Seafood sector mired in wrong forecasts

Outcries are widespread among seafood farmers in the Mekong Delta for a simple reason: forecasts on market demands have proven wrong. Tra catfish and shrimps have for years been the key products in the waterlogged region, and farmers have always relied on forecasts to decide scales of their farming. This year, such forecasts on Tra catfish and shrimps have all gone the wrong way.

In the middle of this year, local enterprises and experts predicted the seafood sector would witness an excess of shrimp products due to limited outlets towards the end of this year, while the demand for Tra fish would run high owing to increasing demands on the global market. The reality, however, is contrary to the prediction.

Frustration over Russian market

Tra fish exporters in Vietnam earlier this year pinned high hopes on export when Russia lifted its import embargo for the product several months ago. The nation at that time expected to ship 70,000 to 120,000 tons to the market this year, an optimistic view by the seafood industry while the world was cutting down seafood consumption due to the economic recession.

Enterprises, agricultural officials and the Vietnam Association of Seafood Exporters and Producers (VASEP) all believed that Tra fish would be a bright point in the global financial meltdown, which had dragged down the whole seafood sector. The low-cost product is suitable for many consumers who are tightening their purse string due to financial problems, they said.

However, while some import markets have recovered, Vietnam’s Tra fish exports to Russia and Ukraine, the markets with the most potential in 2008, have dropped sharply. Russia imported only 400 tons of the fish worth US$600,000 in October, down 95% year-on-year, while in the previous month, this country imported nearly 8,000 tons.

Many enterprises have considered Russia the light at the end of the tunnel for the gloomy seafood sector this year. Nevertheless, a sharp decline on the market is among the main causes for the decrease of Vietnam’s Tra fish export volume that reached just 500,000 tons worth US$1.12 billion in the first ten months of the year, dropping by 10% against last year.

Fish farmers in crisis

Due to the export decline, material fish supply in the country has fallen sharply this month while processing factories are keeping a large fish stockpile. Processors do not want to buy fish although the product is offered at only VND14,500-14,800 per kilo, barely higher than the production cost.

Cao Van Nha, a fish farmer in Dong Thap Province, says it costs around VND12,500 per kilo of fish, not to mention labor, electric and water expenses. Many farmers have incurred big losses since enterprises have lowered the buying price, he adds.

The farmers are displeased that many experts and enterprises earlier predicted a thirst for materials in a good export season at the end of this year. Some breeders therefore have borrowed money to maintain fish farming although they suffered huge losses last year.

Meanwhile, enterprises have blamed narrowed consumption power and the bad Russian market as causes of the low buying price. “We have to offload a large stock of frozen fish products,” they explain why prices are low.

Shrimp prices rise

While shrimp supply was predicted to surge early this year, the nation is in a severe shortage of shrimp products with shrimp prices increasing continuously these days. Most seafood processing factories in the Mekong Delta have been thirsting for shrimp materials for the past two weeks, according to VASEP.

Kim Anh Co. Ltd., a large shrimp exporter in Soc Trang Province, can buy only ten tons of shrimp materials per month after buying 50 tons per month earlier. Shrimp prices therefore have increased by VND10,000-20,000 per kilo against last month.

Exporters say the world market still has a high demand for shrimp while the shrimp harvest in the region has been reduced. Processing factories are pushing up shrimp purchasing to serve the Christmas and New Year holidays.

The shortfall of shrimp is also attributed to the wrong forecast, and also to the huge losses incurred by many farmers last year. Huynh Thanh Tan, director of Cases Co. in Ca Mau Province, says sea shrimp output has come down due to recent bad weather. The enterprise can buy 60% of its processing demand only.

Due to the material shortage, the nation reached US$3.4 billion in export earnings from shrimp in the first ten months of this year, a 9.7% year-on-year decrease.

The Saigon Times Daily

Tags: Vietnam Seafood