European union market: Consumption trends, trade measures and solutions for vietnamese enterprises to enhance fruit and vegetable exportation

Nội dung text: European union market: Consumption trends, trade measures and solutions for vietnamese enterprises to enhance fruit and vegetable exportation

1. EUROPEAN UNION MARKET: CONSUMPTION TRENDS, TRADE MEASURES AND SOLUTIONS FOR VIETNAMESE ENTERPRISES TO ENHANCE FRUIT AND VEGETABLE EXPORTATION Ph.D Nguyen Thi Thu Thuy1 Abstract: The European Union Vietnam Free Trade Agreement (EVFTA) came into effect on August 1st, 2020 making Vietnam one of the countries in the Asia–Pacific region having EVFTA agreements with the EU. EVFTA is expected to create favorable conditions for Vietnamese businesses to expand export market, participating in the global value chain, global supply chain and global production network. For vegetables and fruits, when EVFTA took effect, about 94% of the total 547 tariff lines on fresh and processed vegetables and fruits to the EU have been reduced to 0%, including many fruits and vegetables Vietnam has comparative advantages. This brings great opportunities for enterprises producing and exporting fruits and vegetables to EU market. This paper aims to analyse consumption trends on fruits and vegetables, indentify EU regulations on imported fruit and vegetable products and the degree of satisfaction of Vietnamese enterprises, and then suggests some recommendations to help fruit and vegetable export enterprises improve their performance in EU market. Key words: EVFTA, fruit and vegetable, export, enterprises. 1. INTRODUCTION The EU is currently one of the leading trading partners of Vietnam with two–way trade turnover reaching 56.45 billion USD, of which exports reaching 41.5 billion USD in 2019. The EU's economy is quite stable and on the rise. The European Union Vietnam Free Trade Agreement (EVFTA) came into effect on August 1st, 2020 making Vietnam one of the countries in the Asia–Pacific region, along with Korea and Singapore having EVFTA agreements with the EU. EVFTA is expected to create favorable conditions for Vietnamese businesses to expand export market, participating in the global value chain, global supply chain and global production network For vegetables and fruits, the EU and Vietnam are two complementary and mutually supportive markets. Vietnamese vegetables and fruits are mostly tropical, while the EU has strengths in temperate products. In 2019, Vietnam's fruit and vegetable exports to the EU reached a turnover of US $ 148 million, an increase of 28.5% compared to 2018. However, Vietnam's fruit and vegetable export only accounts for 0.08% of the total import demand of the EU showing the potential extendable of this market. EVFTA opens up a bright future for Vietnamese fruits and vegetables, which are at a disadvantage in price competition in the EU market Before the EVFTA took effect, Vietnamese fruits and vegetables exported to the EU enjoyed a preferential tax rate (GSP), but still at a rather high level (10–20%). When EVFTA took effect, about 94% of the total 547 tariff lines on fresh and processed vegetables and fruits to the EU have been reduced to 0%, including many vegetables and fruits, which are Vietnam's export strengths. Besides, EVFTA is different from previous FTAs, there are no restrictions on commodities and turnover, so there is no need to negotiate specific vegetables and fruits. Vietnam can export any type of 1 Hanoi University of Science and Technology. Email: Thuy.nguyenthithu@hust.edu.vn . 684
2. fruit and vegetable to the EU, as long as the items are made in Vietnam and meet the the required standards. This is a huge competitive advantage compared to vegetables and fruits from Thailand and China, when they do not have a free trade agreement with the EU. Fig. 1. Tariff elimination by the EU for Vietnam’s products Source: Eurostat (2019) However, the favorable conditions that EVFTA creates are mainly the benefits from the reduction of tariff lines, some adjustments of procedures towards increased transparency, flexibility and mainly in terms of enforcement. This may mean that the EU will more likely strengthen non– tariff measures as a major impediment to imports. The EU remains a fastidious market with strict regulations on technical barriers, pesticide residues, banned and restricted substances in fruits and vegetables. If violated, the enterprise will be returned the goods, causing damage not only to the enterprise, but also to the industry. Therefore, a careful examination of nature the barriers, the shortcomings and responsiveness of Vietnameses fruits and vegetables is essential to help fruit and vegetable producers and exporters have solutions to effectively utilize the incentives offered by the agreement. 2. TRENDS IN FRUIT AND VEGETABLE CONSUMPTION IN THE EU In general, vegetables and fruits consumption in Europe focuses on two main groups of fresh and processed fruits and vegetables. In some cases, these two markets interact in a positive direction, in other cases there is competition between these two markets. These two markets are now close to saturation, especially for fresh fruits and vegetables in the season of domestically produced. In recent years, the Netherlands, United Kingdom and Belgium are the leading direct importers of fresh fruit and vegetables from developing countries. The Netherlands and Belgium are major trade hubs for fresh produce from developing countries destined for other European markets. Meanwhile, Germany, France, United Kingdom, Belgium and the Netherlands are the largest importers of processed fruits and vegetables. Imports from developing countries in recent years account for more than 25% of the total EU import turnover. The EU market shows some major trends as follows: European consumers are becoming increasingly concerned about health and well–being. Currently, They are in the intentionally transition to consuming more fruit green vegetables instead of fatty foods. This is reflected in the increasing demand for healthy fruit and vegetable products such as superfoods, organic vegetables and products made from fruit or naturally fermented without artificial additives, non from concentrate juices (NFC), dried fruit and edible nuts, pickled vegetables, coconut products (especially coconut oil). Vegetables and fruits considered unhealthy such as processed fruit and vegetable products high in added sugar, and traditional juices decrease the proportion in the shopping basket of European. 685
