50-year relationship with Vietnam supporting trade for Australian agriculture

The extraordinary growth in Australia’s food and rural exports to Vietnam has been led by the demand for Australian cotton from Vietnam’s thriving yarn-making, textile and apparel industry. Gains are also being realised through the growing preference of the 100 million population for wheat-based breads, noodles and biscuits, and their continuing thirst for beer brewed using Australian barley.

Despite a 50 per cent annual increase in the market for rural and food imports from Australia to 30 June 2023, Agricultural Counsellor in the Australian Embassy in Hanoi, Tony Harman believes there is more to come over the longer term.

“There is still room for growth for existing exports and new opportunities,” Mr Harman said, pointing out that the soaring demand from Vietnam in 2022-23 meant it is now Australia’s fourth largest agricultural export market behind only China, Japan and the US, the world’s largest three economies.

Agricultural Counsellor in the Australian Embassy in Hanoi, Tony Harman

“It might not be as fast as we have seen in the past few years and competition, especially from South American exporters, is getting stronger, but Australian products are highly regarded in Vietnam.”

RELATED: Opportunities for Australian agricultural exports in Vietnam

• Australia has become the largest single supplier of cotton to Vietnam and it is the most important market for our growers, worth nearly $2 billion in 2022-23. (ABS 2023)
• The demand for boxed or processed beef cuts is climbing according to Meat and Livestock Australia, with Australian beef exports to Vietnam worth nearly $150 million in 2022-23 (ABS 2023).
• Retail-packaged refrigerated beef sales have been growing with a shift in consumer preference from traditional ‘wet markets’ to supermarkets – a trend hastened by the COVID pandemic which saw the closure of many traditional food markets – while wealthier Vietnamese consumers are eating more premium meat cuts from Australia, since import tariffs were removed on Australian beef in 2018.
• Vietnam has also become the third most important market for fresh Australian horticultural produce after China, and Japan.

Mr Harman said Australia is seen as a “market of choice” helped by its geographical proximity, and lower freight shipping time and costs compared to the Americas and Europe.

He added the milestone of the 50th anniversary of bilateral relations has been valued and showcased by the Vietnamese government, as was the recent visit by Prime Minister Anthony Albanese.

“The 50th anniversary of the bilateral relationship is also helping our [Australian] brand and broader reputation, but in commerce in the end it all comes down to price, quality, affordability and access; you have to stand on your own two feet here. Food safety and sustainability are also playing an increasing role in Australia’s value-proposition to the Vietnamese consumer.”

Grain exports are key to the trading relationship

More than $1.6 billion of Australian wheat, $265 million of Australian barley and $204 million of Australian malt was sold to Vietnam in 2022-23 (ABS 2023). Steady growth of Vietnam wheat consumption is expected over the next decade as the size of the local economy doubles.

Barley exports to Vietnam are at record levels, with almost all barley imported into Vietnam from Australia.

In 2022, 400,000 tonnes of feed barley mainly for pigs and cattle was sold to Vietnam, plus 150,000 tonnes of malting barley; most of it supplied from WA 4200 grain growers and their exporting company CBH.

CBH Barley Trading Manager Drew Robertson, said the market for malting barley is steady, with 130,000 – 150,000 tonnes of demand annually. Australian barley is turned into malt for the massive local beer industry at Intermalt, the $90 million southern Vietnam malt plant built in 2017 and half owned by CBH.

Another 400,000 tonnes of processed malt already made in Australia, valued at $206 million in 2022-23, was also imported last year and sold to the local beer manufacturing industry.

Beer makes up 95 per cent of all alcohol drink sold in Vietnam, with per capital beer consumption amongst the highest in south-east Asia and the market – dominated by seven large beer companies including Heineken, Carlsberg, Sabeco and Habeco – growing at 9-10 per cent a year with increased population and affluence.

“Vietnam is a premium and very important market for CBH and Australian barley growers,” said Mr Roberston.

Drew Robertson, Barley Trading Manager, CBH. CBH are an evoke^AG. 2024 Partner

“We supply both malting and feed barley, which we ship direct in chartered ships, as well as large shipments of feed barley which is used in livestock feed rations that is fed to pigs and used in the growing aquaculture (mainly prawns) industry.”

Potential for dairy growth

Higher milk and dairy produce sales are also regarded as a growth area by Austrade and Dairy Australia. In 2022-23, Australia exported $77 million of dairy products to Vietnam (ABS 2023).

The OECD predicts dairy consumption in Vietnam is tipped to grow by 40 per cent in the next 10 years. Increasing affluence and changes to food preferences has already seen demand switch from base products such as whole milk and skimmed milk powder to baby infant formula, ice creams, premium cheeses and fresh milk – some of it air freighted directly to Hanoi and Ho Chi Minh.

Market access for Aussie fruits

But it is the opportunities for building on fresh fruit exports to Vietnam that really excites Mr Harman, Austrade and Australian fruit growers.

The trade of 38 Australian fruits to Vietnam was suspended following the introduction of new biosecurity measures in 2015.

Since then the trade of table grapes, oranges, mandarins and cherries has resumed, while Australian peaches and nectarines have recently also been granted access.

Manager of marketing and sales for premium Tasmanian cherry producer Reid Fruits, Tony Coad said Vietnam is now the company’s third largest export market.

“We are delighted to be back in Vietnam and see it as a growth market, especially for slightly smaller sized fruit which we sell for $15-$18 a kilogram, because Vietnamese consumers are both very discerning about quality but also price conscious,” Mr Coad said.

An arial shot of Reid Cherries orchard

Since Tasmania is fruit fly free, Reid Fruits sells its cherries without the need for further any post-harvest treatment. Much of its 150 tonnes of cherries is air freighted to Vietnam the same day as it’s picked and sold as high value gifts during the January Tet celebrations, an event that usually coincides neatly with peak cherry harvest.

In the 2022-23 financial year, around $70 million of table grapes, $20 million of oranges and $12 million of cherries (ABS 2023) was flown from Australia to Vietnam and it’s hoped the market will be opened for other fresh fruits, such as blueberries and plums.

Mr Harman added that market access for fresh plums and blueberries to Vietnam is currently  being progressed alongside market access for Vietnamese pomelos and passionfruit to Australia.

Find out more about the opportunities for Australian agricultural exports in Vietnam here.

Interested in exporting food and beverages or agribusiness to Vietnam? Go to Austrade export services to learn the basics, find the right markets and understand market requirements.