Tea production, processing and consumption have seen high growth in thepast few years in Vietnam. Despite Vietnam’s fifth position among theglobal tea producers, its export revenue ranks only 10th as about 90percent of Vietnamese tea was exported in the form of raw materials.Insight from Vietnam Economic News.
Every year,Vietnam’s tea industry earns hundreds of millions of US dollars inexport revenue. However, 90 percent of the tea export volumes are fromraw tea products or in the form of mixed materials. The industry is inneed of an effective solution for the added value problem.
Export volume - revenue paradox
The Ministry of Agriculture and Rural Development said that in thefirst 10 months of this year, Vietnam exported 116,000 tonnes of tea,worth 187 million USD and is currently among the world’s five top teaproducers and also fifth leading tea exporter.
However,in terms of export revenue, Vietnam’s average export price has onlyreached 1,200 USD per ha, much lower than that of other exporters likeSrilanka (1,200 USD per ha), Kenya (6,000 USD per ha) and only accountsfor 60 percent of the global average price.
According toDeputy Director of the Domestic Market Department under the Ministry ofIndustry and Trade Le Viet Nga, the reason Vietnam tea export valueremains low is that about 90 per cent of Vietnamese tea was exported inthe form of raw materials. There are few companies having invested todevelop tea brands while there are so many companies involved inexporting tea. The latter only care about profits and willing to offerlow quality tea products, which then affects the prestige of Vietnam'stea industry.
Bui Minh Hien, head of the IndustrialPromotion Department, Industry Promotion and Consultancy Centre No.1,the Agency for Regional Industry Development (ARID) also pointed outthat, the low Vietnamese tea export prices were attributed to problemsin the chain of production and consumption of the tea industry today:small scale, lack of links in production, standards and policies onquality, food safety and hygiene management. In particular, the productsslowly adapt to changes of the market tendencies and therefore werestill considered as mixed products in order to reduce costs.
Solutions
There is a big contradiction between the export volumes and value inVietnam's tea export. It is a very necessary to figure out a suitablesolution to this problem, though not easy because there are still somedisagreements about an orientation of the tea industry development.
Doan Xuan Hoa, Deputy Director of the Department of Processing andTrade for Agro-Forestry-Fisheries Products and Salt Production under theMinistry of Agriculture and Rural Development said to improve teaexport turnover, Vietnam should raise export prices equal to the averagelevel in the world market (2,200 USD per ton) and expand the teacultivation scale, taking the large scale rice field model as a goodexample.
Based on experience and success of the teaprocessing and trading model of small households in Japan, Taiwan andChina, Dr. Nguyen Duy Thinh from the Hanoi University of Science andTechnology said that the combination of this model with the developmentof tea culture tourism is a suitable solution to Vietnam’s tea industry.Moreover, with tea growing and processing experience of Vietnamese teagrowers, they can entirely produce high quality tea in large quantityand offer these products at high prices.
He also said thetea processing scale should be at least 500kg per day which means eachproduction unit can produce 30-40 tonnes a year.
Thedevelopment of Vietnam’s tea industry on industrial orhouseholds-oriented scale needs inspection and research of functionalagencies. However, no matter the orientation is, the mechanisation inproduction and the shift of product structure which then bring higheradded value remain the top priority of the industry./.
Every year,Vietnam’s tea industry earns hundreds of millions of US dollars inexport revenue. However, 90 percent of the tea export volumes are fromraw tea products or in the form of mixed materials. The industry is inneed of an effective solution for the added value problem.
Export volume - revenue paradox
The Ministry of Agriculture and Rural Development said that in thefirst 10 months of this year, Vietnam exported 116,000 tonnes of tea,worth 187 million USD and is currently among the world’s five top teaproducers and also fifth leading tea exporter.
However,in terms of export revenue, Vietnam’s average export price has onlyreached 1,200 USD per ha, much lower than that of other exporters likeSrilanka (1,200 USD per ha), Kenya (6,000 USD per ha) and only accountsfor 60 percent of the global average price.
According toDeputy Director of the Domestic Market Department under the Ministry ofIndustry and Trade Le Viet Nga, the reason Vietnam tea export valueremains low is that about 90 per cent of Vietnamese tea was exported inthe form of raw materials. There are few companies having invested todevelop tea brands while there are so many companies involved inexporting tea. The latter only care about profits and willing to offerlow quality tea products, which then affects the prestige of Vietnam'stea industry.
Bui Minh Hien, head of the IndustrialPromotion Department, Industry Promotion and Consultancy Centre No.1,the Agency for Regional Industry Development (ARID) also pointed outthat, the low Vietnamese tea export prices were attributed to problemsin the chain of production and consumption of the tea industry today:small scale, lack of links in production, standards and policies onquality, food safety and hygiene management. In particular, the productsslowly adapt to changes of the market tendencies and therefore werestill considered as mixed products in order to reduce costs.
Solutions
There is a big contradiction between the export volumes and value inVietnam's tea export. It is a very necessary to figure out a suitablesolution to this problem, though not easy because there are still somedisagreements about an orientation of the tea industry development.
Doan Xuan Hoa, Deputy Director of the Department of Processing andTrade for Agro-Forestry-Fisheries Products and Salt Production under theMinistry of Agriculture and Rural Development said to improve teaexport turnover, Vietnam should raise export prices equal to the averagelevel in the world market (2,200 USD per ton) and expand the teacultivation scale, taking the large scale rice field model as a goodexample.
Based on experience and success of the teaprocessing and trading model of small households in Japan, Taiwan andChina, Dr. Nguyen Duy Thinh from the Hanoi University of Science andTechnology said that the combination of this model with the developmentof tea culture tourism is a suitable solution to Vietnam’s tea industry.Moreover, with tea growing and processing experience of Vietnamese teagrowers, they can entirely produce high quality tea in large quantityand offer these products at high prices.
He also said thetea processing scale should be at least 500kg per day which means eachproduction unit can produce 30-40 tonnes a year.
Thedevelopment of Vietnam’s tea industry on industrial orhouseholds-oriented scale needs inspection and research of functionalagencies. However, no matter the orientation is, the mechanisation inproduction and the shift of product structure which then bring higheradded value remain the top priority of the industry./.
