July 6, 2012

Vietnam pangasius industry faces uncertainty

Doubts are casted over a bailout package, worth US$440,000, to aid the tra catfish (pangasius) industry as it is deemed to only benefit enterprises and not farmers.

Companies have not been buying fish from farmers because they lack funds, but farmers must continue to spend money to feed their fish daily.

Tra prices have dropped from US$1.05 to US$0.86 per kilogramme in just two weeks, informed Nguyen Viet Thang, Chair of the Fisheries Association.

"The situation has turned round. Previously, when exporters got big orders, farmers could sell tra catfish well. However, the demand of the EU and the US markets has dropped dramatically," Thang explained, VietNamNet Bridge reports.

Farmers in the Mekong Delta have exported 287,000 tonnes of pangasius worth USD 862 million so far this year, equivalent in volume to the amount of fish exported in 2011. However, profits have been undermined by falling prices.

The regional Steering Committee for Tra Fish Production and Consumption said prices had fallen by US$0.1- US$0.2 per kilogramme compared to 2011.

Deputy Chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP) Duong Ngoc Minh blamed this on stricter bank lending and high interest rates, which have forced farmers to sell at a loss, VNS reports.

Companies must lower sale prices to get money to pay debts, which is making fish prices in the domestic market take a dive.

VASEP has proposed collecting 100,000 tonnes of fish from farmers for storage. This scheme would have enterprises borrow money at 0% for four months to collect fish at the prices which must not be lower than the production costs: US$1.05-US$1.14 per kilogramme.

Truong Dinh Hoe, VASEP's secretary general, stressed that this is the urgent measure that must be taken to revive the pangasius sector.

Farmers disagree. They say they cannot set tra prices because they are decided on by businesses, so the latter would be the only ones making profits.

Meanwhile, businesses have been lowering their prices in an effort to attract buyers.

If farmers cannot make profits with farming, they will abandon the industry and processing companies would be left without fish to process.

Nguyen Huu Nguyen, Deputy Chair of the An Giang Fisheries Association, has worries that help may come too late if administration procedures cause delays.

Recently, tra catfish in Mekong Delta provinces have become oversized (weighing more than one kilogramme). If enterprises do not buy the fish immediately, the fish will become unusable because import markets only want to purchase small fish.

"In the past, the fish weighing 1.2-1.5 kilogrammes were considered oversized, while consumers now favour small fish, therefore, 0.9-1 kilogrammes fish would be listed as oversized already," Nguyen added.