Overview of the Banana Industry in VietnamThe banana export industry in Vietnam has experienced significant growth and hasbecome a prominent player in the global banana trade.. Other imp
Rationale of the research
Over the past several years, Vietnam's exports have grown significantly, and the country is now a significant player in the global economy The abundance of natural resources, cheap labor costs, favorable trade policies, and strategic position of the nation all contribute to its export potential
Vietnam is one of the main exporters of bananas in Southeast Asia, and the banana business there is expanding The Cavendish, Lady Finger, and Williams types of banana are the most often exported from Vietnam Vietnam shipped more than 130,000 tons of bananas in 2020, with over 70% of the exports going to China, according to data from the Vietnam Fruit and Vegetable Association South Korea, Taiwan, and Japan are a few additional top banana export markets for Vietnam.
Vietnam's ideal climate and location make it a prime candidate to become a significant exporter of bananas One of the most extensively grown fruits in Vietnam, the Mekong Delta is where the majority of the nation's bananas are produced Small-scale farmers who grow bananas in the Mekong Delta region, which is renowned for its lush soil and climate ideal for banana production, dominate the Vietnamese banana export sector Following harvest, the bananas are taken to packaging facilities to be graded, sorted, and packed for shipment According to a report by the International Labour Organization (ILO), in Vietnam, the banana industry is a significant source of employment for women, particularly in rural areas where they frequently work as seasonal laborers and young people who work on banana farms during school breaks.
Nevertheless, compared to other nations in the area, such as the Philippines andThailand, Vietnam now exports an untold quantity of bananas Up till now, theVietnamese government has designated banana export and cultivation as a priority sector However, to further exploit the opportunities, more studies should be conducted to gain a more profound understanding of which factors may degrade or facilitate Vietnam’s banana export.
Literature Review
Over the past 50 years, the gravity model has been extensively applied in the literature on international trade (Van Bergeijk et al., 2011) The model has been successfully used to examine a variety of flows, including migration, foreign direct investment, and particularly the flow of international trade This model, which estimates commerce based on the distance between nations and inter-country interactions, is based on Sir Isaac Newton's discovery of the law of gravity Tinbergen (1962) and Pửyhửnen
(1963) were the first authors to examine global trade flows using the gravity equation. Since that time, the gravity model has gained popularity as a tool for empirical research of foreign commerce.
In 1962, Dutch economist Timbergen used the gravity model for the first time to examine international trade flows The trade flow between nation A and country B is the model's dependent variable, whereas GDP and distance are independent variables. The final estimated results demonstrated that, in contrast to distance, the GDP variable has a positive impact on the flow of trade between two countries, indicating that greater proximity and higher economic sizes are associated with more trade.
Initially, there was very little theoretical support for the research being done in this area, but during the second half of the 1970s, a number of theoretical advancements have been made that support the gravity model Anderson (1979) was the first to theoretically validate the gravity model He made the first official attempt to derive the gravity equation from a model that assumed product differentiation by using expenditure systems where items are differentiated by origin (Armington preferences) and all transportation expenses are proxied by distance.
In the empirical economic literature, the gravity model has been applied in a number of empirical methods to explain international trade By employing panel data and a gravity equation, Ozdeser (2010) evaluated the parameters of the explanatory factors for "eurozone" countries These estimated parameters were then used to project
Turkey's trade potential Elshehawy (2014) used the gravity model to research the factors affecting Egypt's exports, and the results showed that the main factors affecting Egypt's exports to its main trading partners are its GDP, the importer's GDP, the importer's population, regional trade agreements, and the border between Egypt and its trading partner Wang (2015) examined the GDP, distance, border, linguistic, and FTA membership elements that have an impact on China's export Koh (2013) investigated the factors that determine Brunei Darussalam's trade and also estimated its trade potential using panel data and stochastic frontier approaches El-Sayed (2012) looked at the economic impacts of trade between Egypt and other economic blocs, including the EU, the Common Market for Eastern and Southern Africa, and the ASEAN Free Trade Area According to Troy's (2014) analysis, the GDP, distance, official language, exchange rate, and background of global trade all have an impact on Cricum's trade.
Many scholars used the gravity model to look into the export of a certain good For example, Ebaidalla (2015) used the gravity model to describe how various factors affected Sudan's agricultural exports It was found that the agricultural exports of Sudan were influenced not only by GDP, population, distance, and exchange rates but also by government policy and whether or not the importing nations spoke Arabic. The population, exchange rate, economy's openness, language, and producing region are the elements affecting export, according to Dlamini (2016), who studied Swaziland's sugar export Using the gravity model, Khiyavi (2013) came to the conclusion that the GDP, exchange rate, distance, and joining the trade organization are the primary factors affecting agricultural export of developing nations.
A variety of studies have been conducted in Vietnam using the gravity model to investigate the variables impacting export For instance, Dao (2013) examined the effects of various variables on the flow of goods imported and exported betweenVietnam and Trans-Pacific Partnership (TPP) nations The study revealed the influence of variables like GDP, population, differences in wealth between nations,exchange rates, import/export tariffs between nations, and the degree of openness ofTPP nations According to Tran et al (2017), the only factors influencing Vietnam's
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5 rice export to ASEAN nations are the exporter's GDP, economic and development gap,inflation, agricultural area, and population of the importing country Ngo (2016) examined the variables influencing Vietnamese agriculture export using the gravity model.
Aims and Objectives
Aims
This report focuses on the analysis of the factors impacting Vietnam's export of bananas and demonstrates the bilateral trade flows between Vietnam and its major trade partners, including the United Kingdom, the United States, Russia, Canada,Australia, China, Japan, South Korea, Singapore, Malaysia, Cambodia, Kuwait, SaudiArabia, based on their economic size and proximity using the gravity model.
