Good growth

Vietnam is a tropical country with favorable soil and climate conditions for producing a variety of fruits and vegetables. In recent years, the fruit processing industry of the country has developed, accounting for about 10% of the total fruit output.

According to statistics from the General Department of Customs, between 2016 and 2020, Vietnam's export rate of processed fruit and vegetables grew at double digits. Notably, the figure for 2019 increased by 41.2% compared to 2018, but then showed signs of slowing down. In 2020, the growth rate of Vietnam's export of processed fruit and vegetables increased by 11.1% compared to 2019. In the first 9 months of 2021, due to difficulties in transportation while preservation of fresh fruits and vegetables of Vietnam was still limited, many businesses in the field resorted to promoting the export of processed products. 

Statistics shows that the export turnover of processed fruit and vegetables in September 2021 reached 65.42 million USD, up 13.7% compared to September 2020. In the first nine months of 2021, the total export turnover of processed fruit and vegetables reached 653.5 million USD, up 16% over the same period in 2020.

The main export markets of Vietnam's processed fruit and vegetables are China, the US, Japan, Korea, Russia, and Australia. In the period of 2016 - 2020, the growth of Vietnam's processed fruit and vegetable exports to China was very high.

In the context of difficulties in exporting fresh vegetables and fruits to China, Vietnamese fruit and vegetable companies has successfully switched to processed fruit and vegetable products. In the first 9 months of 2021, Vietnam's export of processed fruit and vegetables to China grew by 24.8% compared to the same period last year. Besides, the export rate of this item to some major markets such as the US, Japan, Russia, Australia, and India also grew at double-digit rates.

The proportion of Vietnam's processed fruit and vegetable exports to China, the US, Russia and Australia increased from 22.79%, 11.79%, 6.05%, and 2.88% respectively in the 9 months of 2020 to 24.88%, 11.96%, 6.44%, 4.07% in the first 9 months of 2021. In general, Vietnam's fruit and vegetable industry has been quite successful when increasing exports to markets with a large import volume and strict requirements on the quality and variety of products.

The introduction of fruits and vegetables into deep processing will increase the storage time, helping to solve the problem of oversupply. It is forecasted that in the last months of 2021 and the year 2022, Vietnam’s processed fruit and vegetables will experience good growth and have enormous potential because of convenience and long preservation time.

The promotion of the export of processed products will increase the export value of the fruit and vegetable industry, especially in the context of the complicated development of the Covid-19 epidemic in many countries and territories around the world. There is a growing demand for high quality vegetable products without changing the nutritional properties. Retail channels and e-commerce platforms in developed and developing countries also contribute to increasing sales of processed fruits and vegetables.

Shortcomings

In the past few years, the number of enterprises investing in the field of fruit processing and preservation has increased 3 times with 7,500 establishments processing and preserving fruits and vegetables, and about 156 processing factories with modern technology and production lines.

However, the processing industry can only use 8-10% of the annual output of vegetables and fruits. So far, 76.2% of exported fruits and vegetables have not been processed. Consumption is still in the form of fresh or preliminary preservation, and post-harvest losses are still too high, at about over 20%. Compared with the requirements of development and integration in the new competitive conditions, the fruit and vegetable processing industry is still facing many dificulties. The annual output of vegetables and fruits that have high added value is still low, and has not yet made a drastic change in the crop structure.

According to the Development Scheme of the fruit and vegetable processing industry for the period of 2021-2030, it is expected that from 50 to 60 large and medium-sized fruit and vegetable processing establishments will enter the market. Moreover, the export turnover of processed fruit and vegetable products that account for 30% of the total fruit and vegetable is projected to reach 8-10 billion USD. Fruit and vegetable processing capacity is forecasted to reach 2 million tons of products/year, nearly 2 times higher than in 2020.

Dang Phuc Nguyen, General Secretary of the Vietnam Fruit and Vegetable Association, predicted that with the recent trend of expanding scale and investing in new fruit and vegetable processing plants, these goals will soon be achieved within 2 years.

However, he acknowledged that most of Vietnam's processed agricultural products, especially frozen ones, sold in international markets are in the form of raw materials for processing into food and beverage products. This cannot help Vietnamese fruit and vegetable be recognized.

Source: Vietnam Industry & Trade Information Center, Vietnam Fruit and Vegetables Association

Compiled by VietnamCredit