April 30, 2011

Rising fish feed prices lead to drop in Vietnam's tra fish output

Vietnam's rising fish feed prices have led to a significant drop in tra fish output and a surge in fish prices, threatening to cause steep losses for exporters.

The Vietnam Association of Seafood Exporters and Producers (Vasep) said at a meeting early this week that exporters were purchasing tra fish from farmers at nearly VND29,000 (US$1.41) a kilo, and as other input costs like electricity, oil, interest rates and wages, the production cost has amounted to some US$3.4 a kilo.

Vasep, therefore, has decided to raise the floor price for tra exporters to above US$3.4 a kilo to avoid undercutting among local enterprises and to keep them from big losses.

The export price of tra products has increased substantially, but it is still well below production cost, averaging out at only US$2.6 per kilo in the first quarter, which showed a year-on-year increase of 20%.

Despite the price hike, however, tra processors and exporters at the meeting said they could hardly earn a profit due to the spiraling cost.

Nguyen Van Ky, general director of Agifish, a giant tra exporter in An Giang Province, said that orders placed at his company this year totaled 65,000 tonnes, but supply could meet only two-thirds of that.

The second quarter of the year marks the harvest time for tra but almost all of my suppliers in Dong Thap, Can Tho and An Giang provinces said that they could only supply 20,000 tonnes out of my total demand of 65,000 tonnes, he said. Another one-third is to be sourced from his company's own farms.

According to him, although the export price to the US has climbed between 17% and 19% over the last year to US$4 per kilo now, higher cost and freight as well as more expensive materials have wiped out profits.