Challenges for Vietnamese businesses from the F2F strategy
While the F2F strategy offers promising opportunities, it also presents substantial challenges for Vietnamese agricultural and food businesses striving to meet its high standards. These challenges include:
• Challenge of high compliance costs
Adhering to F2F standards demands significant investment, particularly for small and medium-sized enterprises (SMEs). Costs for traceability systems, sustainable production processes, and modern technologies can strain financial resources, creating barriers to accessing high-demand markets like the EU. A core F2F requirement is product transparency and traceability, often necessitating complex systems like blockchain to track goods from farm to table. Implementing such technologies - covering infrastructure, staff training, and maintenance - is expensive, posing a significant hurdle for SMEs competing against larger, better-resourced firms.
• Challenge of Traceability
The F2F strategy mandates rigorous traceability for products entering the EU, requiring Vietnamese businesses to monitor every stage - from cultivation to consumption - across production, transport, and distribution. This is challenging, as Vietnam’s supply chains often rely on traditional methods lacking modern management systems. Building a comprehensive traceability framework requires tight integration among farmers, traders, processors, and retailers, yet many Vietnamese businesses are small and fragmented, lacking the capital and technology to invest. In supply chains involving numerous smallholders, collecting and managing data becomes particularly complex, undermining transparency and continuity. Even direct exporters face difficulties, as sustainability criteria demand detailed reporting on land use, water, and pesticides, necessitating a costly shift from experience-based to data-driven practices.
• Challenge of Increased Competition with Domestic Products in the EU Market
The F2F strategy not only imposes strict standards on imports but also promotes sustainable production within EU member states, intensifying competition for Vietnamese businesses. EU consumers increasingly favor local products, viewing them as environmentally friendlier due to reduced transport emissions. Domestic EU goods benefit from shorter supply chains, greater freshness, and robust oversight, bolstered by government support like subsidies and tax incentives. This advantages local producers, making it harder for Vietnamese imports to compete.
• Challenge of Updating Policy Changes
The F2F strategy remains in development, with policies frequently proposed, drafted, and revised. Vietnamese businesses must continuously monitor these updates and adjust production accordingly. Failure to keep pace risks non-compliance, potentially leading to rejected shipments or fines in the EU market, which could inflict significant economic and reputational damage.
Source: Center for WTO and International Trade - VCCI