Objectives
Factors Influencing Vietnam’s banana export
Scope of the research
in Vietnam and in partner nations
Researching Vietnam's banana export in the period between 2013 and 2021.
Research methods
The gravity is deemed appropriate for analysis of the variables influencing Vietnamese banana export We use the variation of Krugman's (2005) gravity model While only two independent variables—GDP and distances—are included in the original model, this study takes into account the traded flow (export) of Vietnamese bananas as the dependent variable and involves additional factors such as population, inflation, distance, agricultural land area and the difference in exchange rates between Vietnam and its trade partners as explanatory variables to further strengthen the model. Đ Ề -C ƯƠ NG-KTCT 2
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OVERVIEW OF BANANA EXPORT IN VIETNAM
The Importance Of Export In Vietnam Economy
Vietnam's economy has experienced remarkable growth and transformation over the past few decades, emerging as one of the fastest-growing economies in Southeast Asia A key driver of this economic success has been its robust export sector Exports play a crucial role in Vietnam's economy, contributing significantly to its overall GDP, job creation, and foreign exchange earnings.
The export sector in Vietnam has undergone a remarkable expansion, with a diverse range of goods and services being shipped to markets around the world While Vietnam exports various products, including textiles, electronics, and footwear, one particularly notable export commodity is bananas Bananas are a significant agricultural product in Vietnam, and the country has seen a steady increase in banana exports over the years.
The importance of exports in Vietnam's economy cannot be overstated Firstly, exports generate substantial revenue for the country, contributing to its overall economic growth By selling goods and services to international markets, Vietnam earns valuable foreign exchange, which helps to strengthen its financial stability and support its domestic currency This influx of foreign currency allows the country to finance imports, invest in infrastructure development, and stimulate further economic activities.
Secondly, the export sector plays a vital role in job creation As exports increase,industries and businesses involved in producing and distributing these goods experience growth, leading to the creation of employment opportunities for theVietnamese population This job creation helps to reduce unemployment rates,alleviate poverty, and improve the living standards of individuals and families across the country.
Moreover, exporting enables Vietnam to access global markets and participate in the global supply chain By engaging with international markets, Vietnamese businesses can expand their customer base beyond domestic borders, reaching consumers worldwide This exposure to international markets fosters innovation, promotes competitiveness, and encourages the adoption of best practices in production and management It also provides opportunities for Vietnamese companies to collaborate with foreign partners, facilitating knowledge transfer and technology exchange.
Additionally, the export sector contributes to the development of related industries and sectors within Vietnam For example, increased banana exports create a demand for packaging materials, transportation services, and logistical support This, in turn, stimulates growth in these sectors, leading to further economic development and job creation.
In conclusion, exports are of paramount importance to Vietnam's economy They generate substantial revenue, support job creation, facilitate access to global markets,and contribute to the overall economic growth and development of the country The export of bananas, along with other goods and services, plays a significant role in shaping Vietnam's economy and positioning the country as an active participant in the global trade landscape.
Overview of the Banana Industry in Vietnam
The banana export industry in Vietnam has experienced significant growth and has become a prominent player in the global banana trade Vietnam's favorable climate and fertile soil provide suitable conditions for banana cultivation, enabling the country to produce high-quality bananas for export.
The Mekong Delta area of Vietnam, which is renowned for its good climatic conditions and abundant soil, is where banana agriculture is predominantly focused.
The tropical environment of the area, which has heavy rainfall and moderate temperatures, is suitable for banana development.
Many species of bananas, including Cavendish, Lady Finger (also called Pisang Awak or Musa Acuminata), and Red Banana, are grown in Vietnam (also known as Pisang Raja or Musa Belle) Due to its extended shelf life and ubiquity in foreign markets, Cavendish bananas are the most extensively cultivated and exported cultivar in Vietnam.
Vietnamese banana output has steadily increased over the years Many causes, such as expanding local consumption and demand on global markets, are responsible for this expansion Bananas are a common fruit in Vietnamese households, and the country's urbanization and expanding middle class have both increased banana consumption.
Vietnam has also become a prominent player in the world market for banana exports. Bananas from this nation are shipped to several nations, with China being the biggest market Vietnamese bananas are increasingly in demand due to their affordable prices, high quality, and advantageous trade arrangements Other important export markets for Vietnamese bananas include the Middle East, South Korea, Japan, and South.
Both domestic and foreign investments have been made in Vietnam in order to assist the development of the banana sector These investments are meant to increase banana production, refine production methods, and boost total output To raise yields and decrease post-harvest losses, modern agricultural practices and technology are being used, such as enhanced irrigation systems and precision farming methods.
The growth of banana agricultural regions in Vietnam has been aided by investors. They have assisted farmers in obtaining more land, creating new plantations, and growing the overall area devoted to banana farming by providing them with financial help and industry knowledge Its growth has enhanced the nation's capacity to produce bananas while also generating new job possibilities in rural regions.
The banana industry's use of contemporary technologies has been made easier by investments Precision agricultural methods, automated planting and harvesting equipment, and improved irrigation systems are some examples of this By ensuring effective water management, minimizing labor-intensive chores, and maximizing resource use, modern technology has greatly increased production.
Investments have helped the banana industry's research and development efforts New banana cultivars with improved qualities, such as disease resistance, a longer shelf life, and superior flavor, have been made possible through partnerships between investors, farmers, and research organizations Research projects have also concentrated on enhancing banana production methods, solving specific problems, and investigating creative solutions.
The Vietnamese government has recognized the value of the banana sector and taken a number of actions to encourage its growth They consist of assisting farmers financially, advancing banana crop research and development, and enhancing infrastructure in banana-growing areas The assistance provided by the government is to increase output, raise banana quality, and guarantee the sector's long-term expansion.
