Depending Chinese market: Vietnam Cassava petrified!

Sell cheap, losses

In recent years the cassava thrives, is widely grown from north to south with a total area of up to 560.000ha. Ministry of Industry and Trade included in the list of 10 goods exports over $ 1 billion, cassava is the export of agricultural commodities of the country's third largest rice and coffee after.

But, like any other commodity cassava Vietnam is falling into a state of "E" reduced purchases by China. According to Pham Vu Ha - General Secretary of Vietnam Association of cassava, as of late October 6/2014 cassava total inventory of approximately 300,000 tons VN. Tapioca is 150,000 tons.

Cassava large inventories due to reduced purchasing China

Mr. Ha said, the main reason is because cassava VN is dependent primarily on the Chinese market only, the other demanding markets such as Japan, Korea, Russia discerning, demanding and strict quality in indicators of food safety and hygiene during VN products not met.

Up to 85% cassava production of VN's exports to the Chinese market. As of 20/6, VN exported 1.760 million tons, down 14% compared to last year and down 35% compared to 2012.

Before the prolonged gloomy market and large inventories of many businesses selling hole VN must accept lower prices at $ 420/1 ton.

Therefore, many businesses are forced to stop production or produced in moderation, and commercial enterprises, it almost had to stop doing business altogether.

But according to a recent report of Quang Ngai, tapioca exports also fell sharply due to the province's too dependent on the Chinese market.

In particular, exports of wheat starch is only 6 months 23,000 tonnes, reaching 30% year target.

Quang Ngai Provincial leaders said, beginning next September, the department will simultaneously consume biofuel alternative to gasoline A92 E5. Regional cassava farmers in the province will gradually switch to supply Bio-Ethanol plant production Dung Quat E5 instead of crude exports to China today.

Reduced export processing enterprise in moderation ... deadlock

Fall into a similar situation, Pham Nhu Number, Vice Chairman of Quang Ngai province, said local first 6 months of this export about 100,000 tons of wood chips is only 29% of the plan. The cause of this decline is the low price of wood chips and limited consumer market makes many forest product processing factories operating at full capacity.

Mr. Number calculations, the average daily 24 wood chip factory in the province of raw material procurement from farmers totaling about 12 billion. If the plants have stopped purchasing price pressure by the Chinese side or stop importing this commodity, people will face more difficulties.

Quang Ngai export of wood chips also fell into a state of "unmarketable"

Mr. Dao Tan Hue, Captain Services PTSC port in Dung Quat Economic Zone calculations, if every ton of wood chips for export started in 2013 with the current price of 138 USD, the highest price of 128 USD as well just stop, sometimes dropped down to 122 USD per ton.

"Due to the Chinese prices, purchasing power should slow first six months of this year exports of local wood chips decreased significantly compared to the same period last year," said Hue said. Implications from the development of wood chip processing plant massive, unplanned business basically pushed stalemate.

Before extorted problem, Quang Ngai are enabling consortium of two investors Sojitz (Japan) and JK (India) investing pulp mill with a capacity of processing 200,000 tonnes per year. The project has an investment of over 180 million, the construction of Dung Quat Economic Zone in the deep processing of raw materials wood chips.

Meanwhile, Nguyen Ton Quyen - Vice President of Timber and Forest Products Association VN said the total value of exports of wood and wood products to China reached a high VN (2013 reached 740 million dollars) but increased low value, low profitability and hampers sustainable forest management.

VN mainly exporting all kinds of wood in the form of semi-processed raw materials, accounting for 80% of exports.

According to Mr. Right, mainly Chinese traders purchase all kinds of wood products in the form of processing, technology and equipment applied backward environmentally unfriendly.

This has created unfair competition with domestic companies, led to scramble for raw materials, pushing some farmers to pursue profits to cut down young trees to sell to Chinese traders.

China's FDI investment in VN again mostly small businesses, the largest being $ 5 million, the smallest only 0.1 million. In contrast, China's FDI enterprises mainly dealing in wood raw materials and auxiliary materials; these companies convey the kind of detailed wood products the demand for semi-processed timber from China to VN for assembly, finishing, branding originated from VN with the aim of tax evasion and avoid dumping while exports to the European market.

Therefore, the positive impact of FDI on China for wood VN is now very limited.