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Tea exports up against it

Released at: 15:52, 03/01/2016

Tea exports up against it

Volume and value heading downwards as domestic tea production faces a range of issues.

by Thu Hoang - Chu Khoi

Vietnam’s tea exports in 2015 are estimated at 123,000 tons worth $211 million, down 6.8 per cent and 7.4 per cent, respectively, compared with 2014, according to figures from the Ministry of Agriculture and Rural Development (MARD).

In Pakistan, Vietnam’s largest tea export market, volumes increased 0.64 per cent but value was down 7.4 per cent against last year. Exports volumes declined in major markets such as Taiwan, India, the Middle East, the EU, and Japan.

Only in a few non-traditional markets did volumes rise year-on-year, by 22.55 per cent in Russia, 44.94 per cent in Indonesia, and 35.76 per cent in the UAE.

Reputation in decline

Over recent years the price of Vietnam’s exported tea has halved compared to average global prices, with targets in place to increase the price towards this global average by 2020. Paradoxically, as the price of Vietnamese tea continued to fall in 2015 the price of tea from other countries increased.

The decline in both volume and value partially stems from higher requirements in certain markets, according to Mr. Doan Trong Phuong, Deputy Chairman of the Vietnam Tea Association. “Vietnamese tea exporters have not paid sufficient attention to improving product quality,” he said.

Vietnam’s tea industry faces a range of problems regarding seeds, the age of its tea plantations, food safety, the use of pesticides, transport, and harvesting, according to Mr. Dang Kim Son, former Director of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD).

These shortcomings result in low added value for Vietnam’s exported tea. The country has signed a range of FTAs and these may increase exports as tariff barriers fall. These FTAs, however, also set strict requirements on export products, especially food safety standards. “This is a weakness of Vietnam’s tea industry,” Mr. Son acknowledged.

Moreover, enterprises in the domestic tea industry produce what they have without giving due regard to market demand. “Producers have shown little interest in consumer tastes,” Mr. Son added.

Improving quality

Lam Dong province in the central highlands has the largest tea growing area and highest production capacity in the country, with 23,000 ha and 223,000 tonnes per year, accounting for 21 per cent and 30 per cent, respectively.

Its tea exports, however, are facing hardships and volumes are in serious decline.

Without reform the province’s key agricultural product will be unable to expand its international markets, Dr. Pham S, Deputy Chairman of the Lam Dong Provincial People’s Committee, said.

After incidents in which Lam Dong’s exported tea was disposed of upon arrival in export markets, many enterprises in the sector were found to have paid inadequate attention to managing input materials.

Famous local tea exporters such as Tam Chau Co., Phong Giang Co., and TCB Manufacturing and Trade Co., which have headquarters and factories in the high-quality growing areas of Bao Loc and Bao Lam, are now strengthening the monitoring of raw material inputs.

Northern Thai Nguyen province is another major tea growing area in Vietnam, ranking behind only Lam Dong in area and capacity.

Most of the province’s tea production, however, only sells in the domestic market, with just 20-30 per cent being exported.

To strengthen the branding of Thai Nguyen tea, the provincial government has approved a decision on researching the registration of the Thai Nguyen brand name in China, the US, and Taiwan, which are regarded as being major export markets for Thai Nguyen tea in the future.

Northern Phu Tho province, meanwhile, is also trying to promote a new model of tea production and processing following linked chains, to improve production capacity and quality.

Large tea areas in the province, including Phu Tho town and Thanh Son and Yen Lap districts, have been using the model.

Linked chains focus on assessing conditions for producing safe tea, upgrading preservation, guiding management measures such as VietGAP (Vietnamese Good Agricultural Practices), HACCP (Hazard Analysis and Critical Control Point), and ISO (International Organization for Standardization), and improving product quality, packaging, and identification labels.

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