October 26, 2010

Mekong Delta halts seafood production

A series of small-scaled seafood processing plants in Vietnam's Mekong Delta region had to cancel operations due to serious material shortages, a local processor stated.

Nguyen Van Dao, director of Go Dang Seafood JSC in Tien Giang province said that small-scale plants are unable to afford tra fish since its prices have hit two-year record high at between VND18,000 (US$0.923) and VND18,200 (US$0.933) a kilogramme as a result of tightened supply.

According to the director, the weak supply of tra fish has also forced large-scaled plants to cut down their designed capacity by 50%.

Local experts attributed the problem for loose cooperation between domestic processors and breeders, adding that the processors strove to pull tra fish prices down when supply outstripped demand.

The low prices of fish have prompted local farmers to narrow aquaculture, resulting in decreases in output, and pushing processing plants into material shortages.

Currently, cities and provinces in the region are capable of one million tonnes supply of tra fish yearly, while domestic plants have designed capacity of two million tonnes.

The experts warned that the material shortage will last until the end of next year unless processing plants set up their own breeding areas, or join hands with local farmers in expanding aquaculture.

The Vietnam Association of Seafood Exporters and Producers (VASEP) has recently proposed four solutions to the domestic tra fish industry's development, including making supply-demand balance at one million tonnes a year and tightening management on tra fish quality.

Setting up floor prices for tra fish at VND20,000 (US$1.03) a tonne to ensure farmers' profit is also a solution to the industry's development, the association said.