Agricultural Export Outlook to Europe

Agricultural Export Outlook to Europe

When the Vietnam – EU Free Trade Agreement (EVFTA) comes into force, Vietnamese agricultural products will have more opportunities to access European markets owing to a sharp drop in tariff rates to 0-5 per cent in 7-10 years.

Doors wide open to agricultural exports

The European Union (EU) is a prosperous economic zone whose GDP accounts for about 23 per cent of the world’s nominal GDP and per capita GDP is US$40,890 per year.
Deputy Minister of Industry and Trade Cao Quoc Hung said, the EU is one of Vietnam’s two most important trade and investment partners and one main market for Vietnam’s agricultural products, especially seafood and coffee. At the same time, more and more EU agricultural products are imported into the Vietnamese market.
The bilateral trade value amounted over US$50 billion in 2017 and maintained an average annual growth of over 12 per cent. Vietnam’s agricultural exports to the EU valued over US$5 billion in the year, up nearly 12 per cent from a year ago. In the first 10 months of 2018, Vietnam exported US$4.3 billion of agricultural products to the EU, nearly 10 per cent higher than the same period of 2017.
“Bilateral trade and economic relations will enter a new era as EVFTA is about to be signed and ratified by both parties in the near future,” he said.
Vietnam particularly has the advantage of producing and exporting tropical agricultural products to the EU market. The EVFTA will open up many opportunities for agricultural products as tariffs drop.

Challenges remain

According to the Ministry of Industry and Trade, the number of agricultural exporters to the EU market is modest, at about 600 now, mainly small and medium in size. Export shipments to this market are carried out with many intermediate stages, thus reducing the profit margin for Vietnam.
Mr Tran Van Cong, Deputy Director of Department of Agro-product Processing and Market Development under the Ministry of Agriculture and Rural Development, said, besides competitive barriers from the integration process, Vietnamese companies must also face inherent challenges such as weak intensive processing capacity and unpopular brands.
Mr Paolo Lemmar, Italian Trade Counsellor, acknowledged that Vietnam’s agricultural product branding in the world market is limited and lacks popular brand connectivity. Indeed, many products are unknown to EU consumers.
Ms Miriam Garcia Ferrer, Head of the Trade and Economic Section of the Delegation of the European Union to Vietnam, said that the full use of these incentives will require concerted efforts and cooperation of the government, the business community and business associations as well as valuable advice from scholars and scientists.
According to experts, about 70 per cent of farm produce is purchased directly from individual farmers, while only a small share is self-grown by enterprises or purchased from State-run farms. In addition, agricultural sources are far from processing plants, resulting in higher transport costs, worsening input quality that may not meet export requirements. Smallholding, spontaneous, segmented and unconnected production leads to low quality of agricultural products in Vietnam.
In addition, backward processing and preservation causes post-harvest losses of 25 – 30 per cent.
To successfully export agricultural products to the EU market, it is necessary to decentralise food policy administration, said Mr Alexandre Bouchot, Agricultural Counsellor. Promoting local initiatives, encouraging businesses to invest in agriculture and agricultural food and providing training to meet practical requirements is also important.
In particular, the agricultural and food system needs to be reformed to develop in a sustainable way by investing in agricultural restructuring and supporting innovative research and development.
A representative from the European and American Market Department under the Ministry of Industry and Trade suggested that agricultural exporters make their products different, introduce technology to production to increase the value and promote product sustainability.

Source: VCCI

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