Khanh Hoa seafood enterprises in short of raw materials

VF. The shortage of raw materials for fisheries processing is a common issue in fisheries sector in the beginning months of 2011. How does Khanh Hoa province solve this problem?

Mr. Dao Cong Thien (DCT). Material shortage in fisheries processing is still a difficult issue for Khanh Hoa province. Currently, processing factories are operated at only 50-60% of their capacity; many of those have to process other products in order to sustain incomes for their workers. They are now facing not only the lack of shrimp, but also other seafood such as tuna, squid, and mollusc, ... The problem has persisted for years, but there is no feasible solution to comprehensively deal with it.
In order to achieve the 2011 targets, i.e. shipping 59,000 tons of seafood worth US$305 millions, the Khanh HoaDARD has recommended the local enterprises to diversify their sources of raw material supply, avoiding heavy dependency on domestic materials, and actively finding external sources of raw materials for processing. They should also work closely with local farmers and fishers to establish long term relationship, thereby secure the material supply.

From the State management side, we have promulgated policies to encourage fishing vessels to land at the local ports, and to upgrade these fishing ports for better services. Khanh Hoa houses the most crowded fishing ports in the country. This helps the local companies get better access to the raw material supply.

VF. There is a comment that the Chinese traders purchased high volumes of Vietnamese seafood and thus create the current material shortage. However, this did help our local fishers sell their products at higher prices and less depend on domestic processors, who may force them to bring the price down, didn’t it?

Mr. DCT. We are now under market economy, so that no one can force the others to do anything. The processing companies have to invest a large amount of capital in the equipment and premises as well as maintain the payroll for hundreds of workers. In addition, they have to be very competitive in the markets. Therefore, they have to find ways to reduce their production costs. However, when the demand in the market is low and supply is high, our local fishers can not sell their products at high price, they say the processors are bullying them. That is unfair!

If the local fishers sign supply contracts with processors, they will be safe from price fluctuation and oversupply. Selling seafood materials to the Chinese traders is just seasonal and we cannot be sure about their actual need and demand. There are several lessons learnt from the water melon and litchi trading between Vietnamese farmers and Chinese enterprises. Therefore, Vietnamese fishers need to be cautious.

VF. With over 40 processing companies in the province, the material shortage would have damaging impact. How the government should support those companies?

Mr. DCT. Competition will lead to the elimination of weak companies. Only the strong enterprises, who take the business seriously and have clear orientations, can survive the current difficulties. In my opinion, this is a right time for the elimination of weak enterprises, whose low quality products are destroying the images of Vietnamese seafood in international markets. Those enterprises should immediately close down; otherwise the business community can boycott them with the proper interventions of the government.

With the potential enterprises, the government should support them in two ways. First, the government should help them amass sufficient raw materials through import tax elimination. For the long term, the government should promulgate policies to support the development of modern and high-capacity fishing fleet.

We all know that the management and technical skills of Vietnamese fishers are still limited. Even with the government’s support, their operation will not expand beyond the offshore waters of Viet Nam. Therefore, the government should give priority to the enterprises, who have good development prospect, competent workforce, and experiences in international markets. The success of these enterprises will bring a lot of employment opportunities for local people and contribute to state budgets.

I myself know that Hai Vuong company (Havuco) is planning to purchase refrigerated vessels to collect seafood from international waters. This reveals how much the seafood enterprises in Viet Nam can do. I myself think it is a right path to go.

VF. Thank you!