Agribusiness to Vietnam
Trends and opportunities
The agricultural industry plays a significant role in Vietnam’s
socio-economic environment, contributing 17 per cent to total growth
domestic product (GDP) in 2016, with total agricultural production reaching
US $37.7 billion – a slight decrease of 2.3 per cent compared to 2016. The
industry is forecast to grow 6.2 per cent annually on average between
2017-2021 (Source: BMI,
Vietnam Agribusiness Report
, Q4 2017)
- Vietnam is a leading exporter of rice, coffee, rubber, pepper and
cashews. In more recent years, aquaculture and fruit production have also
increased and become more export-oriented.
Coffee production is expected to increase 8.3 per cent from 2017 to 2021,
sugar production 23 per cent and milk production 62.4 per cent.
Vietnam’s agricultural producers are facing many issues including
inefficient infrastructure (technology, seeds, machinery, equipment,
insurance, banks, and transport), poor knowledge of good farming practices,
limited capital, poor food safety standards, and poor supply chain
management. In order to maintain its position as a leading exporter of
agricultural products, Vietnam needs to enhance agricultural product
quality and yield growth by advanced cultivation technology, farming
management system, modern machinery, as well as higher food safety and
Vietnamese consumers perceive Australian products to be of high quality, allowing them to be positioned as premium products. With its geographical proximity, Australian suppliers are able to respond to market needs quicker than suppliers from Europe and the United States. This factor is specifically advantageous for commodities such as wheat, dairy or fresh fruit, given many small to medium-sized Vietnamese food processors prefer to buy in small amounts by the container load.
Vietnam is in the top six fastest-growing meat consumers globally. Meanwhile, total meat supply is estimated to grow at only 1 to 3 per cent per year and therefore not able to meet the demand,
especially beef and poultry (Source: BMI,
Vietnam Agribusiness Report
, Q4 2017).
Reasons for shortage include limited areas for grazing and grasslands,
inadequate attention to animal feeds and breeders, and practices of small
or family-sized grazing resulting in unstable production and quality. In
2010, Vietnamese importers and consumers welcomed the entry of Australian
live cattle. Increased live cattle export from Australia helped alleviate
the supply shortage.
According to the Ministry of Agriculture and Rural Development of Vietnam,
animal breeders and genetics systems are not sufficiently organised and
managed, which leads to exposure to complicated diseases and bio-security and
bio-safe grazing issues. The Vietnamese Government has developed research
centers for genetics and embryos, however, they fail to function
efficiently due to synchronization problems between the labs and actual
In its development direction towards 2020, Vietnam aims to grow over 11 per
cent yearly to reach 500,000 heads of dairy cattle, and 4.8 per cent on
average to reach 12.5 million heads for beef cattle (Decision no. 10/2008/QD- TTg by Prime Minister, Strategy to develop
animal grazing towards 2020, 16 January 2008).
Since January 2013, imports of Australian cattle to Vietnam have increased
rapidly with 68,347 heads in 2013 and more than 360,000 heads in 2015,
accounting for 12.8 per cent of the total Australian live cattle exports.
Exports of Australian feeder and slaughter cattle are supported by the
Exporter Supply Chain Assurance System (ESCAS).
Vietnam has seen a rise in demand for imported fruits and vegetables from
its younger population as this demographic is prepared to pay more for
imported goods as their income levels increases. Horticultural products
account for a large portion of total food imports in Vietnam with US$ 925
million on imported fruit and vegetable in 2016, increasing 48.7 per cent
in compared to 2015 (Source: Vietnam Import-Export Report 2016, Ministry of Industry and
According to the Vietnam’s Ministry of Agriculture and Rural Development
(MARD), in the first eight months of 2017, the country spent US$ 1.02 billion
importing vegetables and fruits, of which import value of vegetable is
US$ 200 million and fruits is over US$ 800 million, presenting over 92 per
cent increase over the same period in 2016. Apples, pears, table grapes and
cherries have become increasingly popular in recent years. However, issues
with the supply chain infrastructure hinders greater sales.
Thailand is the largest export market for Vietnam with value of US$ 617.81
million, accounting for 60.7 per cent of the country’s total imports,
followed on by China at US$ 160.07 million (15.7 per cent), the US at US$ 59.56
million (5.9 per cent) and Australia at US$ 40.85 million (4 per cent).
