Current Situation, Prospects, and Development Trends of the Fruit and Vegetable Industry in Vietnam.
Updated: Sep 7
Currently, Vietnam has approximately 120 types of vegetables and hundreds of different fruits. The fruit and vegetable industry in Vietnam is experiencing significant growth and has promising prospects. Alongside advancements in science and technology, out-of-season fruits and vegetables can also be cultivated and harvested, meeting the demands of domestic consumers and exports.
Fresh Fruits and Vegetables in Vietnam.
Vietnam, with its geographical stretch across multiple latitudes and a tropical monsoon climate, along with certain regions having unique microclimate like Sapa, Tam Dao, and Da Lat, boasts diverse soil fertility. As a result, Vietnam has significant advantages in the production and export of tropical, subtropical, and even temperate fruits and vegetables.
Among the agricultural sectors, fruits and vegetables have experienced remarkable growth in production capacity over the past five years, expanding both in terms of cultivated area and yield.
The specific cultivation areas for each crop are as follows (statistics from 2019):
Fruit trees: The cultivated area for fruit trees reached approximately 1.1 million hectares, a 7.45% increase compared to 2018 (993,000 hectares). Commonly cultivated fruits include dragon fruit, coconut, mango, orange, pomelo, lychee, longan, and rambutan.
Vegetables: In 2019, the vegetable cultivation area reached 966,000 hectares, a 29,100-hectare increase compared to 2018. Popularly cultivated vegetables include potatoes, sweet potatoes, corn, cassava, peanuts, soybeans, and leafy greens.
The Mekong Delta region has the largest vegetable cultivation area in the country, followed by the Southeast region, the South Central Coast, and the Central Highlands.
Vietnam's favorable climate and diverse agricultural regions contribute to the production of fresh and high-quality fruits and vegetables. These products cater to both domestic consumption and export markets, where Vietnamese fruits and vegetables are highly regarded for their taste, nutritional value, and safety. The country's commitment to sustainable agriculture and the adoption of advanced farming techniques are further enhancing the productivity and quality of fresh produce in Vietnam. As a result, Vietnam's fruit and vegetable industry continues to flourish and presents lucrative opportunities for farmers, investors, and exporters alike.
An Overview of the Potential of Processed Fruits and Vegetables of Vietnam in the International Market.
The demand for processed fruits and vegetables is increasing both in the domestic and export markets. Consequently, in recent years, the number of processing facilities for fruits and vegetables has grown, and the processing technology has significantly improved. Popular processed fruit and vegetable products in Vietnam include dried fruits, fruit juices, and canned vegetables.
According to data from the Ministry of Industry and Trade's Import-Export Department in 2022, the overall structure of Vietnam's exported fruits and vegetables has shown positive changes, particularly in the increasing proportion of processed products. Specifically, the share of processed fruits and vegetables accounts for 29.47% - a 3.8% increase compared to 2021. The current export value of processed fruit and vegetable products has exceeded the milestone of 1 billion USD.
Among the processed products, preserved lime is the leading product in terms of price and has recorded rapid growth in 2022. Other popular processed varieties include coconut, cashew nuts, pineapples, and various fruits. In terms of market share in the EU market, processed fruits and vegetables from Vietnam currently account for only around 2.7%. Therefore, there is still significant potential for Vietnamese enterprises to develop processed fruits and vegetables in the international market.
The growing demand for convenient and value-added fruit and vegetable products, coupled with Vietnam's abundant supply of raw materials and improving processing capabilities, creates opportunities for Vietnamese businesses to expand their presence in the international market. With a focus on product quality, innovation, and market diversification, Vietnamese processed fruits and vegetables can capture a larger market share and establish a strong foothold in the global marketplace.
Investment in the fruit and vegetable industry in Vietnam.
In the national economy, the fruit and vegetable industry is relatively small and contributes a modest share to the overall GDP. As a result, it has not attracted significant attention and investment from both the government and private sector. Another reason for the limited investment interest is the relatively low value-added of the industry, with inputs heavily dependent on weather conditions and outputs sensitive to market demand fluctuations.
