Seafood processing factories running at half speed

The continued lack of materials has forced many seafood processing factories to cut their operations. A lot of factories are reportedly running at just 50-60 percent of capacity.

In 2009, it was shrimp that preserve high seafood export growth, while export revenue from other kinds of seafood declined due to narrowed export markets. Now even shrimp are difficult to find.

The Mekong Delta is entering its main crop season, but the shrimp price is sky high, selling for 180,000 dong (30 shrimp per kilo) to 183,000 dong (29 shrimp per kilo).

As such, the shrimp price has jumped by 50 percent from 120,000 dong per kilo in September 2009 to 180,000 a year later. Even with high prices, seafood processing factories cannot collect enough due to shortages.

According to the Ministry of Industry and Trade, seafood export revenue in August reached $460 million, raising the total export revenue in the first eight months of 2010 to $2.9 billion.

In the first seven months, Vietnam exported 110.3 thousand tons, an increase of 15.5 percent over the same period of 2009, valued at $929.9 million (+20 percent).

Japan remains the biggest export market for Vietnam, consuming 32.4 thousand tons. Shrimp (frozen and processed products) is now leading seafood export items, valued at $929.2 million and accounting for 35.45 percent of total seafood export revenue, an increase of 20 percent over the same period of 2009. It is shrimp hatchery costs and domestic shrimp output, not the market, which will decide the export plan.

It is expected that black tiger shrimp exports in 2010 may reach $1.4 billion due to the short supply and changes in consumption habits. Vietnam’s shrimp will be the choice of Japanese importers in 2010, while South Korea will be an important export market as well. Besides, white leg shrimp export revenue is forecast to increase by two-fold to reach $500 million.

Since the beginning of the year, shrimp processing factories have worried about the lack of materials. Most Mekong Delta factories have operated below capacity. According to the Ministry of Agriculture and Rural Development (MARD), in 2010, Mekong Delta will put 550,600 hectares of water surface into use for black tiger shrimp hatcheries, or 70 percent of the region’s aquaculture area, a decrease of 16,000 hectares over 2009.

To obtain an output of 386,000 hectares as targeted, MARD has requested these areas to diversify production methods and has encouraged farmers to improve techniques and apply modern and environment-friendly technologies to meet the increasingly high demand on the international market.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), seafood processing factories may suffer shortages until the end of 2010.

Analysts have cited three reasons for the shrimp shortage in Mekong Delta. First, the increasingly high seafood prices have prompted farmers to harvest early. Second, farmers tend to give up breeding shrimp to cultivate other kinds of seafood with higher profits. Third, in the last many years, the shrimp hatchery area has grown less rapidly than the number of processing factories.

A Mekong Delta shrimp processor and exporter told Thoi bao Kinh te Vietnam reporters that, over the last ten years, shrimp export revenue has increased by two-fold, while hatchery areas have grown very slowly. The area even dropped when farmers, incurring heavy losses in epidemics, gave up.

While the aquaculture area has not expanded considerably, more and more processing factories have emerged. As a result, many processing factories have no materials and many are running at 50-60 percent of designed capacity.

Very few processing factories have shrimp hatchery areas of their own. Most collect materials from farmers, while prices go up and down all the time. In Soc Trang province, there are factories that can process 60 tons of shrimp per day, but they can only purchase 5-6 tons daily. Also, domestic processing factories must compete with Chinese merchants to collect these materials, who now go directly to the Mekong Delta to hunt for shrimp.-Thoi bao Kinh te Vietnam

Tags: Vietnam Seafood, Vietnam seafood sector