Vietnam: Seafood industry, a year of blooming harvest

In 2010, Viet Nam’s fisheries industry achieved its targets in almost all fields of business with the total fisheries output reaching 5.2 million tons, including 2.8 million tons from aquaculture and 2.4 million tons from capture fishery.

Although the global financial crisis has come to an end, clear improvements haven’t been seen in the global economy in the first few months of the year 2010. Some European countries have been on the verge of debt- triggered crisis, thus causing panic and worries among their citizens. The consumers’ demands for staple foods, however, have gradually become stable. Food import, including seafood import, in many markets has flourished and developed better and better since the beginning of the year, which helps a great number of countries to empty their 2009 inventories and boost production in the year 2010.

Distinguished features.

Unlike the unstable conditions in almost all major seafood markets in 2009, which saw a combined year-on-year drop of 5.7% in the country’s seafood exports, the shipments to Japan, EU, and the US has dramatically increased in 2010. The US market rocketed by 45.3% in value compared to 2009.

The three major markets accounted for over 60% of the total seafood export value. The fact that the value grew faster than volume indicates that the quality and value of Viet Nam’s products have been remarkably improved.

In addition to the three major markets, the emerging Korea, China, Australia, and ASEAN countries also plays a very important role, accounting for almost 20% of Viet Nam’s total seafood export value.

Import of the major market

EU

In 2010, the European Unions (EU) continued to be the largest seafood importer of Viet Nam, consuming 364,000 tons of seafood, worth US$1.181 billion, up by 4% in quantity and 9.6% in value compared to 2009, accounting for 23.5% of the total seafood export value of Viet Nam. This growth rate, though still much lower than that in 2006- 2008, is really promising after the 4.2% fall in 2009. The fact that Europe was consecutively hit by the recession in 2008 – 2009 and the debt triggered crisis in 2010 was the main reason for the declining purchasing power of locals and belief among exporters.

Price is also a concerning factor, particularly in the context of the continual devaluation of euro against US dollar. In general, the import of most seafood products, except for shrimp, to EU in 2010 was stagnant.

EU was the biggest importing market of Viet Nam’s Pangasius. Though it is unlikely that the growth rate in the year before 2008 will be maintained, Pangasius products will continue to be Viet Nam’s key seafood export product to this block in the years ahead, as well as in the long-term run as the American market has increasingly imposed high anti-dumping duties on the fish.

The increase in shrimp consumption makes a spotlight in the EU market. In 2010, the shrimp import of most individual markets in the EU saw acceleration. In the first six months of 2010, the shrimp import of the EU reached 1.17 billion euros, up 6.5% in comparison with the same period of last year, mostly due to the growth of processed shrimp import from Thailand and Viet Nam. Viet Nam ranks the eighth in exporting frozen shrimp and the sixth in processed shrimp to EU.

In fact, Viet Nam’s shrimp, though accounting for a modest market share in EU market (approximately 4.3% in 2009), is progressing positively. In 2010, Viet Nam’s shrimp exports to EU reached US$342.5 million, up 19.7% compared to the same period of 2009.

In addition to Pangasius and shrimp, EU also acted as the largest and fastest-growing importer of Viet Nam’s mollusk, mostly squid and octopus. EU is also the second largest consumer of tuna after America.

The US

Among the world’s largest seafood consumer markets, the US is the country with the fastest recovery from the crisis 2008 – 2009. Its seafood import increased slightly by 3.8% in the first ten months of 2010, proving that the purchasing power of the market has been remarkably improved after the slight decline in 2009.

Besides, the oil spill in the Gulf of Mexico in late April, 2010 and the substantial decline in the traditional source of supplies has also boosted the US import of shrimp, whose prices soar by 30% compared to 2009.

In the last six months of the year, the US raise inventories for the sales in late 2010 and early 2011. Viet Nam has availed itself of this opportunity and become one of the five largest shrimp exporter to the US. In general, the purchasing power of the American market in 2010 is much better than that of almost other markets. Viet Nam’ s seafood export to this market has been expanded. The US has surpassed Japan and become Viet Nam’s second-largest seafood exporter, accounting for 19.3% of the total market share.

In 2010, the US imported 157,000 tons of seafood from Viet Shrimp sushi Nam, worth more than US$971 million, up 30.5% in quantity and 45.3% in value compared to the same period of last year. This is a rare development which is of great significance when compared to the 4.2% decline in Viet Nam’ s seafood export to the US in 2009.

The US was Viet Nam’ s second-largest importer of shrimp and Pangasius and the largest importer of tuna.

Its purchasing power is expected to increase and create more opportunities for seafood export.

However, most of the world’s big seafood producers target this market, thus making it a highly challenging destination. That is not to mention the increasing protectionism trend of the US government through antidumping measures and food safety and hygiene standards. On January 4, 2011, the US’s President Barack Obama signed into law the Food Safety Modernization Act, including strengthening the control of imported foods to the US.

Japan

Though Japan’s economy experiences slow growth, seafood is a favorite and popular food in this country. The consumption of such products as shrimp and tuna has recently been promoted, thus increasing their prices. Many sources forecasted that the year 2011 would witness an increase in the seafood purchasing power of Japan.

In 2010, Japan was Viet Nam’s third-largest importer of seafood with the quantity of 135,136 tons, worth nearly US$897 million, accounting for 17.8% of Viet Nam’s total seafood export value, increasing by 19.6% in quantity and 19.1% in value compared to 2009. Like EU and the US, this growth rate is a breakthrough from the 8.5% fall in value in 2009.

Japan was, in fact, the largest importer of shrimp and the third largest importer of molluscs from Viet Nam.