By utilizing its capabilities in production, competitive price, high quality, and advantageous trade agreements, Vietnam has secured its place as a significant participant in the global banana export market The nation has successfully increased the number of nations to which it sells bananas, with China, Japan, South Korea, Russia, and the Middle East among the noteworthy export recipients The rise of Vietnam as a key exporter in the global banana market and the causes influencing its success are covered in more detail in the parts that follow.
China, in particular, has become a crucial market for Vietnamese bananas The proximity of Vietnam to China, along with the increasing purchasing power and changing consumer preferences in the Chinese market, has led to a surge in banana exports to this destination Additionally, Vietnam has been able to capitalize on the
Free Trade Agreements between ASEAN countries and China, which has facilitated smoother trade flows.
To ensure the competitiveness of Vietnamese bananas in the international market, there is a growing emphasis on maintaining high-quality standards Vietnamese banana producers and exporters adhere to strict quality control measures, including proper harvesting techniques, packaging standards, and compliance with international food safety regulations These efforts help to meet the stringent requirements of importing countries and maintain the reputation of Vietnamese bananas as a premium product
Both domestic and foreign investments have been made in Vietnam in order to assist the development of the banana sector These investments are meant to increase banana production, refine production methods, and boost total output To raise yields and decrease post-harvest losses, modern agricultural practices and technology are being used, such as enhanced irrigation systems and precision farming methods.
The growth of banana agricultural regions in Vietnam has been aided by investors. They have assisted farmers in obtaining more land, creating new plantations, and growing the overall area devoted to banana farming by providing them with financial help and industry knowledge Its growth has enhanced the nation's capacity to produce bananas while also generating new job possibilities in rural regions.
The banana industry's use of contemporary technologies has been made easier by investments Precision agricultural methods, automated planting and harvesting equipment, and improved irrigation systems are some examples of this By ensuring effective water management, minimizing labor-intensive chores, and maximizing resource use, modern technology has greatly increased production.
FACTORS AFFECTING VIETNAM’S BANANA EXPORT
Economic Factors
2.1.1 Market demand and consumer preferences
The primary drivers of Vietnam's banana exports to other nations are consumer trends and preferences Vietnamese exporters must comprehend these trends in order to match customer wants and keep a competitive advantage on the international market. The banana sector is impacted by several important consumer trends and preferences.
The emphasis on healthy eating and active lives is one noticeable trend Customers are actively looking for healthier choices as they become more aware of their eating habits Bananas fit in nicely with this trend because to its high nutritional content, which includes fiber, vitamins, and minerals Vietnamese exporters can promote the nutritional value of their bananas by promoting them as a healthy and wholesome snack option.
Additionally, consumer tastes are being influenced by environmental and sustainability issues Products that are ethically sourced, ecologically sustainable, and have no effect on the environment are becoming more and more in demand Bananas and other items that are organic and fair-trade have seen a rise in popularity as a result of this trend By using sustainable agricultural techniques, gaining the necessary certifications, and demonstrating their dedication to moral and ethical banana production, Vietnamese exporters may satisfy this demand.
Accessibility and convenience are also significant elements in customer choices.Consumers want solutions that are handy and easily accessible due to their busy lifestyles and shifting purchase habits Vietnamese exporters may benefit from this development by ensuring a steady supply of bananas through a variety of distribution channels, including supermarkets, grocers, and online shopping sites By facilitating consumer access to bananas, exporters may encourage more consumption and satisfy the needs of customers looking for convenience.
The influence of cultural and regional preferences on consumer decisions is another factor to take into account The flavors, textures, and consumption habits of bananas may vary between different nations and areas Vietnamese exporters need to be aware of these preferences and change their product selection to suit them This might be offering a certain banana variety that is popular in a certain market or adjusting packaging and presentation to suit cultural preferences.
Social media and digital platforms have had a huge impact on consumer behavior and preferences Customers now have more access to information and are better equipped to make educated purchasing decisions They rely on internet testimonials, referrals, and social media influencers to help them make judgments about what to buy. Vietnamese exporters may make use of these platforms to interact with customers, communicate with them about their products, and establish brand loyalty.
Vietnamese banana exporters should do market research and keep up with changing consumer trends to adapt to customer trends and preferences This entails studying market statistics, polling consumers, and keeping an eye on market developments. Exporters may adapt their strategy, product development, and marketing initiatives to the market's shifting demands by knowing customer preferences.
Finally, customer choices and trends have a big impact on the amount of bananas exported from Vietnam Vietnamese exporters may promote their bananas as enticing options for customers throughout the world by adjusting to the rising need for healthy,sustainable, and convenient solutions Exporters may maintain their competitiveness and increase their market share in the worldwide banana sector by being aware of customer preferences, utilizing digital platforms, and consistently developing their offers.
2.1.2 Impact of bilateral and multilateral trade agreements
Vietnam's exports of bananas are significantly impacted by bilateral and multilateral trade agreements, which have an effect on market access, taxes, regulatory standards, and general trade dynamics The trading climate and prospects for Vietnamese exporters are greatly influenced by these accords It is crucial to comprehend the effects of bilateral and multilateral trade agreements in order to successfully negotiate the world banana market.
By lowering trade obstacles and providing preferential trade conditions, bilateral trade agreements between two nations seek to boost commerce and investment Tariff reductions, guarantees of access to certain markets, and collaboration in a variety of trade-related sectors are common components of such accords Vietnamese exporters of bananas may be granted privileged access to certain markets as a result of bilateral trade agreements, giving them a competitive edge over non-participating nations These agreements decrease the cost of exporting bananas and increase their price competitiveness in the target countries by lowering or removing tariffs Moreover, regulatory cooperation and standard alignment clauses are frequently included in bilateral agreements, streamlining the export procedure and guaranteeing conformity with import regulations Generally, the rise of banana exports is a result of bilateral trade agreements that open up new markets and make commerce between Vietnam and its trading partners easier.
