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Growing Markets for U.S. Agricultural Exports: Vietnam, Thailand, and Burma

Vietnam, Thailand, and Burma (Myanmar) are part of the fastest developing region in the world and account for roughly 221 million of Southeast Asia’s population. These three countries benefit immensely from intraregional trade and over the last two decades, they have established robust export-led economies and sustained healthy growth. Formerly agrarian-based economies, Vietnam, Thailand, and Burma no longer rely on domestic agricultural production as the primary source of food and just last year imported a combined total of more than $42 billion in agricultural goods. Of that total, the United States exported over $2.1 billion to Thailand, $4.0 billion to Vietnam, and $126.7 million to Burma. Going forward, U.S. agricultural producers should concentrate on expanding partnerships within the three countries, especially as their economies continue to develop and per capita incomes rise.

U.S. exports to Vietnam reached a record $4.0 billion in 2018, making Vietnam the seventh-largest destination for U.S. agricultural products. With a population over 97 million, Vietnam offers a bustling economy with robust real Gross Domestic Product (GDP) growth of 7.1 percent in 2018. Vietnam has also kept the unemployment rate at only 1.9 percent, maintained stable inflation near 3 percent, and kept more than 90 percent of its population above the national poverty line. Simultaneously, the country has shifted its economy away from agriculture towards manufacturing, increased exports, and effectively integrated itself into the global market. Yet, the agricultural sector still employs 40.3 percent of the labor force and accounts for 15.3 percent of the nation’s GDP.  Likewise, Vietnam exports billions of dollars in tree nuts, coffee, rice, and other goods. Still, Vietnam imports large quantities of agricultural products from across the world. Fortunately, as the second-largest exporter to Vietnam behind China, the United States holds an established position in the Vietnamese market and has many opportunities for growth. 

With the combination of a growing middle-class and high GDP growth, Vietnam is becoming an important market for consumer-oriented products. World exports of consumer-oriented products to Vietnam totaled $14.7 billion in 2018, up 5 percent over 2017. Exports to Vietnam of U.S. consumer-oriented products enjoyed a record year in 2018, reaching $977 million. This amount is up 21 percent since 2017 and is expected to reach $1 billion in 2019. The top five global exports of consumer-oriented products to Vietnam include fresh and processed vegetables, beef and beef products, fresh fruits, tree nuts, and food preparations and miscellaneous beverages. 

With increasing disposable income and concerns about food safety, Vietnamese consumers are willing to pay more for imported food products, which they believe meet higher quality and safety standards. Fresh fruits and prepared food have increased in popularity in Vietnam, with U.S. export values up by 42 percent and 15 percent, respectively from 2017 to 2018. In addition, the tremendous growth of modern retail outlets with improved infrastructure, such as cold chain, helps maintain the quality of U.S. products and give consumers access to well preserved products. 

Top Prospects for U.S. Agricultural Exports

Dairy: U.S. exports of dairy to Vietnam reached $145 million in 2018, a 29-percent increase from 2017. Despite strong competition from countries who enjoy preferential tariffs via free trade agreements with Vietnam (such as New Zealand, Australia, and Europe), U.S. dairy products have a strong position in the Vietnamese market. Export values for U.S. skim milk powder ranked highest in the dairy products group in 2018 based on a strong U.S. supply advantage. Additionally, there is increasing demand for ingredients in Vietnam’s dairy sector that has grown 10 to 12 percent annually. In addition to milk powder, there is strong potential for processed cheese to supply the expanding food service sector, with the export value for these products increasing by 25 percent to $570,000 in 2018. 

Hardwood: As an agricultural-related product, demand for hardwood lumber/timber in Vietnam continues to rise, as the wood processing industry remains a main contributor to the country’s economic growth and foreign exchange earnings. In 2018, Vietnam’s exports of furniture and wooden products reached $8.9 billion, up 15.6 percent over 20171.  To fuel this growth, Vietnam’s furniture industry relies heavily on imports of wood material, which increased by 10 percent from $900 million in 2017 to $990 million in 2018.  The United States is Vietnam’s largest hardwood lumber supplier with exports of $311 million in 2018, up 18 percent over 2017. Traditionally dominated by species like yellow poplar and white oak, Vietnam saw significant growth in consumption of walnut, red oak, and western red alder in 2018.

Meat products: Vietnam’s consumption of meat has risen over the last decade in line with the growing middle-class. The country’s booming hotel, restaurant, and industry sectors continue to drive up the demand for imported beef, pork, poultry, and seafood. U.S. beef exports to Vietnam grew by 35 percent from 2017 to 2018 to nearly $82 million. U.S. pork, despite facing strong competition from Europe, saw tremendous growth in 2018, growing by 191 percent to $35 million. The recent improvements in Vietnam’s meat processing industry, supported by increases in both local and foreign investment, has also driven the country’s demand for pork. In addition to Vietnam’s food service industry, U.S. pork producers should look to Vietnam’s meat processing industry as a market for pork trimming and other budget cuts. U.S. poultry exports had a record year in 2018, reaching $110 million and exports remain strong during the first seven months of 2019.

Cotton: Cotton has emerged as the leading U.S. agricultural export product to Vietnam over the past five years. Cotton exports now account for 49 percent of all U.S. agricultural exports to Vietnam. U.S. cotton exports to Vietnam jumped from $392 million in 2014 to a record-high $1.3 billion in 2018, with exports already over $1 billion for the first seven months of 2019. Vietnam’s spinning industry is likely to grow in the coming years through both expanded and newly established mills supporting continued demand growth. 

Food Preparations/Miscellaneous Beverages: As annual tourism and disposable income increase in Vietnam, consumer demand for prepared foods is rising. In 2018, the United States was the seventh largest exporter of food preparations to Vietnam. As Vietnamese food preparations and miscellaneous beverage imports approach $1 billion, plenty of market space remains available for increased U.S. sales.

Other Notable Goods: Vietnam’s imports of fresh vegetables have grown considerably to reach $920 million last year. However, the United States exported only $1 million, consisting mostly of fresh potatoes. Vietnam’s fresh potato imports totaled $100 million in 2018, illustrating opportunities for growth in U.S. exports. Likewise, feeds and fodders imports grew to $707 million in 2018 from $645 million in 2016. The United States exported $77 million in 2018, behind only China who exported $194.4 million. U.S. fresh fruit exports reached a record $102 million in 2018 and continue to perform well in 2019.

Source: USDA