Vietnam’s agriculture stands ready to grasp opportunities and overcome challenges from the EU-Vietnam Free Trade Agreement to boost exports to promising EU markets.

A drone pilot project at Mekong Delta rice fields pioneered by Bayer
in collaboration with key stakeholders in Vietnam. (Photo: VIR)

Addressing a recent conference on the development of the northern key economic region in the northern province of Hung Yen, Prime Minister Nguyen Xuan Phuc evaluated that the EU-Vietnam Free Trade Agreement (EVFTA) would provide Vietnam further access to the 28 EU member countries. “The EVFTA is particularly important to Vietnam, which is a great opportunity for us to deepen integration into the regional and global markets,” he said.

Praising the chances expected to arise from the EVFTA, Minister of Agriculture and Rural Development Nguyen Xuan Cuong said that the agreement will be one of the new generation FTAs expected to help Vietnam improve a great deal. Vietnamese agriculture can expand export markets and participate more deeply in global value chains and production networks. This FTA also helps restructure the economy; improve business environment and competitiveness; take advantage of investment capital, technical knowledge, management experience, and create more jobs in the country,” he said.

The EVFTA, with the gradual elimination of 99 per cent of tariff barriers, will create new advantages for Vietnamese products and goods to reach the EU market of 512 million people and a GDP of $18.8 trillion which is 22 per cent of the global economy, and per capita income of $36,580 per year. Specifically, it will remove 24 per cent of agricultural tariff lines in the first year and 99 per cent after 10 years for EU products, meanwhile, EU countries will cut 74.6 and 97.3 per cent, respectively, for Vietnamese products. Many Vietnamese products will enjoy tariff exemptions, such as broken rice and grain products. For vegetables and fruit, the EU also committed to abolish tax when the EVFTA takes effect. For aquatic products, about 50 per cent of the tariff lines will be removed, while the remaining 50 per cent will also be eliminated under a five- to seven-year roadmap.

“Along with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) the EVFTA is a huge opportunity for the agricultural sector, promoting export and enhancing the capabilities for Vietnamese agriculture, which has a lot of space to develop,” said Tran Tuan Anh, Minister of Industry and Trade.

Big challenges

According to Minister Cuong, countries participating in the EVFTA are developed economies, thus “when we open the doors, we have to accept the unequal conditions between the sides.”

“The agricultural products of these countries have the advantage in both technology and resources, and Vietnam must accept that competition,” Minister Cuong added.

Meanwhile, according to Truong Dinh Hoe, secretary general of the Vietnam Association of Seafood Exporters and Producers, in order to take advantage of incentives from the EVFTA, exporters need to comply with the EU’s high standards of food hygiene and safety. “Along with the EVFTA’s tax reduction commitments, there are high requirements for quality, food safety, and antibiotic standards for exports that Vietnamese enterprises need to comply with,” he said.

In addition, the EVFTA also stipulates rules of pure origin or internal value for agricultural products. These rules are based on the World Trade Organization framework and are generally applied to member countries.

According to Tran Cong Thang, deputy director of the Institute of ­Policy and Strategy for Agriculture and Rural Development under the Ministry of Agriculture and Rural Development, the EVFTA in some cases has stricter regulations than the CPTPP agreement.

“The requirement of pure origin for rice, peeled cashews, pepper, coffee, processed seafood, shrimp, pork, beef, and chicken stipulates that the value of input materials cannot exceed 70 per cent of ex-factory price and the production steps must be implemented in Vietnam,” he said. “Vietnamese enterprises also have to follow the importing countries’ standards of social responsibility, gender equality, and labour.”

Changes for development

In the trend of global integration, Vietnam’s agricultural enterprises have been continuously improving their competitiveness by improving product quality so as to meet the global demand.

Established in 1995, Nafoods Group has been one of Vietnam’s leading producers and exporters of fruit juice and vegetables. Over the last few years, recognising the potential from FTAs, the company has been preparing by investing in technology and infrastructure. “The EU is one of our major markets, so the EVFTA will help us expand our market. Over the years, we have developed our supply chain. Besides, co-operation with the Netherlands has helped us gain experiences to create products answering the market’s demand,” Loan Ho, marketing director of Nafoods Group, told VIR.

In another case, selling coffee for 11 years, and producing arabica coffee for more than two years, Detech Coffee JSC is wishing to export coffee beans to the EU market. Before upon hearing the news of the signing of the EVFTA, the company’s vice director Le Thi Hang felt happy, telling VIR, “We have been exporting our products to Russia, and now it is expected that the EVFTA will enable us to expand exports to the EU market.”

Hang’s company has made preparations for grasping opportunities brought about from the hallmark deal. “We have laid a particular focus on improving food safety and ensuring product origin. Currently we have some material areas in the northern region of the country, with high technologies applied to all production stages,” she said.

Meanwhile, Nguyen Thi Thu Hang, in charge of import and export activities at Lam Son Sugar Cane JSC, told VIR that her company wishes to export clean and hi-tech agricultural products to the EU. “Most EU countries have a cold climate, so they have high demand of tropical fruits and agricultural products. This is a market with potential for us,” she said. “The EU is also a high demanding market but with our hi-tech agricultural zone of 124 hectares in Lam Son district of the central province of Thanh Hoa, and our experience in exporting to some demanding markets like Japan, we do believe that we can take advantage from the EVFTA with increasing quantities of exports.”

Along with Vietnamese companies, foreign groups also stand ready to capitalise on what the EVFTA will endow them. In a specific case, as a global company with roots in Germany with key businesses in healthcare and agriculture and a presence in more than 90 countries worldwide, Bayer congratulates the governments of the EU and Vietnam for the signing of the EVFTA. “The EVFTA will create considerable opportunities for Vietnam’s agriculture as it will help to boost agricultural exports, improve the sector’s competitiveness, and promote Vietnam’s international economic integration.,” Weraphon Charoenpanit, country head of Crop Science, Bayer Vietnam, told VIR. “The EU is currently the second-largest market for Vietnamese exports of key produce and commodities such as coffee, cashew nuts, and pepper. We see the opportunity for the Vietnamese agricultural sector to access innovation and technology to enhance the prosperity of farmers through productivity incentives and contribute to sustainable economic development.”

“We think of digitalisation in agriculture as the engine that drives the future of the sector,” he added.

Bayer is the world leading agricultural input player with strong focus and investment on digital farming technologies. Given enough data in this digital era, every decision on the farm becomes prescriptive, with calculated risk and probability over time for every crop, practice, and product. Digital farming is the solution to support farmers to make better decisions, and Bayer has the ambitions to offer value adding Tailored Solutions and superior customer experience based on grower needs. With the aim of accompanying, the Vietnamese government to promote sustainable agriculture, particularly in the context of the Fourth Industrial Revolution, Bayer commits to driving the development of the digital economy even in rural areas in Vietnam for smallholders who contribute to the sustainable development of the agriculture industry.

Additionally, Bayer Vietnam also has an action plan to enhance smallholder farmers’ technical capabilities to optimise their cultivation methods and overcome climate challenges and disease/pest stress to achieve higher yield, quality, and profit.

Since May, the company has established Bayer Agricademy with the aim of building up knowledge and skills on safe, sustainable, profitable, and globally acceptable crop production for farmers in Vietnam. From June 7 to 20, some 400 farmers in the southern and Mekong Delta provinces took part in seven advanced kick-off training courses held by Bayer Agricademy.

“With our leading innovation, Bayer is ready for further close co-operation and partnership with the government and relevant stakeholders to achieve the national action plans in their respective areas to ensure the effective implementation of the EVFTA agreements,” Charoenpanit said.