It should be noted that shrimp and Pangasius exported to Japan from Viet Nam in 2010 were 100% inspected, which partly affecting the 2010 growth rate.

Some other important market

Korea

Korea was the only market to retain a stable growth rate for years despite economic recessions. The main cause lies in the dramatic and continual fall in Korea’s capture production in the past years. Furthermore, this is the country where seafood products of various kinds and quality gains particular popularity.

In 2010, Korea imported 112,139 tons of seafood from Viet Nam, worth US$386 million, accounting for 7.7% of Viet Nam’s total seafood export value, increasing by 13% in quantity and 28.3% in value. At present, Korea is the fourth-largest importer of seafood from Viet Nam. Viet Nam’s seafood export to this market is estimated to continue to experience positive growth though the prices may not be as high as in other big markets.

China

The year 2010 has witnessed strong growth in seafood imported from Viet Nam. The people’s life has been much improved, thus making China an outstanding seafood importer worldwide. Meanwhile Viet Nam possesses favourable geographic location for supplying products to this market. The main products sold to China include shrimp, mostly unprocessed, and some kinds of molluscs.

Export to China is foreseen to further grow as the consumption demand in the country’s coastal provinces close to Viet Nam is climbing.

Other markets

Strong consumption of seafood imported from Viet Nam was also recorded in ASEAN countries, Australia, and Canada with the export value ranging from US$117 million to US$215 million in 2010.

Main exported products

In 2010, export volume and value of almost all key seafood items of Viet Nam rose faster than in 2009. Despite insignificant growth in value in 2010, Pangasius alone saw positive changes compared to the 7.6% fall in 2009.

Shrimp

Shrimp makes up a major part in seafood export growth. The export value reached over US$2.1 billion, accounting for 41.9% of the total seafood export from Viet Nam, increasing by 24.1% compared to 2009. Viet Nam’s shrimp was shipped to 92 markets in the world with the main markets being Japan, the US, EU, China, Korea, and Australia.

The increase in export of shrimp is attributed to the substantial growth in the purchasing power in major markets, particularly after the oil spill in the US and the production loss in many shrimp producing countries in the world.

On the other hand, the farmed shrimp output of Viet Nam in 2010 reached almost 470,000 tons, increasing approximately 17% compared to 2009. Although this output is far lower than the processing capacity of many plants, farmed shrimp serves as an important source of material for export processing. Moreover, at present, almost all Viet Nam’s shrimp processing plants have high percentage of value added shrimp products (as high as 80% in some plants), thus making drastic increase in prices for shrimp.

The increase in whiteleg shrimp output has made a remarkable contribution to the material supply and meet the demands for affordable medium and small-sized shrimps in many markets.

Pangasius

Pangasius has continually been the second strategic export product of Viet Nam, earning the country US$1.4 billion in 2010, up slightly 5.2% compared to the same period of last year. However the export value still did not achieve the target. This is may be due to the continual cutback in Russia and Ukraine and the smear campaigns in many markets. The lack of fish materials and increasing prices last few months has also exerted negative impacts on the growth of Pangasius exports.

It is expected that Pangasius export in 2011 will further decrease due to the decline in the farming areas. However, the value will not be affected much given the widespread application of quality control standards such as Global G.A.P, SQF 1000, and BAP, etc. in many farming areas, which help to promote the fish quality and hence the prices of the products.

Molluscs

After the decline in 2009, the molluscs exports in 2010 saw a positive recovery with the export value of US$489 million, up 15% in value compared to 2009, accounting for 9.7% of the total seafood export value of Viet Nam. The recovery of this product depends mainly on the increase in the purchasing power of EU market, the strongest of which are in traditional markets including Italy, Spain, and Korea.

Tuna

Tuna is a product with the highest export growth rate among Viet Nam’s seafood products in 2010. The export value of tuna reached approximately US$293 million, increasing by 60% compared to 2009.

America was the largest importer accounting for nearly half of the value (45.2%), growing by 94% in comparison with last year. The imports of EU and Japan also rose dramatically compared to last year.

Major obstacles

It can be said that the 2010 is the fruitful year for the seafood export. This, however, does not mean the seafood export has not experienced any serious difficulties.

The most noticeable is the severe lack of raw materials, particularly shrimp and Pangasius. The economic recession and the weather changes are basic factors affecting the output, thus making many plants operate at 40 to 50% of the designed capacity. Imports could be a solution, but this, in the long-term run, is not a sustainable approach since the seafood price is on the rise and supplies are decreasing.

Price competition has made the Pangasius price continually fall in the past two years, causing loss to many stakeholders in the production system, particularly the processors and farmers who suffered most. At the moment, the export price is increasing but raw material price also rise to the record, thus discourage farmers to expand to the farming business.

The use of illegal antibiotics, toxic chemicals and weight gaining materials in the aquaculture was and is going to impose profound effects on Viet Nam’s seafood export to major markets such as Japan and EU.

The lack of capital is now a burning question since after much loss, Pangasius and shrimp farmers cannot afford to restock. The supply of raw materials in the coming time is said to depend heavily on the credit access.

Another negative effect is the smear campaigns against Viet Nam’s Pangasius in a wide range of markets. It is advisedly that Viet Nam sets up a complete and accurate information system and dissemination in response to the campaigns.

The quality assurance, however, is still a prerequisite since all the smears target at the product quality and the farming environment. Therefore, instead of focusing on expanding the farming area, reasonable investment should be made in management of the farms and the farming environment, particularly for the intensive models, which are vulnerable to epidemics and can cause negative impacts on the environment.

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