Vietnam sees excess of farm produce imports

Vietnam has become a country that imports more farm produce from China than it exports to the country; in the past, it always saw an excess of exports over imports. According to Pham Thi Tuoc, Deputy Head of the Planning Department under the Ministry of Agriculture and Rural Development, with the market opening process undertaken in accordance with the ASEAN – China Free Trade Agreement (ACFTA), China-sourced vegetables and fruits have beenflowing into Vietnam, turning Vietnam, a country with advantages in agricultural products, into a big farm produce importer.

Statistics released by the Ministry of Trade showed that Vietnam’s farm produce exports to China have decreased from $142.8mil in 2001 to $35mil in 2005. The total export turnover of fruits, which had accounted for a big proportion of total exports, was modest in 2004, at $20mil, just equal to 14% of the fruit exports in 2001, and 29.65% in 2003.

Meanwhile, total import turnover from China has increased from $30.9mil in 2001 to $80.2mil in 2005. China, which consumed 50% of the total Vietnam’s farm produce output, has become a big exporter with the excess of exports over imports in the trade balance with Vietnam.

During the implementation of the ACFTA since 2003, member countries have agreed to carry out the Early Harvest Programme (EHP), under which, 600 farm produce items have been seeing tax cuts. As for Vietnam, EHP began on January 1, 2004 and will end on January 1, 2008. Though Vietnam has not become an official member of the WTO yet, China has granted the most favoured nation (MFN) status to imports from Vietnam since January 1, 2002, as it has granted to other WTO members. The average tax rate on farm produce has been reduced to 13.6%.

Analysts have warned that the opening of the farm produce market will bring many big challenges to Vietnamese farmers as products from China and other countries will flow into Vietnam. In addition, Vietnam-sourced farm produce will also have to compete with other ASEAN countries on the Chinese market. Vietnamese rice, for example, will have to compete against Thai rice.

Analysts have also urged Vietnamese farmers to cooperate with each other to set up big farms, which will allow them to produce agricultural products on a large scale, and compete successfully against foreign-sourced products.

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