3. European Public Health Agency also organizes campaigns to coordinate with supermarkets and media to encourage people to consume more fruits and vegetables. Consumers increasingly prioritize convenience. They are inclined to appreciate the ease of use and prefer convenient and products that require less processing such as juices, fruits and vegetables canned, picked, and processed. At the same time, convenience foods also bring obvious benefits to specific groups of customers such as infants, children, and the elderly. The trend is reflected in the popularity of smaller product packages such as freshly cut vegetables, grapes and other seedless fruits, and frozen vegetables. mixed with spices, herbs and sauces, ripe fruits like avocado, mango, and smoothies made in various ways. EU consumers tend to diversify in consuming fruit and vegetable products and flavors. Today, European consumers are more open to new experiences. This is explained by a number of reasons such as more and more Europeans traveling to distant places and discovering new flavors. The expansive influence of different ethnic cuisines in the European food industry also contributes to this trend. In addition, cooking programs such as 24 hour Kitchen, Chef King, Dinner at Presque Parfait, Jamie Oliver are increasingly popular motivating consumers to cook creatively using imported fruit and vegetables. This trend creates opportunities for exotic vegetables such as rambutan, longan, dragon fruit, new flavors of fruit juices such as rhubarb, quince, elderflower, and exotic fruit flavors such as mango, banana, passion fruit, cherry blossom; exotic fresh herbs, like Thai cilantro. For exotic fruits, the main target group in Europe is the Asian Overseas Community. Those customers generally purchases typical Asian products, including exotic fruits and vegetables through websites and Asian food markets. Fig. 2. European import values and volumes of fresh exotic fruits (non–European sources) Source: Eurostat (2020) EU consumers demonstrate a preference for sustainable supply chains: European consumers are increasingly concerned with the transparency of the production of vegetables they consume, and the sustainability of the supply chain is becoming increasingly important. Partly related to this trend is the expansion of the market for domestically grown fruits like apples, pears, grapes, peaches, berries even though the fruits are not perfect. To reduce fruit and vegetable wastes throughout the entire supply chain, food retailers also loosen their requirements for the size and shape of locally grown fruit. This has allowed for the sale of fruits that were previously rejected as "ugly" fruits. Regarding product prices, another important point is that European consumers are often very price sensitive between organic and conventional fruits and vegetables. They are willing to accept 10% higher price for high standard products. 686
4. 3. AN OVERVIEW OF VIETNAM'S FRUIT AND VEGETABLE EXPORTS TO THE EU 3.1. Exports turnover The EU is the world's leading importer of fruits and vegetables. Although the amount of imported fruits and vegetables from the EU accounts for about 50% of the world's import of vegetables and fruits, the amount of vegetables and fruits imported from Vietnam accounts for only a very small proportion, about 0.08% of the EU's imports. Among EU countries, Vietnam's main fruit and vegetable export markets are the Netherlands, Great Britain, France, Germany, Italy and Switzerland. In particular, the export to the Netherlands is ranked first, accounting for 5% of the total export turnover of vegetables and fruits in Vietnam in general. The import of agricultural products into the EU market is mainly through the Netherlands because the Netherlands is considered the gateway to the EU market for vegetables and fruits. Table 1. Fruit and vegetable exports from Vietnam to the EU by products Unit: USD Commodity Description 2015 2016 2017 2018 2019 Code 0701 Potatoes, fresh or chilled 54 7,637 0702 Tomatoes, fresh or chilled 18 2 10 0703 Onions, shallots, garlic, 185,340 24,744 43,536 56,308 34,626 leeks and other alliaceous vegetables, fresh or chilled 0704 Cabbages, cauliflowers, 2 1,112 36 45,967 52 kohlrabi, kale and similar edible brassicas, fresh or chilled 0705 Lettuce (lactuca sativa) and 2 6 11 chicory (cichorium spp), fresh or chilled 0706 Carrots, turnips, salad 36,619 34,711 62,925 137,537 4,458 beetroot, salsify, celeriac, radishes and similar edible roots, fresh or chilled 0707 Cucumbers or gherkins, 40 108 12,511 fresh or chilled 0708 Leguminous vegetables, 16,487 45,944 72,869 26,207 25,007 shelled or unshelled, fresh 0709 Vegetables; n.e.c. in 991,399 1,186,663 1,166,949 1,460,022 1,316,808 chapter 07, fresh or chilled 0710 Vegetables (uncooked or 4,870,041 5,784,060 6,544,052 5,831,583 6,400,205 cooked by steaming or boiling in water), frozen 687