Although the amount of fruits and vegetables imported from Thailand
increased significantly in the first eight months of 2017, according to the
Department of Plan Protection (MARD), around 90 per cent of these was
re-exported to the China market to meet high demand of this market.
Vietnam was Australia’s second largest export market for fruit before
Vietnam suspended imports of fruits from Australia on 1 January 2015.
In August 2015, Vietnam removed table grapes, mandarins and oranges from
the suspended list of 38 Australian fruits and imports resumed from
Australia to Vietnam. Australian cherry also regained access to the Vietnam
market in October 2017.
Vietnam relies heavily on imported seeds and seedlings to maintain its
leading position in exporting agricultural products. In 2017, Vietnam
exports of horticultural products reached US$ 2.32 billion, increasing 46.5
per cent over the same period in 2016, however, the country imports 80 to 90
per cent of seeds and seedlings. In particular, in 2016 Vietnam imported
nearly 150 thousand tonnes of seeds, including rice varieties, grasses, corn,
vegetables and flowers. Imported products are well-received despite higher
costs compared to domestic ones because they have high production
efficiency, stable quality, shorter harvest time, enhanced anti-diseases
and weather-adaptation abilities.
Vietnam’s animal feed industry is one of the world’s fastest growing
agribusiness markets and in recent years the industry has seen an increase
in foreign investment. Vietnam is listed as one of 20 biggest feed
producing countries. Vietnam has also exported feed since 2013, however,
the majority of feed production is for domestic consumption.
Vietnam is one of the top pork consumers in the world, currently ranking
3rd just behind the European Union and China. Pig and poultry are the major
two segments in Vietnam that account for up to 97 per cent of total feed
consumption in Vietnam (with 64 per cent for pig segment).
According to the Vietnam Animal Feed Association, animal feed production
reached over 23 million tonnes in 2016, of which livestock feed and poultry
was accounting for 20.1 million tonnes and aquatic products was 3.1 million
tonnes. Estimated number of animal feed factories in Vietnam is 218, of which
71 are foreign-owned enterprises and 147 are domestic ones. In 2016,
Vietnam imported more than 19 million tonnes of raw materials, worth nearly
US $5.8 billion. (Source:
Feed Market Review 2016
Cotton and Wool
Vietnam is currently among the top five textile and apparel exporting
countries in the world. The industry have risen sharply in recent years, by
over 150 per cent between 2010 and 2016 (Source: Textile Intelligence Jun 2017). Export revenue in 2017 is
expected to reach US$ 31.5 billion, up about 10 per cent over 2016. The
latter maybe a sign that the sector is recovering especially in light of
two consecutive years of declining growth rate – from 20.9 per cent in 2014
to 10.9 per cent in 2016 and to 5 per cent in 2016. The expansion
of production capacities happens in 2017 both for local and FDI-invested
companies. It is estimated that the number of spindles in Vietnam will grow
from 6.3 million in 2015 to 7.5 million in 2017 (Source:
, Vietnam-Cotton and Products Update- Commodity Report 2 Nov2017).
While the textile and garment industry continues to surge, domestic
production of cotton is small, meeting just 2.3 per cent of total domestic
demand and consumption relies heavily on imported cotton (Source:
The country’s top five cotton suppliers are the US, India, Brazil,
Australia and Cote d'Ivoire. These five countries make up 70 per cent to 80
per cent of the total cotton supply to Vietnam. It is estimated that cotton
planting areas in Vietnam continues to shrink to an insignificant amount
pushing the country closer to importing 100 per cent of cotton to meet
growing demand. Vietnam’s MY2016/2017 cotton imports are expected to reach
1.15 million tonnes (or 5.27 million bales), up 15 per cent compared to the previous
; Marketing year from August 2016-July2017).
Vietnam is likely to remain the fastest-growing cotton-consuming
country because of several factors – reaping the benefits from different
sources, increasing cotton yarn imports from international markets,
especially from China, Turkey and South Korea, and taking advantage of the
opportunities offered by a series of free trade agreements with trading
partners. In other words, as Vietnam’s textile sector grows, the country
will continue to import more cotton in the short to medium term.