Multilateral trade agreements, which aim to offer a framework for trade liberalization and regulatory harmonization on a broader scale, involve a number of countries The World Trade Organization (WTO) is a multinational trade organization that creates rules and encourages dialogue among its member states Multilateral trade agreements promote a more open trading system by removing trade barriers and creating a level playing field for all participants These agreements support a supportive environment for the export of bananas by stabilizing and preparing global trade By promoting fair and nondiscriminatory trade practices, multilateral accords ensure that Vietnamese banana exporters may access various markets under standardized standards and rules
Moreover, multilateral agreements usually incorporate non-tariff barriers, such as technical regulations and sanitary and phytosanitary measures, to help exporters comply with international standards and requirements.
Beyond tariff reductions and market access, bilateral and international trade agreements have an influence on Vietnam's exports of bananas These agreements also promote investment flows, knowledge transfer, and economic cooperation, which opens up prospects for value-added operations and increased competitiveness Trade agreements, for instance, frequently promote foreign direct investment (FDI) by providing a more stable and advantageous investment environment Increasing investment may result in the modernization of the banana industry, better infrastructure, and greater supply chain effectiveness, all of which are advantageous to the export sector.
Moreover, trade pacts encourage rivalry and push exporters to raise output and product quality to comply with global norms As a result, Vietnamese exporters of bananas are better positioned to compete on a worldwide scale through technical developments, information exchange, and capacity building Exporters may increase their market position and draw in new clients by abiding by the norms and specifications of trade agreements and developing confidence and credibility with trading partners.
It is essential to remember that the effects of bilateral and multilateral trade agreements might differ based on their precise provisions, extent, and degree of implementation While some accords may have more robust provisions for regulatory harmonization and market access, others may have more modest effects Also, participating nations' commitment and enforcement are key factors in a trade agreement's success.
In conclusion, trade agreements at the bilateral and international levels significantly affect Vietnam's exports of bananas Market access is increased, trade obstacles are lowered, laws are harmonized, and economic cooperation is encouraged Vietnamese exporters of bananas can gain access to new markets, compete successfully, and raise their level of overall competitiveness in the international banana trade by taking advantage of the advantages of these agreements.
2.1.3 Tariffs, quotas, and non-tariff barriers
Agricultural Factors
Vietnam's robust banana industry depends on effective cultivation methods Producers use a variety of techniques to guarantee that bananas grow, yield, and are of the highest quality possible while supporting sustainability and satisfying consumer demand The careful selection of suitable banana types, preparation of the soil, planting and propagation, soil management, irrigation and water management, pest and disease control, pruning and de-suckering, and post-harvest handling are all part of these procedures.
For a good crop, the correct banana varieties must be chosen Farmers take into account elements including disease resistance, market demand, flavor, and climate adaptation Vietnamese farmers frequently produce Cavendish, Lady Finger, and Lacatan types of bananas Farmers prepare the site after choosing the type by mowing the lawn, pulling weeds, and making sure the soil is suitable for banana development. This covers things like sufficient soil aeration, drainage, and nutrient availability.
It's crucial to use proper planting and propagation techniques to grow strong banana plants Bananas may be multiplied by farmers using tissue culture or suckers Young branches, called suckers, grow from the mother plant's base To grow fresh banana plants, they are split off and planted Using tiny plant tissue samples, tissue culture propagation creates disease-free, genetically homogeneous banana plants that provide consistent quality and a high yield.
The fertility and health of the soil are maintained by good soil management measures.Organic matter, like compost or manure, is added to the soil by farmers to enhance its structure, nutritional content, and moisture retention Frequent soil testing enables targeted fertilizing by identifying nutrient deficits Long-term soil health and sustainable output are influenced by balancing nutrient inputs and employing sustainable agricultural techniques.
Banana farming depends heavily on irrigation and water management since the crop needs consistent and sufficient watering Depending on the climate and the soil's ability to retain moisture, farmers employ various irrigation systems, such as drip irrigation, sprinkler irrigation, or furrow irrigation Effective water management techniques ensure that the banana plants grow and develop to their full potential by conserving water, reducing runoff, and avoiding waterlogging.
The management of pests and diseases is essential to farming The use of biological control agents, crop rotation, and, when necessary, the targeted application of pesticides are all integrated pest management approaches that farmers utilize. Nematodes, weevils, and aphids are a few pests that may be managed via vigilance and early discovery In order to avoid or lessen the effects of illnesses like Fusarium wilt and Black Sigatoka, adequate sanitation is a key component of disease management.
Regular pruning and de-suckering are done to keep plants healthy and increase fruit yield In order to encourage the growth of the primary fruit-bearing plant, pruning entails removing old leaves, unhealthy portions, and superfluous suckers De- suckering entails eliminating excessive stems These procedures increase plant vigor overall and boost airflow and light penetration.
The management of bananas after harvest is also essential to preserving their quality and shelf life The fruit is normally harvested when it reaches the optimum level of ripeness To avoid bruising and damage during shipping, careful cutting, handling, and packaging procedures are used Bananas can be kept in cold storage or under regulated conditions to increase their shelf life and maintain their quality while being exported.
Vietnamese banana farmers may produce high-quality bananas that satisfy international standards, customer preferences, and sustainability needs by implementing these agricultural strategies and methods The success of the banana sector as a whole is a result of ongoing research, information exchange, and training initiatives that improve farming techniques.
In Vietnam, controlling pests and diseases is essential to the production of bananas. Pests and illnesses that might negatively impact banana output and quality are prevented and controlled by farmers using a variety of tactics and procedures A common strategy is integrated pest management (IPM), which integrates a variety of insect-control techniques to reduce the need for synthetic pesticides Farmers put an emphasis on prevention through social norms, including hygiene, crop rotation, and eradicating insect habitats To naturally manage pest populations, they also employ biological control agents such as beneficial insects and microbiological agents Given their possible effects on the environment and human health, chemical pesticides are only employed sparingly and when absolutely required.
