by Hao P. Phan
As Vietnam shares a long in-land border with China, cross-border agricultural trade between the two countries come in two interlinked forms: formal and informal. Informal trade is more popular due to its lower tax, simple exporting procedures at the Vietnamese border stations and relaxed terms (no prior contracts are required when their products are transported to the Chinese border markets)[1]. The export of dragon fruit and other tropical products such as watermelon, jackfruit and durian, despite the encouragement of Vietnamese government to convert to formal basis, is dominated by Vietnamese small farm owners who would prefer to operate informal trade at the border markets.
As part of Chinese government’s strategy to control the widespread coronavirus, China declared a border closure for all imported products from Vietnam between 30/31 January and 5 February 2020[2]. The announcement was made before the Lunar New Year break and reviewed weekly. Vietnam, despite its close proximity to China, had less than 100 confirmed cases at that time. The border closure happened amidst of dragon fruit exporting seasons which resulted in thousands of tons of dragon fruits sitting idly in the containers at the border stations.
A complete border closure, however, was not implemented. On the 5th and 20th of February, the major border stations, Tan Thanh and Huu Nghi (Lang Son Province, northern Vietnam) were opened for Vietnamese exports to China. However, when the Vietnamese border stations first opened, only formal trade business was permitted, and all the drivers had to comply to the strict procedures of quarantine and coronavirus disinfection on both sides. The minor border stations were subsequently opened from the 24th of February to help Vietnamese farm owners (via their hired drivers) who don’t not have contracts with Chinese partners but need to transport their products into Chinese border markets to look for buyers. This followed the Chinese government’s decision as well as the urgent request by the local governments in two border provinces in Vietnam to loosen border restrictions and continue importing goods from Vietnam. Vietnamese drivers who crossed the borders to China, however, had to self-quarantine themselves for 7 days upon returning to Vietnam.
Although there were hundreds of containers of dragon fruits waiting at the parking lot of those major border stations, during the first few days after the border closure was lifted, only 11 containers (around 300 tons) were allowed to pass the border[3]. This only made up a small amount of dragon fruits expected to be exported to China in 2020. China has been the main importing market for agricultural products from Vietnam. Specifically, 70-80% of dragon fruits grown and harvested in Long An Province (Mekong Delta, southern Vietnam) has been exported to Wuhan-Hubei, the epicentre of coronavirus[4]. According to the Department of Industry and Trade in Long An Province, the amount of unsold dragon fruit in the late January and February 2020 was around 30 thousand tons, including 2,000 tons in the warehouse, and 28,000 tons being harvested soon[5]. This specific type of tropical fruit and supply areas, as such, have been seriously hit by the pandemic crisis.
The recent effects of coronavirus spread to agriculture and farm owners in southern Vietnam, through the case of dragon fruit export, could be highlighted from at least two aspects.
First, the pandemic crisis leads to an unexpected fluctuation of price which, in a long run, disrupts the whole value chain of dragon fruits. The border closure and the delay of export flows caused a plunge in dragon fruit price on the domestic market. Particularly, by early January, the price of dragon fruit dropped from 25,000 VND (1.1 USD) to 12,000 VND (0.5 USD) and even to 6,000 VND (0.3 USD) per kg[6]. This ‘eerie’ situation might have left some farm owners on the brink of bankruptcy as they could not get back their investment capital and/or had no savings for next season. To help Vietnamese farm owners to cope with potential financial loss, domestic enterprises, grassroots mass organisations and individuals stepped in by buying dragon fruits in bulk with acceptable prices and distributing to urban dwellers in the big cities like Hanoi, Ho Chi Minh City, etc…After the reopening of border markets on the Chinese side, however, the price of dragon fruit started to shoot up and peaked at around 40,000 VND (1.7 USD) per kg for red dragon fruit in February. Instead of selling their products to get back their initial investment, some farm owners chose to hold onto their products in hope to sell to Chinese buyers. The false demand for dragon fruits not only affected Vietnamese farm owners but also Vietnamese domestics buyers as they could not get the expected amount of goods without compromising with the high prices.
Second, the pandemic crisis exposes the weaknesses of Vietnamese agricultural system since there have been no linkages between producers (particularly small farm owners), distributors and consumers. Meanwhile, for products which are constrained by sell-by-date conditions, it is often unsustainable to over rely on informal cross border and Chinese buyers/distributors. The coronavirus crisis, interestingly, led to a number of business initiatives aiming to increase added value for raw agricultural products. Using dragon fruit to bake baguettes and using watermelon to make rice noodles tend to be two innovative ways to cope with unsold fruits and provide high-quality products for sales in Vietnam and eventually for exports to new markets like South Korea[7]. In fact, these new products, thanks to their unique taste, become very popular and are often highly praised by local people[8].
It is probably a good time for an agriculture-based economy like Vietnam to rethink informal cross-border trade and the export of raw agricultural products. In the case of Vietnam, producing more and exporting cheap raw products only for China – although it’s an expanding market – yet tends to be less reliable and sustainable. To survive in the era of uncertainty and post-pandemic time, there is a need to increase the production of high-quality processed goods and foster formal trade to other challenging markets in ASEAN and Europe.
[1] https://tuoitre.vn/nhieu-cho-bien-gioi-trung-quoc-dong-den-het-thang-hang-nong-san-cang-hep-cua-20200209221215224.htm
[2] https://trithucvn.net/kinh-te/mo-lai-cac-cap-cho-bien-gioi-viet-nam-trung-quoc.html
[3] https://tuoitre.vn/cua-khau-chinh-xuat-nong-san-da-mo-20200221075534127.htm
[4] http://vaas.org.vn/nong-san-trong-dich-covid-19-khong-the-chi-keu-giai-cuu-a19181.html
[5] http://baodansinh.vn/trung-quoc-thong-bao-lui-han-mo-cua-khau-them-20-ngay-2020020809162462.htm
[6]https://viettimes.vn/tac-dong-cua-covid19-doi-voi-nong-dan-385328.html
[7] https://baomoi.com/bun-dua-hau-pizza-banh-mi-thanh-long-tu-nong-san-giai-cuu-mua-corona-duoc-long-khach/c/34088457.epi
[8] https://www.businessinsider.com/coronavirus-vietnam-bakery-uses-66000-pounds-of-unsold-dragon-fruit-2020-3?r=US&IR=T
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Phan Phuong Hao
Hao P. Phan holds PhD from the School of International Development, University of East Anglia. She does research in Gender, Environment and Development. She's particular interested in and has applied a Feminist Political Ecology approach and Global Environmental Justice lens in her current research. She has published papers in both Vietnamese and English, and is an active member of the Asian Association of Women's Studies, Global Environmental Justice group, and Collective of Agrarian Scholars-Activists from the South (casasouth.org).