VietNamNet Bridge - The recently released World Bank report about farm produce supply chain shows worrying issues about Vietnam’s agriculture.

Vietnam received a 55.7 score on the 100-score scale for supply chain operation, 60.6 score for product quality control and 48.4 score for farm produce trade. 

Compared with the Philippines, Vietnam excels in product quality control but is inferior in the supply chain operation and trade. Vietnam’s scores in trade are even lower than Cambodia and Laos.

Lack of investment in logistics services is blamed for big losses in agriculture. 

Farm produce is a major export item which makes up 18-20 percent of the total national product. However, most agribusinesses are small and medium scale, with the number of export products not large.

Meanwhile, according to the Ministry of Industry and Trade, the expenses on logistics services in Vietnam are relatively high, which weaken the competitiveness of Vietnamese products in the region.

This explains why many producers and exporters don’t want to use package logistics services. This results in big losses during the harvesting, processing, storage and transportation. 

The recently released World Bank report about farm produce supply chain shows worrying issues about Vietnam’s agriculture.

A report of the Ministry of Agriculture and Rural Development (MARD) showed that the average loss rate is 25-30 percent.

The loss is a little bit higher in seafood processing, at 35 percent, while it is up to 45 percent in vegetables and fruit. 

This is blamed on the low mechanization level in agricultural production and limited transportation capability.

A World Bank survey showed that Vietnam’s mechanization index is low at 24.4 score, equal to Laos, Cambodia and Myanmar and far below the Philippines. The transportation index in agriculture is lower than Laos by 10-15 score.

Experts pointed out that logistics play an important role in agriculture production, because the longer it takes to transport farm produce, the higher failure rate will occur. 

If the problem cannot be settled, Vietnam will find it hard to join the global production chain.

Cold supply chain – the logistics potential of Vietnam

To date, the World Bank and the State of Vietnam have invested more than $10 billion to develop cold supply chain in an effort to reduce losses and upgrade the quality of food launched into the market.

Julien Brun from CEL Consulting noted that Vietnam’s major farm produce export markets such as the US, Japan and the EU set very strict requirements on food safety control and phytosanitary. 

Cold supply chains will ensure the higher efficiency for farm and seafood exports in the future.

Many parties and companies are involved in the collection, transportation and processing of farm produce and most of them are small scale which lack material facilities and instruments to run cold supply chains effectively.

Vietnam’s cold storage capacity has increased by four times in the last 10 years, but most storehouses are located in the south to store seafood products for export.