5. 0711 Vegetables provisionally 4,139,481 4,608,408 3,601,135 2,425,624 3,521,460 preserved, e.g. by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions, but unsuitable in that state for immediate consumption 0712 Dried vegetables, whole, cut, 826,535 784,620 1,009,195 724,053 1,075,940 sliced, broken or in powder but not further prepared 0713 Dried leguminous 292,864 340,291 334,607 486,701 351,448 vegetables, shelled, whether or not skinned or split. 0714 Manioc, arrowroot, salep, 1,635,493 1,531,634 2,206,398 1,658,010 2,422,746 jerusalem artichokes, sweet potatoes and similar roots and tubers with high starch or inulin content, fresh 0802 Other nuts, fresh or dried, 724,693 76,509 1,340,846 4,248,265 5,314,378 whether or not shelled or peeled 0803 Bananas including plantains, 149,463 144,173 76,639 72,187 68,636 fresh or dried 0804 Dates, figs, pineapples, 517,903 738,752 974,503 1,031,119 1,166,425 avocados, guavas, mangoes, and mangosteens, fresh or dried 0805 Citrus fruit, fresh or dried 3,057,564 4,801,258 7,345,345 10,824,318 9,945,042 0806 Grapes, fresh or dried 3 2 0807 Melons (including 287,662 162,599 54,845 145,666 201,833 watermelons) and papaws (papayas), fresh 0808 Apples, pears and quinces, 156 fresh 0809 Apricots, cherries, peaches 174 323 (including nectarines), plums and soles, fresh 0810 Fruit, fresh; n.e.s. in chapter 8 16,587,569 19,513,504 21,963,338 25,361,653 31,073,375 0811 Fruit and nuts, uncooked or 14,399,918 16,721,381 16,547,496 15,404,035 16,379,287 cooked by steaming or boiling in water, frozen, whether or not containing added sugar or other sweetening matter 688
6. 0812 Fruit and nuts provisionally 2,412 2,615 19,843 174 preserved (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), but unsuitable in that state for immediate consumption 0813 Fruit, dried, other than that 427,151 207,255 1,696,329 551,271 400,472 of headings 0801 to 0806; mixtures of nuts or dried fruits of this Chapter 0814 Peel of citrus fruit or melons 46,831 45,830 59,033 94,449 55,156 (including watermelons), fresh, frozen, dried or provisionally preserved in brine, in sulphur water 2001 Vegetables, fruit, nuts and 3,149,452 2,561,753 1,679,788 2,051,183 3,087,443 other edible parts of plants, prepared or preserved by vinegar or acetic acid 2002 Tomatoes prepared or 30,149 2 461 preserved otherwise than by vinegar or acetic acid 2003 Mushrooms and truffles, 26,629 103,306 83,739 1,004 prepared or preserved otherwise than by vinegar or acetic acid 2004 Vegetables prepared or 1,379,954 758,249 1,344,772 1,272,397 1,391,328 preserved otherwise than by vinegar or acetic acid, frozen, other than products of heading no.2006 2005 Other vegetables prepared or 1,507,040 1,622,139 2,090,150 2,309,444 2,433,129 preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006 2006 Vegetables, fruit, nuts, fruit– 172,179 86,023 144,831 61,961 52,342 peel and other parts of plants preserved by sugar (drained, glace or crystallized) 2007 Jams, fruit jellies, 49,729 98,729 84,950 46,034 302,455 marmalades, fruit or nut puree and fruit or nut pastes, obtained by cooking, 689
7. whether or not containing added sugar or other sweetening matter 2008 Fruit, nuts and other edible 9,636,562 13,475,519 11,573,961 11,478,949 13,911,900 parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included 2009 Fruit juices (including grape 18,473,056 26,454,107 29,123,912 27,353,797 35,370,981 must) and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter. 3.2. Product structure In the period 2010–2019, the export turnover of tropical fruits and vegetables from Vietnam to the EU continued to grow due to the increasing demand for consumption. However, Vietnam still mainly exports fresh fruits and vegetables and semi–processed fruits and vegetables to the EU, while processed fruits and vegetables have been still limited. Low level of post–harvest technology and ineffectiveness of technology transfer to farmers are the fundamental reasons of the situation. Given the long geographical distance between Viet nam and targeted markets and high costs of transportation costs, the structure remains a disadvantages of Vietnam. Among the group of fresh fruits and vegetables exported to the EU region, fruit always has the highest export turnover. The main products exported to the EU are pineapples, dragon fruits, coconut meat, rambutan and mango. Pineapple products remained the item with the highest turnover, followed by dragon fruit. Besides, the export turnover of mango, copra, and rambutan has also increased rapidly in recent years. Below are some of the main fresh fruit and vegetable products and processed fruits and vegetables exported to the EU market. Fresh dragon fruit: The localities where dragon fruit grows the most are Binh Thuan, Tien Giang and Long An. Currently, Vietnam is the main supplier of fresh dragon fruits to this market. Israel and other South American countries are becoming Vietnam's main competitors due to the advantage of cheaper shipping costs compared to air freight if dragon fruit is imported from Vietnam. Canned pineapples: The Netherlands, Germany, and UK are the main pineapple import markets of Vietnam in the EU. However, the pineapple export turnover of Vietnam to the EU only accounts for a very small proportion of the total pineapple import turnover of this market. Most pineapple exporters in Vietnam said that this fruit export took place smoothly. The supply of pineapple is stable, the quality of pineapple is quite uniform, so the processing factories operate at full capacity during the harvest seasons. Currently, Vietnam mainly exports pineapple pieces in cans and cans to the EU. Instant mango: Currently, mango is one of the imported fruits having the highest growth rate in the EU market. Since the Europe cannot produce mango, it must be imported all year round from tropical 690
