Europe has always been a very important market for domestic export manufacturing industries, especially the agricultural export industry with many bright spots in recent years. With 27 member countries, more than 511 million people, GDP per capita income of over 35,000/year, the EU is considered to be an extremely open market, with great purchasing power, a potential market, and an important direction for Vietnam's exports in general, and the agricultural sector in particular.
Regarding the export of Vietnamese agricultural products to the EU market, currently reaching about 5.5 billion USD/year, accounting for 15% of the total value of Vietnam's agricultural products, and is the third-largest market of Vietnam's exported agricultural products (after China and the US). In contrast, although the total output of Vietnamese agricultural products exported to this market is increasing, it still accounts for only 4% of the EU's agricultural product import market. Currently, the EU imports agricultural products about 160 billion USD per year, showing that this is a potential market for Vietnamese products. With the strength of being a country with long-standing developed agriculture, and also a country known for many outstanding agricultural products, Vietnamese goods need to focus on improving the quality of products that are advantageous to meet the strict standards of the EU, which is the foundation to increase the total output of agricultural products and diversify export products.
Especially after the EVFTA comes into effect and is implemented more and more deeply, this is a great opportunity to boost the export of Vietnamese agricultural products to the EU market. Before the EVFTA took effect, Vietnamese vegetables and fruits exported to the EU had a preferential tax rate (GSP), but still at a relatively high level (10 - 20%). From August 1, 2020, the EVFTA comes into effect, about 94% of the total 547 tax lines for fresh and processed vegetables and fruits are cut by the EU to 0%, including many vegetables and fruits that are the export strength of Vietnam. This is a huge competitive advantage compared to agricultural products of countries in Asia (because there are many similar products), especially with the two large agricultural markets of Thailand and China, which have not had a free trade agreement with the EU. The EVFTA is both a great opportunity and a huge challenge for Vietnam's agricultural export sector, requiring a drastic change in the agricultural industry. To take advantage of the effectiveness of the EVFTA, exported agricultural products must necessarily innovate in technology and meet the strict import standards of the EU. At the same time, focus on maximizing resources to promote agricultural exports in the coming time, quickly increase market share in the EU's agricultural import market, before the EU signs FTAs with countries that have a large market and more competitive.
1. Positive signals from exporting agricultural products to the EU market
The development of domestic agricultural products is the basis for the export of goods to other countries, including the EU, which is a potential market and development direction of agricultural production.
Although Vietnam's economy develops in the direction of industrialization and modernization, the agricultural sector has always been the strength of our country and is the basis for the development of processing industries. Therefore, the development of the agricultural sector has always received much attention from departments, ministries, branches, and businesses. Overcoming difficulties in the period of an economic crisis brought about by the Covid-19 epidemic, Vietnam's agriculture still has many points of prosperity and development. In 2021, agricultural production has relatively good growth. In May, the export value of main agricultural products was estimated at 1.75 billion USD, accumulated in the first 5 months of 2021, the export value of main agricultural products was estimated at 7.78 billion USD, up 13.0%.
Agricultural production in our country has received more and more attention and investment from domestic and foreign enterprises, so there has been a drastic change that is to gradually increase the proportion of processed agricultural products in the industry structure, widely apply science and technology to cultivation and production, to increase the quality and value of agricultural products. Due to the focus on investment in post-harvest processing, the value of products has been enhanced, the value-added growth rate of the agricultural product processing industry is about 5-7%/year. Therefore, the export turnover of agricultural products increased sharply, increasing by 8-10% per year on average. Currently, the whole country has formed and relatively developed an industrial system of processing and preserving agricultural products with over 7,500 large-scale establishments and tens of thousands of small agricultural product processing establishments. The proportion of processed agricultural products for export accounts for 45% of the total export turnover of agricultural products.
In terms of science and technology, at present, many stages of agricultural production have a high degree of mechanization, such as the stage of rice cultivation in the Mekong River Delta and Red River Delta reaching 100%, the rice harvest reaching over 90%; The stage of caring for and spraying plant protection drugs every year reaches over 70%. Due to the focus on in-depth development, improving the quality of agricultural production, and processed products, agricultural products have a relatively good growth rate such as vegetables and fruits reach 15.1%/year, cashew kernel reaches 5%/year, rice reaches 8.9%/year, rubber reaches 11.3%/year.
