How to increase the value of tra fish – a thorny problem

The Mekong River Delta exported more than 300,000 tonnes of tra fish in the first half of the year, up 19.4 percent compared to the same period last year, and up just 11.6 percent in value.

In the reviewed period, export turnover of tra fish was more than US$640 million and is estimated to reach more than US$1.4 billion by the end of 2010.

Vietnam has exported tra fish to 13 major markets in the EU, North and Central America, Asia and the Pacific. According to the Vietnam Association of Seafood Exporters and Producers (VASEP), there have been positive signs in exporting tra fish to such markets as Russia, the US, South America, and Brazil.

However, the problem is that the price of tra fish is relatively low compared to the last year’s figure. Currently, the American market is considered to have potential more in terms of export volume and price but only for some Vietnamese businesses which enjoy anti-dumping duties that are low or zero.

Difficulty in terms of prices

This year, the export price of tra fish tended to decrease going from US$2.28 per kilo in 2009 down to US$2.13 per kilo this year. In particular, financial crisis in the EU and the euro’s devaluation have had a great impact on Vietnamese export businesses as the EU is the biggest export market for tra fish.

Currently, Vietnam’s aquatic exports are priced in dollars. However, its major export market is the EU. Therefore, many EU importers have asked seafood exporters to decrease their selling prices, or they will have to stop importing these products. This has made the domestic price drop sharply recently.

… and materials

Many businesses are worried about the 10-30 percent price increase on imported materials while other input costs have also risen 7-10 percent compared to the same period last year. However, there is no way to increase selling prices.

A director from the seafood processing business in the Mekong River Delta has said that if the price of materials continues to decrease, a series of small-scale processing factories will go bankrupt.

Currently, some processing factories only operate at around 20 percent of capacity chiefly to retain their workers and avoid the suspension of production activities.

At present, around 30 percent of the breeding area for tra fish in the Mekong River Delta is caught in the “suspension” situation as the price of foodstuff increase by 40 percent over the last year’s figure. Breeders of tra fish have sometimes suffered losses as the price of raw tra fish was fluctuated between VND14,000-18,500 while the real price of tra fish is VND14,000-16,000 per kilo.

Furthermore, due to difficulties in taking out bank loans, many households can not maintain their production activities, leading to a lack of materials for export processing.

Solutions to the problems

In order to iron out snags, tra fish processing and export companies have tried had a variety of solutions. Many of them have taken the initiative in material supplies by building self-contained production from breeding, and processing through exporting. Others businesses, meanwhile, have cooperated closely with farmers by providing them with capital and buying their products.

VASEP plans to undertake communication campaigns to expand the models for businesses to self-provide materials.

In addition, businesses will export their products to newly-emerging markets like Bulgaria, Romania, and the Czech Republic, which have seen a significant growth rate in 2009, or to the Middle East and China. The steering committee on tra fish production and consumption in the Mekong Delta will also work with relevant agencies to help businesses solve problems related to tax barriers, and international trade taxes; provide information on the market, quality criteria, food hygiene and safety, and respond to distorted information about Vietnamese tra fish in some foreign newspapers.

In the meantime, the Ministry of Agriculture and Rural Development (MARD) will help businesses to boost trade promotion and advertisement Vietnamese tra fish products which meet food hygiene and safety standards.

Raising the quality of the products

As Vietnam’s second biggest export product after shrimp, tra fish exports make up 33.4 percent of total seafood exports.

Although exports in the first half of the year increased by 19.4 percent in volume year-on-year, its value rose by only 11.6 percent and this is attributed to the unsustainable development of tra fish breeding and processing.

MARD Minister Cao Duc Phat believes that the value of tra fish could increase by 10-20 percent of if the farming is incompliance with the Global GAP (Good Agriculture Practice).

In agreement with Minister Phat, VASEP Vice Chairman Nguyen Huu Dung says all businesses should bring their tra fish in line with Global GAP criteria in order to penetrate international markets, especially fastidious markets like the EU.

Mr. Dung also proposes building a fund to ensure the quality and stabilize the price of tra fish according to the market mechanism.

The fund, which is managed by the steering committee on tra fish production and consumption and the business community, will help breeders apply the Global GAP and provide businesses with support when necessary, says Dung.

Minister Phat asks breeders and businesses to improve the effectiveness of breeding and production by improving the quality of tra fish. He encourages breeders to follow the Global GAP and businesses to set a floor price for some major markets to protect the products’ prestige and ensure high profits.-VOV

Tags: Vietnam Tra fish exports