With the ASEAN Economic Community (AEC) set to open its doors later this year, farmers are now facing yet more intense pressure as market share on the home turf slips away as tariffs come off of fruit and vegetables imported from within the region.
Vietnam has been slow in removing border protections such as import tariffs, which starved off competition in the past they say, but now with tariffs coming down it is evident the nation’s farmers haven’t built up enough expertise and competitiveness.
In HCM City, for example, traders are practically giving dragon fruit away, selling them at a mere US$5 (VND10,000) for three kilos. A similar situation is surfacing with respect to rambutan, mango and guava fruit.
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This clearly evidences the lack of internal market mechanisms in place to coordinate and correlate production with demand in some orderly fashion.
In addition they say that sales for fresh fruit from Thailand such as mangosteen, mandarin, and rambutan have begun to flow in huge quantities across the border as consumers find favour with their quality and price.
They also point to statistics from the General Department of Vietnam Customs that show over the past seven years imports of fruit and vegetables from Thailand have tallied in at US$95 million.
Imports from Thailand have by far surpassed even the US$79 million of fruit and vegetables that Vietnam has imported from China for the same time period, they emphasize.
The industry needs a major shake-up with a complete overhaul of the production models or it faces a looming disaster as consumers increasingly are distrustful of the quality of local agricultural food products.
Though overall demand for fresh food is increasing in line with the growth of the middle class in Vietnam, demand is shifting to organic fruits and vegetables for which consumers are willing to pay more.
“Consumers are very keen on issues pertaining to safety and country-of-origin labelling,” said Nguyen Ngoc Hoa, deputy director of HCM City’s Department of Industry and Trade recently.
As the price of farm produce is not terribly high, consumers are fine with paying higher prices for their favourite products Hoa said, adding that consumers are “more than willing to live with a 5% hike in prices for safe products”.
Nguyen Thanh Ha, deputy director of Thu Duc Farm Produce Market, in turn said only high quality and safe products stand any chance at successfully penetrating the local markets.
Quality and safe products are currently shortcomings of Vietnam’s farm produce, Ha underscored.
For example, although Cat Hoa Loc mangos have garnered some brand name recognition and have won over limited trust from consumers, they still have problems maintaining consistency of quality.
Apart from the spoilage during the production stage, losses during transport have also played an important role in destroying quality and profitability and in many cases deteriorated products in transport have had to literally be thrown away.
For his part, Nguyen Lam Vien, general director of Vinamit Joint Stock Company, said farmers need to renovate production methods to improve the quality of farm produce and get their products on present-day day supermarket shelves.
In the past, almost all farm produce came from small households with poorer quality and lower value Vien said, and this has led to difficulties for them to approach modern sales channel.
Lastly, economic expert Le Dang Doanh said farmers specifically and the industry in general needs to reinvent themselves and change their business model.
Agriculture should to be undertaken on a much larger cooperative scale producing a larger volume of product on the market Doanh said and “the small family farm will of necessity go by the wayside”.
Success will virtually be assured if the scale is upsized and further buttressed by strict cooperation among farmers, businesses and distribution systems in the market, Doanh underscored.