September 24, 2010

 

Raw material shortage halves seafood operations in Vietnam

 

 

Numerous Vietnamese seafood processing factories have cut their operations, while many are running at only 50-60% capacity due to the continued dearth of raw materials.

 

It is hard to find shrimp even though the Mekong Delta is starting peak season.

 

Prices have rocketed to between VND180,000 (US$9.16) (30 shrimp per kg) to VND183,000 (US$9.32) (29 shrimp per kg). Prices have leaped by 50% from VND120,000 (US$6.11) per kg in September of last year to VND180,000 (US$9.16) now.

 

Yet even with these prices, seafood processing plants cannot make enough money due to shortages of materials, according to reports.

 

The Ministry of Industry and Trade said seafood export revenue last month yielded US$460 million. This makes the total export revenue for the first eight months of the year US$2.9 billion.

 

Vietnam exported 110,300 tonnes through July - up 15.5% over the first seven months of 2009 - at US$929.9 million, a 20% rise in value.

 

Japan imported 32,400 tonnes, remaining Vietnam's main market.

 

Shrimp (frozen and processed products) is the most popular seafood export item at US$929.2 million and 35.45% of total seafood export revenue, a 20% rise against the same period of 2009.

 

Black tiger shrimp exports may yield US$1.4 billion due to the material shortage and changing consumption trends. White leg shrimp export revenue is expected to jump two-fold to US$500 million.

 

Since 2010 began, most Mekong Delta factories have been running below capacity. According to the Ministry of Agriculture and Rural Development (MARD), the Mekong Delta will use 550,600 hectares of water surface for black tiger shrimp hatcheries this year, or 70% of the region's aquaculture area, a 16,000-hectare drop from 2009.

 

To reach the targeted output of 386,000 hectares, MARD wants the region to diversify production methods and has promoted modern and environmentally-friendly technologies among farmers to meet the burgeoning international demand.

 

The Vietnam Association of Seafood Exporters and Producers (VASEP) said seafood processors may experience shortages through 2010.

 

Analysts believe this is due to continually rising seafood prices that have led farmers to harvest early, their tendency to quit the industry and switch to species that breed higher profits and as in the last several years shrimp hatchery area growth has been exceeded by the expansion of processing factories.

 

Truong Dinh Hoe, general secretary of VASEP, said many firms have chosen to invest in processing facilities over seafood production because of the latter's high risks due to shrimp diseases.

 

It is rare for processing factories to have their own shrimp hatchery areas, as most acquire materials from farmers, and prices fluctuate constantly. In Soc Trang province, factories that can process 60 tonnes of shrimp per day have access to just 5-6 tonnes daily.

 

Further, processing plants must compete with Chinese merchants, who go directly to the Mekong Delta for these materials.