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Enter the dragon

Released at: 09:08, 07/07/2014

Enter the dragon

Vietnamese dragon fruit exports have recorded impressive growth and new markets are being sought by meeting quality-based international standards.

by Do Huong

Dragon fruit has taken over top spot in Vietnam’s fruit exports in recent years, with high growth in both volume and value. In 2013 the country’s fruit industry joined the “$1 Billion Export Club” thanks to a greater contribution by dragon fruit. “It plays an important role in Vietnam’s fruit exports, which primarily include mango and rambutan,” said Mr Nguyen Van Ky, General Secretary of the Vietnam Fruit and Vegetables Association (Vinafruit). “Among exports, dragon fruit brings in 55 per cent of total export turnover, despite its growing area accounting for only 3.1 per cent of total planting.” Even higher export growth is expected this year, with new markets set to emerge.

Vietnam is the largest dragon fruit exporter in the world, as it can be grown all year round in different parts of the country, and it now exports to more than 30 countries. According to Mr Luong Ngoc Trung Lap, Head of the Southern Fruit Institute’s market research department, dragon fruit has recorded the highest export growth in recent years among all fruit grown in the country. Exports in 2012 were worth $150 million, an increase of more than 40 per cent over 2011, while $184.2 million worth was exported from January to November, 2013, for an increase of 8.3 per cent over the same period of 2012. Vietnam’s largest dragon fruit market remains China, which consumes 77 per cent of total output. Only 4 per cent is exported to Europe, 3 per cent to the US, and 1.5 per cent to Japan, with the remainder heading elsewhere. In the first eleven months of 2013, exports to China grew slightly in value, at 3.5 per cent, but fell 3 per cent in volume. At the same time other markets saw sharp increases in both volume and value. Notably, exports to Belgium grew 1,327 per cent in volume and 952 per cent in value, while Italy recorded 138 per cent and 271 per cent, the Czech Republic 126 per cent and 35 per cent, and Russia 83 per cent and 255 per cent growth, respectively.

According to the Ministry of Agriculture and Rural Development (MARD), dragon fruit will continue to be a major export item this year. Exports to Norway more than doubled in value (132 per cent) while falling in volume (18 per cent) in the first eleven months of 2013. In the first two months of this year the Scandinavian country saw dragon fruit imports grow 146 per cent in volume and 469 per cent in value compared with the same period of 2013. Exports to France, meanwhile, grew 165 per cent and 174 per cent, respectively, while those to South Korea grew 227 per cent and 190 per cent, to Italy by 73 per cent and 75 per cent, and to The Netherlands by 83 per cent and 79 per cent.

Analysts have commented that Vietnamese fruit is exported mostly to China over the land border, with the country accounting for 64 per cent of total export turnover. Such reliance on China may prove costly if the country were to suddenly stop importing fruit from Vietnam. But easing this reliance, according to Mr Tran Ngoc Hiep, Director of the Thanh Long Hoang Hau Company in the south-central province of Binh Thuan, is easier said than done because penetrating new markets requires meeting high requirements on quality, safety and other issues. The current capacity of many local enterprises, meanwhile, remains weak. 

Farmers throughout the country have been encouraged to focus on improving dragon fruit yields and quality. Exporters, meanwhile, have indeed been busy researching new markets to add to their traditional markets. Mr Hiep said that his company plans to expand to the US, South Korea, Japan and New Zealand, to complement major markets such as China, the EU, Indonesia and Thailand. “To penetrate these tough markets our dragon fruit must meet international standards, including GlobalGap, EurepGap and VietGap,” he said. “We are already cultivating fruit according to these standards.”

According to Vinafruit the average export price for dragon fruit was $539.5 per ton in 2013, 6 per cent higher than in 2012. Exports to Russia fetched the most, at $4,500 per ton, followed by $3,600-3,630 to Japan, $2,760 to the US, $2,160 to Canada, and $2,100 to the UK. China, as noted, is Vietnam’s largest importer but its price is the lowest, at some $396 per ton. Exporting to the US, South Korea and Japan, the Hoang Hau Company saw volumes grow by 30 per cent in 2013 against 2012, accompanied by a healthy rise in value. The US, Mr Hiep said, is a market with great potential but is very difficult to penetrate because of strict quarantine requirements that are costly for local exporters to implement. The country is the third largest importer of Vietnamese dragon fruit. Upon entering the market in 2008, volumes stood at 100 tons for the year, increasing to 1,200 tons in 2012 and then 1,300 tons in 2013.

The Food and Agriculture Organisation (FAO) forecasts that demand for tropical fruit around the world will be on the increase in the future. In the 2001-2010 period annual demand for fruit worldwide increased 3.6 per cent while output increased 2.8 per cent. Tropical fruit, including dragon fruit, is predicted to have a sharper competitive edge in the future. Europe remains the largest fruit importer in the world, with 8.4 million tons annually. The US consumes 12 million tons of fresh fruit each year, with local production meeting 70 per cent of demand. Mr Vo Mai, Vice President of the Vietnam Gardening Association, expects that the volume of Vietnamese dragon fruit exports to the US will amount to 2,000 tons in the near future.

Exports to Japan and South Korea have also grown handsomely over the years. In 2013 volumes to Japan stood at more than 1,000 tons, and 300 tons to South Korea, from the Long An province-based Hoang Phat Fruit Co. Company Director Nguyen Hong Hung said that it applies vapour heat treatment and develops dragon fruit production based on GlobalGap standards to meet the importers’ requirements. “Demand in markets like Japan and the EU is huge and the price is higher than for China, so we need to meet their standards,” he said. “The challenge for local exporters to these markets is to meet requirements on food hygiene and safety.”

The Centre for Plant Quarantine After Importing No 2 at the Department of Plant Protection under MARD supports Vietnamese enterprises in meeting standards. “Vietnamese dragon fruit has been successfully exported to the US, Japan and South Korea, without any shipments being refused,” said Dr Nguyen Huu Dat from Vinafruit. “Exports to the US and Japan, which bring more benefits to Vietnam, will help the country control price, improve product value and stabilise markets.”

Dragon fruit import markets, 2013

Source: Ministry of Agriculture and Rural Development, 2013

Another challenge for local enterprises is maintain quality during transport. According to MARD it can take 25 days to transport fruit to Europe by ship and cost factors rule out air transport. Vietnam must also contend with expanded growing areas in the US (Hawaii), Japan (Okinawa), Taiwan and Israel. China has recently successfully grown dragon fruit on 20,000 hectares in Guangdong and Guangxi, which almost matches Vietnam’s total area of 25,000 hectares. “It will be a challenge for Vietnam to cope with the entry of China into dragon fruit exports,” said Dr Nguyen Minh Chau, Director of the Southern Fruit Research Institute (SOFRI). He suggested that localities specialising in dragon fruit, such as Binh Thuan, Tien Giang and Long An provinces, quickly address shortcomings related to processing, especially preservation and packaging, and foster trade promotion activities. Relevant agencies must also continue to negotiate trade agreements with import markets that set high standards. Dr Ngo Ngoc Trung Lap from SOFRI said that agencies also need to focus on negotiating agreements with China, as the market consumes two-thirds of Vietnamese dragon fruit but a number of risky and unstable issues remain in play.

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