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Agricultural sector faces unprecedented challenges (03-08-2015)


AsemconnectVietnam - In the agricultural sector, farmers are facing first ever challenges when the export of many key agricultural commodities have declined over the past seven months while imports are overflowing.   

AsemconnectVietnam - In the agricultural sector, farmers are facing first ever challenges when the export of many key agricultural commodities have declined over the past seven months while imports are overflowing.

 As per the assessment of many economic experts at the Conference on Q2/2015 Macro-economy: changes, opportunities and policies organised by the Central Institute for Economic Management (CIEM) on July 29, Vietnam`s agricultural products have never dropped as sharply as in the past seven months.

As per experts, many items worth billions of dollars such fisheries, rubber or race is suffering from two-digit decline compared to the same period. That is not to mention, the domestic consumption market is being dominated by foreign products such as fruits, candies to fresh foods.

As per the latest report by the Ministry of Agricultural and Rural Development (MARD), in the first seven months of the year, the export of agricultural, forestry and fisheries products only reached $16.9 billion, down more than 3.6 percent year-on-year. Especially, many items such as rice, seafood, coffee that have been Vietnam`s billions of dollar export items have suffered from two-digit decline.

While exports declined, what many economists fear the most is the import of many types of animal meat, vegetables and fruits from China, the U.S, Australia, Taiwan, etc. Most worrying is, in many Vietnamese markets, Chinese vegetables and fruits flood the market, competing directly with domestically produced items. Consumers use products of unknown origin, risky to health while farmers suffer from price squeeze right on the home market.

As per the Department of Livestock Husbandry, MARD, in January-May 2015, Vietnam`s rate of importing cattle and poultry has increased two digits from the same period last year. Specifically, Vietnam imported more than 209,000 buffaloes and cows from Australia and Thailand with the import turnover of $195 million, up more than 62 percent in volume and 98.5 percent in value compared to the same period last year. In addition, the country imported 2,032 tonnes of pork with the turnover of nearly $4 million, up 46.6 percent in volume and 60 percent in value. The import of chicken increased remarkably with more than 56,900 tonnes, worth nearly $53 million, up 55 percent in volume and 31 percent in value.

Vietnam also pays more and more to import animal feed, pesticides, seeds, etc. In the first six months, Vietnam spent nine trillion dong (more than $460 million to import pesticides, 16 trillion dong to import fertiliser, $1.68 billion to import foods and materials for the animal husbandry), etc.

At the seminar, Dr Nguyen Dinh Cung, Head of CIEM affirmed that, Vietnam`s agricultural industry is facing a lot of major issues from export due to the impact of exchange rate; competition in product quality compared to other countries. The domestic market is greatly affected by foreign cheap goods.

Production stimulus and agricultural development factors are lack of focus, especially credit capital remains very expensive and hard to access for farmers. Barriers about food safety standards; environment, consumer and industry protection policy have not been implemented, causing disadvantages to agricultural products, Vietnamese farmers in the liberalisation playground.

Cung emphasizes that “While export face difficulties, the domestic market is flooded with cheap imported products. What is worth mentioning is that many vegetables and fruit items are smuggled without being quarantined, the origin is unknown, guising Vietnamese goods with much cheaper price than domestic goods. Meanwhile, inflation over the past seven months rose below than one percent while the price of raw materials such as fertilisers, electricity, petroleum, veterinary drugs, pesticides, etc. are rising, making production costs to be expensive while the selling price is cheap, causing farmers to be afflicted”.

Dr Le Dinh An, former director of the National centre for Socio-economic Information and Forecast, the Ministry of Planning and Investment emphasized that agriculture in the first half of this year is very worth worrying. We have not been able to do anything though we have issued many agricultural stimulating policies. Vietnam lacks typical agricultural production models to multiply and develop the production chain. Many agricultural products of Vietnam are still export oriented, labourers in field still accounts for more than 70 percent. Therefore, bad fluctuations of this field affect greatly the country`s life.

An stressed that, though reduced exports are affected by adverse developments of the world economy such as devalued euros, the fallen demand of the Chinese market, etc., it is clear that we have not taken initiative to diversify the market, improve product quality to increase the competitiveness. Many export items of Vietnam such as rice, rubber exceeded in volume compared to the same period last year but the value is far less due to being squeezed at too low price.




(source in Eximbank)
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