17/08/2023 10:00 (GMT+07:00)
“It is now August, but export markets have not recovered yet. There has been no order,” the deputy general director of a wooden furniture manufacturing company said.
The businessman was very optimistic earlier this year when setting a goal of revenue of $1 billion in 2023. However, the goal may be unattainable as the number of orders he has had so far is only 20 percent of that of the same period last year.
Meanwhile, the capital of the enterprise has become exhausted, and it is not easy to access loans from the national VND15 trillion credit package.
The Ministry of Agriculture and Rural Development (MARD) reported that by the end of July 2023, Vietnam had exported $29.13 billion worth of farm produce, down 9.1 percent compared with the same period last year.
Except for rice and vegetables which are witnessing a boom in orders and sharp increases in export turnover, the other farm produce items, including ones in the ‘billion-dollar club, i.e. products with annual export turnover of $1 billion or higher, have seen sharp decreases.
In the first seven months, seafood exports brought a modest turnover of $4.95 billion, down 25.4 percent. Of this, catfish exports dropped by 36 percent, while shrimp and fell tuna 27 percent. The exports of forestry produce brought $7.79 billion in turnover, down 25.5 percent.
Currently, farm, forestry and seafood produce are mostly exported to Asian markets (48.3 percent), the Americas (22.4 percent) and Europe (11.3 percent). However, by the end of July, only Asia had seen a slight growth rate of 2.3 percent, while the other two markets had decreased considerably by 29.2 and 13.3 percent, respectively.
China, the US and Japan were the three biggest consumers of Vietnam’s farm, forestry and seafood produce in the first seven months. But only exports to China increased (+12.5 percent), while exports to the US and Japan decreased, by 29.3 and 6.9 percent, respectively.
According to the Steering Committee for Agricultural Market Development, the Russia-Ukraine conflict has influenced the reshaping of the international supply chain, while high inflation around the globe has forced people to cut spending and inventories in the US, Japan and EU are on the rise. All these factors explain why the number of orders for farm produce has dropped dramatically.
The Vietnam Cashew Association (Vinacas) confirmed that Vietnam’s major export markets all have tightened their purse strings and cut imports.
Meanwhile, African countries have tried to produce and process cashew nuts themselves. The material imports from Africa have low quality, and Vietnamese enterprises store materials for a long time, which affects quality.
Export targets lowered
Vinacas, while citing difficulties, has once again asked to adjust the targeted export turnover in 2023 to $3.05 billion. Prior to that, the association asked to lower the figure from $3.8 billion as set by MARD to $3.1 billion.
Regarding forestry products, after setting a record in 2022 with export turnover reaching $17 billion in 2022, the woodwork industry earlier this year planned to collect $18 billion in turnover in 2023. However, the target was lowered to $14 billion because of difficulties.
The same situation is seen in the seafood sector. After the prosperous 2022 with export turnover of $11 billion, Vietnamese farmers put high hopes on export turnover in 2023. However, the current slide in exports has forced the Vietnam Association of Seafood Exporters and Producers (VASEP) to slash export targets in both scenarios it outlined for the last months of the year.
In the first scenario, if exports go well in the last five months, the total export turnover will be over $9 billion, down 15-16 percent compared with 2022. Of this, catfish export turnover may decrease by 28 percent to $1.7-1.8 billion, tuna 14-15 percent to $870 million.
In the less optimistic scenario, the exports would bring $8.5-8.7 billion. The seafood exports will get worse if Vietnam cannot get the IUU (Illegal, unreported and unregulated fishing) yellow card lifted.
Despite bad news, at the July press conference, MARD’s Phung Duc Tien said Vietnam would still be able to gain $54-55 billion worth of exports this year if forestry and seafood can regain growth momentum in the second half of the year.
Tran Chung
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