Vietnamese farm produce confidently conquering the EU market

With an export growth rate of 10% annually, farm produce is currently one of Vietnam’s major exports to the European Union (EU). The Vietnam-EU Free Trade Agreement (EVFTA), set to be signed in the near future, is expected to produce a sharp increase in the export turnover of Vietnam’s agricultural products to this market.

Coffee is among Vietnam's key agricultural products exported to the EU market.

The EU, gateway into other markets for Vietnamese farm produce

Experienced in exporting agricultural products to the EU market, Phan Van Thuong, Director of G.O.C Export Food Processing JSC, said his company currently has three factories specialised in producing and supplying export farm produce, such as pineapples, pickled cucumber and bamboo shoots, to the EU with a higher turnover year after year. He stated that, as for the EU market, the goods will have to meet high technical standards, with notice put on the policies related to environmental protection, energy saving and the labour criteria.

“We previously refused to export 35 goods containers to a German consortium, and only took over 20 containers because, in fact, prices in the EU are not attractive compared to other countries such as the United States. However, their standard system is always the no. 1, so if we can satisfy it, we will be able to export products all over the world. Not to mention that workers and managers will also learn more experience to improve their level, which is the most important factor,” Thuong said.

Specifically, thanks to learning the management process and standards, with only two people in charge of logistics affairs, the G.O.C Company can export up to 4,000 containers annually and declare thousands of customs declarations at leisure.

The story of G.O.C shows that the exports of goods as a whole, and farm produce in particular, to the EU will bring many benefits for businesses, not just high revenues. According to the Ministry of Industry and Trade, Vietnam’s agricultural products have huge potential to be exported to Europe. At present, many Vietnamese enterprises have proved that the quality of their products meets the requirements of the EU and matches with the tastes of the EU people. A variety of Vietnamese agricultural products are favoured in this fastidious market, including cashew nuts, coffee, fruit and vegetables, dragon fruit, and fabric. In the first 10 months of 2018, Vietnam exported US$4.3 billion worth of farm produce to the EU, up nearly 10% over the same period in 2017.

The EU is currently one of Vietnam’s two most important partners in terms of trade and investment, and is also one of the major markets for Vietnamese agricultural products, particularly seafood and coffee. Meanwhile, more and more EU agricultural products are imported into the Vietnamese market.

Quality a top priority

The EVFTA has been finalised and will be signed and ratified in the near future, promising to help increase the export turnover of farm produce from Vietnam to the EU market. However, what’s important is that businesses must satisfy the quality standards. This is a big problem for Vietnamese companies, as a recent survey shows that roughly 70% of agricultural materials are collected from farmers, while only a small percentage is developed by enterprises themselves or bought from state farms.

The farming materials areas are located too far from processing plants, the costs of transportation are high, and the raw materials do not ensure the quality requirements, making it impossible for them to be processed for exports, especially to such an extremely fastidious market as the EU.

In addition, there remains the use of unknown chemicals in processing and preserving fresh vegetables. Not only that, Vietnam’s post-harvest technology is still limited, and little technical progress in this field has been transferred to farmers.

Along with the barriers to competition from the integration process, enterprises also have to face internal challenges, such as intensive processing capacity and the limited development of their trademarks.

Nguyen Thi Huyen, Director of the Vietnam Cinnamon Production and Export Company, said that the trend of the EU market is to use natural products. Therefore, Vietnamese firms should not only keep strict control of food safety and hygiene and product quality, but also move towards developing organic and clean products. Huyen added that her company always attaches importance to providing farmers with cultivation technique training, from not using fertiliser and chemicals, in order to get the highest-quality products to meet the requirements of this market. .

Nguyen Thi Hong Minh, Chairwoman of the Food Transparency Association, emphasised that, in order to build up strong internal power and facilitate enterprises’ deep integration and resilience to the market’s fluctuations, the organisation of goods production with suitable forms is of prime importance.

“Vietnam has many valuable products of common origin, but its businesses are doing it separately. At present, there are many things that have developed beyond the scope of enterprises, and it is the trade associations where these problems could be resolved. Therefore, it is necessary to better organise the trade associations to embrace and build trademarks for characteristic products for Vietnam, thus facilitating the exports of goods to Europe,” Minh said.

Vietnam’s agricultural exports to the EU are currently subject to a 14% tax, but when the EVFTA is signed the tax will be brought down to 0% and the EU will become a large market for Vietnam’s farm produce.