Agro-exports amid trade war

15-Jan-2019 Intellasia | The Saigon Times | 6:00 AM Print This Post

Vietnam’s agri-product exports have slowed down after five months of the Sino-US trade war. What are the true reasons?

Although the US has lost the position as the top market for Vietnam’s agri-product exports held in 14 years (2001-2014), this market has remained firmly in the second position since 2015, because it is still the largest market for Vietnam’s leading agro exports, such as timber and woodwork, which account for 36-44 percent of the total export revenue of these commodities; cashew nuts (32-37 percent) and seafood (about 20 percent).

Meanwhile, China has maintained the top position after overtaking the US for the first time in 2011, and has even become the largest importer of quite a few major agri-products of Vietnam over the past many years. The country accounts for some 90 percent of Vietnam’s cassava and cassava product exports, 65-76 percent of fruit and vegetable exports, 43-66 percent of rubber exports and 30-39 percent of rice exports.

In this context, the Sino-US trade war certainly has some impact on Vietnam’s agri-product trade.

Slower export growth

Statistics show that over the past five months of the Sino-US trade war last year, Vietnam’s export turnover was $109.2 billion, up 12.4 percent or $12 billion higher than the same period in 2017, but much lower compared with the growth rate of 16.9 percent in the first half of the year.

Meanwhile, the respective figures for Vietnam’s imports in the five-month period were $105.1 billion and $13.3 billion, up 14.5 percent year-on-year and much higher compared with the growth rate of 9.6 percent in the first half of the year.

These opposite developments mean that exports are slowing down while imports are accelerating.

The situation is more serious with the agri-product trade. Exports of major agri-products in the five-month period were nearly $15.8 billion, up only 2.5 percent or nearly $400 million from the year-earlier period, while agri-product imports increased by more than $1.5 billion, up 17.4 percent year-on-year.

Both the US and China are the main factors for the export slowdown and import pickup. A calculation from statistics show that exports to China in the five-month period were just more than $3.6 billion, down 11.7 percent or nearly half a billion US dollars less than the year-earlier period, while imports from the neighbouring country were more than $700 million, up 38.9 percent or over $200 million.

Exports to the US in the five-month period reached nearly $3.5 billion, an increase of 15.7 percent or nearly half a billion US dollars from the year-earlier period, but imports from the states amounted to nearly $1.6 billion, soaring 87.9 percent year-on-year or $740 million.

So, Vietnam’s total exports to these two markets over the past five months remained unchanged from the export figure of over $7.1 billion in the same period in 2017, but total imports increased by more than $950 million, or 69.2 percent. The above figures also mean that the modest revenue and growth of Vietnam’s agri-product exports over the past five months were brought about by other markets.

Agri-products still account for a large share of Vietnam’s export profile, at 16.6 percent, so they played a role in the export slowdown over the past five months.

A combination of many reasons

The Sino-US trade war is not the only reason for this situation. There are others.

First, at least up to three-fourths of the drop of $460 million in agri-product exports to China over the past five months is the result of factors other than the trade war. Statistics show that rice exports to China in the five-month period were nearly $200 million, $220 million less than the year-earlier period, due to China’s import restriction. The most typical example is its increase of the glutinous rice import tax by nine times to a combined rate of 50 percent, pushing Vietnamese glutinous rice exporters to the wall because they could not find replacement markets.

The drop of more than $70 million in cassava and cassava product exports to China is due to a drastic fall in imports from the neighbouring country and Vietnam’s virtual failure to find replacement markets.

Meanwhile, the reason for a drop of more than $40 million in rubber exports to China is different. Rubber exports to the northern neighbour over the past five months amounted to more than 560,000 tonnes, an increase of 65,000 tonnes from the year-earlier period, but the average export price was only $1,283 per tonne, a fall of $241 per tonne compared with the same period in 2017. The price drop is also the reason for the fall in exports of some other agri-products to China over the past five months.

Second, for the US market, the strong increase in imports of US agri-products, up to $740 million, is the result of other factors.

The increase in cotton imports from the US to $134 million, or nearly 70 percent of the increase in the value of this commodity in the global market, is due to the much lower price of US cotton, at $1,865 per tonne in the five-month period, compared with the average price of $2,135 per tonne in other markets.

The increase in imports of US soybean and animal feed materials, with a combined $458 million, is a result from the impact of the Sino-US trade war. The US products suffered slow sales and had “soft” prices, so Vietnamese enterprises stepped up imports from the states and reduced or restricted imports from other countries.

Meanwhile, the strong increase of Vietnam’s exports of seafood to $188 million and timber and woodwork to $349 million to the US is due to the strong competitiveness of these products, though they are somehow impacted by the trade war.

Third, contrasting developments in the agri-product trade over the past five months result from a fall in prices of exports and a rise in prices of imports.

https://english.thesaigontimes.vn/65510/agro-exports-amid-trade-war.html

 


Category: Economy, Vietnam

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