Disease-resistant cultivars are essential for controlling banana diseases Farmers choose and cultivate cultivars that show tolerance or resistance to the common illnesses in their area As a result, there is a lower chance of infection and less need for chemical treatments To stop the spread of disease, sanitation techniques are encouraged Farmers keep a clean growing environment and remove and discard any sick plant debris Cleanliness practices decrease disease inoculum and stop illnesses from spreading to healthy plants.
Cultural customs aid in the management and prevention of illness To stop the spread of disease and lessen pathogen development in the soil, crop rotation is used Plants should be spaced apart sufficiently to allow for ventilation and prevent the spread of diseases To reduce the spread of disease, farmers also concentrate on weed management and the removal of sick plant portions Early pest and disease identification in banana crops depends on routine monitoring In order to intervene quickly and stop the development of the illness, farmers regularly monitor plants for indications of infestation or disease symptoms.
Effective pest and disease control is based on ongoing research and knowledge exchange Farmers engage with agricultural specialists and research organizations and actively participate in training programs These programs offer the most recent information on identifying, tracking, and controlling pests and diseases Farmers may respond proactively and create effective management plans by staying updated about new pests and illnesses thanks to ongoing research.
In order to effectively control pests and diseases, regulations must be followed. Regarding the use of pesticides and residue restrictions, farmers follow national and international regulations Bananas that are in compliance with standards are safe, of high quality, and continue to have access to markets despite stringent import restrictions Vietnamese banana farmers may reduce crop losses, raise yield and quality, and promote ecologically friendly and sustainable agricultural methods by putting these pest and disease control techniques into effect.
Vietnamese banana exports depend heavily on logistics and transportation to get their produce to other markets quickly and effectively The maintenance of banana quality and freshness, meeting delivery schedules, and meeting customer requests all depend on efficient management of transportation and logistical systems When considering the logistics and transportation of banana exports, a number of aspects are involved.
Environmental Factors
2.3.1 Climate and geographical suitability for banana cultivation
Vietnam has environmental and geographical circumstances that are conducive to banana development These trees are typically grown on garden plots, and in riverbanks and thrive on alluvial soil, suitable for Vietnam’s hot, humid, and rainy climate The country's heat and humidity, portrayed by high temperatures and bountiful precipitation, give an optimal condition for the development of bananas
Banana-cultivated land represents 19% of the total area of fruit trees, with an output of 1.4 million tons In Central and Southern Vietnam, there are numerous areas with enormous banana land like Dong Nai, Soc Trang, Ca Mau, Thanh Hoa, Quang Tri, and Khanh Hoa with banana land from 3,000 to 8,000 ha; In the North, there are Hanoi, Phu Though, Hung Yen
The different geography of Vietnam, including seaside fields, highlands, and waterway deltas, further adds to the adaptability of banana development.
In the southern districts of Vietnam, especially the Mekong Delta, the environment is described by high moistness and a long developing season, which are good for banana creation The temperature goes from 25 to 30 degrees Celsius consistently, giving the essential warmth to ideal development The district gets huge precipitation,guaranteeing a sufficient water supply for banana plants With the riverside alluvial soil that is suitable for banana trees, Hanoi has verified that this is one of the critical yields for exporting activities, bringing high values for farmers.
In the central areas of Vietnam, for example, the Lam Dong region, the cooler environment, and higher elevation facilitate reasonable circumstances for developing bananas too The cooler temperatures joined with very much depleted soils add to the development of bananas with unmistakable flavor profiles.
The rich soils found in various pieces of Vietnam, for example, alluvial soils in the Mekong Delta and volcanic soils in the high countries, support the supplement prerequisites of banana plants These soils are plentiful in the natural matter and minerals, adding to banana manors' general well-being and efficiency.
Vietnam's geological area likewise is critical in its reasonableness for banana development and commodity The closeness to different global business sectors in Asia, including China and other Southeast Asian nations, considers proficient transportation and diminishes strategic difficulties.
2.3.2 Environmental sustainability practices in banana production
There are numerous factors that impact the adoption of sustainability practices A few figures normally found in past examinations connected with the adoption of sustainability practices can be gathered into 2 groups: (1) socioeconomic factors of farmers including age, education, farming experience, perception, income, land ownership, researching behaviors, etc; (2) Behavioural control factors such as perception towards new technologies and access to resources.
Environmental sustainability practices have a significant part in banana creation, adding to the general manageability of the business In Vietnam, endeavors are being made to execute agricultural sustainability practices to limit the environmental effect of banana development One key perspective is the reception of environmental- friendly cultivating procedures, like organic farming or pest control These practices are expected to lessen the dependence on substance pesticides and composts, subsequently limiting soil and water contamination.
Furthermore, the proficient utilization of water assets through dribble water system frameworks and water protection estimates mitigates water shortage and advances practical water for the executives in banana estates In addition, the protection of biodiversity is underscored through the assurance of normal natural surroundings, the safeguarding of local species, and the advancement of agroforestry rehearses that improve biological variety Supportable land the executive's methods, like soil disintegration counteraction and reforestation endeavors, are additionally being carried out to safeguard soil wellbeing and keep up with long haul efficiency By focusing on ecological manageability rehearses, the banana send-out industry in Vietnam could not just satisfy global guidelines and affirmations at any point yet additionally add to the safeguarding of the typical habitat and advance the drawn-out suitability of banana creation.
Efforts to enhance banana farmers’ adoption of sustainable agricultural practices should be focused on improving sustainable agricultural perception, especially the perception of the application of inputs as well as enhancing knowledge and skills of market access and production cooperation Moreover, extension courses should be implemented more to improve farmers’ knowledge and skills in terms of sustainable agricultural practices.
