Vietnam major exporter of farm produce, but cannot influence prices

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  Workers process tra fish for export at a plant in the Mekong Delta. Seafood exporters complain that the prices of many products have plummeted this year.

Though the agricultural export scene has been generally vibrant, allowing Vietnam to narrow its once large trade deficit, exporters complain that profits have taken a hit due to falling prices.

Despite many of them shipping larger volumes this year, earnings have declined.

Le Van Loi, chairman of Thong Nhat Rubber JSC, said the rubber industry is facing difficulties since export prices have fallen while costs have increased sharply due to the recent hikes in power, fuel, and fertilizer prices.

"Many rubber exporters are shipping at only VND46-47 million per ton. We are trying to review our production process to minimize costs."

According to the Ministry of Agriculture and Rural Development, average rubber export prices dropped by more than 30 percent in the first half from a year earlier.

Thus, exports were up 26.7 percent in volume terms in the first seven months, but earnings fell 12.5 percent to US$1.4 billion.

The ministry said demand remained high in some major markets like China, Malaysia and India, but could not drive up prices.

Rice exports saw a 10 percent decline in volume and 15 percent fall in value, according to the Vietnam Food Association.

Pham Thai Binh, director of Mekong Delta-based rice exporter Trung An Company, said both exporters and farmers were hit hard by the market downturn.

Large stockpiles in Thailand and India have put downward pressure on prices.

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Binh said though prices started to pick up recently, exporters did not benefit since they had signed contracts when prices were low.

Many other Vietnamese export staples like cashews and coffee too were affected by lower global prices. Coffee shipments rose by 31.6 percent in the first seven months, but a price drop meant revenues were only 25.4 percent up at $2.5 billion.

Seafood exports grew 6.5 percent to $3.4 billion in the same period, but the industry complained that the prices of many products have plummeted.

Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers, said tra fish fetches only $2 per kilogram in Europe, which is too low.

He said the industry should be restructured to increase the quality and value of exports, and regulations tightened to allow only highly qualified producers to export.

Pham Chi Lan, an economist, said Vietnam is a major exporter of various products, including rice and coffee, but has no influence on global prices.

Until exporters can control prices, they will continue to face the risk of shipping more but earning less, she told Vietweek.

Thailand has successfully influenced rice prices because the country has a storage system that allows it to withhold or boost sales to get the best prices, she said, advising Vietnam to do the same.

Vietnamese exporters should also focus on adding value to their products to earn more, she said.

If local companies do not become more competitive, foreign enterprises could dominate the export sector, she warned.

Strong exports have been a rare bright spot for Vietnam this year. In the first seven months they jumped 19 percent to $62.9 billion, data released by the General Statistics Office showed.

The trade gap was down to $58 million from $5.8 billion a year earlier.

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