|Food producers toil to meet stringent EU regulations, illustration photo. Source: Dantri |
The global health crisis has slowed down the plans of Vietnamese chicken producer Koyu & Unitek Co., Ltd. (K&U) to expand its export market to EU member countries. K&U is a joint venture between Unitek Enterprise Co., Ltd. and Koyushokucho Co., Ltd. – one of Japan’s largest companies in industrial chicken farming – and operates a factory in the southern province of Dong Nai.
K&U exported the first batch of 300 tonnes of chicken breast to Japan in 2017. After successful negotiations with partners to export the meat to Singapore and Hong Kong, K&U was planning to conquer the EU market. However, this endeavour seems to be far more difficult than expected.
The strict conditions that local producers have to adapt to are tough for many. For example, Chapter 6 of the EU-Vietnam Free Trade Agreement (EVFTA) on sanitary and phytosanitary (SPS) measures provides a framework to protect human, animal, or plant life and health from introduction, establishment, and spread of pests, diseases, and additives, toxins, and contaminants in food and feed.
Nearly a year after the EVFTA came into effect, Dang Phuc Nguyen, general secretary of the Vietnam Fruit & Vegetable Association (VinaFruit) believed that the competitiveness of Vietnamese fruit in the EU market is increasing, thanks to the rise of agricultural production and tariff exemptions and reductions in the EVFTA.
According to VinaFruit, in the first six months of 2021, the total export value of fruit and vegetables reached over $2 billion, up 17.4 per cent over the same period in 2020. However, the EU was not among the top five export markets.
According to Nguyen, Europe has always been a market with very high standards for food quality, but the pandemic has now further pushed these standards to a higher level. Intra-regional consumers are more interested in the food they eat every day, even as Europe has been effectively bringing the pandemic under control via vaccination programmes.
Nguyen warned that non-tariff barriers are being erected as soon as tariff barriers are removed, while the requirements for chemical residues in food imported into the EU are becoming more stringent, such as within the SPS measures.
In Vietnam, there are not many businesses that can directly export food to the EU because most of them are of small scale, and their competitiveness in the export market is not high.
Fruit and vegetable producer Nafoods JSC used to face many difficulties in ensuring production because the commitment of farmers to the business was loose. After the first outbreaks of COVID-19 in the EU, Ho Thi Loan, sales manager of Nafoods realised that this market is changing markedly, with more consumers preferring organic products with high nutritional value.
Because of this, Nafoods was one of the few Vietnamese enterprises that have been directly exporting passion fruit and some concentrated tropical fruits to the EU market, with a turnover of about $15 million per year.
In response to this trend, Nafoods established 1,500 hectares of plantation for passion fruit and cooperates with the Hanoian Institute of Crops Research and Development and a pesticide supplier to find products suitable for biological plant protection. These efforts have not only helped the company raise product quality, but also enabled a cleaner production environment for farmers as well as ensured a sustainable production to supply the EU market.
Despite the difficulties in accessing the market, the EU has remained attractive for domestic companies and motivated many to upgrade their products and processes to increase exports.
Nguyen Dinh Tung, general director of Vina T&T, said that the advantages from the EVFTA have motivated his company to focus on exploiting this market more strongly. However, he realised that the EU is a market with high technical standards for imported goods, especially food. “In addition to food safety certifications recognised by third parties, this market also requires suppliers to implement social responsibility and ensure sustainability factors,” explained Tung.
Vina T&T – one of the first enterprises to export fruit to the EU with the preferential tariffs under the EVFTA – has accelerated the construction of a HACCP-certified preliminary processing factory and, at the same time, built plantations for mangoes, longan, and other fruits on an area of 500ha in the Mekong Delta provinces of Vinh Long and Dong Thap to further support its export operations. Moreover, the company also upgraded its production and processing conditions to meet the environmental and social certifications required in the EU.
The EVFTA is expected to help Vietnam go further and comprehensively improve issues in building a clean food chain. However, one of the biggest challenges for the country is that the government must quickly improve production and quality control processes in a wide range of industries to meet the stringent requirements of the trading partner, as well as improve the conditions for businesses to enjoy the preferential tariffs of the EVFTA.