Vietnamese fruits struggle to gain foothold in international markets

By Ngan Anh   December 15, 2017 | 09:48 am PT
Vietnamese fruits struggle to gain foothold in international markets
Fruit and vegetables are expected to be a major foreign currency earner for Vietnam. Photo by Reuters
Doors have been opened but strict controls and high aviation fees are standing in the way.

Vietnam is struggling to find international buyers for its tropical fruit, despite having been licensed to export by demanding markets such as the U.S, Australia, Canada and Japan.

Starting December 29, the U.S. Department of Agriculture will allow imports of fresh mangoes from Vietnam, following in the footsteps of dragon fruit, rambutan, lychees, longan and star apple.

Earlier this year, Australia also opened its doors to fresh dragon fruit imports from Vietnam after nine years of negotiations. Vietnam delivered its first dragon fruit shipment to the market in September, becoming the sole country allowed to ship the fruit to Australia to date.

But despite these breakthroughs, strict requirements still make it difficult for fresh fruit to enter these markets.

Mango exports to the U.S. are a prime example. Fresh mangoes from Vietnam will be subject to regulations that include orchard requirements, irradiation treatment and port of entry inspections.

The fruit must also be imported in commercial consignments accompanied by a phytosanitary certificate issued by Vietnam’s Plant Protection Department.

Even if these requirements are met, sales of Vietnamese mangoes are not guaranteed as they depend on consumer tastes and distribution, said Dam Quang Thang, CEO of fruit exporter Agricare Vietnam.

In addition, local mangoes may find it hard to compete with those from Mexico, which has the biggest mango output in the Americas at over 1.5 million tons each year. Mexican mangoes are good quality and meet U.S. import requirements, he added.

It's too early to say if Vietnam will be able to export 3,000 tons of fresh mangoes to the U.S. each year as planned, equivalent to one percent of U.S. import volume and its total domestic output, Thang said.

Another obstacle to fruit exports is high transport fees that raise retail costs in overseas markets.

For example, Vietnamese dragon fruit is sold for $8 per kilogram in the U.S., 10 times higher than prices in the local market, while Vietnamese lychees are sold for $16 per kilogram in Australia, 16 times higher than at home, according to some fruit exporters.

Vuong Dinh Khoat, director of local fruit exporter Hugo, said aviation fees often account for more than half of Vietnamese fruit export prices.

A representative from a fruit exporter in the southern province of Binh Duong said her firm had to temporarily halt shipments of mangoes to Japan because of high transport fees that made the product uncompetitive.

She said her firm had to pay an aviation transport fee of $1.8 per kilogram of mangoes shipped to Japan, 50 percent higher than that paid by Thai exporters despite the shorter distance.

Explaining the issue, she said many countries like Australia and Thailand offer transport subsidies to domestic traders to boost exports.

Together with high aviation fees, poor trade promotions have limited Vietnam’s fruit export expansion. Despite infiltrating the U.S., local fruits are only sold in a limited number of places, such as California and New York, due to inefficient promotional activities, according to the Vietnam Fruit and Vegetable Association.

To boost exports, the Vietnamese government should subsidize transport fees for local fruit exporters without violating its international commitments, according to industry insiders.

Meanwhile, producers should try to apply new cultivation models and set global food safety standards as their top priority, they added.

Major foreign currency earner

Vietnam's total fruit and vegetable exports hit $3.2 billion in the first 11 months of this year, marking a jump of 43.1 percent on-year and leaving other key agricultural exports far behind.

A growing appetite among foreign consumers for Vietnamese fruit is expected to reduce the country’s reliance on China, which accounted for 70 percent of Vietnam's fruit and vegetable exports in 2016. Local fruits are now exported to 60 countries and territories.

At a recent session of the legislative National Assembly, Nguyen Thien Nhan, the chief of Ho Chi Minh City’s Communist Party, called for the government to focus on helping farmers grow fruit and vegetables for export to combat rural poverty.

Last year, total export revenue from fruit and vegetables surpassed that of crude oil, Vietnam’s key export, for the first time, he said, citing that Vietnam earned $2.4 billion from shipping crude oil and $2.45 billion from fruit and vegetable exports.

The growth of crude oil exports has slowed over the past five years, while fruit and vegetable export revenue has increased 30 percent each year, he added.

“Fruit and vegetable export value will reach an estimated $9-10 billion by 2020, higher than crude oil even at its peak,” Nhan told legislators.

Minister of Agriculture and Rural Development Nguyen Xuan Cuong said his ministry is reviewing farming production to help rural areas make the most of their local conditions.

Each commune should focus on certain products for export, he said.

"We have nearly 9,000 communes nationwide with different climate conditions and the potential to grow specialty fruit and vegetables that would create huge export earnings," he added.

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