Brian Jeffrey
Coconut Industry Insights at the Forum
During the forum titled “Connecting Coconut Production and Consumption” on December 13, Nguyen Thi Thanh Thuy, director of the Department of Science, Technology, and Environment under the Ministry of Agriculture and Rural Development, shared insights on Vietnam’s coconut sector. Coconuts are recognized as one of the key industrial crops in the nation’s development strategy through 2030, alongside coffee, rubber, tea, cashew, and pepper.
Coconuts have emerged as a lucrative export product for Vietnam, with significant potential to enhance farmer earnings through value-added coconut products.
In 2023, the coconut industry in Vietnam reached an impressive export value of $900 million, with projections for 2024 indicating a potential surpassing of the $1 billion mark. This positions the coconut sector as a promising billion-dollar agricultural industry with opportunities for expanding international markets.
Challenges Facing the Coconut Processing Sector
Nguyen Thi Kim Thanh, Chairwoman of the Vietnam Coconut Association, highlighted a critical issue: the domestic coconut processing sector is experiencing a substantial shortage of raw materials.
Despite major investments in processing facilities within Ben Tre Province, the supply of coconuts is insufficient to keep factories operating. Some businesses are operating at merely 10-15% of their capacity, with others reporting shutdowns.
Recently, the dried coconut market has shifted towards exports to China, benefitting from a 0% tax rate. Companies are now setting up facilities to preprocess coconuts for export to China, which has significantly reduced the availability of raw coconuts for local processors.
To safeguard local resources and draw investment for deeper processing, Chairwoman Thanh pointed to Indonesia’s strategy, which will implement an 80% export tax on coconuts starting January 1, 2025.
“If Vietnam doesn’t enact tax policies or impose tariffs to secure raw coconut supplies for processing, the industry will inevitably face decline,” Thanh cautioned.
Strategic Recommendations for the Future
Le Thanh Hoa, Deputy Director of the Department of Quality, Processing, and Market Development, emphasized the need for businesses to formulate strategies that elevate product prices in export markets. Increased profits should be reinvested into supporting farmers rather than relying on low-cost exports.
“The focus should shift from cheap raw materials to competing based on quality,” Hoa remarked.
Nguyen Phong Phu, Technical Director of Vina T&T Group, raised concerns regarding the misuse of planting area codes (MSVT) and packaging facility codes (CSĐG) within the coconut and agricultural sectors.
Some entities, after acquiring MSVT codes, resort to reselling or leasing them, which results in misleading product origins. Certain farming areas fall short of production standards, leading to violations of safety regulations.
This undermines the quality of exports and invites tighter regulations or import bans from markets like China, harming both farmers and legitimate businesses while jeopardizing Vietnam’s reputation.
Phu proposed the digital management of MSVT and CSĐG codes to ensure traceability from production to export and advised authorities to combat fraudulent practices while educating farmers and businesses on the importance of maintaining Vietnam’s agricultural brand.
Market Expansions and Regulatory Challenges
Phan Thi Thu Hien, Director of Post-Import Plant Quarantine Center 2, noted that breaking into new export markets can demand extensive negotiations, citing that it took Vietnam a decade to gain access to the U.S. mango market.
“Joining export chains requires meeting importer standards, and often exceeding them,” Hien explained. She emphasized that obtaining planting area and packaging codes serves only as an initial step; the reputability of each company and the quality of Vietnamese products must be upheld rigorously.
Repeated infractions could lead to more stringent barriers or outright bans from trade partners, Hien warned.
At the recent Vietnam Fruit Festival in Beijing, many foreign companies showed strong interest in entering the Vietnamese market, suggesting that competition is likely to intensify.
Deputy Director Hoa expressed concern upon discovering that fresh coconuts are sold for as little as 1,000 VND each. To prevent the issues of “bumper harvests leading to low prices,” he called for collaborative efforts among all stakeholders to ensure equitable returns for farmers and promote sustainable growth in the coconut industry.