According to preliminary statistics released by the General Department of
Vietnam Customs, in the first six months of 2017 Vietnam imported 2.5 million
tonnes of wheat, valued at $529.4 million, increasing 47.86 per cent in
volume and 41.29 per cent in value over the same period in 2016.
The largest supplier of wheat to Vietnam is Australia, accounting for 42.1
per cent of total wheat imports to reach over 1 million tonnes, the 2 nd largest supplier is Canada with 485.9 thousand tonnes,
accounting for 18.9 per cent and the third is Brazil with 104.6 thousand
tonnes imported, accounting for 4.06 per cent.
Vietnam is one of the biggest rice producers in the world and consumers
traditionally use rice-based foods for daily diets. The pace of
urbanisation, rapid development of international fast food chains and
westernisation in recent years have led to the change in consumption
pattern. Wheat-based foods started becoming the second most important in
the major cities of Vietnam after rice. The growth of baked wheat-based and
noodles requires high qualify milling wheat which rely completely on
The wheat used for bread/baguette has been increased to 40 to 45 per cent of
total milling wheat consumption. Other baked goods and wheat-based foods
have also been increased from 15 to 25 per cent and Chinese noodles/instant
noodles use dropped to 35-40 per cent (Source:
In order to support growth in agricultural production, there has been an
increasing use of fertilisers in Vietnam. According to the Vietnamese
Ministry of Industry and Trade, Vietnam spent US$ 964 million importing over 3.6 million tonnes of fertilizers between January and
September 2017, posting respective year-on-year increases of 21 per cent
and 17.8 per cent. The fertilizers, mostly urea, Ammonium Sulfate,
Potassium, Diammonium Phosphate and Nitrogen-Phosphorous-Potassium
fertilizers, were imported mainly from China, Russia, Indonesia, Canada and
Vietnam imports almost 50 to 60 per cent of its fertilisers, making it one of
the largest importers in the world. (Source: VietinBankSc,
Industry Report: Fertilizers manufacturing in Vietnam
Although Vietnam’s aquaculture sector has an increasing share in
agricultural GDP, the contribution of aquaculture to national GDP has
remained quite stable at around 4 per cent. Vietnam exports seafood to 160 foreign markets and has become one of the
largest aquaculture producers in Southeast Asia and the world.
According to the Directorate of Fisheries, the country’s fisheries
production in September 2017 was at 698.8 thousand tonmes, up 5.6 per cent
compared to the same period last year. Of which, fishing production reached
over 303 thousand tonnes, and aquaculture yield gained 395 thousand tonnes,
increasing by 5.6 per cent year on year.
According to Decision No. 1445/QD-TTg of August 16, 2013, approving the
master plan on fisheries development through 2020 with a vision toward
2030, the fisheries sector will be basically industrialized by 2020 and
modernized by 2030 and continue its comprehensive, effective and
sustainable development and become a large commodity production sector with
a rational structure and forms of organization of production and high
productivity, quality, efficiency and competitiveness, firmly integrate
into the international economy, step-by-step increased income and living
standards of farmers and fishermen; while protecting the eco-environment
and fishery resources and contributing to safeguarding national defence and
security at sea and on islands.
A lack in advanced technology has greatly influenced the quality and value
of exporting Vietnamese aquacultural products. Existing factories have low
capacity and limited experience in the sector. Also, there was an increase
in the number of shipments being rejected by importing countries due to
antibiotic residues and other contaminants being detected during routine
testing. There are opportunities for Australian firms to export processing
equipment, technology, facilities as well as expertise in sustainable
fishery management. On the other side, the Australian Center for
International Agricultural Research is currently investing nearly A$ 100
million in more than 170 research projects in Vietnam, from livestock to
policy making, food safety, fisheries and forestry, from the Minister of
Ministry of Agriculture and Water Resources of Australia in Sep 2017.
Major exporters of agricultural goods include low-cost countries such as China, India, Thailand as well as higher quality product suppliers such as Australia, New Zealand, France and the US.
