Increasing the value of Vietnam’s tea exports

Each year, Vietnam produces 180,000 tonnes of tea including 130,000 tonnes for export, earning US$79 million. Currently, it ranks fifth in the world in both production and export volume.

Over the past 15 years, the tea sector has surpassed its set targets for cultivated acreage, productivity and export volume. But export tea prices are lower than those in other countries such as India, Sri Lanka, and Kenya.

Vietnam has a total area of 120,000 hectares of tea grown in 34 provinces, mostly in the northern mountainous and central highland regions.

In 2009, the average price of tea in those countries was US$2.43 per kilo while Vietnamese tea stood at US$1.23 per kilo.

Between 1998 and this year, the world’s average tea price increased by 18 percent while Vietnam’s tea price fell by 20 percent.

Difficulties

There are as many as 6 million Vietnamese involved in growing tea. But on average, they can only earn about VND20 million from each hectare of tea a year.

The poor performance is attributed to weak competition among Vietnamese businesses whose poor quality tea products seriously undercut the prestige of the tea sector. In fact, production areas can only meet 50 percent of their capacity and the management of product quality, especially food hygiene and safety is not good. Tea growers often use pesticides and chemical fertilizers to increase productivity.

Nguyen Thu Hang, chief representative of Britain’s Tonkin Tea Trading Company, says between 1996 and 1999, Vietnam’s black tea met the strict requirements set by European countries. However, from 2000 to 2005, due to an increase in the residues of pesticides in tea products, the quality of tea has decreased seriously.

Hang says another factor is that Vietnamese businesses have not built trademarks for their products in the world market and are not conscientiously adhering to the conditions of long-term contracts.

President of the Pakistan Tea Association Muhammad Hanif Janoo says Pakistan could buy Vietnamese tea at a higher price if the product quality was stable. He adds that many Pakistani businesses want to invest in Vietnam’s tea sector to meet local consumer demand for high quality tea products. Vietnam should offer tax incentive policies for the tea sector.

Mr Janoo notes that Vietnam has not yet set up a tea trading centre, which discourages importers from purchasing Vietnamese tea products. “The tea sector should set up such a centre to set norms in terms of price and quality in accordance with international standards,” he suggests.

Orientations

Le Xuan, head of the Agro-Forestry-Fisheries Processing Department under the Ministry of Agriculture and Rural Development (MARD), proposes that the tea sector should establish closer economic links between processing businesses and tea growers and closely co-ordinate businesses, authorities and the Vietnam Tea Association to make breakthroughs in improving the quality of tea products and ensuring food hygiene and safety.

Regarding future development orientations, Xuan has asked provinces to improve the technical management of tea growing areas and organize training courses for officials who can then teach farmers to grow clean and safe tea.

Relevant agencies, in his words, should supervise tea production facilities to ensure food hygiene and safety conditions. MARD should co-ordinate with the Association to control the use of pesticides in the tea growing areas, establish links between businesses and tea growers, and develop a modern processing industry.

In addition, he says, it is important to conduct research on major and potential markets in order to boost export volumes and gradually gain a firm foothold there. – VOV

Tags: Vietnam tea, Vietnam tea exports