VietNamNet Bridge – Chinese traders have gained control of the fresh fruit and vegetable segments of the Thai agriculture industry – negatively affecting the quality of produce shipped into Vietnam.

Experts at the Vietnam Fruit and Vegetables Association (Vinafruit) also say there are legitimate concerns that Chinese domination of these segments of the market pose a serious threat to the nation’s economic security.

Long-term dangers

Nguyen Van Ky, secretary general of Vinafruit, citing a study conducted by Thailand’s Pesticide Alert Network, said that out of 138 samples of produce in three major Thai growing regions, 46.6% were found to contain unsafe insecticide and pesticide residue levels.

In addition, Mr Ky said more than half of the fruit and vegetables of Thailand that were awarded the ‘Q mark’ for quality by the National Bureau of Agricultural Commodity and Food Standards, were found to have harmful residue levels.

In addition, 25% of the fruit and vegetables tested that had been certified as being organic (and supposedly free of chemicals), were found to contain residues exceeding accepted standards.

All orange, guava and red samples failed the tests; so did 71.4% of dragon fruit samples; 66.7% of papaya, basil and long beans; 44.6% of nam dokmai mangoes; 22% of water spinach; and 11% of tomatoes and cucumbers.

Only cabbage and watermelon samples were found to be free of harmful residues.

To compound the problem, Mr Ky said many Chinese traders are now circumventing normal trading policies and procedures and negotiating directly with Thai and Vietnamese farmers and other actors in the industry.

These informal cross-border trading procedures have become particularly common in the Thailand provinces of Chumphon, Chanthaburi, Rayong and Trat, said Secretary General Ky, and give Chinese traders unfettered access to the Vietnamese market.

Hoang Trung, from the Ministry of Agriculture and Rural Development, said most of the Thai fruit and vegetables that are shipped into Vietnam through official channels, meet with acceptable standards for food safety.

It’s the produce coming through the informal market that should give all consumers pause for concern, said Mr Trung.

Chinese threat to control market prices

Chinese traders have for years bought produce from Thai farmers for export using futures contracts, said Vinafruit Secretary General Ky.

In other words, Thai farmers sell their produce for future delivery to Chinese buyers prior to harvest as a hedge should cash prices decline.

This creates the scenario, where the Chinese traders collectively have the potential to control the prices of all fruit and vegetables exported to Vietnam via their ability to perform (or failure to perform) on their futures contracts.

There already have been numerous reports of futures contract disputes involving situations where Chinese traders have refused to buy all the produce at the agreed upon amount forcing Thai farmers to reduce their prices.

Thai fruit and vegetables dominate domestic market

Secretary General Ky, said it’s hard to get an accurate figure on the total value of fruit and vegetable imports into Vietnam because so much of the trading is done on the informal market.

However, he said, the reported import value of Thai produce was about US$60 million in the first three months of 2016, which shows the impact on the nation’s food supply and economy is huge.

Vo Mai, former deputy chairwoman of the Vietnam Gardening Association, in turn has expressed concern over the fact that Thai produce now dominates the shelves of the Big C supermarket chain.

The Big C retail chain is one of the largest supermarket chains in the country and the Chinese takeover of the Thai fruit and vegetable segments clearly poses a threat to not only the food supply, but the nation’s economic security, said Ms Mai.

Lastly, Nguyen Van Ngai, head of the Economics Faculty of the Ho Chi Minh City University of Agriculture and Forestry, said Vietnamese consumers should be wary of all Thai produce.

He suggests Vietnamese authorities institute strict measures to ensure the safety of produce shipped into the country, particularly that via informal cross-border trade with Thailand.

He also proposes that the government implement measures to counter China’s takeover of the Thai fruit and vegetable segments of agriculture as it could become dangerous if China chose to control produce prices in Vietnam.

VOV