Exports of processed agricultural products skyrocket

In the first quarter of this year, the export turnover of processed agricultural products of Vietnam reached US$166 million, an increase of 33 percent over the same period last year.

Processing agricultural products for export at International Fresh Vegetables and Fruits Production and Supply Joint Stock Company. (Photo: SGGP)

According to the Ministry of Industry and Trade, in the first quarter, processed products with the highest export values included dried mango with $14.4 million, up 149.7 percent over the same period last year; passion fruit juice with $10.6 million, up 3.5 percent; dried fruits with nearly $9.5 million, up 222 percent.

This positive growth was the result of the whole process of investment in many years of the industrial processing industry. According to Mr. Dang Phuc Nguyen, General Secretary of the Vietnam Fruit and Vegetable Association, in the period from 2018 to 2019, 30 large projects on agricultural product processing with an investment of around $1 billion started construction and some facilities have come into operations.

Amid the context of the Covid-19 outbreak, processed fruits and vegetables were not affected by the pandemic thanks to the convenience and long storage time. If exports of processed agricultural products are promoted, the export value of the fruit and vegetable industry will increase while the pandemic still develops complicatedly.

According to the Ministry of Agriculture and Rural Development (MARD), the growth rate of the value of deeply-processed agricultural products reached 7-8 percent per annum; the output proportion of deeply-processed and high value-added products of all industries was from 30 percent upwards; more than 50 percent of facilities processing key export agricultural products reached advanced production technology. Thereby, the clusters of production – preservation – processing – consumption of agricultural products were established, attaching with concentrated raw material areas, contributing to the economic development of rural areas, the establishment of new rural areas, and resolving jobs for farmers.

Especially, Vietnam has been participating in new-generation free trade agreements (FTAs) so the opportunity to expand the export market for agricultural products, especially, processed products, is more open. However, the country’s agricultural product processing technology merely meets regional and international standards in some industries, including cashew nut, coffee, rice, shrimp, and pangasius fish.

Figures from the MARD show that the total export value of agricultural products in the world hit $2.2 trillion per year. Vietnamese farm produce has many opportunities but how to grasp them. In fact, many Vietnamese enterprises have not been able to take initiative in the supply of raw materials, from the quantity, time, type, quality, safety level to the price of materials. The linkage among the stages in the value chain of product lines has not been close enough in general.

Mr. Nguyen Lam Vien, Chairman of Vinamit Company, analyzed that currently, many enterprises have invested in modern processing plants and paid attention to brand development. That is the right strategy. However, the most difficult thing is how to ensure the uniformity and quality of raw material areas. Enterprises are mainly traders while the production is handled by farmers themselves, leading to slackening in quality. Most agricultural enterprises could not afford fertile land with a favorable location.

For instance, according to the International Fresh Vegetables and Fruits Production and Supply Joint Stock Company, a subsidiary of TH Group, to have 500 hectares of vegetable-growing area in Nghe An and Lam Dong provinces, the most difficult thing is high initial investment capital, and the payback period is extremely long. Therefore, not all enterprises are brave enough to make an investment. 

According to Mr. Dang Phuc Nguyen, the fruit and vegetable processing industry will prevail and be on the upward momentum, especially when the EU-Vietnam Free Trade Agreement takes effect. However, the technical barriers of the EU market are extremely strict so enterprises need to prepare raw material areas that meet standards.

On the other hand, some neighboring countries invested in technology, at the same time, promoted imports of Vietnamese agricultural products to process then export to the EU market in order to vie for the market share with Vietnam. Hence, the State and enterprises need to encourage farmers to join cooperatives, creating large-scale field to implement mechanization. The country can attract investment from the US, Japan, South Korea, Australia, and Israel to accelerate the deep processing technology to develop strongly.

The MARD is completing the draft project on “developing fruit and vegetable processing industry to strive to stand among the top five countries in the world”.

To achieve this target, the country needs to quickly implement measures, such as preferential loans for the agricultural sector, multiplying the model of the large-scale field, building the linkage chain between enterprises and farmers, and prioritizing the construction of processing factories associated with raw material areas.

At the same time, it is necessary to complete a system to forecast and update market information and trade policies of key export markets. This is also an important step to help Vietnam’s agricultural product processing industry to enter the top agricultural exporters in the world.

Despite strong growth in the first quarter of this year, as the export value of processed agricultural products only accounted for a low proportion of 18.6 percent of the total export value of fruits and vegetables, it could not make up for the decline of the fruit and vegetable industry in the first three months.