CHAPTER 2: SITUATION ANALYSIS OF VIETNAMESE AGRICULTURAL PRODUCTS’
2.1.2. Analysis of micro environmental factors
In 2021, trade from all countries outside the EU in agricultural products accounted for 8.1% (equivalent to €347 billion) of total international trade from the rest of the world. With imports taking up to €150 billion, EU trade in agricultural products more than doubled, reaching an average annual growth of 4.8 % in the timeframe of 2020- 2021. The EU imported 138 million tons of agricultural products in 2021
EU imports of agricultural products were mainly from Brazil (9%, €13.4 billion) and the United Kingdom (9%; €13.0 billion), the United States (6%; €9.3 billion), Norway (5%; €7.3 billion), China (5%; €6.9 billion) and Ukraine (5%; €6.9 billion;
mainly vegetables and oils and fats) (Eurostat, 2022b).
Diagram 1.1: Extra-EU (countries outside of the EU) exports and imports of agricultural products by main partners, 2021 (in shares and million Euro)
Source: Eurostat (2022b) Brazil is the single biggest exporter of agricultural products to the EU. The imports from Brazil are dominated by primary products, in particular foodstuffs, beverages and tobacco products, followed by mineral products and vegetable products (13%) equivalent to €8 billion. Brazil is considered to be the largest source of EU’s vegetable products imports (Eurostat, 2022b). In 2020, Brazil was the second largest exporter of vegetable products in the world and this was the second most exported product in Brazil (OEC, 2020a).
With the United Kingdom, it is both the EU's largest export destination (22 %) with the value of €24 billion, and the largest import origin (15 %) worth €7 billion of foodstuffs. Though having left the EU on January 31st, 2020, the UK still continued to be the EU's important trading partner as it is the third biggest trading partner (12.6%), after the United States and China. The UK has a leading food industry with the nation’s food and farming contributes USD 156.42 billion to the UK economy annually according
to the UK’s (Food and Drink Federation, 2020). Wrapping up the year 2020, the UK exported $18.3 billion in food products, making it the twelfth largest global food exporter and making food products the eighth most exported product in the United Kingdom. In 2020 alone, United Kingdom exported $3.16 billion in vegetable products with the main destinations being Ireland ($681 million), Netherlands ($370 million), France ($213 million), Germany ($198 million), and Nigeria ($151 million). The UK agriculture sector is highly integrated with the EU as before Brexit, the UK agriculture sector received
$46.5 billion from the EU's Common Agricultural Policy (CAP) between 2010 and 2019 (DEFRA, 2021).
The United States has the largest bilateral trade and investment relationship and the most integrated economic relationship in the world with the EU. In 2020, the United States was the largest exporter in the world in terms of vegetable products with a total turnover of USD 71.7 billion (OEC, 2020b). US exports of agricultural and food products totaled USD 177 billion in 2021, exceeding the total of 2020 by 18%, and surpassing the record set in 2014 by 14.6%, according to US Department of Commerce data. The top five US agricultural and related products exported to the European Union by the United States are tree nuts, soybeans, forest products, fish and fish products ($1.0 billion), and distilled spirits. As one of the biggest economies and one of the most influential countries in the world, the U.S. is bound to pose difficulties for Vietnam’s attempts to further penetrate the EU’s agricultural products market.
Before the invasion of Russia by March, 2022, Ukraine was supplying almost half of the country’s cereals and vegetable oils as well as 25% of the poultry meat consumed to the EU when it came to the agri-food sector. Quoting the European Parliamentary Research Service (2022), Ukraine exported more than 40% of its goods to the EU, making the EU the country's main trading partner. Of the 1.0 % of EU goods originating in Ukraine, 35.7% are agricultural products with the main being cereals, animal/vegetable fats and oils, oilseeds, edible fruits and nuts, meat and edible meat offal. However, with the climbing tension of the Russian war increasingly becoming
uncertain, the future of Ukraine’s agri-food trade has still to be assessed and this may be considered to be Vietnam’s opportunity to make a break to its agricultural products exports.
In addition to the above four countries, Vietnam also has to face many other competitors in the market such as Norway, China, Japan etc. all of which are developed countries in the world. As the EU is a prosperous market with many opportunities, competition here is inevitable with the rivals all having advantage points to succeed in this market. This is a big challenge for Vietnamese agricultural enterprises.
2.1.2.2. Consumers
The European Union demography displays a highly populated and culturally diverse population with 27 member states, as of 2021. The EU's population has grown relatively consistent with little changes over time and by January 1st, 2021, the population is about 447 million people (Eurostat, 2021). As a compilation of multiple countries and cultures, the EU market has a variety of demands and preferences when it comes to consuming goods. Although there are certain differences in customs and consumer markets between national markets in the EU, these countries are located in Western and Northern Europe, so they have similar economic and cultural characteristics.
In particular, it is of a distinct characteristic that EU consumers usually want to buy clean, safe and healthy food products as they are increasingly interested in sustainability, including traceability, social responsibility and environmental protection factors. Customers will give priority to the selection of products that are produced in an environmentally friendly manner, using green energy and ensuring benefits for consumers. According to Reg Leenes, International Business Marketing and Management consultant for the Center for the Promotion of Imports from developing countries (CBI), after 2020, 45% of Europeans over 50 years old will be willing to pay more to buy quality products, respectively. With the people’s growing consciousness about their health, climate change and the rise of veganism and vegetarianism, the EU is
witnessing growing demand for organic products and an expansion of plant-based products. Especially, EU rice production, which consists mainly of Japonica rice, is expected to decline slightly as EU rice production systems face difficulties in terms of weather conditions and land preparation for submerged crops, leading to a slight decline in sowing area (European Commission. Directorate General for Agriculture and Rural Development., 2021).
After the wake of COVID-19, across Europe, the countries are also witnessing significant change of course in shopping habits, food consumption and the way consumers cook and eat. It’s possible with the spread of the virus as well as its unpredictable variants, many of the changes may be lasting. Confirmed by Nuijten (2020), some of the changes may include enjoying a wide variety of food becoming an importance, the purchase of more local food, reducing unsustainable packaging and food waste etc.