Reasonably priced imported fruits provide stiff competition for local produce in Vietnam. Will they invade the market further and what's the future for Vietnamese fruit?
Dr. Nguyen Minh Chau, head of the southern fruit research institute, sat down with Thanh Nien Weekly, to explore the bigger picture.
Thanh Nien Weekly: The domestic market is flooded with imported fruits. How do they compete with local fruits?
Nguyen Minh Chau: We both export and import fruits. Last year, we exported US$438 million worth of fruit, and imported some $280 million. The trade surplus was more than $150 million. We import mangosteens and lanzones from Thailand, and export dragon fruits to the country. We ship large volumes of dragon fruit abroad, estimated to produce turnover of $70 million each year.
The trade surplus this year is expected to be higher than that of last year. We have already tapped some markets with strict requirements including Japan since last year. Along with dragon fruit, there are other fruits infiltrating foreign markets in 2010. Trade is a two-way process, thus, imported fruits are common.
How do Vietnamese fruits compare to imported produce?
High-quality fruits in Vietnam are rather expensive. In the south, the fruit sold at Ben Thanh Market is better and more expensive than that of most places in the world. They are in no way inferior to imported products. Even though we use outdated cultivation technology, we still manage to export $438 million worth of fruit, which is not a small amount.
Is it difficult for Vietnamese consumers to afford local fruit?
We import pears that we cannot grow in Vietnam and cheap tangerines from China. Only those on a low-income buy the tangerines. High-end people do not buy Chinese fruits.
Vietnam houses 776,000 hectares of orchards, including 282,000 hectares in the Mekong Delta, according to the Ministry of Agriculture and Rural Development.
The country imports fruits from 23 foreign markets, including Belgium, India, Kenya, Turkey, the Philippines, Iran and Pakistan.
We import three fruits from Thailand of which there are not many in Vietnam lanzones, mangosteens and green mangoes. Other Vietnamese fruits such as yellow mangoes and pomelos can compete with imported products. The fruit market has reciprocal exchange, both export and import. Thus, the import (of fruits) is quite normal.
However, in Vietnam, due to small-scale production, there are only a few kinds of certain fruits. So, it ends up that they are too expensive. For example, sweet mangoes are priced at VND50,000-60,000 ($2.5-3) per kilogram at Ben Thanh Market. The high price makes it difficult for them to compete with imported products.
There are many levels in the distribution system. Do these push up fruit prices?
Vietnamese fruits are often traded from gardens to wholesale markets of districts, and then to wholesale markets of cities, before they end up in retail shops. Thus, fruit prices are often high, and the farmers do not make much profit.
In other countries, farmers sell their fruits to co-operatives who then resell the products to retail shops. If we had co-operatives, we could take out the district and city wholesale market distribution levels.
We should establish cooperatives, and invest in large cultivation areas for one crop only.
Why do imported fruits enter the market so easily?
Our food hygiene and safety regulations are not tight enough, and other countries have strict regulations. Besides, there are many cases of smuggling that occur because of ineffective prevention.
What is the future for Vietnamese fruit?
The market will develop but it would grow faster if we better organized production. Over the past five years, fruit export turnover has risen by $30 million. This year, we have seen an increase of $30 to 40 million from 2009.
The state should support farmers in production, and firms should take charge of selling products.
Production now is small scale, thus the state should offer support to farmers in terms of capital, technique, and training.
Firms are not interested in the field because of small output, so the state should also introduce policies to encourage them to invest. It should be easier for them to get bank loans.
Vietnam is a big exporter of fruit, but we don't yet have a proper packing factory in the Mekong Delta. Thus, it is difficult to increase our (fruit) export turnovers.
What about production to serve local consumption?
We are producing some kinds of fruit that originally come from abroad such as Thai green mangos and lanzones. The products are sold in the domestic market, and not exported.
Before importing fruit trees for local cultivation and selling them to farmers, we must see whether they can grow in Vietnam or not. At the moment, the fruit trees are imported and sold directly to local farmers.