8. countries to serve regional consumption. This is also the main export item of Vietnam to some European countries, then re–exported to other European countries. The main exporting countries of mango are France, Portugal, UK, and Netherlands. The Netherlands is a re–exporter of mangos to Germany and France as well as to the UK, Belgium, and Norway. The amount of mango re–exports to Sweden and Norway has increased slightly in the past 10 years. Processed vegetables and fruit juices: Since Vietnam mainly exports raw fruits and vegetables in the past, the export market share of processed vegetables frozen or preserved by vinegar and fruit juice is rather limited. Meanwhile processed vegetables and fruit juices not only increase in value but also provide a competitive advantage, making it easier for the products to overcome technical barriers of the import market. This is because canned and frozen products often less subject to the same strict examination on food hygiene as fresh products. Vietnam is currently applying technical advances to preserve vegetables and fruits and investing to expand processed fruit and vegetables production to boost exports to the EU market. Tropical fruits and vegetables off–season still have great potential for growth, especially avocados and mangoes. This is also the opportunity and advantage that Vietnamese fruit and vegetable exporters need to grasp. With a humid tropical climate in the South to a temperate climate in the North, Vietnam can cultivate and provide more crops satisfying the requirements of EU market. 4. EU REGULATIONS ON IMPORTED FRUIT AND VEGETABLE PRODUCTS AND THE ABILITY OF VIETNAM ENTERPRISES TO MEET EU REQUIREMENTS 4.1. EU regulations on imported fruits and vegetables 4.1.1. Food safety and hygiene regulations Fruits imported into the EU market must conform to the standards of the The Codex Alimentarius Commission. The EU has regulated maximum residue levels (MRL) in and on foods in general and on fresh litchi and longan in particular. These products, if they contain more pesticide residues than allowed, will be forced to withdraw from the EU market. Table 2. EU food safety related documents and directives Object Document General Food Law Regulation Regulation (EC) 178/2002 Food hygiene, including hazard analysis and critical Regulation (EC) 852/2004; 853/2004; control points (HACCP) 854/2004 Maximum levels for certain contaminants in foodstuffs Regulation (EC) 1881/2006 Maximum residue levels of pesticides in or on food Regulation (EC) 396/2005 Microbiological criteria for foodstuffs Regulation (EC) 2073/2005 The EU General Food Law is considered as an important legal framework for food safety in the market. To ensure food safety and hygiene and to allow appropriate action to be taken in the event of food unsafe, food products must be traced throughout the supply chain and risks of infection need to be minimized. An important aspect of controlling food safety and hygiene hazards is the definition of critical control points (HACCP) through the enforcement of food management principles. Another important aspect is that food products are subject to official control regulations. Products considered unsafe will 691
9. be refused import into the EU market. In the Northwest European countries, the buyer's requirements are even higher than the official EU regulations. Maximum residue levels: Since September 2008, the EU has issued regulations to standardize the maximum residue levels permitted for use both in and on food products. Meanwhile, some supermarkets have increased their MRL level by 70% compared to the regulations. There are also EU fruit and vegetable importers allowing four drugs maximum for certain products. If the product uses more than four types, it will be rejected even if the usage level is lower than the specified standard. Among the EU countries, Germany is the one with the strictest regulations on this issue. Some other countries are also gradually lowering the level of use of plant protection drugs. EU Regulation (EC) No 1881/2006 sets forth maximum levels for certain contaminants in foodstuffs so as to keep them at levels which are toxicologically acceptable. This policy is regularly updated. In addition to limits for general foods, the regulation also sets limits on certain substances contained in certain products. Contaminants are substances that can occur during different stages of the process of growing, processing, packaging, transporting or storing goods. The most common substances found in processed fruits and vegetables include mycotoxins, heavy metals, bacteria, pesticides and foreign matter. For fresh fruit and vegetables, your main concerns will be the contamination of lead, cadmium and nitrate (mainly for spinach, lettuce and rucola). Table 3. The current limits for lead and cadmium in fresh fruit and vegetables (December 2019) Maximum level of lead: Fruit, excluding cranberries, currants, elderberries and strawberry tree fruit 0.10 mg/kg wet weight Cranberries, currants, elderberries and strawberry tree fruit 0.20 mg/kg wet weight Maximum level of cadmium: Vegetables and fruit, excluding root and tuber vegetables, leaf vegetables, 0.050 mg/kg wet weight fresh herbs, leafy brassica, stem vegetables, fungi and seaweed Root and tuber vegetables (excluding celeriac, parsnips, salsify and 0.10 mg/kg wet weight horseradish), stem vegetables (excluding celery); for potatoes, the maximum level applies to peeled potatoes Leaf vegetables, fresh herbs, leafy brassica, celery, celeriac, parsnips, salsify, 0.20 mg/kg wet weight horseradish and certain fungi (common mushroom, Oyster mushroom, Shiitake mushroom) Plant protection regulations: Fresh fruits and vegetables, when exported to the EU market, must comply with the EU legislation on plant protection(EC) No 1107/2009. The EU has introduced phytosanitary regulations to avoid the contamination and spread of organisms harmful to plants and plant products on the EU market. These regulations specify that certain organisms listed are not allowed to be imported into the EU, with a few exceptions. 