The agricultural industry plays an essential role in Vietnam’s socio-economic environment. Over the next decade, in Vietnam, increasing incomes and emerging food manufacturing sectors are probably driving powerful growth in the consumption of agricultural products.
Australia can provide Vietnam with Agricultural exports that cannot be produced locally or at a sufficient size due to differences in climatic zones, topography, and farming techniques.
Australia’s budding agribusiness and food sector offer incredible opportunities for investors in Vietnam who want to increase food and fiber production and add value to downstream processing industries.
In order to expand Agricultural Exports to Vietnam, there are myriad wonderful opportunities for Australia.
Did you know that Vietnam imported US$26.9 billion of agricultural products in 2020?
Australia is especially well placed to meet growing Vietnamese demand for:
- Livestock sector
- Horticulture
- Animal feed
- Cotton and wool
- Grains
- Fertilizers
- Aquaculture
Opportunities
Vietnamese consumers recognize Australian products to be of high quality, enabling them to be positioned as great products. With its geographical immediacy, Australian suppliers can respond to market demands quickly as compared to other suppliers from the United States and Europe. This factor is particularly beneficial for commodities such as wheat, dairy products, or fresh fruits and vegetables
Main points of growing agricultural imports
From 2000 to 2020, the value of Vietnam’s AFF imports rose by 2,054%, from US$1.2 billion to US$26.7 billion. (Source: UN Comtrade 2022).
The reasons behind it:
Growing income:
From 2000 to 2021, GDP per capita in Vietnam rose by 644%, from US$500 to US$3,720. High growth rates are estimated to continue, with GDP per capita rising to US$6,680 by 2027.
Increasing population:
The current population of 100 million in Vietnam, is expected to rise to 104 million by 2030 (Source: Our World in Data 2022).
Dynamic consumer preferences:
Many consumers are eating more animal proteins and dairy products. This pattern has been observed in other rapidly developing countries, such as China.
Increasing demand for ideas by the manufacturing sector:
Food manufacturing, textile production, and animal feed capacity is increasing in Vietnam. This is increasing the demand for agricultural products used in the production process.
Understanding Vietnam’s agricultural market:
Vietnam is a big producer and importer of AFF products. Due to Vietnam’s climate and geography, it needs to import meat, grains, fibers and dairy products.
Australian AFF products are evidently high in demand in Vietnam, as in 2021-22, Vietnam imported a record A$3.4 billion of AFF products from Australia. This was a 39.2% increase from A$2.4 billion in 2020-21. The reason behind this rise is a substantial increase in wheat and cotton exports.
Australian AFF exports to Vietnam, FY 2017–18 to FY 2021–22
The agreements between Australia and Vietnam help facilitate trade, which include:
- ASEAN-Australia-New Zealand Free Trade Agreement
- Comprehensive and Progressive Agreement for Trans-Pacific Partnership
- Regional Comprehensive Economic Partnership.
Counter-seasonality is a big benefit for Australian exporters while other major competitors, such as the European Union and the United States, are in the Northern Hemisphere.
As compared to other major competitors, such as Argentina, Brazil, European Union and the United States, Australia’s vicinity to Vietnam also decreases freight costs and increased product shelf-life.
The Vietnamese meat market
If we talk about the Vietnamese meat market, it has risen substantially as the country has industrialized and incomes have increased. According to the OECD-FAO forecast, Vietnam’s meat consumption rose from 12,050 kilotons to 13,875 kt from 2021 to 2031. This 1,825 kt increase is almost double the 944 kt of beef Australia exported worldwide in 2021-22.
Vietnamese meat consumption, 1990 to 2031
Fish was the most consumed meat in 2021. Sheep meat consumption remains low but grows gradually from a low base.
Study shows that beef consumption is decreasing. However, this is because of a substantial decline in the cross-border trade of Indian buffalo.
Approximately 90% of all Indian buffalo imported to Vietnam was re-exported to China in 2020. On the other hand, in 2021, only 15% of Indian buffalo imported to Vietnam were re-exported (Source: MLA 2021).
As consumers become wealthier, demand for Australia’s high-quality beef is expected to grow. Beef is considered to be superior meat that is enjoyed in Vietnam’s food service sector.
The Vietnamese wheat market
Since 1990, imports of wheat in Vietnam have grown considerably. Fixed growth is expected to continue over the coming decade. Because of the increasing demand for wheat-based products and the increasing use of wheat in animal feed, the demand for wheat has been growing day by day. This demand will be met by increased imports as wheat is not commercially produced in Vietnam.
Wheat exports from Australia to Vietnam are primarily used in noodles, bread, and sweet biscuits (Source: AEGIC 2021). So, the Vietnamese consumption and exports of this product are expected to grow. In order to support the growing livestock industry, Vietnam imports animal feed from Australia. Demand for feed wheat is estimated to grow by 30.1%, from 1,250 kt to 1.626 kt from 2021 to 2031.
The Vietnamese cotton market
In order to support the rapidly increasing textile and clothes industry, Vietnamese cotton imports have increased considerably. FAO-OECD estimates cotton imports to rise by 60.4%, from 1,540 kt to 2,470 kt in 2021 to 2031.
Vietnamese cotton imports and production, 1990 to 2031
Domestic cotton production can’t meet the demand from Vietnam’s spinning mills. Cotton is not produced on a commercial scale. It is produced only for artisanal purposes.
Vietnamese spinning mills imported raw cotton and changed it into cotton yarn. The yarn is highly used in the Vietnamese textile and apparel industry and re-exported abroad, including in South Korea and China (Source: ITC Trade Map 2022).
The Vietnamese dairy products market
OECD-FAO estimates Vietnam’s dairy consumption will increase by 40.4%, from 1,320 kt to 1,853 kt from 2021 to 2031.
Vietnam dairy products by consumption, 1990 to 2031
Dairy consumption in Vietnam per capita remains low. For example, in 2017, milk consumption per capita was only 8.7 liters. This was far below;
- China at 24.1
- India at 106.1
- Australia at 219.5
(Source: Our World in Data 2022)
However, dairy consumption is forecast to increase as consumers become wealthier and the population ages. Australia was Vietnam’s 4th largest source of dairy imports in 2021. If you want to know more about the agriculture field and new updates, visit Tradologie.