Positive signals of agricultural products for export in the EU market
Coffee exports to the EU are also thriving again, in which, in the first 5 months of the year, besides the US market, Germany and Italy are the largest coffee consuming markets of Vietnam with a market share of 14 % and 7.6% respectively. The EU is also the second-largest market for Vietnam's cashew nut consumption, reaching 33,885 tons per year, equivalent to 173.17 million USD, accounting for 21% of the total output and accounting for 18.3% of the total cashew nut export turnover of the whole country. In terms of vegetables and fruits, besides fruits that have been exported for many years, in June 2021, the first batch of lychee was exported to the Czech Republic, France, and is expected to boost exports to other countries in the EU. This is the first batch of lychee with the Itrace247 traceability stamp to be imported officially, consumers in Europe can immediately access the entire detailed schedule of the care, harvesting, and packing process according to the global GAP standard. This has the meaning of "opening up", extremely important for lychee export in particular, and is a general direction for the development of agricultural export of all Vietnamese products.
2. Main directions for Vietnamese agricultural products
The development of Vietnamese agricultural products focuses on being associated with standards of quality, hygiene, and food safety according to strict EU standards.
For many Vietnamese agricultural products to penetrate deeply into the EU market, which is considered a difficult market with strict regulations on plant quarantine, quality management, food safety, and hygiene, forcing Vietnamese agricultural products to make drastic changes in quality, applying cultivation methods according to standards such as VietGAP, Global GAP. Currently, Vietnamese agricultural products are still produced in small pieces, farmers do not have a deep understanding of advanced techniques to improve productivity and product quality, as well as many limitations in accessing technology in building a traceability process for products. Therefore, farmers need to associate with businesses, corporations, or gather into a cooperative model to easily apply technology to the process of growing and harvesting. Besides, enterprises and cooperatives producing agricultural products also need to pay attention to building a system of post-harvest preservation and processing, especially deep processing. Because in order for products to meet VietGap and Global GAP standards, the percentage of fruits and vegetables that do not meet the requirements of design and quality for export will increase. Therefore, deep processing will help make use of these products as raw materials for processing. Deeply aware of the direction of developing domestic agriculture for export and the position of the whole agricultural industry globally, so it is necessary to expand and accelerate the modernization process in the processing of agricultural products, to increasingly improve the quality and value of goods. This has been emphasized in many policies of the Government in recent years, especially in Resolution No.53/NQ-CP dated February 17, 2019, the Government has set a target that "Vietnam's agriculture ranks among the 15 most developed countries in the world, in which the agricultural product processing industry ranks among the top 10 countries in the world. Vietnam has become a center of deep processing of world agriculture, a logistics center for global agricultural products.
Bringing traceability technology into the cultivation, production, and processing of agricultural products.
To expand the Vietnamese agricultural product market to other countries in the world, especially the EU market, it is necessary to have a clear origin, production, and processing processes, and Vietnamese agricultural products must apply traceability technology to each stage of product creation. In Europe, since 2005, the EU has defined traceability as a mandatory regulation for member countries. That shows that developed countries' markets have paid great attention to traceability, especially in the food industry, many years ago. In the context that customers increasingly need transparency for products, goods, and especially agricultural products, traceability is considered as a superior solution and an inevitable trend for Vietnamese goods. Traceability allows consumers to have complete information upstream, from the final product to the place of origin, to review each stage in processing and distribution. The current trend is to use information technology and electronic devices to facilitate information updating, data management, and product traceability. With this solution, manufacturing enterprises put information on the system from the first stages of the production chain to product packaging.
The application of traceability of agricultural products is the foundation for Vietnamese enterprises to expand further in the international market, which requires strict traceability of goods, and is considered a passport for the further step in integration, raising the position of Vietnamese goods in the international arena./.
Pham Kim Oanh
Journal of Industrial and Commercial Research - VIOIT