Seafood export enterprises accelerate but still face difficulties

VCN - Although many solutions have been applied to increase exports in niche markets, such as strategy alternation to target close markets, and quality product launching, seafood enterprises still face many problems.
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Seafood export enterprises accelerate but still face difficulties
Vietnamese seafood attracted many foreign visitors at the international seafood exhibition held at the end of 2022. Photo: T.H

Change strategy

Seafood exports have rebounded from February 2023 after a continuous decline from the end of 2022 to January 2023. Many large-scale seafood exporters have changed their export strategies, such as: exporting to niche markets, changing export products with reasonable prices, and adapting to inflation situations. As a result, initially, positive results were obtained. Although the business results in February 2023 were not equal to the same period last year, compared to the previous months, the export revenue of the enterprise has achieved higher. For example, in February, Vinh Hoan Joint Stock Company achieved export revenue of 758 billion VND, 29% lower than the same period but up 69% compared to January 2023. All of Vinh Hoan's export markets to the U.S., China, Europe, or the domestic market recovered from the previous month, with an increase of two to three digits. However, compared to the second quarter of 2022, Vinh Hoan's export revenue to the U.S. market decreased by 69%; the Chinese and domestic markets also went down by 2-3%. However, revenue from the European market improved.

Similarly, Mr Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Food Joint Stock Company, said that the company also has mapped out production and export strategies in the new context. In 2022, shrimp farming faced difficulties due to diseases; especially commercial shrimp was priced at world prices. Many shrimp businesses managed to store raw materials for peak consumption at the end of the year, such as buying commercial shrimp when the price was still soft and importing cheap shrimp from other countries. Unexpectedly, shrimp from other countries supplied too much, while the inflation recession made purchasing power not as expected. In early 2023, there was a huge inventory of distributors and processing plants. At the end of the first quarter of 2023, the world shrimp price dropped, while Vietnam's commercial shrimp was at the highest price in history because of scarcity. However, domestic businesses face the pressure of inventory and bank debt, especially low consumption and price devaluation. Therefore, businesses have to sell at a low price at world prices, although this is undesirable. It is expected to overcome the ongoing challenges," Mr Ho Quoc Luc shared.

According to Ms Nguyen Ha, a tuna market expert from the Vietnam Association of Seafood Exporters and Producers (VASEP), currently, the exchange rate difference is causing Vietnamese products to be priced higher than those of other rival countries in major import markets such as the E.U., the U.S... Besides, the price of raw tuna in the world market since the end of last year has been on an increasing trend, causing importers delaying orders to wait for the price to drop. All these are leading to the plummet of Vietnam's tuna exports. In the U.S., Vietnam's tuna exports continued to decline sharply, down 45% in February 2023, reaching more than 20 million USD. In return for this decrease, businesses shifted to small markets, exporting to Germany, the Netherlands, and Spain with positive high growth rates of 77%, 372% and 58%, respectively.

Exports to the main market decreased, and many businesses, typically catfish export ones, have turned to niche markets, which tend to change consumption due to inflation. While pangasius exports to the top 10 markets decreased by 8% - 60% over the same period, Germany - the 9th-ranked market, still maintained a growth rate of 81%. By the end of February 2023, pangasius exports to Germany reached more than US$6.2 million, an increase of 81% over the same period in 2022 and accounted for 2.6% of the total export value of Vietnamese pangasius to markets. Inflation also changes the seafood consumption trend of the country, with Europe's largest economy. Instead of consuming a lot of fresh and chilled seafood, the German people increased their consumption of frozen seafood, requiring export businesses to change their products accordingly.

Many recommendations to remove obstacles for businesses

Mr Truong Dinh Hoe, General Secretary of VASEP, said currently, the price of input materials for aqua feed production is at a record high and unstable, leading to the escalation of production cost of aqua feed and seafood products. In addition, the aquaculture industry is struggling with the problem of cost and competitiveness. Specifically, the price of shrimp raw materials in Vietnam is 20-30% higher than the price of shrimp of the same type in India and Ecuador. On the other hand, animal feed is a dominant input cost of the total value of farmed aquatic products. Soybean meal is the main raw material, accounting for 80-90% of aqua and animal feed costs. However, this item has a high import price and is not eligible for import tax reduction like wheat and corn, according to Decree 101/2021/ND-CP dated November 15, 2021, of the Government.

The aqua feeds production industry, in particular, and animal feed in general, are facing the risk of a sharp decrease in output, high selling prices, and reduced competitiveness, affecting the production and export of enterprises' goods. Therefore, VASEP proposed that the Ministry of Finance and the Ministry of Agriculture and Rural Development reduce the import tax rate of soybean meal from 2% to 0%, helping businesses in the industry boldly invest in production and export.

According to Mr Truong Dinh Hoe, implementing the "Action plan to combat illegal, unreported and unregulated fishing, prepares to work with the 4th European Commission (E.C.) Inspection Delegation by the Prime Minister", businesses have encountered inadequacies in the issue of certification of raw materials and certificates of food safety for the production and export of seafood to the E.U. Currently, VASEP has reported to the authorities and proposed to consider and direct to remove the above shortcomings to both well implement current regulations and open up the chain of seafood exploitation, processing and export to the E.U.

In addition, related to the Korean market - a large export market of Vietnamese seafood, including the shrimp industry, which is also facing difficulties, Mr Truong Dinh Hoe said that Vietnam is currently a major supplier of digital shrimp for South Korea, which account for more than 50% of Korea's 100,000 tons of shrimp imports each year. The FTA agreement between Vietnam and Korea, implemented in 2015, seems to facilitate trade and import tariffs for Vietnamese shrimp products. However, according to detailed information from VASEP member businesses, Vietnamese shrimp products imported to Korea are being requested by the Government of this country to auction to buy shrimp import quotas from Vietnam for 14- 16% of import value. If outside the quota, the import tax rate is 20%. Thus, imports of Vietnamese shrimp from Korea subject to a tax rate of 14-20% are not following the spirit of the FTA between Vietnam and Korea. The discrimination is especially clear compared with the Korea-Peru FTA because shrimp imported from Peru have no quota and enjoy a 0% tax rate. From this shortcoming, to create favourable conditions for businesses, VASEP reported to the Minister of Industry and Trade to propose the Government and the Ministry of Foreign Affairs review and recommend to the Korean side to consider the abolition of shrimp import quotas from Vietnam.

By Le Thu/ Thu Phuong

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