Processed fruit and vegetable industry: Wide-ranging potential in 2023
In the agricultural industry, fruits and vegetables are one of the sectors that have seen negative growth compared to 2021. However, with the increasing demand from international markets, especially from EU countries, the market share of processed fruits and vegetables has received good news.
This shows the sensitivity of the Ministry of Agriculture in opening up the market to many types of significant fruits.
The potential of Vietnamese processed fruit and vegetable in the global market overview
According to data from the Ministry of Industry and Trade’s Import-Export Department in 2022, the overall structure of exported fruits and vegetables from Vietnam has shown positive changes. This is reflected in the increase in the proportion of processed fruits and vegetables, accounting for 29.47% – an increase of 3.8 points compared to 2021.
Now, the current export revenue of processed products has exceeded 1 billion USD.
The processed sponge gourd product leads in price and has shown fast growth in 2022. Other popular processed products include coconut, cashews, pineapple, and various fruits.
Vietnam’s processed fruit and vegetable market share in the EU is only around 2.7%. Therefore, the potential for Vietnamese companies to develop processed fruits and vegetables in the international market is still enormous.
This highlights the urgency of promoting processing technology to increase the market share of fruits and vegetables.
Vietnam’s processed fruit and vegetable industry has potential in the global market
Exporting fruits and vegetables to China became less difficult in the final months of the year. However, in the first 11 months of the year, exports to this market only reached 1.4 billion USD, a 22% decrease compared to the same period in 2021.
In contrast to China, exports of fruits and vegetables to other markets have demonstrated resilience with strong growth rates, including the US (up 14.4% in the first 11 months of 2022), South Korea (up 14.1%), Thailand (up 19.7%), Japan (up 7.3%), the Netherlands (up 47.2%), and Australia (up 5.5%).
The US imported around 11 billion USD worth of processed fruits and vegetables in 2022, with 280 million USD coming from Vietnam. Vietnam’s export value of processed fruits and vegetables to the US has grown strongly by 30-45% annually over the past three years.
Fresh products account for about 70% of Vietnamese fruits and vegetables exported to Europe, while processed products only account for 30%. European consumers prefer nutritious and green food, which is why vegetable products are a perfect choice to replace animal products.
Vietnam’s fruit and vegetable industry needs to focus on processing and preserving produce to meet international standards in order to meet the high demands of these consumer markets. Fruit juice and frozen juice products account for a large proportion of the processed products exported to the EU.
Vietnam’s processed fruits and vegetables have a lot of potentials to expand their global export market share, which will lead to more development opportunities.
Boosting fruit and vegetable processing technology to enhance competitiveness
Data from the Ministry of Agriculture and Rural Development shows that the annual fruit and vegetable harvest in Vietnam is just over 31 million tons, of which only about 4.5 million tons are processed, accounting for 12-17% of the total nationwide production.
About 76% of exported fruits and vegetables are still in fresh or unprocessed form. However, the demand for processed fruits and vegetables is increasing worldwide, especially in Europe. This is why Vietnam’s export revenue of fruits and vegetables is relatively low.
To improve competitiveness, it’s necessary to increase the processing and preservation of fruits and vegetables.
Regarding processing, there are currently 150 modern fruit and vegetable processing plants in the country with a capacity of nearly 1.1 million tons/year, which only processes about 8-10% of the annual fruit and vegetable production. In addition, 3.4 million tons are processed by 7,500 small-scale fruit preservation and processing facilities operated by households, which cannot meet the quality requirements for exports.
Le Thanh Hoa, Deputy Director of the Processing and Market Development Department of the Ministry of Agriculture and Rural Development, emphasized that Vietnam still mainly exports fresh fruits and vegetables that are difficult to transport over long distances due to short shelf life. Therefore, the ministry hopes that the fruit and vegetable industry will focus on processed products, as this is the market trend in the near future.
Nguyen Van Thu, CEO of G.C Food Co., said that developing the fruit and vegetable industry towards processing not only helps control costs but also increases the value of goods by 3-4 times compared to fresh produce. This also helps extend the shelf life of agricultural products and reduce local oversupply.
Vietnam is making efforts to improve the technology for processing fruit and vegetable
However, most processing businesses are small-scale, with less than 2 billion VND in the capital, and are not prioritized in terms of production areas. Furthermore, the post-harvest preservation work of farmers has not been given enough attention, resulting in losses of over 20%. Many fruit processing businesses have also reported difficulties in accessing bank loans, with only about 30% having the ability to do so.
Therefore, Nguyen Manh Hung, Chairman of the Board of Directors of Nafoods, suggests that the Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade should propose the authority to allocate funds to prioritize supporting businesses to invest in refrigeration systems and new processing technology. This will help to develop fruit processing factories and manage planting areas rationally to avoid situations where factories have no raw materials.
According to Associate Professor Dr. Pham Anh Tuan, Director of the Institute of Agricultural Machinery and Post-Harvest Technology, in the fruit production, processing, and trading sector, small-scale businesses account for 97%. Therefore, the direction for developing modern processing technology that suits small-scale businesses is necessary. Focusing on this direction will increase the processing rate and meet the demand for diversified processed fruit products.
Mr. Dang Phuc Nguyen, Secretary-General of the Vietnam Fruit and Vegetable Association, proposed that in the near future, the Government and relevant ministries need to support localities in planning processing zones and encourage investment policies; support in terms of capital and technology transfer is also needed.
In particular, support is needed in terms of capital and connection between farmers and businesses to build effective and sustainable linkages in the raw material regions.
Considerations when exporting processed fruit and vegetable
Ministry of Industry and Trade stated that currently, Vietnam mainly exports fresh fruits, which are difficult to transport over long distances due to the inability to preserve them for a long time. The trend toward new cold electric drying technologies offers high-quality, eco-friendly products at low production costs.
Therefore, businesses need to understand and grasp information about the market, from consumer tastes to regulations, standards on origin rules, and food safety… to increase the quality of goods and conquer this “demanding” market.
At the conference on summarizing the agricultural sector’s work in 2022 and deploying tasks for 2023 on January 13, Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan said that in order to promote exports, in addition to focusing on processing technology, it is necessary to continue to restructure production to elevate Vietnamese agricultural products.
Building policies to promote cross-border trade, shifting from small to large scale. Moreover, accelerating negotiations with foreign partners to increase the quantity of agricultural and aquatic products exported to official markets, especially China.
Along with that, implementing trade promotion programs, especially on digital platforms, e-commerce, and information technology applications to promote exports and consumption of agricultural products. Effectively implementing trade defense, handling disputes and lawsuits in international trade, and creating favorable conditions for agricultural exporters.
In conclusion, the demand for fruits and vegetables has increased in international markets, especially from EU countries. That has helped the Vietnamese fruit and vegetable processing industry flourish in recent years.
Therefore, the Import-Export Department encourages agricultural businesses to focus on the processed product segment, which will be the trend of the market in the coming time.
————————–
VIRAC provides diverse forms of research reports on various industries in Vietnam, including comprehensive and detailed analyses of markets, products, and services based on the needs of clients in different fields.
Specifically, VIRAC offers products and services related to:
VIRAC is a reliable companion for businesses on the journey to conquer the Vietnamese market.
