Vietnam urged to diversify production

Published on
June 23, 2011

As Vietnam’s seafood producers get ready for Vietfish, the country’s largest seafood trade fair, which opens on 27 June, Scandinavian experts providing support to the sector locally say Vietnam’s aquaculture industry needs to diversify the species it’s farming while also improving branding and image in its export markets.

Yet Vietnam suffers a lack of workers skilled in modern technology needed to modernize supply chains in the seafood sector, explains Nguyen Thi Thu Hang, a Danish embassy official overseeing the Fisheries Sector Programme Support (FSPS), funded by the Danish government to encourage the local shrimp sector to improve overseas branding and foster an image for quality in order to get an edge on competition. 

Vietnam’s seafood exports rose 11 percent in volume and 18 percent in value to USD 5 billion (from 1.4 million metric tons exported) to Vietnam in 2010. Shrimp shipments contributed over USD 2 billion to that figure, with pangasius exports totaling USD 1.4 billion and third-ranked mollusk almost USD 460 million.

The FSPS, run alongside Vietnam’s ministry of planning, is also advising local regulators how to improve food-safety management and quality controls in order to give Vietnamese exports a quality niche and shift the industry away from competing on price. A 30 percent increase since 2009 in the cost of fish feed, much of which is imported from China, has hurt producers, said Hang.  

Pangasius and shrimp will continue to be the staples of local output, according to a USD 200 million master plan for the sector published by the Vietnamese government that sees local seafood output rising to 4.5 million tons a year by 2020. Yet rising feed and electricity prices have been blamed for many processing firms operating below capacity, leading to calls for a new focus on quality and diversification of species in the sector.

Helping Vietnam improve its marketing and quality standards has been a focus of Scandinavian aid to the sector. Mai Tran, a spokesperson for commercial affairs at the Norwegian embassy in Hanoi, said Norwegian aid, channeled through the Norwegian national aid agency NorAd, would help the country deal with a surplus pangasius production while also encouraging cultivation of other species such as crab. Likewise, the FSPS has been teaching farmers to diversify “rather than depending on a few species,” said Hang. 

A 16-fold increase in seafood exports since 2000 has ranked Vietnam among the world’s top 10 seafood producers, with the country’s earnings comparable to what it takes from the garment trade – both industries have been ranked as key export sectors by Hanoi. Vietnam benefits from a long coastline and river system where small holders pen and cage fish. Yet the cost of compliance to standards demanded by main export markets has been a drag on the competitiveness of the local sector, which remains dominated by medium- and small-sized enterprises. 

The government is encouraging an expansion of the aquaculture sector into coastline untapped by fish farming. While ultimately declining to be interviewed, a spokesperson for Nguyen Huu Dung, deputy chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP), said the industry’s stress would in the future be on “quality rather than quantity.”

Another factor is China: Vietnam’s official media has reported that tensions with the larger neighbor has kept trawlers off the sea for fear of being impounded by patrols from China, which disputes Vietnam’s territorial waters. 

In some respects, however, Vietnam has benefitted from China’s economic success. Vietnamese wages, which remain well below the average of China and Southeast Asian states like Thailand, have been a factor in investment, particularly from Japan. 

Ho Quoc Lu, chairman of Fimex VN, a shrimp processing joint venture with Japan-based Saota Foods, said the firm is benefitting from rising demand for shrimp as well as a shift in processing facilities from China to Vietnam to avail of lower wages. “This trend will continue,” he said.

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