High costs lead to poor profits for seafood exporters

Vietnam’s seafood export revenues in Q1 totalled Us$ 1.1 billion; a 22% rise yoy. 

But higher revenues did not translate into profits for exporters because the costs of basic materials and production have been steep, said the Ministry of Agriculture and Rural Development (MARD).

While some seafood companies will break even, most of them will suffer sharp losses, said General Director of Agifish Nguyen Van Ky. 

Nguyen Duy Nhut, deputy general director of Nam Viet Joint Stock Company in the Mekong Delta, said the firm made more than VND 300 billion (USD 14.2 million) from seafood exports but saw zero profits. And Nguyen Van Dao, director of Go Dang Seafood Joint Stock Company, enjoyed a climb of 15 per cent in company sales – but only a marginal profit increase.

Shrimp business Minh Hai Seafood JS Company made USD 13 million from exports in the first quarter of 2011, or 40 per cent more than during the same period of 2010. The profit was not considerable, but Minh Hai would maintain relations with importers and export markets and did not plan to lay off any workers, the company director assured.

The Ca Mau Association of Seafood Exporters and Producers said that shrimp exporters achieved total revenues of USD 155 million, reports SGGP.

The lofty costs have tightened the pressure on seafood companies, commented Vietnam Association of Seafood Exporters and Producers (VASEP) Chairman Tran Thien Hai.

Because the country has benefited from seafood exports by collecting a tremendous amount of foreign currency and creating many farming jobs, he said, the main objective now is to bolster production and exports so the industry can continue doing its part to steady the country’s social wellbeing.

VASEP has hiked prices of tra sold to the US from USD 3.8 to USD 4 per kg and to Europe from USD 3.2 to USD 3.4 per kg. Even so, shrimp prices have stayed at USD 10-USD 11.75 per kg.

One silver lining is that, since Japan’s earthquake and tsunami disasters, Vietnamese companies have been completing myriad contracts to export their seafood there, told Ly Van Thuan, general secretary of the Ca Mau Province’s Association of Seafood Exporters and Processors, reports VietnamNetBridge.

Businesses’ biggest hurdle now is the dearth of seafood materials, which has caused factories to run at only 40-50 per cent capacity.

Seafood enterprises and farmers have not developed breeding farms because of the hiking prices of feed and lending interest rates plus limitations in obtaining loans, according to Duong Nghia Quoc, director of the Dong Thap Province Agriculture and Rural Development Department.

Exporters expect that the second quarter will be even tougher.

Source: Vietfish International

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