4.1.2. Official controls on imported fruits and vegetables to EU market These controls are in place to ensure that all food imported into the EU market is safe, also means compliance with applicable product regulations. There are three different types of checks including document verification, labeling test and physical inspection. In the event that the EU continuously detects that specific products originating from a non-compliant country, the EU will exercise the control with high frequency or conduct the urgent measures. Control measures can be taken at all steps of product import and marketing in the EU market. However, most of the testing will be done at the destination when the product is imported into the 692
10. market. In addition, in this case, the product can only be imported under very strict conditions, such as a medical certificate and an inspection report. Products from countries continuously in violation of the regulation will be listed in Annex I of Regulation (EC) No 669/2009. Traceability: For an importer of fresh fruit and vegetables, traceability is a requirement. In order to meet this requirement, the EU importer will ask the exporter to provide proof of origin of all fresh fruits and vegetables. European consumers are increasingly concerned with transparency in the production of fruits and vegetables they consume, and supply chain sustainability is also becoming increasingly important. European importers also face increasing pressure from the retail chain due to the requirement for goods to be certified of Corporate Social Responsibility (CSR). Importers are therefore required to take a closer look at the environmental protection efforts and the implementation of social responsibilities by all supply chain members including oversea exporters like Vietnamese enterprises. 4.1.3. Regulations on product ingredients Products can be rejected by the buyer or the EU customs authorities in the event of no declaration, no authorization or a high content of foreign substances. The EU also has specific legislation for food additives (such as colorants, thickeners) and flavors that list electronic codes and substances permitted for use. In case businesses want to add vitamins in their products, they also need to know the types and sources of vitamins, and mineral formulas allowed. Legal regulations specify which ingredients and food additives are allowed in fruit juices and fruit jams, marmalade, sweet chestnut jam. For processed fruits and vegetables, businesses often encounter problems due to not declaring customs or the content of preservatives exceeding the permitted level. The most common problems are the use of sulfur as a preservative in coconut and dried fruit products, and the use of benzoic acid in some pickled vegetable products. Another common problem is not declaring or the content of food coloring in excess of the permitted level. 4.1.4. Labeling regulations EU legislation defines general and specific marketing standards for all fresh fruits and vegetables with regard to minimum quality and minimum ripeness. Fresh fruits and vegetables that do not have specific marketing standards will have to comply with the general marketing standards. The EU sets specific marketing standards for such the following fresh fruits and vegetables as apples, citrus fruits, kiwi fruit, lettuce, peaches and nectarines, pears, strawberries, bell peppers, grapes and tomatoes. These products must be accompanied by a certificate of conformity for each package. Consignments of products imported for processing purposes are not subject to EU marketing standards. However, on the packaging of the goods, it is necessary to state the phrase "intended for processing" or equivalent phrases. The label must provide consumers with information about the product's ingredients, the manufacturer, the method of storage and preparation. The carton containing fresh fruit and vegetables must contain the information including name and address of packer and carrier; name of the product if the product is invisible from the outside of the package; country of origin; classification and sizes according to marketing standards. Besides, with fruit juices and fruit jams, fruit extracts and sweet chestnut jam, there are specific regulations to ensure adequate information is provided to consumers. For quick–frozen foods, there are specific regulations on labels and quality. 4.1.5. Package Regulations Consumer packaging materials used for food such as cans or jars will be subject to the specific medical control regulations for ingredients that come into contact with food. Food packaging 693
