May 27, 2010

Higher input material prices, rising shipping costs and rising electricity, water and fuel prices have brought huge challenges for Vietnamese seafood export enterprises.

In the first five months of 2010, Vietnamese companies exported US$1.63 billion in seafood products, fulfilling 35% of the yearly plan to obtain US$4.5 billion. Though the five month export turnover is encouraging, increasing by 18% over the same period of 2009, enterprises admit that majority of the turnover came from last year's orders.

Nguyen Thanh Dam, General Director of Bac Lieu Seafood Company, said that the additional costs have made production costs rise by 6-8%. Meanwhile, they cannot raise prices in accordance with the higher costs of input materials. If they do, the company will not be able to compete with those in India, Indonesia or Thailand.

Input materials, which account for a big proportion of seafood production costs, have been soaring. Le Van Quang, Chair of Minh Phu Seafood Company, noted that shrimp prices increased by 30% over 2009, while the supply is more scarce. Tra fish prices have also increased by 11%, making finished products less competitive.

Seafood companies agree that cutting expenses may be the only solution.

Agromonitor, an analysis and forecast firm in Vietnam, has suggested that in order to cope with difficulties, seafood companies should diversify their export markets by trying to penetrate new ones in the Middle East, South America or China. Regarding the EU market, the firm thinks that Vietnamese enterprises should shift to potential markets that favour Vietnam's tra fish, such as Sweden, Luxembourg, Bulgaria, Slovenia, Romania, Estonia, Hungary and Slovakia.