Lack of integration handicaps Vietnam’s agro-industry

Most Vietnamese food processors lack stable relationships with farmers and aquaculturists, reports Nguoi Lao Dong, and thus must wonder if they’ll have the supply they need to fill orders from customers.

Analysts say Vietnam’s processors of shrimp, rubber, sugar and other staples ‘live from hand to mouth’, because the processors cannot control their sources of supply.

Chu Van An, Deputy General Director of Minh Phu Seafood Company, says that in some nearby countries, the development of supply has received special attention. Thailand, for example, clearly defines which plants and animals are to be developed in which areas, and which factories with how much capacity can be established in which areas. Meanwhile, in Vietnam, it’s a free for all.

Processors seriously short of materials

At this moment, many seafood processing factories in Mekong Delta are running at just thirty to forty percent of capacity because they can’t get adequate supplies of shrimp. With supply short, prices have soared in the last few months. Black tiger shrimp (20 to the kilo) are selling at 185,000 dong per kilo, up 25,000 dong over the previous month.

The director of a seafood processing company complained that his company can purchase only 15 tonnes of shrimp each day from farmers though it needs 150 tonnes.

Vietnam is #5 exporter of natural rubber, but its industries that make products from rubber still cannot control their supplies. Many producers are currently having to pay three times more than a year ago for latex. It takes seven years on average to bring a rubber tree into production. Therefore, if enterprises do not have a long term strategy on developing plantations, they will still have to ‘live from hand to mouth’.

The sugar refining industry also has been suffering from supply shortages. Though many sugar refineries only run at twenty to thirty percent of their capacity, in many localities local authorities are still granting licenses to new refineries.

Shaking hands with farmers – the only solution

Some processors are trying to ‘save themselves’ by taking the initiative in establishing durable relationships with primary producers.

The Minh Phu Seafood Company has largely solved its supply problem by investing in a project to produce breeders in Ninh Thuan province and by cooperating with farmers to breed shrimp in a 600 hectare tract in Kien Giang and Ca Mau province.

Even when they wish to, however, few enterprises are capable of doing what Minh Phu has done.

Le The Chi, Deputy General Director of the Vietnam Coffee Corporation, said that the State ought to intervene to help organize proper programming and foster durable relationships between primary producers and processors. Chi said that it is first necessary to build up infrastructure and policies which direct capital to the rural areas.

Nguoi lao dong

Tags: Vietnam agro industry