashew nuts.

In addition to these results, Minister of Agriculture and Rural Development Nguyen Xuan Cuong admitted several shortcomings and limitations that hamper the growth of the sector and need to be addressed soon. The pace of agricultural restructuring remains uneven in different localities, while innovation has not met requirements. He also pointed to the lack of agricultural value chains, low labor productivity and efficiency, and high post-harvest losses.

Moreover, export growth has shown signs of slowing down and prices of agricultural products have been reduced by between 10-15 percent. In particular, the slow progress in resolving issues related to illegal, unreported and unregulated (IUU) fishing and regaining the trust of the EU, the risks of diseases affecting livestock and crops, and food hygiene, continue to haunt the sector.

Goals for 2020

At an online conference to review operations in 2019 and set out plans for 2020, Prime Minister Nguyen Xuan Phuc emphasized three major challenges of the agricultural sector in 2019. These include trade wars and tightened regulations set by foreign markets, widespread and ongoing disease causing unprecedented consequences, and climate change and extreme weather conditions.

PM Phuc urged the agricultural sector to achieve GDP growth of three percent, export turnover of agricultural, forestry and fishery products of more than US$43 billion, and forestry coverage of 42 percent in 2020.

To complete the goals, PM Phuc asked the agricultural sector to expand markets and improve the quality and efficiency of agricultural restructuring in association with renewing the growth model. Also on the agenda he set out for 2020 are ensuring quality and maintaining the prestige of agricultural products in discerning markets, overcoming difficulties in capital access, land accumulation and agricultural output, and completing infrastructure serving agricultural and rural development.

Minister of Agriculture and Rural Development Nguyen Xuan Cuong pledged his ministry would continue to promote agricultural restructuring in association with renewing the growth model and building new rural areas. Agriculture will be strongly connected with the processing industry, preservation, markets, exports and global value chains, he added.

The Ministry of Agriculture and Rural Development plans to choose leading firms with strong financial and technical capacity and market accessibility to efficiently lead value chains. The ministry will also help firms that invest in agricultural, forestry and fishery processing.