Agro-exports amid trade war
Agro-exports amid trade war
Vietnam’s agro-product exports have slowed down after five months of the Sino-U.S. trade war. What are the true reasons?
Although the U.S. has lost the position as the top market for Vietnam’s agro-product exports held in 14 years (2001-2014), this market has remained firmly in the second position since 2015, because it is still the largest market for Vietnam’s leading agro exports, such as timber and woodwork, which account for 36-44% of the total export revenue of these commodities; cashew nuts (32-37%) and seafood (about 20%).
Meanwhile, China has maintained the top position after overtaking the U.S. for the first time in 2011, and has even become the largest importer of quite a few major agro-products of Vietnam over the past many years. The country accounts for some 90% of Vietnam’s cassava and cassava product exports, 65-76% of fruit and vegetable exports, 43-66% of rubber exports and 30-39% of rice exports.
In this context, the Sino-U.S. trade war certainly has some impact on Vietnam’s agro-product trade.
Slower export growth
Statistics show that over the past five months of the Sino-U.S. trade war last year, Vietnam’s export turnover was US$109.2 billion, up 12.4% or US$12 billion higher than the same period in 2017, but much lower compared with the growth rate of 16.9% in the first half of the year.
Meanwhile, the respective figures for Vietnam’s imports in the five-month period were US$105.1 billion and US$13.3 billion, up 14.5% year-on-year and much higher compared with the growth rate of 9.6% in the first half of the year.
These opposite developments mean that exports are slowing down while imports are accelerating.
The situation is more serious with the agro-product trade. Exports of major agro-products in the five-month period were nearly US$15.8 billion, up only 2.5% or nearly US$400 million from the year-earlier period, while agro-product imports increased by more than US$1.5 billion, up 17.4% year-on-year.
Both the U.S. and China are the main factors for the export slowdown and import pickup. A calculation from statistics show that exports to China in the five-month period were just more than US$3.6 billion, down 11.7% or nearly half a billion U.S. dollars less than the year-earlier period, while imports from the neighboring country were more than US$700 million, up 38.9% or over US$200 million.
Exports to the U.S. in the five-month period reached nearly US$3.5 billion, an increase of 15.7% or nearly half a billion U.S. dollars from the year-earlier period, but imports from the states amounted to nearly US$1.6 billion, soaring 87.9% year-on-year or US$740 million.
So, Vietnam’s total exports to these two markets over the past five months remained unchanged from the export figure of over US$7.1 billion in the same period in 2017, but total imports increased by more than US$950 million, or 69.2%. The above figures also mean that the modest revenue and growth of Vietnam’s agro-product exports over the past five months were brought about by other markets.
Agro-products still account for a large share of Vietnam’s export profile, at 16.6%, so they played a role in the export slowdown over the past five months.
A combination of many reasons
The Sino-U.S. trade war is not the only reason for this situation. There are others.
First, at least up to three-fourths of the drop of US$460 million in agro-product exports to China over the past five months is the result of factors other than the trade war. Statistics show that rice exports to China in the five-month period were nearly US$200 million, US$220 million less than the year-earlier period, due to China’s import restriction. The most typical example is its increase of the glutinous rice import tax by nine times to a combined rate of 50%, pushing Vietnamese glutinous rice exporters to the wall because they could not find replacement markets.
The drop of more than US$70 million in cassava and cassava product exports to China is due to a drastic fall in imports from the neighboring country and Vietnam’s virtual failure to find replacement markets.
Meanwhile, the reason for a drop of more than US$40 million in rubber exports to China is different. Rubber exports to the northern neighbor over the past five months amounted to more than 560,000 tons, an increase of 65,000 tons from the year-earlier period, but the average export price was only US$1,283 per ton, a fall of US$241 per ton compared with the same period in 2017. The price drop is also the reason for the fall in exports of some other agro-products to China over the past five months.
Second, for the U.S. market, the strong increase in imports of U.S. agro-products, up to US$740 million, is the result of other factors.
The increase in cotton imports from the U.S. to US$134 million, or nearly 70% of the increase in the value of this commodity in the global market, is due to the much lower price of U.S. cotton, at US$1,865 per ton in the five-month period, compared with the average price of US$2,135 per ton in other markets.
The increase in imports of U.S. soybean and animal feed materials, with a combined US$458 million, is a result from the impact of the Sino-U.S. trade war. The U.S. products suffered slow sales and had “soft” prices, so Vietnamese enterprises stepped up imports from the states and reduced or restricted imports from other countries.
Meanwhile, the strong increase of Vietnam’s exports of seafood to US$188 million and timber and woodwork to US$349 million to the U.S. is due to the strong competitiveness of these products, though they are somehow impacted by the trade war.
Third, contrasting developments in the agro-product trade over the past five months result from a fall in prices of exports and a rise in prices of imports.