2.3.3 Impact of climate change on banana production and exports
Climbing temperatures can unfavorably affect banana development Bananas flourish in unambiguous temperature reaches, and deviations from these ideal circumstances can adversely affect their development and efficiency Higher temperatures can prompt expanded plant pressure, influencing photosynthesis, supplement take-up, and in general plant well-being Outrageous intensity can likewise improve the probability of intensity stress-related messes, for example, natural product burn from the sun or shriveling, which can lessen crop quality and market esteem.
Changes in precipitation designs related to environmental change can likewise affect banana creation Modifications in precipitation force, recurrence, and dispersion can upset the water equilibrium of banana ranches Inordinate precipitation can prompt waterlogging, root decay, and expanded weakness to illnesses, while delayed dry seasons can cause water pressure, diminished yields, and more modest measured organic products These vacillations in precipitation examples can disturb the ordinary stock of bananas for trade, influencing market soundness and unwavering quality.
Moreover, environmental change can impact the occurrence and seriousness of vermin and sicknesses that influence banana crops Higher temperatures and changing precipitation examples can make better circumstances for the multiplication of nuisances and the spread of illnesses, like Panama sickness and Dark Sigatoka These variables can build the requirement for bug control measures, including the utilization of pesticides, which might have suggestions for the supportability and ecological effect of banana creation.
Government Support and Initiatives
2.4.1 Role of government policies and Incentives
One key policy is the Agricultural Restructuring Plan, which centers around improving the intensity and supportability of the rural area This plan incorporates measures to further develop creation strategies, upgrade the framework, and foster excellent banana assortments that satisfy worldwide guidelines The public authority's accentuation on farming rebuilding gives a good climate to banana export by working with modernization, development, and proficiency in the business.
Another critical arrangement is the exchange advancement and market access drives attempted by the public authority Vietnam has effectively participated in reciprocal and multilateral economic accords, like the Exhaustive and Moderate Understanding for Trans-Pacific Partnership (CPTPP) and the European Union-Vietnam Free TradeAgreement (EVFTA) These arrangements have brought about diminished exchange boundaries, brought down duties, and further developed market access for Vietnamese banana exporters By extending open market doors and establishing a better exchange climate, these strategies add to the development of the banana trade.
The public authority likewise gives monetary and non-monetary motivators to help the banana exporting industry For example, there are awards and endowments accessible for banana ranchers and exporters to put resources into current cultivating strategies, framework advancement, and post-reap offices These motivating forces expect to work on the quality, efficiency, and seriousness of Vietnamese bananas in the worldwide market Also, the public authority offers help with getting essential affirmations and consistence with worldwide guidelines, which is urgent for getting to specific business sectors with stricter import prerequisites.
2.4.2 Support for research and development
One illustration of help for innovative work is the foundation of farming exploration establishments and focuses in Vietnam These foundations center around leading logical examinations, tests, and preliminaries to further develop crop efficiency, infection obstruction, post-reap dealing with methods, and in general nature of bananas They frequently collaborate with nearby ranchers, exporters, and industry partners to distinguish difficulties and foster imaginative arrangements.
Furthermore, the public authority and related organizations offer monetary help as awards, appropriations, and examination financing for rural exploration projects. These assets empower analysts to investigate new development strategies, foster supportable practices, and present cutting-edge innovations for banana creation For example, monetary help might be accommodated investigations on productive water system frameworks, bug, and sickness the board procedures, or the improvement of new banana assortments that are more qualified for trade.
Moreover, scholastic establishments and colleges in Vietnam add to innovative work endeavors by directing examinations on different parts of the banana exporting industry Specialists and understudies center around dissecting market patterns, recognizing shopper inclinations, and investigating potential product objections They additionally concentrate on inventory network strategies, post-collect taking care of methods, and bundling developments to upgrade the intensity of Vietnamese banana trades.
2.4.3 Promotion of international trade and export assistance programs
One illustration of the advancement of the global exchange program in Vietnam is the Market Access Support Program (MASP) MASP is intended to help Vietnamese exporters in recognizing and getting to global business sectors by giving them market data, exchange advancement exercises, and backing in gathering exporting prerequisites Through MASP, exporters gain experience in target markets, exchange guidelines, customer inclinations, and patterns, which empowers them to foster successful commodity techniques.
Also, Vietnam has effectively taken part in different product help programs started by global associations like the World Trade Organization (WTO) and the International Trade Centre (ITC) These projects offer limited building studios, specialized help, and preparation to improve the commodity abilities of Vietnamese organizations For example, the ITC's Commodity Quality Administration program upholds Vietnamese exporters in further developing item quality, satisfying global guidelines, and conforming to sterile and phytosanitary guidelines, pivotal for effective banana trades.
To feature the effect of these commodity help programs, we should think about certain information As per the Overall Branch of Vietnam Customs, the worth of Vietnam's banana trades has been consistently expanding lately In 2020, Vietnam traded roughly209,000 tons of bananas, producing an income of around $107 million This advancement can be credited, somewhat, to the assistance given by convey assist programs, which with assisting Vietnamese exporters with investigating trade preventions, accessing new business areas, and meeting the quality and regulatory necessities of acquiring countries.
Gravity Model
The purpose of this essay is to analyze the factors that influence banana exports from Vietnam to various countries and to understand the dynamics of the banana export industry in Vietnam To achieve this, we will employ the gravity model, which is a widely used framework in international trade analysis.
The gravity model is based on the principle that trade flows between countries are influenced by factors such as economic size, distance, and trade costs It provides a useful framework to examine the determinants of trade and understand the patterns and drivers of exports.
By applying the gravity model to the analysis of banana exports from Vietnam, we aim to identify and evaluate the factors that significantly affect the export performance of Vietnamese bananas Specifically, we will investigate the role of population, GDP, tax rates, and production levels in shaping the volume and direction of banana exports.