Tariffs, regulations and customs
Trade between Vietnam and Australia is directly improved by the
ASEAN-Australia-New Zealand Free Trade Agreement
(AANZFTA), which gives preferential tariffs for Australian exporters and
investors in Vietnam. Some highlights of the AANZFTA to Vietnamese trade
elimination of a five per cent tariff by 2017 on exports of pork
- reduction of a 30 per cent tariff to zero per cent by 2018 on exports of
frozen shrimps and prawns
- binding of zero per cent tariffs on pure-bred breeding animals, oxen,
buffaloes and other live bovine animals.
For more information, access the Department of Foreign Affairs and Trade’s
(DFAT) Free Trade Agreement Portal.
Certain imported products must be inspected before being cleared at customs
provides a legal foundation for the operation of the customs sector and
creates a favourable environment for import-export activities. Companies
that import goods must submit a dossier of documents to the customs
authorities. The dossier must include at least the company’s business
registration certificate and import business code registration certificate.
Imported goods require the following documents:
- bill of lading
- cargo release order
- commercial invoice
- customs import declaration form
technical standard/health certificate
terminal handling receipts
Marketing your products and services
Seeking an appropriate local importer or distributor as a partner is very
crucial for Australian exporters to achieve success in their business in
Vietnam. Obtaining valuable support from this local partner in relation to
setting up the business and dealing with complicated import procedures will
lead to easier market access. Australian exporters should undertake
thorough market research to identify potential buyers and reliable
distributors, as financial information on companies is generally not
It is important for Australian exporters to visit the market frequently in
the initial entry phase to provide technical or marketing support to their
clients or distributors. Local companies usually have limited access to
information on suppliers and rarely have budgets to visit Australia, so
frequent visits are crucial towards building personal relationships with
key decision makers. These will help to navigate potential problems such as
late deliveries, quality issues or faulty documentation.
Australian exporters and investors should also be aware of Vietnam’s
frequent regulatory changes. Regular updates of policy changes are advised
to help exporters adjust their marketing strategies accordingly and timely.
The distribution value chain for industrial sales includes food processing
companies and intermediary local traders or consignee importers and
international trading firms. Direct sales with frequent market visits are
recommended for this market segment. For consumer goods, the distribution
channel includes importers, wholesalers and distribution points such as
supermarkets and food retail outlets.
The emergence of supermarkets and hypermarkets in major urban centers offers opportunities to Australian suppliers of consumer goods for direct
Vietnam has 11 major seaports, including Ho Chi Minh City in the south, Hai
Phong in the north and Da Nang in the centre. More container ports are
planned to open and another project is ongoing to reduce traffic congestion
in inner Ho Chi Minh City by relocating its eight port facilities to
outlying areas by 2020. Container handling activity is focused in the two
main shipping centres of Ho Chi Minh City and Hai Phong, including their
respective satellite ports of Cai Mep-Thi Vai and Cai Lan. These locations
make up 97 per cent of Vietnam’s total container handling volumes.
There are two Vietnamese airports that deal with cargo handling for
international markets: Tan Son Nhat Airport (TSNA) in Ho Chi Minh City and
Noi Bai Airport (NBA) in Hanoi. A third airport, Long Thanh Airport located
approximately 40 km northeast of Ho Chi Minh City Tan Sot Nhat Airport is
currently under construction and is expected to be operational by 2020.
TSNA has two cargo terminals including Tan Son Nhat Cargo Services (TCS)
and Saigon Cargo Service Corporation (SCSC).
The majority of Logistics Service Providers (LSPs) consider trucking costs
to be higher and standard of trucking service delivery to be lower in
Vietnam relative to China, India, Malaysia and Thailand. Most of the
trucking companies are small and operate second-hand trucks that are
subject to poor maintenance.
Links and industry contacts
General Statistics Office (GSO)
Information Center for Agriculture and Rural Development
USDA – Foreign Agricultural Service
Government, business and trade
Department of Animal Health
Department of Livestock Production
Directorate for Standards, Meterology and Quality
General Department of Vietnam Customs
Ministry of Agricultural and Rural Development
Ministry of Planning and Investment
Ministry of Public Health
Ministry of Science and Technology
National Agro-Forestry-Fisheries Quality Assurance Department
Plant Protection Department (PPD)
Vietnam Academy of Agricultural Science
Vietnam Investment Review
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