Hanoi (VNS/VNA) -Despite being considered as the driving force of Vietnam’s economic growth,agriculture has been held back by an incomplete logistics system which fails toensure quality and connect farms with markets, according to Ministry ofAgriculture and Rural Development (MARD).

Vietnam has recently opened itsdoors for agricultural products to be exported to the international markets,yet struggled to win over customers and couldn’t compete with products fromother countries in terms of quality and price due to drawbacks of the existinglogistics system.

Most small- and medium-sizedenterprises fail to afford the cost of logistics services.  

According to Vietnam Associationof Logistics Services Enterprises, the expenses for storing and transportingagricultural products account for up to 30 percent of selling prices, higherthan those of Thailand and Singapore.

Meanwhile, low-cost logisticsservices lack quality control indicators, causing high losses due to damage andbacterial infection.

Hai quan (Customs)newspaper reported that the percentages of food loss and waste in the supplychain for HCM City’s market, for example, are 32 percent for vegetables, 14 percentfor meat and 12 percent for fish.

Tran Thanh Hai, deputy head of theDepartment of Import and Export under Ministry of Industry and Trade, blamedpoor storage and delivery systems as the main causes to low business indexes ofagricultural products in Mekong Delta.

Despite being Vietnam’s largestrice bowl and agricultural region, the area does not have a completed supplychain while scattered ports have limited capacity, increasing logistics expensesfrom 7 to10 USD for each tonne of agricultural products.

Up to 90 percent of rice grown inMekong Delta is sold directly to traders, then re-distributed for riceprocessing companies and exporters. The process is similar to other typesof fruit and vegetable due to the lack of collection centreswhich can sort, pack and preserve agricultural products following food safetystandards.

As agricultural products comethrough many stages before finally approach markets, prices are pushed higherwhile farmers do not benefit from the process.

Although provincialauthorities in Vietnam have recognised these problems and plan on buildingtheir own logistics centres, a network linking these centres whichinvolves land reserve, infrastructure and facilities have not been developed.

In the Mekong Delta, goods aretransported via waterways while in other parts of the country, roadtransportation is the most common.

Poor logistics systems also hinderborder trade.

According to Vietnam BorderTraders Association, the total value of goods exchanged through border gates,including rice, peppercorn, rubber and coffee, reaches 30 billion USD per year,increasing by more than 20 percent per year.

However, MARD said storagesystems, especially cold storages, at border gates were unable to satisfy therising demand of agricultural exports while cargoes are still mostly manuallyloaded, slowing down cross-border clearance activities.

Tran Cong Thang, deputy head ofthe Institute of Policy and Strategy for Agriculture and Rural Development,said degraded markets at border gates and insecure payment services restrainedborder trade between Vietnam and neighbouring countries./.