Tariffs are not the magic key that promotes the export of fruits and vegetables

Dang Phuc Nguyen, Secretary General and Chief of Office of the Vietnam Fruit and Vegetable Association

How do you evaluate the results of fruit and vegetable exports from the beginning of the year to now, especially the impact of UKVFTA on fruit and vegetable export?

Overall, in the first three months of this year, fruit and vegetable exports increased by more than 6% over the same period last year. The main reason is because the Covid-19 pandemic was less stressful with a vaccine. The issue of border blockades in the fruit and vegetable consuming countries of Vietnam has been reduced; creating conditions for the better circulation of goods, helping the fruit and vegetable export turnover in the first months of this year grow. In March and April of 2020, vegetables and fruits could not be exported anywhere due to the outbreak of Covid-19.

Free trade deals in general have a positive impact on increasing Vietnam's fruit and vegetable export turnover. As for the Vietnam-UK FTA, the fruit and vegetable industry exported to the UK market is about USD 1 million/ month, this is a relatively modest number. Since the signed UKVFTA, the exports of fruits and vegetables to this market have increased by about 20%. Although the total export turnover to the UK market is relatively modest in total exports of about USD 3.5 billion per year of Vietnamese vegetables and fruits, the above growth was also a good number.

Despite benefits in terms of tariffs when exporting fruits and vegetables to the UK as well as many other markets that have signed FTAs with Vietnam, fruit and vegetable exports are facing many difficulties and challenges in logistics. Could you please talk about this?

Taxes are one of the advantages, but they are not the key basement. There are many factors when promoting exports of fruits and vegetables to the UK as well as other markets are Vietnamese products that they like or not and whether the goods fully meet the requirements of quality assurance, if they have food hygiene and safety or not.

In addition, from 2020 to now, fruit and vegetable export enterprises have also faced logistics problems, lack of containers, lack of ships, and lack of means of transporting planes. The charges are too high, so there are times when businesses want to sell but cannot sell. This situation inhibits the increase in exports to many other markets, not just the UK market. The tax reduction makes no sense compared to the soaring logistics costs. Previously, the freight was only USD 2,000 per container, but now the cost increases to USD 6,000-8,000/container. Under freight increases, the cost of goods is too high for buyers.

In fact, in businesses where goods are sold, they will automatically find them. The problem is the State must work with firms to remove difficulties so that enterprises can export more and go further.

The UK is not an easy market. How does the process of fruit and vegetable production in Vietnam need to be adjusted and changed to better meet the requirements, promoting exports to the UK in particular and many other markets?

For a long time, Vietnam only focused on exporting fruits and vegetables to China because this market is easier than many other markets. However, from 2019 up to now, China started to apply official imports. They also demand quality for the safety and hygiene of the newly purchased food. Farmers and exporting enterprises have looked back at themselves, setting up the requirements to organise production in a safe direction of VietGAP and GlobalGAP with the process, there are materials for export.

From 2019 and 2020 to now, FTAs such as EVFTA and UKVFTA also contributed to the farmers' ideology how they conquer the market and change production methods. That change starts slowly. For example, the area of vegetables and fruits grown in the direction of safety used to be only 5%, but it has gradually increased to 10-15% under the momentum of market opening.

In 2020, when the production of vegetables and fruits began to change significantly, the Covid-19 pandemic broke out, making it difficult to transport goods. Last Lunar New Year, many dragon fruit areas were planted according to VietGAP and Global GAP standards but could not be sold because firms did not have containers to ship goods or refrigerated vehicles, so they had to be sold domestically. However, this year or next year when the pandemic is overcome, the goods will be traded, and planted areas in a safe direction will have a better output.

What are your recommendations to help firms make better use of trade deals in fruit and vegetable exports?

The State should promote dissemination and propaganda for farmers how to grow safely to meet the requirements of import markets. The issue of issuing VietGAP, Global GAP certificates is quick and cost-effective.

The State also needs to promote research on preserving goods, vegetables and fruits to reduce the number of goods to be transported by air and increase the volume of exported goods by sea; expanding the processing industry to help enterprises expand processing factories. With fresh fruits and vegetables that cannot be exported immediately, processing can be promoted for long-term preservation.

Regarding trade promotion, it is proposed to organise more online conferences and fairs to connect trade with foreign visitors in the context that Covid-19 has not been controlled as currently.