Population is a crucial factor as it represents the potential consumer base and demand for bananas in importing countries GDP reflects the economic strength and purchasing power of a country, which can influence its ability to import and consume bananas Tax rates can impact the cost of importing bananas and affect competitiveness in the global market Lastly, production levels in both Vietnam and the destination countries can determine the availability and supply of bananas.
By examining the relationship between these factors and banana exports, we can gain valuable insights into the key drivers of Vietnam's banana export industry This analysis can provide policymakers, industry stakeholders, and market participants with a better understanding of the factors that contribute to the success and growth of banana exports, and inform strategies to enhance Vietnam's competitive position in the global banana trade.
Overall, the utilization of the gravity model allows us to explore the various factors influencing banana exports from Vietnam and provides a quantitative framework to assess their impact Through this analysis, we aim to deepen our understanding of the dynamics of the banana export industry and contribute to the broader discourse on international trade and agricultural economics.
A key factor that might reveal information about the potential for exports is population The demand for products and services inside a nation's boundaries is directly influenced by the number of its people Generally speaking, a higher population means a greater need for food items, especially agricultural products like bananas A sizable market formed by a sizable population provides the opportunity for exporters to satisfy the escalating demand.
Population size also affects food choices and consumption habits Bananas and other readily accessible food products like them are frequently in higher demand in densely populated places, particularly metropolitan centers The demand for these commodities rises as populations rise, giving exporters the possibility to meet changing consumer demands.
Population expansion may aid in the development of the economy in addition to consumption habits There is a commensurate requirement for housing, economic opportunities, and infrastructure development as people grow Rising salaries and more population purchasing power may result from this rise As a result, nations with bigger populations could have a greater ability to import products, such as bananas, presenting the potential for export for nations like Vietnam.
Population density has an impact on market potential from a trading standpoint.
A greater population offers exporters a wider market base to draw on Exporters can gain economies of scale, maximize output, and enhance sales volume by satisfying the needs of a sizable population This might increase profitability and support the expansion of the exporting sector as a whole.
Moreover, a country's trade balance may be impacted by its population size A nation may need to rely on imports to meet its domestic demand for some products when it has a high population but few agricultural resources or production facilities Exporting nations, like Vietnam, have a chance to provide these items, like bananas, and contribute to meeting the import needs of populous countries.
Although population size has a significant role in determining export potential, success in exporting depends on a variety of criteria Infrastructure, trade rules, market accessibility, competition, and product quality all play crucial roles in determining the success of an export Thus, it is essential to do a thorough market study and comprehend the distinctive characteristics of each target market.
Vietnam's banana export potential to those particular markets is highly dependent on the capabilities of the importing nations Demand for imported bananas, especially those from Vietnam, is directly impacted by the amount of output in the importing nations.
Since the banana-importing nations' internal production capability is smaller, they are more dependent on imports to satisfy their need Under such circumstances, Vietnam can take advantage of the chance to export more bananas in order to meet the demands of the importing nations thanks to its strong banana-producing capabilities Vietnam is able to establish itself as a trustworthy supplier and obtain a competitive edge in those markets because to the availability of a sizable surplus for export.
On the other side, the importing nations' dependency on imports may be diminished if they have a stronger local production capability for bananas Vietnam's ability to export goods to certain markets under this situation could be constrained The capacity of the importing nations to satisfy their own demand through local production may reduce the requirement for large amounts of banana imports from Vietnam.
Analysis Of Empirical Results
Based on the regression results you provided for the gravity model of trade, let's analyze the findings:
● Population: The coefficient for population is estimated to be 0.0001711 with a standard error of 6.68e-06 The t-value is 25.61, indicating that population has a highly significant positive effect on exports This suggests that as the population of a country increases, its exports tend to increase as well.
● Tax: The coefficient for tax is estimated to be 9661.909 with a standard error of 12798.77 However, the t-value is 0.75, and the p-value (0.472) is greater than 0.05, indicating that tax is not statistically significant in explaining exports. Therefore, changes in tax rates do not appear to have a substantial impact on exports in this model.
● Production: The coefficient for production is estimated to be 0.0086998 with a standard error of 0.0133548 The t-value is 0.65, and the p-value (0.533) is greater than 0.05, suggesting that production is not statistically significant in explaining exports Therefore, changes in production levels do not seem to have a significant impact on exports in this model.
● GDP: The coefficient for GDP is estimated to be -2.13e-09 with a standard error of 3.50e-10 The t-value is -6.10, and the p-value is 0.000, indicating that GDP significantly negatively affects exports This implies that as GDP increases, exports tend to decrease It's important to note that the magnitude of the coefficient is very small, so the practical significance of this effect may be limited.
● Adjusted R-squared: The adjusted R-squared value is 0.9874, indicating that the model explains approximately 98.74% of the variation in exports, suggesting a high level of explanatory power.
Overall, based on the provided results, population appears to be a significant driver of exports, while tax and production do not show significant relationships with exports.
GDP, on the other hand, has a statistically significant negative effect on exports,although the magnitude of this effect is small These findings can help understand the factors influencing trade flows in the context of the gravity model.
CONCLUSION AND RECOMMENDATIONS FOR VIETNAM
Conclusions
3.1.1 Major Drivers Of Banana Export In Vietnam
First, consumer trends and preferences are the primary drivers of Vietnam's banana exports to other countries Vietnamese exporters must understand these trends in order to meet customer demands and maintain a competitive advantage on the global market.
Second, bilateral and multilateral trade agreements have a significant impact on Vietnam's banana exports, affecting market access, taxes, regulatory standards, and general trade dynamics These agreements have a significant impact on the trading climate and prospects for Vietnamese exporters To successfully negotiate the global banana market, it is critical to understand the effects of bilateral and multilateral trade agreements.
