Where are bananas grown in Vietnam?
Vietnam boasts over 130,000 hectares of banana plantations, yielding 2.1 million tons annually and representing 19% of the nation’s total fruit-growing area. Approximately 80% of this output is destined for export, predominantly South American banana varieties, complemented by local and Laba varieties. Dong Nai province stands out as a key banana-growing region, contributing 13,149 hectares (8.53% of the country’s banana area), with Trang Bom district being a primary hub where yields can reach an impressive 40-45 tons per hectare.
In 2023, banana exports ranked 3rd among Vietnam’s fruit exports, generating $308 million, behind durian and dragon fruit. By mid-2024, Vietnam exported 420,000 tons of bananas to China, with export turnover reaching $220 million—an 18% increase over the same period in 2023.
How are Vietnam’s banana exports to China performing?
Vietnam’s banana exports to China have shown remarkable growth, particularly after the fresh banana export protocol was signed on November 1, 2022. Following steady increases from 2018 to 2021, exports surged from $260 million in 2021 to $310.6 million in 2022—a 34.2% jump. This robust performance continued into 2023, maintaining export revenues exceeding $300 million, underscoring China’s critical role as a market for Vietnamese bananas.
The Chinese market, accounting for nearly 90% of Vietnam’s banana exports, is key to this growth. In 2023, China imported 1.77 million tons of bananas worth $1.08 billion. Among its top suppliers were the Philippines (686,000 tons), Vietnam (506,000 tons), Ecuador (266,000 tons), and Cambodia (263,000 tons), with these four countries providing 97% of China’s banana imports.
In 2024, the impact of Panama disease on Philippine bananas drove prices up to $524 per ton, prompting China to reduce imports from the Philippines and shift to Vietnam.
Philippine banana imports to China dropped by 39.3% in the first half of 2024. Meanwhile, due to conflict and instability in the Red Sea, rising transport costs for Ecuadorian bananas also benefited Vietnam and Cambodia. Both countries saw increased exports to China as a result.
Bananas are now the most imported fruit in China, surpassing durian (1.43 million tons) and coconut (1.18 million tons). In terms of revenue, bananas rank 4th, following fresh durian ($6.72 billion), cherries ($2.65 billion), and frozen durian (over $1 billion).
Data from 2023 to June 2024
What is the current state of Vietnam’s banana exports to Japan and South Korea?
Vietnam’s banana exports to Japan and South Korea are experiencing significant shifts. In Japan, a trade agreement effective April 1, 2024, eliminated the 3% import tax on bananas, leading to a substantial surge in Vietnamese exports. In the first seven months of 2024, Vietnam exported 7,900 tons of bananas to Japan, valued at 1.05 billion yen ($7.1 million), representing a 62% increase in volume and an 80.2% rise in value compared to the same period in 2022. This gives Vietnam a competitive advantage over the Philippines, which now faces a 13% import tax despite previously dominating the Japanese market. Given Japan’s annual $1 billion banana import market, Vietnam’s current 1.3% share indicates immense growth potential. Similarly, South Korea, which imports nearly 100% of its bananas, presents a promising market. In the first half of 2024, South Korea imported $35.6 million worth of bananas from Vietnam, making it Vietnam’s second-largest banana export market after China. Despite ranking 6th among suppliers, Vietnam has considerable potential to expand its share in South Korea’s $300 million annual banana import market.
What are the most promising banana export markets for Vietnam?
Analysis of banana imports across the world’s top six markets highlights significant untapped potential for Vietnamese bananas, particularly in European, American, and Japanese markets. European markets, for instance, are expanding their banana imports by an average of 20% annually. Currently, these regions are predominantly supplied by bananas from Ecuador, the Philippines, Costa Rica, and Colombia, indicating a clear opportunity for Vietnam to diversify its export destinations beyond its traditional markets.
European and American markets account for 26.7% and 21.5% of global banana import demand, respectively. While the Chinese market offers considerable opportunities, it may not sustain long-term growth, as China is also one of the largest banana-producing countries. In 2023, banana consumption in Europe is estimated to reach 661,487 tons, marking a 13% increase from 2022, with continued growth expected in 2024.
India, the world’s largest banana producer, had an output of 31 million tons from 878,000 hectares in 2020. Given its significant domestic production, India is unlikely to increase banana imports significantly in the future. Relying heavily on the Chinese market may not be sustainable in the long run, especially as the banana epidemic in the Philippines resolves, which could stabilise banana prices and reduce Vietnam’s exports to China.
Vietnamese businesses should target potential markets like Japan, which offers a preferential tax rate of 0%, along with South Korea and, importantly, Europe. Given the ongoing complexities surrounding war and the Red Sea, sourcing goods from the East Asia region is essential. Vietnam’s favourable climate, extensive coastline, and absence of banana diseases create a competitive advantage against the Philippines in the Chinese, Japanese, and European markets.
Although the Philippines is the second-largest banana-producing country after Ecuador, its banana prices are expected to remain low. However, imports of Philippine bananas do not benefit from tax exemptions. Consequently, countries importing from the The Philippines face taxes ranging from 10% to 40% on the total value of imported goods, positioning Vietnamese bananas as a more attractive option in the global market.
Who are Vietnam’s main competitors in the global banana market?
Vietnam faces significant competition in the global banana market, primarily from the Philippines, which currently dominates exports to key markets like Japan, South Korea, China, and New Zealand. For example, the Philippines supplies an overwhelming 98.7% of South Korea’s banana imports, which constitute 48.7% of the country’s total fruit imports. Beyond the Philippines, Vietnam must also contend with emerging competitors such as India and established players like Guatemala, both of whom are actively expanding their export footprints.
India’s banana exports were valued at approximately $142.9 million in 2021, representing just 1% of global exports, as most bananas produced in India are consumed domestically. However, in the past three years, Indian banana exports have surged by 300%. The National Plantation Board of India has also proposed a plan to export over 75,000 tons of bananas in the coming years, aiming to position bananas as a significant export product for the country.
Guatemala has seen steady growth in banana exports, largely driven by increasing demand in the U.S. market. The country benefits from favorable growing conditions and previous investments aimed at expansion, resulting in an abundant supply of low-cost bananas. This has facilitated Guatemala’s export growth, particularly to the United States, the primary destination for its bananas. With an average export price of $380 per ton, Guatemalan bananas remain among the most competitively priced on the global market.
As Vietnam looks to expand its banana exports, it must carefully navigate this competitive landscape, leveraging its unique advantages while addressing the challenges posed by established players like the Philippines, India, and Guatemala.
Conclusion
Vietnam’s banana exports are poised for significant growth, particularly in major markets such as China, Japan, South Korea, and Europe. The recent signing of favourable trade agreements, including the reduction of banana import taxes to 0% for Japan, presents Vietnam with a valuable opportunity to enhance its competitive edge in the global market. The rising demand for bananas in both China and Europe highlights the substantial potential for Vietnamese bananas.
Nevertheless, Vietnam faces stiff competition from other countries, notably the Philippines, India, and Guatemala. The Philippines remains the primary supplier of bananas to Japan, South Korea, and China. Concurrently, India has ramped up its banana exports significantly in recent years, while Guatemala has made remarkable strides in the U.S. market with competitively priced bananas.
To fully harness this potential, Vietnam must prioritize improving product quality, adhering to international standards, and developing effective marketing strategies. Diversifying export markets beyond China will also be crucial for ensuring the sustainability of the banana export industry in the long term. With its favourable natural conditions, Vietnam is well-positioned to assert itself in the global banana market.
See more: Vietnam’s fruit and vegetable exports: Key markets, challenges, and opportunities