11. materials must be manufactured in such a way that it is impossible to transfer constituents into the food in quantities that could endanger human health, alter the food composition in an unacceptable way, or spoil the taste of food. The EU Rules on food contact materials can be of general scope and it is not easy to prove to EU importers that imported fruit and vegetable products comply with all regulations. Consequently, EU food product importers generally require documentation of toxins and chemical risk assessments from materials that come into contact with food and/or claim of compliance. 4.2. The ability of Vietnam Enterprises to meet EU requirements Currently, there is still a large gap between the requirements of the EU market and the ability to satisfy of Vietnamese enterprises. Some businesses do not fully understand the EU market's regulations and procedures leading to non–compliance or incomplete compliance. As a result, delays, increased costs and lead to EU authorities apply the controls. 4.2.1. Quality standard requirements: GlobalGAP has become the minimum standard applied in some European supermarkets, especially in the Northwest European market. This suggests that growers and exporters also need to pay attention to cleaning and disinfecting equipment, containers, and means of transport. Meanwhile, the production process, especially post–harvest preservation of agricultural products in general, and vegetables and fruits in particular in Vietnam still has many shortcomings. The production system is still relatively fragmented, difficult to control and not qualified to meet the set technical standards. Currently, Vietnam's fruit and vegetable production applying VietGap standards has been relatively sucessful in the cultivation and production stages. Although aiming to standardize according to GlobalGAP, however, VietGAP standards are not equivalent to GlobalGAP and therefore do not meet the requirements of many European customers. To expand export markets, Vietnamese businesses must apply GlobalGAP or EuroGAP. 4.2.2. Ability to meet requirements for a sustainable supply chain EU consumers are increasingly concerned with transparency in the production of vegetables and fruits they use. CSR is still seen by Vietnamese businesses as a voluntary criterion instead of a mandatory one. Enterprises should record evidence of their efforts to protect the environment and carry out activities that demonstrate social responsibility. In addition, more efforts are needed to develop organic farming practices to fight disease and kill pesticides. For example, some young Vietnamese enterprises are experimenting with an organic method to eradicate pests using garlic and chili extracts (developed by a Japanese professor), but this method is not practical performance. There are also a number of other national initiatives on organic farming that are still on a small scale and currently in the development stage. In terms of supply stability, EU importers often look for reliable suppliers in strategic areas to be able to supply fruit and vegetables to consumers at any time of the year. The exotic and tropical fruits will appeal to EU consumers. This will be a strength for exporters from countries with tropical climates, including Vietnam. However, with the fragmented nature, the small and the lack of linkage, the development of stable supply now requires more strategic investment. 4.2.3. Export packaging and packaging design The packaging and packaging design for food products is currently not really suitable for the EU market. Although Vietnamese products can be found in Asian supermarkets in the EU, the packaging and design standards for this niche market are relatively low and cannot be compared with the 694
12. requirements of popular food retail in Europe. Currently, fresh fruits and vegetables in Vietnam are mainly sold in small Asian stores and not in big supermarkets. Thus, it can be seen that opening and keeping markets for each type of fruit and vegetable in the EU market is not easy. Collection and preservation are still done manually with little assistance from machines. 4.2.4. Traceability The EU is one of the markets with the most stringent requirements on the origin of goods. Fruit must be managed according to the number of the growing area, grown according to a strict monitoring process from the selection of varieties, soil preparation, pesticide and disease management, and the types and doses of fertilizers and pesticides used to ensure the appearance and quality of the fruit according to specified standards. This has only responded to a rather limited extent in Vietnam. One of the fruits that satisfies this requirement relatively well is dragon fruit. Case study: Dragon fruit export to the EU market The legal requirements that dragon fruit products must comply with are standards on maximum residue levels allowed (MRLs) of plant protection products and phytosanitary regulations of importing countries. These regulations and standards are not the same in different countries and are based on Codex and International Plant Protection Standards. Dragon fruit imported into a country containing higher than permitted levels of pesticides will be withdrawn from the European market. The discovery of a consignment of dragon fruits infected with quarantine objects of the importing country will cause the shipment to be refused entry into this country. In addition, the European market has additional fairness and sustainability standards. Most European buyers have their own set of rules and give more favor to fair trade certified products, which are ethical and environmental issues posed as corporate social responsibility and supply chain responsibility. Recently, the number of exported consignments of Vietnamese dragon fruits has been repeatedly warned from importing countries due to pesticide residue contamination. According to statistics of the Plant Protection Department, from 2015 to 2018, there were 17 cases of dragon fruit warning against residues of plant protection drugs, including carbendazim, dithiocarbamates, carbofuran, permethrin, dimethoate, iprodione, azoxystrobin. Among them, the shipments of dragon fruit exported to Europe