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|Dragon fruit businesses are struggling with orders, low prices, and also transportation issues. Photo: Le Toan|
Vietnam is amid its main harvest season for fresh dragon fruit. While the supply is increasing, the main export market China strictly limits imports due to concerns related to the pandemic – a situation that could last for months.
Because the Department of Commerce of Yunnan has closed its border gates to Vietnamese dragon fruit imports since July, Vietnamese localities with large plantations have been pushed into an oversupply, with prolonged difficulties expected.
In the central province of Binh Thuan – one of the dragon fruit centres of Vietnam with an area of around 33,750 hectares – exports are slowing down, prices are falling, and transportation costs are high. Many companies are suffering losses due to sharp price drops of dragon fruit that sometimes only reached 56 US cents per kg.
Many other localities have similar problems, including the southern provinces of Long An and Tien Giang. The situation forced Nguyen Hong Dien, Minister of Industry and Trade, to send a letter at the end of August to Minister of Commerce of China and Governor of China’s Yunnan province, requesting the opening of imports for agricultural products, especially dragon fruit.
Since the Chinese side has not made any moves to remove the regulations restricting the import of Vietnamese dragon fruit, the crisis has slowed down the growth of Vietnam’s agricultural exports. Figures from the Ministry of Agriculture and Rural Development (MARD) show that in August, exports dropped sharply. Particularly fruit exports decreased by 25.8 per cent over the same period last year.
This is not the first time that Vietnam’s dragon fruit has faced difficulties, but the prolonged pandemic makes the export situation more complex this year. Localities do not want to expand their plantations when the output and sales are uncertain, and freight is increasingly expensive. Meanwhile, the sector’s goal of reaching an export value of $10 billion by 2030 becomes increasingly unreachable.
According to Decision No.1554/QD-UBND from 2016 of Binh Thuan People’s Committee, the cultivation area for dragon fruit planned by the locality was supposed to reach 30,000ha by 2025. However, data from the province’s Department of Agriculture and Rural Development shows that the province currently has 33,750ha of dragon fruit plantations – far exceeding the plan for 2025. It was estimated that dragon fruit output in 2020 reached nearly 700,000 tonnes.
The dependence on China, the market that accounts for 80 per cent of the total exports of dragon fruit, makes price stabilisation even more precarious. Data from the MARD shows that in July, the price of dragon fruit in many provinces in the Mekong Delta dropped sharply. In Tien Giang, the average monthly price was 56 US cents per kg for white dragon fruit and 74 US cents for red dragon fruit.
“Many businesses are affected by China’s decision to restrict dragon fruit imports,” said Dang Phuc Nguyen, general secretary of the Vietnam Fruit and Vegetables Association (VinaFruit).
He said businesses are having a hard time with orders, low prices, and shipping.
In Binh Thuan, the pandemic and small-scale exports are exacerbating the output of dragon fruits. Bien Tan Tai, deputy director of Binh Thuan Department of Industry and Trade said that in 2020, the province’s dragon fruit output was nearly 700,000 tonnes, but official exports are just over 6,800 tonnes, the rest was mainly traded with Chinese traders at the border gates.
Meanwhile, Long An is implementing measures to combat the pandemic, causing a backlog of goods that can take months to resolve. Output constraints could also force local producers to reschedule operations, challenging delivery times and the rest of the supply chain.
Nguyen Quoc Trinh, chairman of the Long An Dragon Fruit Association, said it mobilised businesses to purchase even for their relatives to preserve the fruit but their demand can only cover the first harvest. For the next harvests, it would be difficult to organise necessary cold storage.
Slowed-down exports also exposed other issues regarding the development of dragon fruit plantations. According to VinaFruit, the country’s dragon fruit area is now about 55,000ha. Since localities continuously expand their plantations, the supply sharply increases. With this comes intensified pressure on infrastructure, lack of irrigation water, and increased electricity consumption. Estimations for Binh Thuan state a consumption of up to 568 million KWh per year, an increase of 236 per cent compared to 2010.
Chau Thi Le, deputy director of Long An Department of Industry and Trade, is concerned that farmers may abandon dragon fruit cultivation due to continuously falling prices. In Duc Tan commune, about 2ha of dragon fruit plantation had been cut down by farmers to switch to another plant in the hope of better profits. Growing dragon fruit is different from other produce and farmers have to maintain and constantly invest in fertilisers – an estimated cost of more than $2,170 per hectare.
To combat the strong reliance on the Chinese market, Vietnam has made efforts to promote other export markets through a series of online trade events. Vu Ba Phu, director general of Vietrade said, “A diversification of value-added products made from dragon fruit should be considered in order to diversify consumption channels, reduce seasonal pressure, and also develop new brands.”