Logistics costs are twice as high as Thailand
In February 2021, the Prime Minister issued Decision No. 221 approving the action plan to improve competitiveness and develop the logistics market in Vietnam until 2025.
In particular, the Ministry of Agriculture and Rural Development was assigned to build and complete logistics infrastructure for agriculture, especially planning and implementing the construction of a warehouse system, logistics centers serving agriculture in agricultural production areas. large-scale goods and connections between industries to logistics centers and seaports, airports and border gates.
Mr. Nguyen Quoc Toan – Director of the Department of Agricultural Product Processing and Market Development, said that groups of agricultural products that require logistics services are mainly in the fruit industry. Currently, we have more than 7,500 industrial-scale agricultural, forestry and fishery processing establishments. However, many establishments are not attached to raw material areas. This is the core difficulty, and the Ministry of Agriculture and Rural Development has a project to build raw material areas associated with processing facilities.
Besides, we also have a system of roads, railways, seaports, airports, national border gates, 9,000 people’s markets, 1,200 supermarkets; 250 commercial centers, more than 1,800 convenience stores and nearly 1,700 safe agricultural product chains.
Developing logistics for agriculture helps Vietnam’s agricultural products increase added value and competitiveness.
However, according to Mr. Toan, because the cost of hard infrastructure has not been synchronized, the logistics cost for agricultural export on average accounts for about 20-25%, quite high compared to other countries in the region (such as Thailand, logistics costs of agricultural products for export only account for about 10-15%).
Many limitations in logistics infrastructure along the agricultural value chain pointed out by Mr. Toan include: Storage capacity has not met the requirements; logistics service supply chains are mostly performed by small businesses at each stage; Logistics services have only been developed in big cities while key agricultural production areas such as the Mekong Delta have not had many.
In addition, the distribution channel of agricultural products through the system of wholesale markets and people’s markets has not met the requirements in terms of quantity and quality; limited infrastructure and services for border trade…
According to research data of Gemadept Logistics, every year processing factories in the Mekong Delta have the need to transport about 2-3 million tons of seafood, 6-7 million tons of rice, 2.5-3 million tons of fruit to the system. system of cold storage and ports in Ho Chi Minh City and Ba Ria – Vung Tau. In contrast, factories of consumer goods, agricultural tools, agro-pharmaceuticals, fertilizers, and animal feeds in the Southeast have a need to transport 6-7 million tons of animal feed and 2 million tons of fertilizer to the market. the South West.
However, 70% of export goods each year have to be transported to Ho Chi Minh City or Cai Mep port by road, causing product prices to rise; Traffic is difficult and time consuming.
Mr. Nguyen Quoc Toan – Director of the Department of Agricultural Product Processing and Market Development. Photo: Minh Phuc.
According to statistics, there are currently about 4,000 enterprises providing logistics services, of which 88% are domestic enterprises, 10% are joint venture enterprises and 2% are 100% foreign owned enterprises. Although the number of foreign enterprises is small, they hold a large market share.
Toan said that in Vietnam, there are now a number of modern and professional logistics models. For example, the smart cold supply chain of Belgian businesses proposed to be deployed in the Mekong Delta and the Southeast region in association with the river transport system, built according to the system of ports in the region (focusing on the supply of goods and services). cold storage is essential, direct). This project was started in 2018 in Tra Vinh.
In Thailand, focus on building logistics points associated with concentrated material areas to provide warehousing, cold storage and packaging services. In particular, in the concentrated material areas, they clearly separate the material areas through planning. Specifically, the North is rice, cassava, maize, sugarcane and oil crops; In the south are perennial crops, rubber trees and aquaculture; Central and Western regions are livestock and poultry raising.
Building a logistics center associated with the raw material area
According to Minister Le Minh Hoan, in order to form a synchronous logistics system serving the agricultural economy, we need to develop a plan, have a scheme, strategy, plan… However, each plan, The strategy needs to take many years of survey, evaluation and construction to come out.
Therefore, Minister Le Minh Hoan suggested that relevant units need to separate the scope and tasks to focus on implementing each year based on actual conditions and capacity. In particular, in addition to the state budget, it is necessary to attract industry associations and businesses to participate. Because the state cannot exploit and operate the logistics infrastructure system as efficiently as enterprises.
At this stage, we need to separate the goals and tasks to focus resources to support the formation of logistics centers in the concentrated raw material areas through the integration of the implementation of the pilot project to build the region. standard agricultural and forestry materials for domestic consumption and export in the period of 2022 – 2025; Decision 1804 of the Prime Minister approving the program to support the development of collective and cooperative economy in the period of 2021 – 2025.
The Minister emphasized that in the process of building logistics service supply models in raw material areas, it is necessary to associate with the participation of purchasing and processing enterprises and cooperatives. In which, the enterprise will guide cooperatives in management and system operation skills in a professional and effective manner.
Farmers are weak in logistics knowledge. Illustrative photos.
Deputy Minister of Agriculture and Rural Development Tran Thanh Nam shared, realizing that farmers’ organizations are weak in terms of logistics knowledge, infrastructure and linkages, in the period of 2023 – 2027, Thailand will focus on supporting the cooperatives develop logistics systems to increase the added value of agricultural products. MARD also needs to develop a program to develop agricultural logistics systems in agricultural cooperatives.
Mr. Nguyen Van Viet – Director of the Planning Department (Ministry of Agriculture and Rural Development) said that if we only focus on building programs and projects without identifying resources and having policies to support development, It is very difficult to form an effective logistics service delivery system for agriculture.
“Only when we develop a policy framework can we develop sustainable logistics infrastructure, especially policies on land, credit and support for market development. Because, in fact, if you rely on the state budget to invest in cold storage, warehouses, etc., it is not effective. The most important thing is to attract businesses and cooperatives to invest and operate, “said Mr. Viet.
According to Mr. Tran Cong Thang – Director of the Institute of Policy and Strategy for Agriculture and Rural Development, the country’s logistics system includes small centers, connection centers and services to bring goods, agricultural products into major markets. Therefore, it is necessary to have an assessment of the agricultural value chain and address each stage in that value chain.
Currently, we have projects to build a logistics center for the Mekong Delta in Can Tho. The World Bank is also ready to sponsor to establish a logistics center in Dong Thap when the locality can arrange the premises. Some logistics centers in border areas and seaports have also been planned and have premises, so it is necessary to review, evaluate and support to promote the formation of these logistics centers in a synchronous manner. Great, high efficiency.
The Department of Agricultural Product Processing and Market Development proposed to focus on supporting logistics hard and soft infrastructure in border corridors to gather and trade directly to the import market, especially on land. our immediate.
The second model is to invest in the formation of community logistics points in the countryside associated with raw material areas. Every point needs to have an electronic trading floor, cold storage to preserve fresh agricultural products, dry warehouse, storage yard, loading and unloading of container trucks, checkpoints, quality control of output and input goods. retail outlet and community product promotion space.
