Green exports: an order winner for agricultural food processors

Although Vietnam has gained momentum in agricultural exports in recent years, reaching about $US40 billion per year and setting a record high of $US53.22 billion in 2022, many Vietnamese food processing companies have reportedly lost their orders to competitors due to slow implementation of sustainability commitments.

The EU is the world's largest fruit and vegetable import market, but Vietnam's market share only accounts for 0.18 per cent of the EU's total import value, partly due to failure to comply with stringent norms set by this region.

Generally, food production in Vietnam has yet to meet green growth requirements. At a past conference, Minister of Agriculture and Rural Development Le Minh Hoan highlighted the need to transition to a green food system with low emissions and said greening agriculture is not a burden but an opportunity.

How to start the greening process? This was one of the major questions raised in the recent Logistics and Supply Chain Management Forum at RMIT University Vietnam. Experts at the event shared findings from projects facilitating Vietnamese manufacturers and food producers in handling compliance with environmental regulations.

Ms Nguyen Thi Thanh An, Country Manager of the Australian Centre for International Agricultural Research (ACIAR) in Vietnam, highlighted the experience in supporting vegetables farmers in Moc Chau district to acquire Vietnamese Good Agricultural Practices (VietGAP) certification. The example showed how aiming for high-value distributors like the premium retailers in Hanoi can stimulate a sustainable impact on farming and processing.

Ms An said, “This success exemplifies the private sector’s role in enabling farmers to apply certified standards for high-value markets.”

The project provided technical and business training for farmers, empowering them to meet higher food quality standards from high-end retailers, resulting in a five-fold revenue increase.

“The vision sharing among champion farmers, local authorities, private businesses, research institutions, and development partners have significantly benefitted all stakeholders, especially smallholder farmers,” she added.

Mr Nguyen Viet Dung, Country Chief Executive of Bureau Veritas Vietnam, a world leader in testing, inspection, and certification, said the certification process provides opportunities for learning from the best practices of supply chain partners and adapting to higher international standards. This can enhance and promote the brands of Vietnamese agricultural products.

He re-emphasised the role of supply chain leaders in motivating farmers and food processing companies in adapting to global certification, citing the success of the carbon neutral project implemented in Vinamilk's dairy farms. The company’s farm in Nghe An is the first of its kind to receive a PAS 2060 carbon neutral certification.

Recent research published in the Journal of Supply Chain Management and Business Strategy and the Environment by RMIT University researchers Dr Nguyen Manh Hung, Professor Robert McClelland, Professor Mathews Nkhoma, Associate Professor Pham Cong Hiep, and their partners in Ireland and the UK, surveyed 437 manufacturers in seven countries. It indicates that exporting led to a proactive approach in handling customers’ green pressures and better sustainable measures. These findings highlight a practical approach for local firms to be exposed to more challenging markets and learn new standards, processes, and schemes.

Dr Nguyen Manh Hung, Senior Program Manager for Logistics and Supply Chain Management at RMIT Vietnam said, “When all companies strive to compete on costs, quality, and delivery, being green can help a company win sales orders and achieve a competitive advantage in the marketplace.

“Meeting environmental regulations and satisfying higher sustainable requirements are essential in business strategy development and an appropriate thing to do since they are often not a choice but are imposed by the realities of a circular economy.”

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