Local food producers pick up gauntlet

10:00 | 22/08/2019
As fruit and seafood imports, particularly from the United States, have risen a great deal in the past three weeks, domestic businesses are exercising plans to cope with this competition. Thu Huong reports.
local food producers pick up gauntlet
Decreasing prices of imported seafood products are satisfying Vietnamese customers while putting pressure on local businesses, Photo: Le Toan

One evening last week, Bui Anh Tuyet, a 32-year-old office worker living in Hanoi, went home carrying several packages of seafood on her bike. Beaming with joy, she said that this is the first time her family could taste food imported from the US.

“Until now, I could only see Alaskan lobster or king crab on TV or the internet because with my income these were never in reach. But now that prices dropped, for the first time ever, I can buy these expensive foods for my whole family to have a small birthday party. It feels like a dream come true,” Tuyet said.

In contrast to previous years when seafood from the US had to be ordered several days or even a week in advance at exorbitant prices, even the most expensive products like Alaskan lobster, king crab, and salmon are showcased in supermarkets and seafood stores and are on ever-increasing offer online.

Moreover, prices have dropped significantly compared to last year. Alaskan king crab, which used to be shipped to Vietnam at over VND1 million ($43.48) per kilogramme, is now found in overwhelming amounts for only VND650,000 ($28.26) per kg.

The price of imported products, inclusive of customs and tariffs, is still lower than domestic products. Explaining this, Vu Vinh Phu, former chairman of the Hanoi Supermarket Association, said that the US-China trade war has temporarily interrupted the flow of goods between the two countries. Many Chinese companies announced to stop buying US agricultural products in response to US President Donald Trump’s decision last week to impose tariffs on another $300 billion of Chinese imports, sharply escalating the tit-for-tat trade dispute between the world’s largest economies.

“In fact, the two countries are finding new markets for all their products, including agricultural products, food, and electronics. When supply exceeds demand, prices go down. This is also a good chance for Vietnamese customers to taste the most delicious food, as well as use the best gadgets from developed countries,” Phu told VIR.

According to Le Huu Thinh, representative of US.Mart, which has three supermarket in Ho Chi Minh City that provides high-quality goods imported from across the world – over the past months, the import procedures have been made much more favourable than before, making it easier for goods to enter Vietnam.

According to Phu, the US products have increased rapidly in Vietnam because of a significant climb in per capita income in the country, with consumers in favour of imported items. Besides, technical barriers are being lifted to provide better access to the Vietnamese market.

“Imported agricultural products are always welcome,” said Phu. “General preconceptions hold that they are more carefully planted, processed, and preserved, and fully comply with regulations on residues of hazardous substances, ensuring safety – a trait particularly appreciated by medium- and high-income consumers.”

This was affirmed by Hoang Thi Hang, an independent merchant on Facebook, who confirmed to VIR that her business has improved since imported seafood became cheaper.

“As an individual online merchant dealing with retail customers only, I sell around 100kg of Alaskan lobsters and king crabs a day. I can earn twice as much as when I only sold local seafood,” Hang said.

PRESSURE ON LOCAL BUSINESSES

In the first six months, Vietnam imported more than 319 tonnes of cherries from the US worth over $2.9 million, with an average import price of only about VND200,000 ($8.70) per kg, while it was VND400,000-550,000 ($17.40-23.90) last year. Additionally, more than 12,400 tonnes of assorted apples were also imported from the US, worth nearly $16 million, at the average price of just over VND29,000 ($1.26) per kg.

Beef imports from the US also increased sharply, with about 4,800 tonnes at the cost of over $30.2 million – at the average price of only VND144,000 ($6.26) per kg. Vietnam also bought 2,500 tonnes of pork for $4 million, at VND37,000 ($1.60) per kg on average. Meanwhile, US lobster imports in the first half of the year exceeded 100 tonnes, worth $1.7 million at the average price of about VND385,000 ($16.74) per kg.

Compared to the same period last year, seafood imports from the US to Vietnam doubled in turnover while the volume of fruits and vegetables also increased by about 30 per cent, according to the General Department of Vietnam Customs.

The influx of foreign goods have put significant pressure on Vietnam-based food producers and suppliers like C.P. Vietnam, Masan Group, and Japfa Comfeed Vietnam or Minh Phu Seafood Corporation, AGIFISH, Vinh Hoan, Hung Vuong, and CAMIMEX – the leading seafood producing and processing companies.

In response to the flooding of foreign products in the domestic market, local businesses are exerting different measures to keep their competitiveness. For example, farm produce processor and exporter Vina T&T Import and Export Trading Service Co., Ltd. is boosting promotion campaigns to attract more customers.

CEO Nguyen Dinh Tung said that the company, in addition to boosting exports, is also developing a distribution network for local fruit by opening two retail stores in the south “to provide high-quality local products to consumers to compete with foreign imported goods.”

In another case, Thailand’s C.P. Vietnam is also deploying programmes to expand its local market share for fresh meat, processed foodstuff, and sausage.

To strengthen its firm niche in the domestic market, the company has also been upgrading technical infrastructure, and building Southeast Asia’s most modern chicken slaughtering and processing plant with the total investment of $200 million.

“Our feed-farm-food system is applied to all products of C.P. like pork, chicken, shrimp, and processed food,” said Le Nhat Thuy, senior vice president of C.P. Vietnam. “We are building the most modern plants to optimise production and improve value and quality. Our products can compete with any import and have already made inroads to regional markets.”

According to ORFARM, a domestic company producing and providing organic fresh and processed food, while local companies are feeling the punch from foreign imported products, they should not be too worried.

“I believe that the consumption of low-priced foreign products will not last too long because quality is the core value of any products. If the quality of foreign food is as good as Vietnamese ones, surely they cannot be as unbelievably cheap as we are seeing now,” said Nguyen Quoc Hung, director of ORFARM farming and processing department. “I also believe that customers will realise the difference in the taste and nutritional values of products before making any decisions.”

However, some companies are focusing on exports rather than seeking to consume products in the local market. For example, Le Van Diep, deputy general director of Minh Phu Seafood Corporation, told VIR that imported seafood “does not impact the company which has a big focus on exports.”

After shaking hands with Mitsui & Co., Ltd., Minh Phu aims to occupy 25 per cent of the global shrimp market in the next 15-20 years (5 per cent now).

Minh Phu is implementing a series of co-operation programmes on supporting farmers to raise the quality of products and the competitiveness of the company. An example is the recent co-operative programme to help 20,000 small-scale Vietnamese shrimp farms adopt practices that will qualify them for Seafood Watch’s Best Choice.

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