Industry stakeholders grapple with falling production, higher costs and low prices
Farmers harvest tra fish in the Mekong Delta. A shortage of the fish is expected to recur next month.
As many as 147 firms have stopped seafood processing and export to pursue other kinds of business since the beginning of this year, pushed out by a shortage of raw material and high input costs.
And more might follow suit.
The Vietnam Association of Seafood Exporters and Producers (VASEP) says the raw material shortage, which has forced many businesses to shut down or reduce the scale of their operations, has been caused by diseases and reduced production.
The director of a seafood processing company in the Mekong Delta said his firm was able to purchase just two or three tons of materials a day, about half of what it could get during the same period last year.
The situation, coupled with the increase in other input costs like electricity, fuel and salaries, has the company facing losses of over US$5,000 a month. His firm, which has over 100 employees, is now planning to cut its workforce drastically.
VASEP estimates that many seafood processing facilities in the central region and the Mekong Delta are only able to run at 30 percent of their capacity.
Truong Dinh Hoe, general secretary of the association, said diseases have damaged nearly 52,300 hectares out of 213,000 hectares of shrimp production in the Mekong Delta. The region annually provides some 213,000 tons of shrimp for local production and export.
With no signs of the supply getting better over the coming months, many firms are saying the government should allow import of shrimp with preferential tax rates so that they can continue production and retain their export markets.
It is not just shrimp, but the supply of fish that is also failing to meet demand.
Many firms are not interested in offshore fishing because of high input costs. Bui Khiem Nhuong, member of the managing board of the Ha Long Seafood Company, said transport costs have increased by 5-7 percent since early this year, as also labor costs, gasoline and electricity prices. Fishing vessels are hesitant to operate at these prices, he said.
A report submitted at a recent meeting held by VASEP said that the selling price of seafood has not caught up with the increase in spending on offshore fishing trips, which has upped by 40 percent over the last year, preventing nearly 20 percent of boats in Ben Tre Province from going offshore.
The shortage is also because local firms have to compete with Chinese traders in purchasing seafood offshore or at ports. To get the raw material they need, Vietnamese firms have to raise their purchase prices without a corresponding increase in export prices, lowering their profits, said vice chairwoman of VASEP Nguyen Thi Thu Sac.
VASEP said the shortage of tra fish that the industry had experienced early this year, when supply met just 50 percent of export demand, could recur next month.
Apart from fish and shrimp farmers discouraged from continuing with their vocation because of various problems including repeated losses in production and in the market, trading companies are also losing interest in exporting because of higher input costs and difficulties in sourcing raw material, said Nhuong.
"Production costs have increased by 20 percent and profits are down 30 percent over last year. In fact, our earnings are not significant," he said.
His firm this year has only one export contract 100 tons of tra fish to China, Nhuong said. "Because we can't earn much profit, we do not want to expand markets."
Despite all these difficulties, however, the seafood industry performed well in the first six months of the year. According to the General Statistics Office, seafood export turnover reached $2.6 billion in the first half of this year, up 28 percent over the same period last year.