Where are Vietnamese goods in the global value chain?

Published: 02/01/2011 05:00



VietNamNet Bridge – 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

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.

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

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.

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.

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

Provide by Vietnam Travel

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