VietNamNet Bridge - The strong-dong exchange rate policy has dealt a blow to farm-produce exporters and agricultural businesses.

Hoi Vu Company’s salty cucumber and tomato exports to Russia, for example, have been decreasing dramatically since May 2014, when Russia began faced economic sanctions from western countries. 

Khuat Duy Hung, a member of the company’s board of directors, said though Hoi Vu has cut prices by 10-15 percent, the sale of products in Russia has been going very slowly because of the depreciation of the ruble. About 170 tons of cucumber and tomato cannot be sold.

The currencies’ price fluctuation, according to Hung, has caused a loss of VND10 billion to the small company.

Thai Ba Nam, general director of Seaprodex Da Nang, noted that seafood exports had never been in such a deadlock before.

“The export price has dropped dramatically by 30 percent. I have had no new orders over the last month,” he said.

There are two reasons behind the sharp fall of seafood exports prices. First, the euro and yen depreciation by 20 percent has made Vietnamese products more expensive. Second, as Indian, Thai and Indonesian farmers have had bountiful crops this year, their export products are cheaper, forcing Vietnamese exporters to offer lower prices.

When asked about his business plan, Nam said what he can do now is buy materials for stockpiling, retain workers and cut production costs, while hoping the market warms up after May.

Nguyen Van Dao, general director of Godaco in Tien Giang province, noted that the demand from the EU has decreased because of depreciation of the euro.

“The euro has lost 20 percent of its value. This is why EU traders hesitate to import products,” he said.

Can Van Luc, a renowned economist, noted that the current exchange rate policy has big caused major difficulties for export companies, and that the watchdog agency should be “flexible” when regulating the exchange rate.

“I know that the State Bank promised not to devalue the dong by more than two percent this year. But the 2-percent target is designed for normal conditions. Flexible solutions are needed in special circumstances,” he noted.

Luc said Vietnam should think of pegging the dong to a “basket of hard currencies” instead of the US dollar only.

The Ministry of Agriculture and Rural Development (MARD) estimated that farm produce exports in the first quarter would bring $1.27 billion, or 20.6 percent lower than the same period last year.

Meanwhile, the Vietnam Association of Seafood Exporters and Producers (VASEP) has reported a 22 percent decrease in seafood export turnover by mid-March 2015 compared with the same period last year.

TBKTSG