However, in recent years, the potential and economic viability of the fruit and vegetable industry have been gradually recognized. Particularly, fruit and vegetable exports have shown promising growth rates, outperforming many other export sectors, which has led to increased attention and investment in the industry.
Currently, Vietnam has established three high-tech agricultural zones in Phu Yen, Bac Lieu, and Hau Giang. The government is also considering the establishment of three more high-tech agricultural zones in Thai Nguyen, Quang Ninh, and Lam Dong.
Recently, the Prime Minister issued Directive No. 25/CT-TTg on June 4, 2020, regarding tasks and solutions for the development of agro-forestry-fishery processing industries and agricultural mechanization. The objective is to strive for Vietnam's agriculture sector to be among the top 15 globally by 2030, with agro-processing ranking among the top 10 in the world.
In addition to state investment, the private sector has seen the emergence of large investors in agriculture, including the fruit and vegetable industry. The participation of major corporations such as Vingroup, T&T, LiveFoods, and Dong Giao is gradually transforming the landscape of Vietnam's fruit and vegetable industry. As of now, there are 47 certified high-tech agricultural enterprises in the country. Advanced and environmentally friendly fruit and vegetable production processes such as Global GAP and VietGAP have been applied and replicated. According to the Department of Quality Management of Agricultural, Forestry, and Aquatic Products (Ministry of Agriculture and Rural Development), by the end of 2022, the country had approximately 480,000 hectares of certified VietGAP crops (with over 10% dedicated to vegetables), and there were 8,304 certified VietGAP establishments.
Businesses are increasingly investing in integrated fruit and vegetable processing, implementing closed-loop processes from cultivation, harvesting, preservation, to processing, to ensure product quality and safety. Currently, across the country, nearly 1,500 agricultural chains have been developed, encompassing nearly 2,400 products, and there are 3,300 controlled points of sale for safe agricultural products.
The investment trend in fruit and vegetable processing is expected to continue, driven by the growing demand for processed and value-added products, both domestically and in the international market. With supportive policies, improving infrastructure, and increasing private sector involvement, the fruit and vegetable industry in Vietnam holds significant potential for further development and expansion
Foreign direct investment (FDI) in agriculture, particularly in the fruit and vegetable sector, in Vietnam is still relatively limited. According to the Department of Foreign Investment, FDI attraction in agriculture is currently focused on small-scale projects, mainly in seafood processing and fruit production in specific locations. There hasn't been any major foreign investor entering the agriculture sector by investing in large-scale fruit and vegetable cultivation projects in Vietnam using high-tech or organic methods.
Foreign investment in the Vietnamese agriculture sector remains modest for several reasons, including:
Difficulty for foreign businesses to access agricultural land for establishing stable raw material areas (agricultural investments often require large land holdings).
Limited supporting logistics services and infrastructure for agricultural production and processing in Vietnam.
Various risks related to natural disasters, diseases, and unpredictable weather patterns.
However, with Vietnam's increasing integration, signing and implementing new free trade agreements (FTAs), expanding market access for Vietnamese agricultural products, and opening doors for foreign investors in Vietnam, it is expected that foreign investment in the agricultural sector will increase in the near future.
COVID-19 pandemic: In 2020, due to the impact of the COVID-19 pandemic, FDI inflows into Vietnam also decreased. However, in the agro-forestry-fishery sector, there were 17 investment projects in the first nine months of 2020, nearly equal to the 18 projects recorded in the entire year of 2019. The total investment value reached USD 108.4 million, surpassing the figure of USD 104.1 million for the entire year of 2019.
While the level of foreign investment in the fruit and vegetable industry is currently limited, the favorable investment environment, improved infrastructure, and growing market opportunities in Vietnam are expected to attract more foreign investors in the agricultural sector in the future.
Investing in the fruit and vegetable industry in Vietnam offers a lucrative and sustainable opportunity. With a favorable market landscape, growth drivers, technological advancements, and government support, investors can capitalize on the rising demand for fresh produce. However, it is essential to navigate the challenges and risks with careful planning and innovative strategies. By staying informed about market trends and leveraging the right opportunities, investors can contribute to the growth of this thriving sector while reaping significant rewards.