Export of vegetables and fruits is forecasted to face many difficulties in the third quarter of 2021, and it will not prosper until the fourth quarter of 2021. However, this year's fruit and vegetable exports are assessed by the Ministry of Industry and Trade to still reach the target set at the beginning of the year with a figure of about US$3.5-3.6 billion.

Many specialty fruits and key export products such as durian, lychee, mango, dragon fruit,
are in the main season, so the supply of vegetables is abundant. Photo: N. Thanh

Export value increased by 18%

According to the Department of Agricultural Product Processing and Market Development (Ministry of Agriculture and Rural Development), in the first five months of this year, the export value of vegetables and fruits reached US$1.77 billion, up by 18% compared the same period last year.

China is Vietnam's largest fruit and vegetable export market with more than 60% market share. From January 2021 to the end of April 2021, the most exported fruit and vegetable product is dragon fruit, reaching US$455.1 million (accounting for 33.2% of total fruit and vegetable exports), up by 7.3% compared the same period last year.

According to the Ministry of Industry and Trade, Asia is still the main export market of Vietnam's vegetables and fruits, accounting for over 85% of total fruit and vegetable export turnover. In particular, the focus is still on the Chinese market, followed by the South Korean, Japanese and ASEAN markets. Exporting vegetables to these markets has many advantages such as large market size and consumption, similar consumption habits, and convenient geographical location for transportation. In addition, the import tax rate of fruit and vegetable products from Vietnam has mostly been reduced to 0% due to the implementation of Free Trade Agreements (FTAs).

For markets in Europe and America, according to tariff commitments in new generation FTAs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the European Union and Vietnam Trade Agreement (EVFTA), most of the fresh and processed fruit and vegetable products will be completely tax-free as soon as the FTA takes effect. This is a new factor that opens up opportunities for Vietnam's fruit and vegetable exports when Vietnam's fruit and vegetable products in these markets still account for a small proportion and have plenty of room for growth.

Mr. Nguyen Quoc Toan, Director of the Department of Agricultural Product Processing and Market Development, said that many specialty fruits and also key export products such as durian, litchi, mango, dragon fruit are in the main season, so the supply is abundant. In addition, the world market's fruit consumption demand recovered after the pandemic, plus the effectiveness of FTAs, trade promotion programs and efforts to promote and boost fruit and vegetable exports by ministries, sectors and localities have brought high efficiency to market activities, solving problems for farmers.

Export target of US$3.6 billion

Besides the favorable factors, the Ministry of Industry and Trade said Vietnam's fruit and vegetable exports faced many difficulties. The 4th outbreak of the Covid-19 pandemic in Vietnam disrupted the harvesting and production of vegetables and fruits in the main growing areas.

Besides, China is also entering the seasonal fruit harvest season, causing a decrease in import demand, which may hinder the growth momentum of Vietnamese vegetables and fruits to this market in the coming months.

Another important factor is that Vietnamese fruits and vegetables are still mainly consumed and exported in fresh form, accounting for about 80%; while processed fruit and vegetable products for export account for only 20% of total export turnover.

Currently, the number of factories and processing capacity of Vietnamese enterprises are still low. The export is mainly in fresh form, making it difficult for Vietnamese fruits and vegetables to compete in terms of quality and price in distant markets due to the short consumption time, high storage and transportation costs.

For fruits that have been allowed to be exported to markets with high quality requirements such as the EU, the United States, Japan, South Korea, Australia, and New Zealand, the export volume is still very limited. This is due to the area and output of GAP certified fruits, qualified and granted planting area codes according to the regulations of fastidious markets are still very modest compared to the total area and fruit output of the country, limiting the signing and performance of export contracts.

From the perspective of taking advantage of FTAs, the representative of the Ministry of Industry and Trade said: "The work of opening the market on tariffs through FTAs has been handled well. However, Vietnam has not yet taken advantage of the opportunity to promote fruit exports because the negotiation on technical standards is quite complicated and takes a long time (usually takes 3-5 years and requires equivalent trade-offs).”

It is forecasted that in the third quarter of 2021, fruit and vegetable exports will still face difficulties due to the limited circulation and transportation of goods; the rainy season starts in the raw material production area. The opportunity for fruit and vegetable export may be better in the fourth quarter of 2021 when the Covid-19 pandemic is basically under control and the markets enter the cold season with higher value.

With orders in the third quarter of 2021 and the fourth quarter of 2021 on average increasing by about 20% compared to the first two quarters of the year, fruit and vegetable exports are expected to reach US$3.5-3.6 billion for the whole year.