VietNamNet Bridge – Change your way of thinking and doing business. Form production chains to become more competitive.

Workers process farm produce for export at GOC Food Processing Export Joint Stock Company. The nation's agriculture sector should form production chains to raise its competitiveness ahead of the signing of several FTAs this year.

This was the key message that Agriculture and Rural Development Minister Cao Duc Phat conveyed to stakeholders at an online conference held on Thursday to discuss opportunities and challenges presented by international integration of the agriculture sector.

Viet Nam's expected signing of several bilateral and multi-lateral free trade agreements this year would provide major export opportunities, especially for farm produce, he said.

At the same time, the dissolution of tariff barriers would pose stiff challenges, he added.

Since it joined the World Trade Organisation (WTO) in 2007, Viet Nam has signed seven free trade agreements (FTA) and maintained stable relationships with 160 countries and territories, according to Tran Kim Long, head of the ministry's Department for International Co-operation.

"Commitments to bilateral and regional trade agreements can contribute to expanding export markets, diversifying export commodities and markets, boosting production, creating jobs and incomes for farmers, promoting technological applications, changing production mechanisms and bringing into full play the advantages of (all) sectors," Long said.

Statistics presented at the conference showed the progress that Viet Nam has made in farm produce exports, which account for between 26 and 27 per cent of the export of all goods every year.

Agriculture is the only sector that has recorded a trade surplus, with US$8.5 billion in 2013 and $9.5 billion in 2014.

Phat said "numerous" agricultural products, especially in animal husbandry, have managed to enter and maintain a "firm standing" in picky markets.

He also said that in the past, "we had successfully protected home-produced goods through taxes. However, in the future, only chicken from ASEAN will carry five per cent import duty. On other products, the tariff will be zero.

"Thus, without proper measures, Viet Nam might become a consumption market for farm produce from other countries. That will shrink local production and farmers will lose chances to increase production and incomes," Phat said.

Another senior official underscored the minister's warning.

"The majority of countries that Viet Nam is set to sign trade agreements with have strong advantages in agriculture. For instance, EU countries are good at husbandry, Australia and New Zealand have advantages in producing beef and fruits and the US is strong in exporting chicken, pork and beef. So there is certainly great competitive pressure on Vietnamese commodities," said Luong Hoang Thai, head of the Ministry of Industry and Trade's Multilateral Trade Policy Department.

Conference participants agreed that Viet Nam had been slow to readjust its production mechanisms to make full use of opportunities and establish comparative advantages.

Viet Nam also lacked appropriate planning and investment policies for specific products or industries with high demand in domestic and world markets. Moreover, production remained fragmented and commodities were not produced in large quantities while the quality of goods had not been constant, they said.

Le Dinh Son, Vice Chairman of the Ha Tinh People's Committee, said the central province had recently reorganised its production chain and enjoyed "initial" results from deploying new models in producing vegetables, fruits and pigs using new technologies.

"The biggest challenge we face in international integration is maintaining and expanding export markets," Son said.

"Vietnamese produce usually find it hard to compete with foreign ones. In addition, many Vietnamese are fond of imported goods. Therefore, if we do not reorganise farming production, we could even lose out at home."

Son said middlemen had considerably increased production costs.

For example, farmers had to pay VND33,000 (US$1.5) per kilogram of feed for prawns when they bought it from an agent, VND5,000 higher than if they bought it directly from the first seller/supplier or from producers, he said.

"The cutting of tariffs would not be a major issue if we manage the distribution phase well and reduce intermediate costs, which can help reduce production costs," said Son.

Son also called for the central and local governments to "make the local market healthier and annul benefits of certain groups.

"Ha Tinh has examined and inspected 996 establishments trading in agricultural materials. As a result, we completely shut down 662 establishments which were operating without licences, sold goods of low quality at high prices."

Tran Kim Long, head of the MARD's Department for International Co-operation, said the agriculture sector should map out specific strategies and increase approaches to key market of farm produce while establishing co-operation with potential partners.

"It is important to study and assess potential impacts of integration, enhance competitiveness of farm produce, develop human resources for international alliances, reform institutions and improve the capacity of State management bodies," he said.

Other participants mentioned the need for enterprises to increase their competitiveness by being aware of risks and other influences of FTAs on their operations. They should also be helped in coming up with their own strategies and solutions, the delegates said.

Source: VNS