are refused to enter this country market, and the fruits had to be re–exported or destroyed. Based on the results of non–compliance monitoring and the inspection carried out by the EU Commission in March 2017 to evaluate the control of pesticides in food in Vietnam, the European Commission considered the Dragon fruit products imported from Vietnam pose serious health risks. On November 8th, 2018, the European Union (EU) issued a new Decision Commission Implementing Regulation (EU) 2018/1660 regarding the conditions for exporting dragon fruits to the EU. This regulation came into effect on December 8th, 2018 and notification of G/SPS/N/EU/286 on the official sampling of pesticide residues on dragon fruits of Vietnam exported to the EU. Thus, the EU requires Vietnam to check the pesticide residue for 100% of dragon fruits exported to the EU instead of only 10% as at present and requires that each batch of dragon fruits exported must have a safety certificate issued by a competent authority of Vietnam. This ensure that pesticide residues do not exceed the maximum residue level of EC (EU–MRLs) together with testing results of authorized laboratories. Official control level for sampling at a frequency of 10% is applied for the total shipment upon arrival at the EU port to check the pesticide residue level following the surveillance program issued under Article 29 (2) of Regulation (EC) No 396/2005. Tightly adjusting food safety regulations 695
13. and increasing the frequency of dragon fruit inspection will also be detrimental to the export progress, incurring additional costs and a likely rejection rate increased because the EU countries have modern testing equipment. 5. SOLUTIONS FOR VIETNAMESE ENTERPRISES TO ENHANCE VEGETABLE AND FRUIT EXPORTS TO THE EU EVFTA is effective from August 1st 2020 offering Vietnam new opportunities in exporting goods in general, vegetables and fruits in particular to the EU market in the coming years. To take the advantages of opportunities, minimize difficulties and challenges, enterprises, farmers and cooperatives producing and supplying vegetables for export, need to implement some of the following main solutions. Changing awareness and improving understanding, building market development strategies. Enterprises must also change perceptions of food safety management and monitoring, including end– product inspection and monitoring of all elements throughout the production chain. The decisive factor is to build chains of agricultural products that not only meet the standards but also have stable quality. Businesses can see this as an opportunity to change the way of thinking and doing. Safe production in the direction of GAP is a must. Although EVFTA has incentives with flexible SPS (food hygiene and safety measures) regulations, the EU is a very difficult market with strict regulations on technical barriers, pesticide residues, banned substances. Therefore, meeting these standards is a necessary condition to be able to enter and increase sales in the market. In addition, when producing cleanly according to regulations such as VietGAP, GlobalGAP, the percentage of vegetables that do not meet the requirements in terms of designs and forms for fresh export will increase. Therefore, the deep processing will help take advantage of these products as raw materials for processing. Actively link with farmers producing and supplying vegetables for export to build safe material areas that meet EU standards. The enterprise supports farmers to grow and from there buy fruit from large areas, apply safe cultivation methods according to the standards like GlobalGAP, thus ensuring quantity and quality to to the EU. Enterprises themselves also need to support and set standards for farmers to ensure that only farmers who meet the requirements will join the production and supply chain. Pay attention to building post–harvest preservation and processing system. In addition, the enterprise focuses on other important factors such as standards of social responsibility, labor, environment What are they looking for? Choosing the mode of transport is also important to ensure both cost savings, emission reduction and deterioration of aviation quality. Understand and proactively develop distribution channel systems. With fresh fruits and vegetables, Vietnamese businesses can: Export to an importer or wholesaler, then they will distribute the product or directly transact in the real retail segment. products in Europe, especially supermarkets specializing in retail food. For processed fruits and vegetables, businesses can target importers/wholesalers, food manufacturers that use canned fruits and vegetables as raw materials, packaging, canning companies or companies. bottling companies, direct sales to food retailers, including supermarkets, specialty food retailers and food service channels. Enlist the help of state management agencies and associations. For example, in the first phase when the EVFTA comes into effect, the Ministry of Agriculture and Rural Development will organize a quick response mission to come directly to the enterprises to guide and support enterprises to comply with the requirements and procedures required by the EU market. Enterprises should proactively raise their difficulties and problems to receive this support. Enterprises also need to improve their 696
