Vietnam agriculture faces stiff competition from imports

In 2015, the massive imports of chicken legs from the US sparked hot debate. Local newspapers then quoted economists who warned that Vietnam’s animal husbandry would ‘die’ after TPP takes effect. 

Vietnamese farmers complained that their chicken could not compete with the US imports which were sold at the surprisingly low price of VND20,000 per kilo. They called for a dumping investigation into American chicken imports. 

The increasingly high proportion of imported frozen meat in Vietnam shows a new tendency that Vietnamese consumers would rather eat quarantined frozen meat than fresh products with unclear origin.

In the first six months of 2015, Vietnamese consumed 70,000 tons of import chicken. Meanwhile, in 2014, Vietnamese imported 100,000 tons.

Truong Dinh Tuyen, former Minister of Trade, now the Ministry of Industry and Trade, said that under the next-generation free trade agreements (FTAs) such as TPP and EVFTA (the EU-Vietnam FTA), the openness of Vietnam’s agriculture will enlarge with tariffs on farm produce falling to zero right after the agreements take effect.

He warned that if Vietnamese enterprises cannot take full advantage of the FTAs, they will face big challenges.

“Foreign products are cleaner and they will get cheaper thanks to tariff cuts. Vietnamese consumers tend to buy clean products. All these will be great challenges for Vietnamese enterprises,” Tuyen said.

He said the phrase ‘developing a comprehensive agriculture’, repeated in government policies should be replaced by ‘developing multi-functional agriculture based on comparative advantages’.  

There are three main functions for agriculture. First, ensuring food security. Second, creating ecological areas where both agriculture and tourism are developed in combination. Third, building agriculture which takes care of human health.

Tuyen went on to say that if applying advanced technologies in agricultural production, one hectare of land will bring higher value than garment exports.

In order to do this, agriculture needs to ‘stand on its own two feet – taking full advantage of the land fund when Vietnam joins FTAs, and applying advanced technologies in agricultural production.

With FTAs, some labor-intensive industries such as textile & garment and footwear would attract workers from the agricultural sector. If so, the land owned by the workers could be available for lease, which will be avgood condition for concentrated agricultural production.