| In 2023, exports of wood and forestry products only brought in $13.5 billion. In 2024, the target for wood and forestry product exports is $17.5 billion. |
For the first time, 2023 marked a period of no growth in exports of timber and forest products.
According to the Ministry of Agriculture and Rural Development , in 2023, exports of wood and wood products totaled US$13.37 billion, a decrease of 16.5%. 2023 was a difficult year for the wood industry as consumer demand in key export markets such as the United States and the EU declined sharply, leading to a drop in orders, forcing many businesses to scale back production, or even close down.
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| Exports of wood, wood products, and forestry products in 2023 only brought in $13.37 billion. |
In 2023, Binh Duong's wood industry accounted for 42-45% of the country's total export turnover, with export sales of approximately 5 billion USD. Lam Viet Joint Stock Company (Binh Duong), while one of the relatively successful export businesses in 2023, only achieved 80% of its 2022 export value. Most other businesses in Binh Duong only reached 50-60% of their 2022 sales figures.
Mr. Nguyen Liem, Chairman of the Board of Directors of Lam Viet Joint Stock Company, shared that in the third and fourth quarters of 2023, orders increased, but these were orders to compensate for reduced inventory from the US and EU and to serve the Christmas and New Year holidays, not sustainable orders. "The outlook for wood exports is unclear; orders for early 2024 have been secured, but the factory is not yet operating at full capacity ," Mr. Nguyen Liem shared.
Speaking about the export results of wood and forestry products in 2023, Mr. Nguyen Quoc Tri, Deputy Minister of Agriculture and Rural Development, said that the plan for 2023 was to export wood and forestry products worth 16-17 billion USD, but by the end of December, the export value had only reached nearly 14 billion USD. It can be affirmed that over the past 20 years, the export targets of the forestry sector have continuously reached peaks, but this year they have declined. This signals that the industry must quickly restructure its products, from raw materials and finished products to markets…
Is the target of $17.5 billion for 2024 achievable?
Entering 2024, the forestry sector aims for export turnover of 17.5 billion USD. Mr. Nguyen Quoc Tri believes these targets are quite high, especially in the context of prolonged and unpredictable political conflicts, and difficulties in both the input and output aspects of exports.
Assessing the export market for wood and wood products in 2024, Mr. Do Xuan Lap – Chairman of the Vietnam Wood and Forest Products Association – stated that although the market has shown some signs of recovery, 2024 still presents some challenges for the industry. Besides difficulties in market access, the industry is facing several current issues that directly affect its sustainability.
"In 2024, the wood industry will still be in a state of instability; therefore, overall, the forecast is that the wood industry will experience growth, but at a slow pace, approximately 10-12% compared to the last quarters of 2023," Mr. Do Xuan Lap commented.
Currently, the United States is Vietnam's largest export market for wood and wood products. Mr. Pham Quang Huy, Vietnam's agricultural attaché in the United States, assessed that inflation in the US market is cooling down, employment is increasing, especially in construction and real estate transactions, which show positive signs. This indicates that wood product exports to the US market are expected to grow again.
However, it is difficult to predict the future due to declining but still high inflation, weak consumer demand, and a sharp drop in most wood exports to the US. Americans typically replace furniture after only a few years, but rising living costs mean income is spent on essentials, leaving little room for replacing home and exterior furnishings.
Nevertheless, there are still positive factors. Mr. Pham Quang Huy analyzed that the low-price segment is selling poorly, while the high-price segment remains stable. The US market has reduced construction but is not frozen, and affluent households continue to build and replace furniture.
The inventory levels in the United States are projected to gradually decrease by the end of 2023. This presents an opportunity for Vietnam to boost exports of wood and wood products to the United States in the coming period. Importers will resume orders, but the orders will no longer be as large as before.
Mr. Pham Quang Huy also noted that the US legal environment requires imported wood products to ensure environmental protection, safety, revenue, and fair trade. Therefore, businesses should comply with Decree 102 on Vietnam's legal timber system and Agreement 301 between the two countries on the exploitation and trade of illegally harvested timber. At the same time, they should monitor trade protection cases in the industry, develop new products with high technical content, creativity, and environmental friendliness… to increase competitiveness in the world's largest wood product market.
Regarding the EU market, on June 29, 2023, the European Commission's Regulation on Deforestation Prevention and Control (EUDR) officially came into effect. This new regulation will significantly impact Vietnam's export turnover to the EU. Mr. Nguyen Chanh Phuong, Vice President and General Secretary of the Ho Chi Minh City Handicraft and Wood Processing Association (HAWA), stated that the specific requirements of the EUDR pose major challenges for Vietnam's wood processing and export industry.
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