Inflation causes global consumers to "tighten their belts" to balance spending. Many agricultural products, a billion-dollar strength of Vietnam, are in trouble and have to lower their export targets.

Exports to Europe - American market fell sharply

The company's deputy general director for exporting wood and wood products stated that it was already August, and the export market had yet to recover.

This person said his business set a revenue target of about 1 billion USD early this year. However, up to now, export orders are only 20% compared to the same period in 2022, which is a decrease of 80%.

Meanwhile, the company's capital has been exhausted; getting a loan from the 15,000 billion dong support package takes work. So, the business executive bemoaned, there still needs to be a basis for calculating this year's business outcomes.

According to data from the Ministry of Agriculture and Rural Development, exports of agricultural, forestry, and fishery products totaled only 29.13 billion USD by the end of July 2023, a decrease of 9.1% from the same time last year.
Many commodity categories in the "billion-dollar export club" of the agriculture business nevertheless registered a profound decrease. The exceptions were rice and vegetables, which saw an explosion in orders, pushing export turnover to a record high.

For instance, seafood exports only made $4.95 billion in the first seven months of 2023, a decrease of 25.4% from the same period in the previous year. Pangasius exports fell sharply by 36%, and shrimp and tuna decreased by 27%.
Forest products were exported for 7.79 billion USD, a decrease of 25.5% from the same time in 2022.

At the moment, the primary destinations for agro-forestry-fishery exports are Asia (48.3%), the Americas (22.4%), and Europe (11.3%). By the end of July, however, only the Asian market had seen a little increase of 2.3%; by comparison, the American and European markets had experienced significant declines of 29.2% and 13.3%, respectively, over the same period in 2022.

In the first seven months of 2023, China, the United States, and Japan are Vietnam's top three export destinations by nation and territory for its agricultural, forestry, and fishery products. Only exports to the Chinese market, however, saw a growth of 12.5% over the same period in 2022; in contrast, exports to the US and Japan saw declines of 29.3% and 6.9%, respectively.

According to the Steering Committee for Agricultural Product Market Development (Ministry of Agriculture and Rural Development), the Russia-Ukraine conflict affects the trend of reshaping international supply chains, and global inflation forces consumers to tighten spending, inventories in the US, Japan, and the EU increased,... are the causes of a sharp decline in export orders of the agricultural industry.

The Vietnam Cashew Association (VINACAS) report also shows that the main markets of Vietnam's cashew nuts are actively "tightening their belts", reducing spending on non-essential consumer goods, making exports more difficult. The export of this item is affected.

Additionally, as African nations gradually transition to self-production and processing of cashew kernels, cashew firms also require assistance. As a result, Vietnam typically imports low-quality raw materials from Africa. Businesses import products that have been kept long-term, which lowers the quality of processed cashew kernels.

Lower export target

Facing the cashew industry is difficult; VINACAS once again proposed to adjust the cashew export turnover in 2023 to 3.05 billion USD. Previously, this association also applied to adjust the export target from 3.8 billion USD according to the Ministry of Agriculture and Rural Development plan to 3.1 billion USD.

In the forest products group, after setting a record in 2022 with an export turnover of nearly 17 billion USD, this strong industry of our country is expected to earn 18 billion USD from exports at the beginning of this year. However, the aim has been reduced to 14 billion USD due to difficulties in the export market.
Similar to how last year's seafood industry did well, exports brought in over 11 billion USD. Shrimp and pangasius shattered all prior export records, and tuna formally overtook salmon as Vietnam's billion-dollar seafood.

But before the export momentum plummeted, in the two export scenarios in the last months of the year, the Vietnam Association of Seafood Exporters and Producers (VASEP) lowered the export target much lower than in 2022.

Specifically, in the favorable export scenario in the last 5 months of the year, the total export turnover in 2023 will reach over US$9 billion, down 15-16% compared to 2022. Tuna, squid, and octopus will decline by roughly 14–15% to reach USD 870 million and USD 650 million, respectively. Pangasius will decrease by 28% to reach $1.,7–1.8 billion USD.

In the less optimistic scenario, exports may bring in only $8.5-8.7 billion. Seafood exports will worsen if the inspection results of the EC's (European Community) IUU anti-fishing program in October do not meet the expectation of removing the yellow card.

According to Mr. Truong Dinh Hoe - General Secretary of VASEP- seafood businesses must keep close contact with importers, keeping the markets in great demand. Since then, boosting exports during the recovery period. From now until the end of the year, special attention will be paid to the Chinese market because this market recovers relatively quickly.

Although many strengths of billions of USD are forecast to decrease, however, at the July regular press conference of the Ministry of Agriculture and Rural Development, Deputy Minister Phung Duc Tien said that the export target of 54-55 billion USD of the agricultural sector. Could be completed if the two key sectors, forestry and fisheries, regain their growth momentum in the second half of 2023.

Some optimistic signals have appeared. The Deputy Minister said that many large and potential markets with the two industries mentioned above, such as the US, EU ... gradually increase purchasing power.

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