Tra fish industry must restructure

There’s a saying among Mekong Delta farmers: tra fish can spawn land. However, at the same time, it can eat it up.

The local saying testifies to the harsh reality of a highly risky business that can either bring farmers’ fortune or take away all their property.

The tra fish industry in the Mekong Delta has for dozens of years gone through many ups and downs. In fact, it has had more downs than ups.

Once again, tra fish farmers last year suffered great losses due to declining prices, and exhausted farmers cannot afford losses again.

These days in An Giang Province, the centre of the tra industry in the Delta, amid desolate ponds and gloomy floating villages, empty-handed farmers feel an urge to change more than ever.

After all, they cannot just call it a day, given that they have been deeply involved in the industry that is so established in the Delta.

So, no mattered how battered they are, farmers and other players in the industry are struggling to find a way out; otherwise they cannot survive.

Value chain

Given that the fish industry has sufficient experience, techniques and support industries to flourish, most problems are traced back to price fluctuations.

In fact, losses of harvests are rare among fish farmers.

Prices go down when most farmers harvest and sell fish at the same time, or when harvests exceed market demands.

Sadly, such stories have happened over and over again in the Delta.

“Unlike rice farmers who can store rice when selling prices are too low, fish farmers cannot wait for prices to go up at all,” said Nguyen Thai Son, chairman of Thuan An, a tra fish processing and exporting company in Chau Thanh District.

“Every single day of waiting costs dozens, if not hundreds of millions of dong (thousands of dollars) in feed to maintain fish,” he explained.

“So farmers compete with each other to sell their harvests as soon as possible.”

Only when farmers’ production was regulated can surplus crises be solved, he said, and regulation was only possible when involved parties in the industry were linked together in the value chain.

Thuan An was one of three companies entrusted by the provincial industry association to develop pilot connectivity models towards sustainable development of the industry, he noted, following last year’s decision by the provincial People’s Committee to sort things out.

Accordingly, farmers, processors, banks and feed suppliers are the four parties that will work together in the value chain.

Fish farmers and processors are the main players at the front of the chain.

Farmers rely on production plans and technical aid provided by processors to work on their own ponds and cages, while processors are required to buy all harvests of farmers.

“We do not fix prices at the beginning, but buy fish according to market prices,” said the chairman. “In that way, processors and farmers can share both profits and risks.”

However, in a business that requires enormous investment, processors and farmers alone cannot make it without supporting parties like banks and feed suppliers.

In fact, crisis after crisis in the last four years has exhausted both farmers and processors, so banks had an important role to play to make the chain possible, said Khuu Thi Cam Nhung, deputy director of the company. Thuan An Company alone has halved its manpower to 400 workers who now work for only four hours a day with monthly wages halved to just VND1.5 million ($700), and its capacity has dropped from 120 to 40 tonnes a day.

“In fish farming, feed accounts for up to 70 per cent of investment,” she explained, “The percentage should be halved between feed suppliers and banks, given that farmers already contribute 30 per cent in terms of property and labour.”

“Suppliers supply half of feed on credit, and banks pay them for remaining feed,” she said, adding that suppliers would award cheaper prices to farmers in the chain.

In that way, banks did not give loans to farmers directly but in form of payments to feed suppliers.

However, only farmers having from five to more than 12 hectares could enter into this industrial value chain, said Nhung.

So small farmers either pooled forces together to form a unit or turn to breeding baby fish; otherwise they would perish.

“The industry of scale has no place for small farmers whose random production contains risks,” she explained.

If the chain is widely applied in the industry, processors can decide how many tonnes of fish farmers should turn out, resulting in good prices for both exporters and farmers, according to chairman Son.

On the other hand, with farming processes controlled closely from breeding to chemical uses, the chain ensures farmers end up with clean fish that meet all required hygienic standards.

“Only processors certified by the Department of Fisheries are allowed to join the chain,” he noted.

Legal ties

Unlike other linking models in the past, the value chain requires legal accountability of all involved partners.

“In the past, we were just like lovers who vowed to each other,” explained Son. “But now we’re legally married with full responsibilities.”

“So if any parties break contracts, they will be sued in courts,” he added. The most worrying link in the chain, he said, were farmers who were ready to sell their fish to collectors, rather than to contractors, for higher prices.

A panel of inspectors, including representatives of banks, processors and paid village chiefs, would be formed to check illegal selling of fish, he said.

Banks, which have been traditionally reluctant in disbursing to fish farmers given risks of the industry, were the most worrying concern.

“Farmers sell fish to processors, and processors in turn will pay banks on farmers’ behalf,” he said, explaining that in that way banks are assured returns of their loans since they don’t have to collect payments from farmers.

“We can do nothing regarding banks, and only governments at both central and provincial levels can sort this out to incorporate banks into the chain,” he said.

“We want incentive policies for the fishing industry just like that of the rice industry because fish export turnover is almost on the same par with that of rice,” he said.

The scheme of the value chain, which has been presented to all parties excluding banks, has received positive feedback.

Five farmers having a total of more than 40 hectares of fishing ponds, two breeding farmers, four feed suppliers and three chemicals suppliers want to join the chain, according to the chairman.

“We submitted the scheme to the provincial Department of Agriculture and Rural Development and the People’s Committee and were given the green light,” he said.

“The People’s Committee is working with the Bank of Agriculture and Rural Development,” he added, noting he just waited for the results to summon a meeting of stakeholders to kickstart the chain, hopefully within this year.

Phan Thanh Luyen, 49, a fish farmer in Chau Thanh District for eight years, said he earnestly wanted to join such a value chain.

“I have learned from hard-earned experience that processors would not buy my fish during times of crises,” he said. “They just took fish from their own ponds.”

“Once I have contracted with processors, I will no longer have to worry about consumption,” he said, adding that he would be informed of emerging diseases and provided with appropriate pesticides.

“We knew nothing about what was happening and were just asking each other,” he added. “I know all the techniques, and I just need good baby fish and capital.” — VNS

Tags: Vietnam Tra fish