Seafood processing workshops lack materials, who’s to blame?

Seafood companies complain that they cannot find enough materials to fulfill the export contracts signed with foreign partners. They have fallen into their own trap.

No materials to process

Nguyen Van Ky, General Director of Agifish An Giang, said that foreign partners want to place orders for the deliveries until mid 2012, but he has to refuse a lot of orders because of the lack of materials.

Other seafood processing companies are also moving heaven and earth to collect materials which are getting depleted. The Vietnam Association of Seafood Exporters and Producers (VASEP) has warned that the material shortage will last until the end of 2012.

The Ministry of Agriculture and Rural Development (MARD) has reported that just over the last few years, 30 percent of the tra fish farming area in Mekong Delta has been eliminated, because people now use the area for growing rice or farming other aquatic species. The figure is 50 percent in some localities.

Since mid September 2011, domestic processing factories have been scrambling for collecting tra fish from farmers. The material shortage has pushed the price up to 26,500 dong per kilo. However, even if accepting the high prices, seafood producers do not have materials to purchase.

Who’s to blame?

In late 2010, hearing the forecasts about the serious material shortage, farmers rushed to farm fish, hoping to sell fish at high prices. The tra fish price once jumped to 29,000 dong per kilo, thus bringing fat profits to farmers.

However, since June 2011, the fish price has dropped dramatically, because seafood companies unexpectedly decreased the purchases in an attempt to force the prices down.

At that time, VASEP announced that in July, big seafood processing companies will collect all the tra fish materials left at fish ponds. Especially, the companies accepted to pay 26,000 dong per kilo for the fish which can meet the requirements for export.

However, in fact, farmers could sell fish at 24,000 dong per kilo at maximum. Especially, the fish which cannot meet the requirements for export can be sold at 22,000 dong per kilo only. As such, the sale price is just equal or even lower than the production cost. A lot of farmers have decided to give up farming because they cannot make profits with their production.

Who’s to blame for the material shortage? A big tra fish exporter said that processing companies are not guilty.

“It is true that some companies unexpectedly broke the contracts the signed with farmers under which they take responsibility for the outlet of tra fish. However, prior to that, farmers also broke the contracts they signed with companies, and sold fish to small merchants who accepted higher prices,” he said.

Farmers and exporters need to join hands

Both farmers and exporters understand well that they should join forces for the mutual benefits. Therefore, agreements were signed under which farmers and exporters cooperate closely in farming and consuming tra fish.

After the model of farmer-exporter cooperation between Agifish and 30 households was born in 2005, some tens of “alliances” have been established so far. To date, the tra fish farming area of processing companies has reached 40 percent of the total tra fish farming area in Mekong Delta.

However, in many cases, farmers and exporters, the involved parties in the cooperation models, do not respect they promises: farmers would rather sell fish to private merchants if the merchants pay higher prices, while seafood companies try to impose their terms on farmers when the market prices go down.

Deputy Minister of Agriculture and Rural Development, Luong Le Phuong, said that it is necessary to turn aquaculture into a conditional business. Seafood companies will be allowed to export products only if they have cultivation area and markets, while farmers will be allowed to farm only if they have sale contracts with companies.

Source: TBKTVN

Tags: Vietnam Seafood, Vietnam seafood sector