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Where are Vietnamese goods in the global value chain?

In Uncategorized on January 8, 2011 at 4:12 am




Where are Vietnamese goods in the global value chain?


QĐND – Monday, January 03, 2011, 20:37 (GMT+7)

Vietnam is well known as one of the most powerful exporters of agricultural products in the world. However, Vietnamese farmers and Vietnamese enterprises cannot pocket enough money from their exports.


H’Nu is sitting by the loom in her house in Don Village in EaWer commune, Buon Don District in Dak Lak province. When she does not have to go to the rice field, she stays at home to weave blockade products to sell to tourists. Forty kilometers far away from her house, the Buon Ma Thuot Coffee Transaction Centre is operating, where people trade coffee and earn money from the coffee beans H’Nu and her husband harvest. However, she is neither aware or concerned with this. The only thing H’Nu knows is that her husband sold coffee at 30,000 dong per kilo.


H’Nu’s coffee


Daklak, the most fertile land of the Central Highlands, is reputable for endless coffee fields. However, for many years local farmers have experienced difficulties. Sometimes they suffer from the failures of the coffee crop and they do not earn enough money to make living. However, when they have bountiful crops, they are still not satisfied, because the prices always decrease due to the profuse supply.


Every year after the harvesting H’Nu sells coffee to merchants, who then sell the coffee to processors and exporters. The prices depend on the export prices. If Vietnam’s coffee sells for good prices, she will be able to sell coffee at higher prices, and vice versa. The only source that provides information to H’Nu are the bulletins of the Dak Lak television. “I wish the coffee price would stay firmly at 35,000 dong per kilo or higher. Only with that price can we earn enough money to make a living,” H’Nu said.


Other farmers have worries similar to H’Nu. Vietnam now has 561,000 households growing coffee plants, 46 percent of which are poor households, 30 percent of coffee growers are ethnic minorities and 75 percent of these people are poor people.


Many experts believe that Vietnam has enough advantages and potential to boost coffee exports. However, Vietnam’s coffee products have remained in the lower segment of the global value chain.


H/Nu and other coffee growers once put high hopes on sustainable development models for Vietnam’s coffee. To date, Vietnam has not made any considerable progress in implementing the model.


Vietnamese exporters still cannot earn money from added value


The same situation is occurring  in other agricultural products, such as peppers, cashews, tea, garments and footwear products. In the global value chain, Vietnamese enterprises can only undertake production phases which contain little added value and the phases which generate most of the profit (processing products, increasing brand value and commercializing products) are undertaken by foreign enterprises.


For example, when making garment products, Vietnamese enterprises only make finished products, which generates the lowest value in the value chain, while other phases of the production chain, including material production, and production commercialization are carried out by foreign enterprises.


Currently, the garment and footwear products that Vietnam export under the mode of FOB accounts for just 20 percent of the garment product value chain. As a matter of fact, enterprises cannot pocket all 20 percent because they have to pay for materials, labor and import taxes.


The problem is that Vietnamese enterprises still lacks the ability to design products that fit the tastes of European and US consumers. Vietnamese enterprises can only suggest ideas, while only importers can complete the designs and make decisions about production. Distribution is also a weak point of Vietnamese producers due to the limitations in experience and capital.


Source: Thoi bao Kinh te Saigon


Source: QDND

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