Insight

29 September 2022

Rising incomes and a growing food manufacturing sector are expected to drive strong growth in consumption of agricultural products in Vietnam over the next decade.

Australian agricultural, fisheries and forestry (AFF) exports to Vietnam benefit from a strong bilateral relationship, counter-seasonality and geographical proximity. Differences in climatic zones, topography and farming practices allow Australia to supply Vietnam with produce that cannot be produced locally or at sufficient scale.

Australia is especially well placed to meet growing Vietnamese demand for:

The value of Vietnam's AFF imports rose by 2,054% from US$1.2 billion in 2000 (A$2.1 billion) to US$26.7 billion in 2020 (A$38.5 billion) (Source: UN Comtrade 2022).

This was caused by:

Vietnam is both a large producer and importer of AFF products. Vietnam's climate and geography mean that imports of meat, grains, fibres and dairy products are particularly important.

Australian AFF products have a strong and growing presence in Vietnam. Australia exported a record A$3.4 billion of AFF products to Vietnam in 2021–22. This was a 39.2% increase from A$2.4 billion in 2020–21 (see Figure 1). The rise was caused by substantial increases in wheat and cotton exports.

Figure 1: Australian AFF exports to Vietnam, FY 2017–18 to FY 2021–22

Australia's trade agreements with Vietnam lower tariffs and help facilitate trade. These include:

Australian exporters benefit from counter-seasonality. Many of our major competitors, such as the United States and the European Union, are in the Northern Hemisphere.

Australia's proximity to Vietnam also reduces freight costs and increases product shelf-life compared to major competitors such as the United States, Argentina, Brazil and European Union.

Meat consumption in Vietnam has risen substantially as the country has industrialised and incomes have risen. OECD-FAO forecasts Vietnam's meat consumption to rise 15.1% from 12,050 kilotonnes (kt) in 2021 to 13,875 kt in 2031 (see Figure 2). This 1,825 kt increase is almost double the 944 kt of beef Australia exported to the world in total in 2021–22.

Figure 2: Vietnamese meat consumption, 1990 to 2031

Vietnam's wheat imports have grown considerably since 1990. Steady growth is expected to continue over the coming decade (see Figure 3).

The increased consumption of wheat-based food products and the use of wheat in animal feed is driving demand for wheat. As wheat is not commercially produced in Vietnam, this demand will be met by increased imports.

Figure 3: Vietnam wheat consumption by use, 1990 to 2031

Vietnamese cotton imports have grown substantially to support the rapidly expanding textile and apparel industry. FAO-OECD forecasts Vietnam cotton imports to rise by 60.4%, from 1,540 kt in 2021 to 2,470 kt in 2031.

Figure 4: Vietnamese cotton imports and production, 1990 to 2031

OECD-FAO forecasts Vietnam's dairy consumption will rise by 40.4%, from 1,320 kt in 2021 to 1,853 kt in 2031. Highly processed dairy products such as milk powders are forecast to grow substantially over the next decade (see Figure 5).

Figure 5: Vietnam dairy products by consumption, 1990 to 2031

The Manual of Importing Country Requirements has information about Vietnam's import conditions.

Austrade has more information about market opportunities in Vietnam.

The Australian Government's network of Agriculture Counsellors provided information for this article. More information about the Agriculture Counsellor network, including contact details, is available on the Department of Agriculture, Fisheries and Forestry website.

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