Banana growing area in Vietnam
Vietnam has over 130,000 hectares of banana plantations, producing 2.1 million tons annually, which accounts for 19% of the nation’s fruit-growing area. About 80% of the output is exported, primarily South American bananas, with some contributions from local and Laba varieties. Dong Nai province is a major banana-growing region, with 13,149 hectares (8.53% of the country’s banana area), primarily in Trang Bom district, where yields reach 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.
Banana export situation to China
Vietnam’s banana exports experienced steady growth from 2018 to 2021. However, a breakthrough came after the signing of a fresh banana export protocol with China on November 1, 2022. In 2021, banana exports earned Vietnam $260 million, which increased by 34.2% in 2022 to $310.6 million. This strong performance continued in 2023, with over $300 million in export revenues remaining.
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
Banana export situation to Japan and Korea
With Japan, the trade agreement effective from April 1, 2024, reduced the banana import tax to 0% (previously 3%), leading to a significant surge in Vietnamese banana exports. In the first 7 months of 2024, Vietnam exported 7,900 tons of bananas to Japan, worth 1.05 billion yen ($7.1 million), marking a 62% increase in volume and an 80.2% rise in value compared to the same period in 2022. Previously, the Philippines dominated the Japanese banana market, supplying 79.8% of total imports, but now faces a 13% import tax, giving Vietnam a competitive edge. With Japan spending $1 billion annually on banana imports, Vietnam’s current 1.3% share highlights a tremendous growth opportunity over the next five years.
In South Korea, nearly 100% of bananas are imported due to unfavourable domestic growing conditions. Bananas are a popular fruit in the country, and in the first half of 2024 alone, South Korea spent $164 million on importing fruits and vegetables from Vietnam, including $35.6 million worth of bananas. South Korea is Vietnam’s second-largest banana export market after China, yet Vietnam ranks only 6th among the major suppliers to this market. Given South Korea’s annual banana import market size of $300 million, Vietnam has significant potential to expand its share in the coming years.
The potential banana export market for Vietnam
The data on banana imports from the world’s top six markets reveals significant untapped potential for Vietnamese bananas, especially in European, American, and Japanese markets. In particular, European markets are increasing their imports by an average of 20% annually. Currently, these markets are primarily supplied by bananas from Ecuador, the Philippines, Costa Rica, and Colombia.
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.
Competition from Other Markets
Currently, the Philippines dominates the banana export market, supplying Japan, South Korea, China, and New Zealand. Bananas constitute 48.7% of South Korea’s total fruit imports, with the Philippines accounting for an overwhelming 98.7% of those imports. Aside from the Philippines, Vietnam must remain vigilant against competitors such as India and Guatemala.
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