Third, tariffs, quotas, and non-tariff barriers have a significant impact on Vietnam's banana exports because they affect market access, trade costs, and legal compliance. Vietnamese exporters must understand these trade restrictions in order to navigate the international market and remain competitive.
Vietnamese banana exports also rely heavily on logistics and transportation to reach other markets quickly and efficiently The preservation of banana quality and freshness, as well as meeting delivery schedules and customer requests, are all dependent on the efficient management of transportation and logistical systems.
In addition, the climate and geographical conditions in Vietnam are ideal for banana cultivation The country's tropical climate, characterized by high temperatures and abundant rainfall, is ideal for banana cultivation Vietnam's varied topography, which includes coastal plains, highlands, and river deltas, adds to the versatility of banana cultivation.
Last but not least, the Vietnamese government recognizes the importance of the banana industry and has taken a number of steps to promote its expansion They include financial assistance to farmers, advancement of banana crop research and development, and improvements to infrastructure in banana-growing areas The government's assistance is intended to boost output, improve banana quality, and ensure the sector's long-term growth.
3.1.2 Room For Growth In Global Banana Market
Vietnam has a lot of room to grow in the global banana market Vietnam is currently the world's 14th largest banana exporter, accounting for only a small portion of the global market Several factors, however, suggest that Vietnam has the potential to increase its market share in the coming years:
- Rising demand: Banana demand is expected to rise further in the coming years, particularly in emerging markets such as China and India Vietnam now has a significant opportunity to increase its banana exports to these markets.
- Increasing production capacity: Vietnam has been investing in expanding its banana production capacity, with a focus on improving yields and quality As a result, Vietnamese bananas are more competitive in the global market.
- Diversification: Vietnam has been expanding its banana variety offerings, which now include Cavendish, Lady Finger, and Red bananas This diversification has contributed to Vietnamese bananas becoming more appealing to a broader range of consumers.
- Trade agreements: Vietnam has signed several trade agreements that open up new markets and lower trade barriers The recently signed Comprehensive andProgressive Agreement for Trans-Pacific Partnership (CPTPP), for example,grants preferential access to key markets such as Japan and Canada.
- Government assistance: The Vietnamese government has actively supported the development of the banana industry by offering incentives and assistance to farmers and exporters This support is expected to continue, creating favorable conditions for the industry's growth.
Overall, these factors indicate that Vietnam has a lot of room to grow in the global banana market Vietnam has the potential to become a major player in the global banana trade with continued investment in production and infrastructure, as well as government support.
Recommendations For Vietnam
By focusing on several key areas, Vietnam has the potential to expand its banana market globally These include expanding market access through trade agreements and partnerships, increasing production capacity, improving quality and consistency, and diversifying varieties.
Investing in new technology and infrastructure is one way for Vietnam to increase production capacity This could include using advanced irrigation systems, modern farming methods, and developing new banana varieties that are more suited to local conditions By taking these steps, Vietnamese farmers will be able to increase yields while decreasing costs, making them more competitive in the global market.
Another critical area for Vietnam to focus on is quality and consistency This can be accomplished by implementing stringent quality control measures at every stage of the supply chain, from farming to packing and transportation Vietnamese exporters can build a strong reputation for dependability and consistency by ensuring that bananas meet international quality standards, which is critical for long-term success in the global market.
Diversifying banana varieties is also important for Vietnam's global market expansion.Currently, the country primarily produces Cavendish bananas, but other banana varieties are popular in various markets around the world Vietnamese exporters can expand their customer base and enter new markets by producing a wider variety of banana varieties.
Expanding market access is also critical for Vietnam's global banana market expansion Several trade treaties have been signed by the country, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which grants preferential access to key markets such as Japan and Canada Vietnam can continue to work on strengthening trade ties with other countries in order to increase market access and lower trade barriers.
Finally, strong partnerships with other industry players can assist Vietnam in expanding its global banana market Working with international retailers to develop new marketing strategies or collaborating with other banana producers to share knowledge and resources could be examples of this Vietnamese exporters can expand their reach in the global banana industry by working together to enter new markets.
To summarize, expanding the global banana market requires a collaborative effort from all industry players in Vietnam Vietnamese exporters can capitalize on the growing demand for bananas around the world by increasing production capacity,improving quality and consistency, diversifying varieties, expanding market access,and developing strong partnerships.
Nguyen, T T., Nguyen, H T., & Nguyen, T T (2020) Overview of the banana industry in Vietnam Journal of Agriculture and Rural Development, 18(2), 111-122.
Thanh, N T., & Tuyen, N T (2018) The development of Vietnam's banana industry: Opportunities and challenges Agriculture and Forestry, 64(4), 7-14.
Nguyen, T T., & Nguyen, H T (2019) Banana exports from Vietnam: Challenges and prospects Agricultural Economics and Rural Development, 16(2), 93-106.
Le, T T., Nguyen, T H., & Tran, T T (2017) Factors affecting the competitiveness of banana production in Vietnam: A case study in Tien Giang Province Vietnam Journal of Agriculture and Rural Development, 11(2), 49-58.
Pham, T H., & Hoang, T H (2021) The role of smallholder farmers in the banana value chain in Vietnam Journal of Asian Agriculture and Development, 18(2), 1-15.
Real Farm (n.d.) Banana Trees Can Bring in Billions of Dollars If They Make Good Use of Every Part.
Nguyen Van Thanha, Chinawat YapwattanaphunBanana Farmers (2015) Adoption of Sustainable Agriculture Practices in the Vietnam Uplands: the Case of Quang Tri Province Agriculture and Agricultural Science Procedia 5.
Thuy Le Toan, Nguyen Huu, Michel Simioni, Hoa Phan, Hironori Arai, et al Agriculture in Viet Nam under the impact of climate change 2021.
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