Controlling biological risks, protecting farm produce from 'shocks'

Towards the China market

Since early December 2021, long lines of trucks with farm produce were stuck at the Vietnam-China border gates. The situation is expected to continue as hundreds of thousands of tons of dragon fruit, jackfruit and mango are about to be harvested. In particular, in the first three months of 2022 around 300,000 tons of dragon fruit will be harvested of which 80% is expected to go to the China market

Dragon fruits in particular and Vietnamese farm produce in general have been mainly depending on export markets, especially the Chinese market.  Mai Xuan Thin, Director of Rong Do Company Limited explained that the bottom of the problem was the fast expansion of dragon fruit cultivation areas while the quality and the capacity of processing and preserving still lagged behind.

 “Previously, the agricultural sector focused on production. It seemed that we tried to meet China’s demand because with a population of 1.4 billion people plus its proximity to our territory this market can consume a large quantity of fruits,” said Thin.

According to the Department of Crop Production, Vietnam had about 5,500 hectares under dragon fruit cultivation. The area was expanded by several thousand hectares  each year and have increased to 60,000 hectares by now. The production was estimated at 1.4 million tons per year.  The three  provinces of Binh Thuan, Long An and Tien Giang have the largest dragon fruit growing areas in Vietnam with 34,000 hectares, 12,000 hectares and 10,000 hectares respectively, accounting for more than 80% of the country’s dragon fruit production.

After nearly 20 years, the production of dragon fruits has increased by more than 10 times meanwhile the country’s population has grown by only 25%. Thus, the domestic market could consume only a small proportion of increasing dragon fruit production and it must rely on the Chinese market to consume the surplus, according to Thin.

What happened to dragon fruit was not the only story because Vietnam had many agricultural products ranking in the top five in terms of supply in the world.  As demand changes the strong growth of supply not only make it hard for consumption but also bring the value down. And the stories of “good harvests bad prices” are more likely to happen repeatedly.

Dragon fruit is among the agricultural products that Vietnam has the potential and strengths. However we are now facing fierce competition from China. Approximately 40,000 hectares are under dragon fruit cultivation in China, mainly in the southern provinces such as Guangxi, Guangdong, Guizhou, Hainan, Yunnan and Fujian.     

Guangxi, a gateway connecting China and Vietnam is now the largest dragon fruit growing area of China with nearly 2,000 hectares. The area is expected to increase in the future. In addition, the farm-gate price of dragon fruit in China is only around VND25,000 per kilo. It means that if Vietnam wants to bring the dragon fruit to this market the price (including transport cost) must be equivalent to the price of its Chinese counterpart. It’s not easy as the costs of transport and logistics is rising.

Creating mobile cold storage on the sea

Despite acknowledging the challenges from the Chinese market, Thin insisted on his point of view that China remained an important market, a “magnet” attracting enterprises from around the world, not just from Vietnam. The problem is how to maintain the stability for the entire supply chain, avoiding “shocks” as what has happened at the border gates recently.  

From his experiences acquired through years, the Director of Rong Do Co. Ltd. emphasized that management agencies as well as businesses need to link up with each other to demonstrate the capacity in controlling disease, especially when China will continue its “Zero Covid” policy.

 “Apart from plant quarantine, ensuring food safety we need to urgently take measures on controlling biological risks, especially the Covid-19. Stakeholders need to propagate, and raise people’s awareness of 5K measures, wearing gloves while processing along with regular Covid-19 testing and screening in workplaces. By this way, Vietnam is showing its goodwill in controlling biological risks which have been of concern to Chinese authorities recently,” Thin said.

Along with disease and pest control, Thin suggested that the relevant ministries and agencies should coordinate with domestic and foreign transport agencies to research and develop a system of refrigerated cargo ships to create mobile cold rooms on the sea which can serve both export and offshore fishing.

Despite considering sea freight a choice, the leader of Rong Do Co. Ltd admitted that with current farming practices, geographical proximity and existing transport infrastructures, road transport is still the optimal choice.

According to Thin, the Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade, the General Department of Customs along with several relevant agencies should create mechanisms for the Chinese counterparts or a third party to come and conduct site inspections. Thin believed that with serious attitude towards work, Vietnam will soon solve the problem of supply and demand.

Regarding the long-term solution for Vietnamese dragon fruit, Mai Xuan Thin raised the problem of restructuring dragon fruit varieties. Currently Vietnam has three dragon fruit varieties including white flesh and red peel, purple flesh and red peel and yellow peel and while flesh. Amongst them, the white flesh-red peel and purple flesh-red peel are the most-planted varieties.

It’s costly and time-consuming to grow purple dragon fruit varieties. However this type of dragon fruit can be used to create various products such as cocktail and other beverages. Thin sai many enterprises are now willing to buy purple dragon fruits for freeze for VND5,000-7,000 per kilo while the white-flesh dragon fruits can be sold for only VND500-1,000 per kilo.  

It takes around two years to increase the proportion of the purple variety in dragon fruit cultivation, according to Thin. Purple dragon fruit variety was developed by the Southern Fruit Tree Institute and has been growing widely in major dragon fruit growing areas nationwide.

According to Ho Thi Ngoc, Deputy General Director of Blue Ocean Export- Import Company Limited there were two existing problems of exporting farm produce by sea. First, the cost of logistics has increased significantly, especially for the countries without empty containers like Vietnam.

Second, the quality of most of the tropical fruits such as dragon fruits, mangoes and durians can be kept after a long journey on the sea to arrive in North America or Europe because Vietnam’s post-harvest preservation technologies can’t meet the requirements.

Ngoc gave an example: In 2021 a container took 45 days to travel from Vietnam to the US by sea excluding the time of congestion at seaport due to delay in customs clearance. Specifically, it costed around US$20,000 to ship a 40-foot container from Vietnam to Los Angeles. The amount was sometimes higher than the value of the goods inside

Because Blue Ocean Co. Ltd. focused on exports to the US and Europe it has not been affected by the congestion of agricultural products at Vietnam-China border gates recently. Thus, Ngoc said master plans for developing growing areas to meet specific market demand were needed.