Lumber industry orders fall, though turnover hits $10 billion


A report by the Ministry of Agriculture and Rural Development (MARD) shows that exports of wood and wood products in July totaled $1.4 billion, down 5.5% from June 2022 and 1.6% compared to the same period last year. July was the first month with a negative growth rate this year.

The General Forestry Department said Vietnam’s wood and wood products are exported to 110 countries and territories. Among these, the United States, Japan, China, EU and South Korea are the top five markets.

However, since the beginning of the year, Vietnam has seen only a sharp increase in its exports to Japan, China and South Korea. Exports to the EU increased slightly by 0.8% compared to the same period last year.

Meanwhile, the United States, which consumes 60% of Vietnam’s exports, has experienced a negative growth rate. The market generated $5.84 billion in revenue, up 4.9% from the same period last year.

Thus, wood and timber exports earned $9.7 billion in Vietnam in the first seven months of the year, a slight increase of 1.2 percent over the same period last year.

Analysts say industry growth is slowing. Over the past 20 years, exports of wood and wood products have always been at high levels.

Export turnover, for example, increased from $219 million in 2000 to $11.3 billion in 2019. In 2020-2021, despite the Covid-19 epidemic, which paralyzed the activities of production, exports of wood and wood products still brought in $13 billion and $15.8 billion, respectively, a rate of growth unmatched by any other industry in the country.

Wood and wood products are the only group of agricultural products whose export turnover exceeds 10 billion dollars per year and which has the highest trade surplus. However, the industry’s picture has turned bleak.

Falling orders

A quick survey of 51 exporting wood processing companies conducted by associations and Forest Trends showed unsatisfactory results.

Regarding the US market, 32 out of 45 companies said their export turnover fell in the second quarter by an average of 39.6% compared to the first months of the year.

The same also happens with the EU market. Twenty-four out of 38 companies confirmed lower revenue in the second quarter, with an average drop of 42%.

As with other markets, the number of companies confirming a drop in their export turnover is overwhelming. The decline ranged from 22.15 to 41%.

Meanwhile, To Xuan Phuc of Forest Trends cited another survey which showed that 71% of surveyed companies claimed that export orders and turnover will drop sharply by the end of the year. .

As many as 44% of companies expected their revenues to fall by 40% this year.

The sharp drop in the number of orders and the unsatisfactory business results of joinery manufacturers are unprecedented. Even in 2020 and 2021, orders are still pouring in to Vietnam. The number of orders was so high that companies had to increase production and recruit new workers.

However, companies are now running out of orders and are facing problems in finding capital, workers’ compensation and spending on raw materials.

To cope, according to Phuc, companies reduced their scale of production, switched to other products and sought new markets.

Chairman of the Vietnam Timber and Forest Products Association (Vifores), Do Xuan Lap, said the Russian-Ukrainian conflict had driven up timber prices, causing difficulties for joinery manufacturers.

Vietnam’s main export markets, the United States, Europe and the United Kingdom, are experiencing high inflation rates and demand has dropped significantly. This had a direct impact on companies in the timber industry.

“The joinery export market in the last months of the year will be bleak,” Lap said.

He called on commercial banks to help carpentry companies overcome their difficulties by extending debt repayments, reducing interest rates and offering preferential loans. He also asked the Ministry of Finance (MOF) to reduce certain types of taxes and fees to support businesses.

On inputs, Lap said Vietnamese companies need to become self-sufficient in input supply to reduce their reliance on wood imports, which amount to 5-6 million cubic meters a year. .

Tam An


Comments are closed.