How to improve processing rate of vegetables and fruits for export?

Vietnam needs to quickly build qualified raw material areas, develop machinery and technology and issue appropriate mechanisms to attract businesses to invest in fruit and vegetable processing to expand market share for these products.

Good processing and preservation technology allows Vietnamese fruit to be exported further with higher value. In the photo: Vietnamese mangoes are sold in the US. Photo: Internet.

Consumer demand is increasing

Demand for fruit in the world is on the rise. The global processed fruit and vegetable market is set to see a compound annual growth rate (CAGR) of 8.3% over the forecast period (2018-2023).

In the US, for example, the trend of year-round fruit and vegetable consumption to cope with obesity has been increasing. Moreover, the demand for traditional dishes of Asian and African American people leads to an increase in the demand for tropical fruit and vegetable products in US. Canned fruit and vegetable juices are popular products, accounting for about 35 - 37% of total US agricultural imports. However, Vietnam accounts for only 0.5% of total fruit and vegetable imports in this market.

The draft project for the development of the fruit and vegetable processing market in 2021-2025 is being urgently completed by the Ministry of Agriculture and Rural Development (MARD), setting targets by 2030: Fruit and vegetable export turnover value is US$8-10 billion. Of which, the proportion of export turnover of processed fruit and vegetable products reaches at least 30%.

Losses after harvest of fell by an average of 1-1.5% per year.

More than 70% of export fruit and vegetable processing and preservation establishments achieved advanced production technology qualifications.

Fruit and vegetable processing capacity reach two million tonnes of products per year, two times higher than that of 2020.

Attracting new investment in 50-60 modern fruit and vegetable processing and preservation establishments with advanced production technologies associated with large and concentrated raw material production areas.

According to the Institute of Policy and Strategy for Agriculture and Rural Development (MARD), Vietnam's processed fruits and fresh fruits can increase their market share in the US because these items from China exported to the US have been subject to a 25% tariff since May 10, 2019.

In the EU, Vietnam only accounts for 0.4% with US$175 million of the fruit and vegetable export value. However, the growth has been very high in the last five years, averaging approximately 20% annually. Similarly, demand for tropical fruit products in other markets such as China, South Korea, and Japan is also increasing, opening up great opportunities for the Vietnamese fruit industry.

Dang Phuc Nguyen, General Secretary of the Vietnam Fruit and Vegetable Association, pointed out that processed fruit and vegetable products were more and more favoured by foreign customers. This is reflected in the growth in exports of processed fruits and vegetables while exports of raw fruits and vegetables have experienced a sharp decline recently. In the first four months of 2020, the export of processed vegetables and fruits reached US$237 million, up 36% compared to the same period in 2019. This showed processed fruit and vegetable products are not affected by the Covid-19 pandemic and trading technical barriers.

Recommendations from businesses

Nguyen Dinh Tung, Director of Vina T&T Group, said fresh and good quality fruit had high export value but Vietnam's technology for harvesting, preserving and transporting is limited. Hence, many types of products, when coming to distant markets like the EU and the US, are very difficult to sell because they were reduced in quality and no longer fresh. Therefore, the development of the processing industry not only means the development of the drying or fruit juice processing line but also investment in processing, post-harvest preservation technology and logistics development for fruit and vegetable transportation.

Tung said, previously, coconuts of Vina T&T could only be preserved for 28 days and after this time the grated coconut would be black. However, thanks to technological innovation, the shelf life of coconuts has increased up to 70 days, so the company can export more orders. Nevertheless, the preservation technology of many other fruits is still limited.

Ung The Lam, Chairman of the Board of Directors of Minh Bach Agricultural Cooperative also pointed out that to develop processing, it was necessary to have a source of raw materials ensuring quality and quantity to meet the operating capacity of the plant and must have a consumer market. Currently, most farmers have cultivated small and fragmented parcels of land, which is not up to the standards that export enterprises and markets require. Meanwhile, exporting firms do not have enough resources and conditions to organise direct production, and large processing factories do not have enough raw materials for processing and only operate seasonally. According to Lam, the State and the agriculture sector need specific mechanisms and to play a role in connecting farmers, processing enterprises, and exporting enterprises into a continuous chain, promoting production, processing and exporting with common standards, thereby enhancing the value and consolidating brands for Vietnamese vegetables and fruits in particular, and Vietnamese agricultural products in general, on the global market.

A representative of Dong Giao Company said that all machinery to process vegetables and fruits in Vietnam was imported from abroad, so the price was very high. To cut the cost of machinery investment for enterprises in the agricultural sector, the Ministry of Industry and Trade, the Ministry of Science and Technology, the Ministry of Agriculture and Rural Development, universities and research institutes need to work with enterprises to focus on researching machinery for preliminary processing and processing of vegetables and fruits as well as agricultural products. There are many types of machines that Vietnam can manufacture like fruit washing machines, peeling machines and juicing machines.

According to a representative of Dong Giao Company, the average initial cost of an agro-fruit and vegetable processing unit is from VND 400 billion to about VND2,000 billion. With such large capital, the State needs to study appropriate policies to give priority to businesses investing in the processing of fruits, vegetables and agricultural products on issues like as loan period, repayment period and interest rates.