Vietnamese agricultural products struggle to enter supermarkets

Although it is an agricultural powerhouse, many Vietnamese agricultural products which are sparsely imported in supermarkets to compete in the domestic market are still facing many difficulties. Many experts believe that the State needs to intervene more strongly in order to have fair access to distributors; ensuring the harmonization of interests between producers and distributors.

State management agencies need to better the balance to ensure the harmonization of interests in the consumption of goods at supermarkets. Photo: Nguyen Thanh

High discounts, capital appropriation

At the 5th National Farmers Forum in 2020 with the theme "Capital and technology in the 6-house linkage", farmer Pham Van Khang from Village 8, Dak Buk So Commune, Tuy Duc District, said that farmers are in a relatively weak position in the distribution of products to the market.

"Farmers produce by themselves and cannot sell directly, but when selling through distribution channels, they must have a very high discount. In order to regularly sell their products, farmers must accept a discount rate. If the discount is only 15-20%, it can only be sold once a year,"said Mr. Khang.

As a person with a lot of experience in the supermarket industry, Mr. Vu Vinh Phu, former Chairman of the Hanoi Supermarket Association, emphasized that it is difficult to put goods into the supermarket.The supermarket occupies a large amount of capital from farmers who produce products in the agricultural sector. In addition to the 35% discount, supermarkets in their high position also make three-month late payments to farmers.

Taking specific evidence in the story of clean fish products of Dai Ang Cooperative (Thanh Tri, Hanoi), this company invested in high technology and quality products but still found it difficult to enter the supermarket, Mr. Vu Vinh Phu said.

"According to media reports, the distributor saw and evaluated the good quality of the fish, but when buying fish in the supermarket, he bought it at the price of the unclean fish with 30% discount and only three months later to pay. Currently, 80% of goods entering the supermarket must be consigned. With the above methods of discounting and delayed payment, it is clear that supermarkets are appropriating capital properly,” Mr. Phu said.

In addition to the discount, capital appropriation and distribution of goods through supermarkets, this expert pointed out other shortcomings. Typically, there are cases where a batch of vermicelli entering the supermarket costs up VND20 million to create a code and three months later the supermarket has not imported the goods, along with many other requirements and procedures to be met.

"However, not all supermarkets act like that. There are still very good supermarkets like Hapro, the same batch of vermicelli as above only discounted only 17%, equal to half of other supermarkets and imported seven days later. Or like Vinmart discount 0% within one year for fresh food," Mr. Vu Vinh Phu said.

Need for fair to access to distributors

Regarding bringing Vietnamese agricultural products into supermarkets, economist Nguyen Dinh Cung said that there is currently unfair competition in the distribution of agricultural products. In the same supermarket, there is a phenomenon thatenterprise A has different standards to enterprise B. This creates unhealthy competition between businesses.

"It is necessary to have fairness in access to distributors. Each supermarket has the right to set its own standards, but the Ministry of Industry and Trade should have an arbitration role to ensure fairness in goods consumption," Nguyen DinhCung said.

Mr. Vu Vinh Phu also said that it is necessary to review this issue to both protect the producer and ensure profitable distribution. This expert said that Thailand is a country with astrict Sugar Law. According to this law, when selling 1kg of sugar to the market, it is legal to ensure 60% of profits belong to farmers, 40% are divided among traders. This policy is very transparent. We do not need to follow this rule, but we have to have certain regulations so that the producers reducelosses.

From the perspective of state management agencies, Deputy Minister of Industry and Trade Do Thang Hai expressed his opinion that despite businesses and farmers facing difficulties in the consumption of products, it is clear that at present Vietnam is moving towards a market economy. Therefore, the units themselves must pay more attention to the consumption and output of their products.

Regarding the responsibility of the Ministry of Industry and Trade in facilitating the consumption of agricultural products, the leader of the Ministry of Industry and Trade said that as of December 31, 2019, there were 1,085 supermarkets nationwide. In addition, there were 240 trade centers (including 100 foreign invested retail establishments) and about 8,500 markets nationwide. The aforementioned markets are large scale, not "temporary markets". This system has contributed to helping farmers sell their produce.

According to the assessment report of the Institute of Social Opinion Research under the Central Propaganda Department, issued in July 2020, up to 75-76% of goods consumed in the current supermarket system are made in Vietnam. There are even many supermarkets like Big C, where the amount of Vietnamese goods being consumed is up to about 95-96%.

"I think that is also one of the efforts to support farmers, producers and consumers of agricultural products," Deputy Minister Do Thang Hai said.