Global Rice News

After its first year in effect, the EU-Vietnam Free Trade Agreement has brought about remarkable opportunities to boost exports of Vietnamese organic products to the EU market.

Trung An High-Tech Farming JSC is one of the export pioneers to the EU market, mainly focusing on its ST20 rice. When the EU-Vietnam Free Trade Agreement (EVFTA) took effect last August, the company delivered six containers with about 3,000 tonnes of rice to Germany. Of this, Trung An’s ST20 rice was valued at over $1,000 per tonne, while the selling price of the product also including Jasmine rice exceeded $600 per tonne.

Before the EVFTA, the export price of Jasmine rice was around $520 per tonne and that of ST20 rice approximately $800 per tonne. “The first consignment opened opportunities for Vietnamese rice exporters to access one of the most anticipated trade agreements,” said Pham Thai Binh, director of Trung An.

The average export price of Trung An’s fragrant rice is $700-900 per tonne, of which rice exported to Germany, France, Switzerland, and the United States has the highest price, reaching up to $1,500 per tonne.

Along with rice varieties, the EVFTA has helped some organic products to approach the European market.

Andreas Stoffers, country director of the Friedrich Naumann Foundation for Freedom (FNF) in Vietnam said, “The great advantage of trade with the EU is that by focusing on high quality and highly profitable agricultural products, Vietnam can open new markets – in addition to Asian buyers who are more oriented towards lower-cost goods. Among the Vietnamese companies in our EVFTA Lighthouse project, such as Viethaus or Tan Vuong, many exporters fit exactly into this scheme of a niche strategy and produce sustainable agricultural products.”

Based on an EU report on the EVFTA released recently, exports from Vietnam in 2020 increased 22.8 per cent, with exports of fresh and dried tropical fruits, nuts, and spices growing 21.5 per cent. However, compared to exporters to the EU with a long history like Columbia, Brazil, and Ecuador, Vietnam’s position remained unchanged in 2020 compared to the previous year.

To export more organic products to the EU market, Vietnamese businesses need to be granted the bloc’s organic certifications, which are among the most difficult to receive in the world, with higher requirements than other markets.

Thus, the conversion from normal farms producing mass products to certified organic farms is not easy. To improve at least land quality takes years. The soil has to be improved for many crops by adding nutrients and reducing the use of pesticides and herbicides, possibly decreasing profits for farmers for a few years.

According to a 2020 survey published by the Organics International, a membership-based organisation working to bring true sustainability to agriculture across the globe, Vietnam’s organic farming area was about 237,000 hectares in 2019, ranked 32th in the world and accounting for about 1.1 per cent of the total agricultural land.

Le Anh Tuan, inclusive business advisor of the Gender Responsive Equitable Agriculture and Tourism (GREAT) programme, said that it is necessary to target high-end export markets with higher added value for products, creating competitive advantages as well as better reputation for businesses in the international market. In addition, importers and customers in these markets are better committed to policies on sustainable development, social responsibility, and the protection of biodiversity and natural resources.

These methods are also applied by Vinasamex JSC, an enterprise growing and processing organic cinnamon and star anise based in Gia Lam district in Hanoi. By the end of June, Vinasamex planned an organic material area of about 4,000ha in the northern provinces of Lao Cai, Yen Bai, and Lang Son, and a processing plant of 15,000 square metres with a monthly capacity of 40,000 litres for essential cinnamon oil and 2,000 tonnes of dried cinnamon products.

Vinasamex’ products are exported to main markets in the EU such as Germany, the Netherlands, Italy, and some other countries, as well as to the US, Japan, and South Korea.

General director of Vinasamex Nguyen Thi Huyen asserted, “Previously, exporting to India reached prices of around $2,000 for low-grade cinnamon, but the export price of high-quality goods to markets in the EU can even reach $5,000, sometimes up to $7,000 per tonne.”

Vinasamex applied for the EU’s international organic certification for its products, in addition to the certifications of the US, Japan, and South Korea. The brand also gained certification of the International Food Standard, Fair Trade, and Fair For Life.

Despite acknowledging that full certifications have brought Vinasamex certain advantages to enter the EU market, especially on the back of the EVFTA, Huyen said, “It is not quite as simple as that. Just to obtain the EU’s organic certification, Vinasamex had to comply with strict requirements, such as organic planting, seeds and crops, and processing and packaging.”

Understanding all EU standards is a must, FNF’s Stoffers emphasised. “All factors – such as soil, water, energy efficiency, biodiversity, and ecological balance – have to be taken into account,” he added.

Furthermore, Vietnamese companies must familiarise themselves with certification processes and have contacts with specialised importers of organic products such as Alnatura, Basic, Tegut, and Reformhaus in Germany. “My advice would be to look for one or some key products that already have good reputation and subsequently strengthen the brand,” he said. “Organic coffee and pepper could be among these high-end products. Entering this business with high level and sustainable agricultural products will be highly rewarding for Vietnamese farmers and exporters.”