Lack of technology, business savvy blamed for Vietnam's low-value farm exports

By Nguyen Nga, Thanh Nien News

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A farmer pumps water to a rice paddy field in Tien Duong village, outside Hanoi. Photo: Reuters A farmer pumps water to a rice paddy field in Tien Duong village, outside Hanoi. Photo: Reuters

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While Vietnam is among the world's top exporters of rice, coffee and seafood, profits from these items are not high due to the use of obsolete technologies and business strategies, experts said.
Vo Thanh Do, a senior official in the agriculture ministry, said at a recent conference on the food industry that Vietnamese robusta coffee is praised for its high natural quality, yet only 17 percent of exports is categorized as first-grade.
Vietnam accounts for more than 20 percent of global coffee exports, but because of low prices, Vietnamese coffee exports only make up 3 percent in terms of value, Do said.
Rice exports suffer similarly, with Vietnamese rice always being cheaper than Thai, he said.
Its tra fish accounts for 90 percent of the world market share, but always fetches 20-30 percent less than its neighbor’s products, according to Do.
He blamed it on the fact that a majority of Vietnamese producers still work manually or apply "too old" technologies imported from China and the former Soviet union.
Pham Minh Duc, an economist with the World Bank, agreed, saying the scale of Vietnam's agricultural production is "much smaller" and "more dispersed" than those of other countries which also rely on agriculture.
He said 70 percent of farmers grow rice on less than 0.5 hectare on average, while coffee is grown on 2-5 hectares by households.
Fishermen and aquaculturists achieve only 30 percent of their potential productivity, he added.
Ly Kim Chi, chairwoman of an association of food producers in Ho Chi Minh City, said most Vietnamese rice processors have automatic lines only for polishing, while the rest, including packaging and delivery, is done by hand, leading to low productivity.
Quality-driven exports
The World Bank estimates the value of Vietnam’s agricultural exports can increase by 20-50 percent if producers tighten control over the quality of seedlings, the growing process and post-harvest storage.
The value can go up by up to 150 percent if automation is used in processing and another 20-40 percent if packaging, delivery and distribution are improved.
The global trend is about improving quality, not quantity, Duc said.
The World Bank expert also suggested changes in the business approach.
He said for rice exports, businesses should stop getting contracts through the government.
Instead, farmers need to collaborate with processors and retailers to create products with packaging and brands which would "definitely" fetch higher prices, he said.
However, Tran Thanh Hai, CEO of the Buon Ma Thuot Coffee and Commodity Exchange, said businesses need the government's assistance in improving quality and prices, considering coffee exports contribute quite a lot to the economy.

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