14. technological capacity and capacity to adapt to the trend of e-commerce and to name the e-commerce floor that the Ministry of Industry and Trade is about to introduce in the near future. Actively participate in seminars and conferences to master the contents of the agreement, commitments in the field of trade in goods, trade in services, investment, plans to reduce or eliminate import tax products and EVFTA's market access commitments to improve understanding of the Agreement's commitments. In order to be able to choose your product and the pesticide used, about MRLs that apply to business products need to know how to mine the EU database on MRLs. To reduce the amount of pesticides, businesses can apply an Integrated Pest Management Program (IPM). Enterprises can search the food and feed rapid warning system (RASFF) database for information about products being withdrawn and the reasons why. EU customers will often require exporters to adopt a food safety management system based on HACCP principles. Therefore, businesses should consider applying a HACCP system in everyday practice. An enterprise can advise on strict control requirements for imports to determine the level of control that applies to its products. This list is regularly updated. An operator should have a clear understanding of the growing, drying, processing and storage processes and can negotiate with its supplier. For example, the Codex Food Standards Code for information on avoiding and reducing mycotoxins in nuts, peanuts and dried figs can be consulted or FAO guidelines to avoid fungus. musty in pistachios. Irradiation can also be a way to treat infections, but according to EU legislation, it cannot be used on processed fruits and vegetables and edible nuts. It is necessary to promote the advantages of diversity, enhance deeply processed fruits and vegetables, and increase the value–added content. With the advantages of diversity as well as quality, Vietnamese agricultural products have the ability to reach out further when participating in the world market. In addition, deep processing will help make use of vegetables, tubers and fruits as raw materials for processing, thereby maximizing the value of harvested products, helping farmers increase more. The income generated by the product is consumed. This will overcome the limitation of the long distance transport. Develop partnerships between domestic businesses and with Dutch partners. Domestic enterprises need to strengthen cooperation, sharing for mutual benefits instead of unfair competition and market grabbing. Besides, the Netherlands has been considered as the gateway to transshipment of vegetables, tubers and fruits to the EU market. Therefore, Vietnamese exporters who want to export to the EU need to have a plan to research and approach importers, distribution channels and retail systems in the Netherlands to be able to build a strategy. fruit and vegetable exports to the Netherlands and through it to the EU. Attention should be paid to the origin of fruits and vegetables. This issue needs to be addressed both in the short and long term. Accordingly, certifications are particularly important for fresh products, and for processed products as well. Enterprises and producers (farmers, cooperatives) provide vegetables for export, in addition to paying attention to the production and packaging process to ensure and improve the quality of vegetables and fruits for export. On the other hand, attention should be paid to the uniformity of the quality of vegetables and fruits for export. Diversify fruit and vegetable products for export. In addition to fresh produce, there should be a variety of canned and dried fruit and vegetable products. 6. CONCLUSION Vietnamese businesses are now very eager and hoping to make good use of EVFTA to boost fruit and vegetable exports to the EU. However, the difficulties and barriers posed are still too great from the 697
15. barriers of non–tax trade, from internal resources and responsiveness of enterprises, sometimes from unfair competition in the market and At the inadequate and effective support from macro management agencies. The technical standards are set higher and higher and often suddenly change, inconsistency between countries forces, businesses must "meet the high standards from cultivation to harvest" and must always be updated. information on how to respond promptly to sudden changes in technical standards. However, the reality shows that there are still many successful businesses in accessing the EU market. This is a difficult, but not impossible, task. Therefore, businesses need to adapt to receive opportunities and overcome challenges to make the best use of favorable conditions that EVFTA brings. It is decisive to be successful that businesses must master EU regulations, from which to actively reform themselves in terms of organization, apparatus, human resources, especially professionalizing production processes. Processing; expand processing scale, diversify fruits and vegetables processed in the form of dried, canned and have clear, transparent and public traceability. REFERENCES 1. AGROINFO (2010), Thị trường xuất khẩu EU – Ngành hàng rau quả, Số 01/tháng 11.2010 2. Antonio Baselice et. al. (2017). Trends in EU Consumers’ Attitude Towards Fresh–cut Fruit and Vegetables. Food Quality and Preference, Volume 59, July 2017, Pages 87–96. 3. European Commission (2017), Final report of an audit carried out in viet nam, Ref. Ares (2017) 3909265 4. Graffham, A. (2006), EU legal requirements for imports of fruits and vegetables (a suppliers guide), Fresh Insights no. 1, DFID/IIED/NRI, www.agrifoodstandards.org. 5. Pascal Liu (2007), Regulations, standards and certification for agricultural exports, Rap Publication 2007/13. 6. Stea TH et. al. (2020) Fruit and vegetable consumption in Europe according to gender, educational attainment and regional affiliation-A cross–sectional study in 21 European countries. PLoS ONE 15(5): e0232521. 7. Warner Uiterwijk et. al. (2016), Báo cáo thị trường rau quả EU. 698