Agro-exports face increased stress

Agriculture and aquaculture groups are constantly improving capabilities. Photo: Le Toan

According to David John Whitehead, chairman of animal feed and food processing group Mavin, COVID-19 has drastically disrupted the industries his business touches. The need for restaurants, schools, and social events to be closed has reduced the demand for food across the board.

“We have export contracts to neighbouring Southeast Asian countries and to Europe and the United States. During these difficult times, our export activity has declined – there have been difficulties in logistics, supply chain management, and government restrictions on exports,” Whitehead explained.

After recovering from the previous devastation of African swine fever, Vietnamese farmers increased their pig breeding herds, resulting in an increase in the total supply of pork available in the market. But transport and delivery delays and constraints due to the effects of the pandemic have also resulted in fluctuations in food prices, and this will continue as the supply is constantly disrupted, according to Whitehead. “The second half of 2021 should see some difficulty in the capacity and capability of food producers to satisfy the domestic demand,” he predicted.

Mavin is operating five feedmills in the provinces of Hung Yen, Nghe An, Binh Dinh, and Dong Thap with total annual production capacity of one million tonnes.

Exporters of various products are also trying deal with current restrictions. Nguyen Dinh Tung, general director of fruit exporter Vina T&T Group, told VIR, “The company is operating two factories in the Mekong Delta provinces of Ben Tre and Tien Giang under capacity. Since the enforcement of the night curfew, its productivity at two factories has been slashed by 50 per cent. The company is managing to maintain operation despite the challenges, such as the blockage of raw material areas and a shortage of workers to harvest fruit.”

If the situation continues, Tung said, Vina T&T’s fruit output will be reduced by half in the coming time. “We are in hot water to deliver products to our foreign buyers like the US, Australia, and Canada. Each month we export 100 containers of fruits but it reduced to 60-70 containers over the past month. We predict a 30 per cent decline in our fruit exports in the last six months of 2021,” he added.

Meanwhile, the Association of Seafood Exporters and Producers said only about 30 per cent of seafood enterprises in the southern provinces can comply with stay-at-work production models, while the remaining 70 per cent have had to close. At operating enterprises, seafood production has also dipped to 40-50 per cent due to reduced staff.

According to the latest report by Oxford Economics, Vietnam’s agri-food sector contributed $86.4 billion to the country’s GDP in 2019 – equivalent to 26 per cent of total GDP – and was responsible for half of the country’s entire workforce with 27.5 million jobs. It also contributed a total of $13.2 billion in tax revenues. But COVID-19 created very challenging conditions for agri-food in 2020 with a 4 per cent drop overall as well as 90,000 jobs lost.

“The key challenge for Vietnam’s food and agriculture will remain disruption across the food supply chain,” explained Siang Hee Tan, executive director of CropLife Asia. “Everyone is concerned with the recent report by the national government projecting a 30 per cent falloff in fruit and vegetable exports for the second half of this year. No doubt, it’s a reflection of just how disruptive the pandemic continues to be across the food value chain.”

Having said that, the general long-term trajectory for Vietnam’s food and agriculture sector has been very strong. The Vietnam Poultry Association noted that the nation’s livestock industry has maintained around 5-6 per cent annual growth over the past decade while the feed industry has reached the growth of between 13-15 per cent per year. Currently, Vietnam is the top country in the region in terms of animal feed production.

“Given the commitment by the government, resilience of the farmers, and increasing adoption of technologies that help drive sustainable agricultural production, I would look for Vietnam to weather the storm and bounce back sooner rather than later,” Tan added.

Whitehead from Mavin said, “The food, agriculture, and aquaculture sector is constantly developing smarter and more cost effective solutions to logistics and supply difficulties, and should be in a stronger position in a fiercely competitive market as the second half of the year 2021 unfolds. Mavin is constantly looking at innovative ways to improve productivity and reduce the cost of production to enable us to supply high-quality products to the people of Vietnam at the best possible price.”

Most recently, the Ministry of Agriculture and Rural Development proposed to the prime minister to provide pandemic relief measures for companies in the sector. The ministry suggested reducing corporate income tax (CIT) and delaying CIT payment for enterprises producing seed, animal feed, processing, slaughtering, and farming. Other relief measures are exemption or reduction of import tax on raw materials for animal feed production and biological products for environmental treatment, as well as equipment for animal husbandry to reduce production costs.

The ministry also asked the PM to support 50 per cent of expenses for businesses, cooperatives, livestock farms, and slaughterhouses under the stay-at-work model. At the same time, the government should support costs of livestock materials at 20 per cent for enterprises and cooperatives, and 30 per cent for farmers. The support period is due to take place from September to the end of the year.n