Within the agriculture sector, agro-processing and related industrial services play a crucial role in adding value to agricultural output and in upgrading and diversifying demand. It has emerged as a dynamic sector, making a strong contribution to industrial and export development. Rice, coffee, fruits and vegetables that are processed in some way before being exported account for a significant share of agro exports. Given its high importance, the industry has been given special attention by the government of Vietnam in recent years.
Market trends
Rice
It is expected that processed rice will reach 32 million MT, accounting for 90 percent of total rice production in 2010, and 39 million MT in 2020, of which 4 million MT is proposed for yearly export. In order to increase domestic production and improve rice quality for export, there is a strong need for advanced driers and large complex mills with graders. Coffee
Along with the industrialization modernization strategy of Vietnam, Vinacafe is focusing much on the investment in new machinery as well as gradual replacement of old and backward ones. With that in mind, the expected trend is increasing import of modern processing technologies and medium to large-capacity processing lines.
Fruits and vegetables
In 2000, the Vietnamese government sets forth an ambitious goal that exports of fruit and vegetables should reach $1 billion by 2010, more than tripling the 2001 level. Towards that end, proper processing facilities and technologies should be acquired.
Meat
By the year 2020, projection is to produce 6 million MT of raw pork, 5 million MT of processed product of which 1.55 million MT is for export. To achieve this ambitious goal, intensive investments in advanced processing equipment and technology, appropriate transport and storage facilities as well as training in quality management and hygienic control are highly required.
Market evaluation
Considering that the Vietnamese government is actively pursuing investment in the agri-food sector to build on competitive advantages in agri-food exports, there is no doubt that demand will increase for production and processing technologies, and storage facilities. At present, a number of large exporters including China, Taiwan, Japan, Germany, France and UK have obtained high profile in the market. However, current supply volume of advanced processing facilities and technologies still falls far off expected future demand. This obviously presents great opportunities to relevant foreign exporters to initiate/expand its presence in Vietnam, since the government is well aware of quality standards set by the western world.
Market size indicatorsRice and coffee are the major commodities:
The gross output of agriculture is steadily increasing reaching USD 7.78 billion in 2002 and USD 8.09 billion in 2003. Rice, coffee, fruits and vegetables and meat are among the most important commodities. Rice
The average paddy rice production/year for the past 4 years were approximately 33,000 thousand tons in the entire country. Out of this, yearly export earns around USD 675 million. Different drying methods are being used for agricultural products to meet critical moisture content, high quality and incur less produce losses. Sun-drying is very common during the dry season. Drying machines are used only when it is absolutely necessary, especially in summer-autumn rice crop in Mekong River Delta. There is a number of drying machine chambers, ranging from 0.5 to 10 MT. Rice for domestic use is milled in small hullers.
Coffee
Coffee output was recorded to be at 841,000 tons in 2001, 700,000 tons in 2002 and 771,000 tons in 2003. 95% of the output was exported. At the household level, simple machines are used widely. These include hand controlled, foot controlled, and mechanized ones are utilized to crush coffee pods. Coffee growers undertake primary processing of 80 percent of the coffee produced in the country.
Domestic manufacturers have made coffee bean processors, which employ the wet method, Raoeng type with a capacity of 750-3,000 kg/h, accompanied with a drier system. A number of dried coffee processors were imported after 1975 from UK and Germany with a capacity of 2,000 ton and 5,000 tones/year respectively. At present, some dried processing lines with a capacity of 2,000 kg/h, are provided to Vietnam coffee growers, under an agreement between Vietnam and Germany.
Vinacafe is the biggest state owned corporation specializing in coffee production, processing, export - import in Vietnam. Currently, it has ten big coffee bean processing lines, one value added coffee processing factory to produce instant coffee, roast coffee with capacity of 1,000 tons per year. Approximately 1.000 basic coffee processing facilities are located in coffee producing areas.
Fruits and Vegetables
The average output of fruit and vegetables is USD 0.89 billion for the period 2000-2003. About 23 State Owned Enterprises (SOE) are involved in fruit and vegetable processing with capacity ranging from 500 to 10,000 tones/year. The largest company is the Vegetables and Fruits General Corporation (VEGETEXCO), a centrally managed SOE under the Ministry of Agriculture and Development. The corporation has 14 fruit and vegetable processing companies with a capacity of 600-10,000 tones/year.
Larger processors are involved in more advanced processing techniques than small ones. Most of the smaller processors focus on drying the produce, as this method requires little capital. The larger processors typically possess machinery for canning, pickling, freezing and concentrating.
The average age of equipment used by large processors is 6 years. The oldest types of equipment are juicing, concentrating and mixing machines. The equipment’s origin varies greatly, though the majority of the equipment utilized by the large processors (65%) is locally manufactured. The exception is machinery for sterilizing, quick freezing, juicing and concentrating. Of imported equipment, a majority are of Russian, Chinese, Taiwanese and German origin.
Meat
The output of meat industry in Vietnam is 1.6 million tonnes annually; 77 per cent is pork, 16 per cent poultry and 7 per cent red meat. The main pig meat products are distributed as fresh meat whereas only a small, however increasing, percentage of pork is processed into canned meat, sausage etc.
Meat processing is a relatively small-scale activity in Vietnam. Only a few processors have capacity of over 10,000 MT per year. At present, there are about 290 official slaughterhouses. However, a large part of the production and the processing is conducted in a few concentrated commercial slaughterhouses. The two leading companies in the meat processing industry are the Vietnam Animal Industry Corporation (Vissan) and Amimex. Animex's plant is one of the few plants in Vietnam that complies with international hygiene standards.
Poor practices of quality management and hygienic control and lack of appropriate processing equipment have adversely affected the meat quality and food safety. Lack of cold storage facilities has a severe impact on the meat processing industry as well. Very few slaughterhouses, meat processors, and meat traders have cold transport or storage facilities, making it difficult to transport meat and meat products over long distances without spoiling the meat quality.
Source: Danish Embassy of Hanoi (2006)