March 6, 2012

Vietnam is about to lose its position as the world's biggest exporter of tra as production has taken a dive due to resigning fish farmers in the Mekong Delta and a lack of capital.

Pangasius prices are rising -- from the low levels of VND18,000 (US$0.85) - VND23,000 (US$1.09) per kilogramme to as high as VND 29,000 (US$1.37). However, farmers and exporters expect losses when the price climbs to its highest-ever level.

Some exporters believe that with the current tra prices, farmers would get VND 5,000 (US$0.24) per kilogrammeme at minimum, because the total production cost is just VND20,000 (US$0.94), according to reports. 

If farmers use industrial feed, Deputy Chair of the An Giang province Aquaculture Association, Le Chi Binh said, current sales prices will let them break even and, if exporters delay the payment for one month or longer, farmers will incur losses. Meanwhile, as it is currently very difficult to access bank loans, payment delays prove to be a high risk.

Since farmers do not have aquaculture areas like companies do, farmers now cannot get the tax refund for feed purchases, increasing production costs by VND2000 (US$0.09) per kilogramme. They also cannot borrow money from banks at good interest rates because banks are tightening credits.

Further, the investment rate for 100 tonnes of fish has boomed from VND1.5 billion (US$ 70,798) in 2010 to VND2.5 billion (US$117,997) today.

Exporters are also risking losses.

Tran Van Hung, chairman of Hung Ca Company in Dong Thap province, explained that some workers have left the company to run their own business and raise the collection price to VND29,000 (US$1.37) per kilogramme to scramble with other seafood firms.

A multitude of Vietnamese enterprises have been exporting products at prices lower than the floor prices set up by the Vietnam Association of Seafood Exporters and Producers (VASEP) or below production costs.

Nguyen Phuoc Tuyen from the Dong Thap provincial Department of Agriculture and Rural Development (MARD) has pointed out that this is really "dangerous" because these companies are undervaluing the products.