Ben Tre Province Seeking Solutions to Coconut Processing Industry

Ben Tre now has more than 37,500 ha of coconut area, which bears nearly 260 million fruits annually. This output is enough for all processing companies and 150 coconut candy producers in the locality to operate at their full capacities. In 2005, desiccated coconut copra processing factories used around 126 million fruits while candy makers consumed some 34 million fruits. Hence, the factories and sweet manufacturers operated at half of their designed capacities. The core reason for the half operation of local units resulted from the soaring price of coconut materials. They failed in the price competition with rivals from China and Thailand which were ready to pay higher prices. The willingness to pay higher prices has persuaded local farmers to sell large volumes of fruits to foreigners. This has led to a severe shortage of materials for the coconut processing industry in Ben Tre Province. The higher price will produce higher profits; hence, many coconut copra processors shifted to trading coconut fruits.

 

Before this circumstance, the first solution of Ben Tre Province was to exempt all taxes for fresh coconut processing units, aiming to encourage these units to buy in coconut fruits and then preliminarily process them before selling them on to desiccated copra processors. However, this solution did not work in Ben Tre as expected when coconut fruits continued being sent to foreigners. The long operational suspension of many desiccated copra processing factories has left thousands of workers unemployed. A representative of Phu Hung Coconut Processing Company - a joint venture of Sri Lanka’s Silvermill Co. and Ben Tre’s Truc Giang Import & Export Co., complained that the production of his dried coconut copra processing company has never reached the expected capacity because of insufficient input materials. Many foreign partners intended to terminate the contracts as local firms could not fulfil the contract volume. At present, the monthly salary of his company’s 700 workers has halved to some VND500,000 each on average.

The People’s Committee of Ben Tre Province has recently cooperated with the Agricultural Cooperative Development International and Volunteers in Overseas Cooperative Assistance (ACDI/VOCA) and the Research Institute of Vegetable Oil, Otto, Aromatic Spices and Cosmetics of Vietnam (OPI) to open a seminar on “Developing the coconut industry, plans for growth” to seek measures to resolve the existing difficulties and consolidate the long-term development of the coconut industry of Vietnam in general and of Ben Tre in particular. Many companies and factories supported the imposition of export tax on material coconut. The money collected from taxes will be used to assist farmers and develop the coconut industry. However, many are doubtful of the feasibility of this measure when Vietnam is integrating into the world economy and the country is applying an export stimulation policy to bring in more foreign currencies.

 

The Ministry of Industry said the coconut processing industry of Ben Tre Province has a lot of things to do and adjust, including policies, capital, seedling, cultivation techniques, technology and processing capacity. The Government has assigned the Ministry of Industry to build up a project to renew and modernise preservation and processing technologies for farm produces until 2015. The investment to increase the value and competitiveness of coconut products will be focused on in the development of the coconut processing industry.

 

According to the Ben Tre Department of Science and Technology, the production lines of coconut processing factories are backward in comparison with regional countries, affecting the export value of processed products. Since 2004, Vietnamese companies have always exported at prices lower than those in China, India and the Philippines. Hence, local companies could not increase prices of input materials as foreigners did. Worse, processing units in Ben Tre Province lacked long-termed development strategies, cooperation and investment for wholesalers and farmers of coconuts. When the price of coconut fruits was low, processing companies and factories chose products carefully and wholesalers had to carry materials to production bases of buyers to sell. Hence, when the price went up, farmers and wholesalers would choose the best buyers. Therefore, it is essential to renew technologies, reduce production costs and tighten cooperation with farmers to sharpen competitive edge for survival. They should also borrow money from banks to elongate the operation.

 

Besides, the People’s Committee of Ben Tre Province has asked the Prime Minister for permission to levy export tariffs on coconut materials and to use the taxes for investment for the expansion of the cultivation area. At the same time, the province also proposed that the Ministry of Agriculture and Rural Development conduct studies on good coconut species to help farmers raise productivity and quality to meet the demand of the coconut processing industry in Ben Tre.