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Redirecting Catfish Exports to US Needs Considerations

Economics Politics +2 more

VIET NAM - Vietnamese catfish exporters have been warned redirecting their produces to the US market is an unwise move as it may trigger new waves of anti-dumping lawsuits raised by local farmers, according to a recent conference.

The demand for seafood imports in the EU market has been decreasing dramatically, since people have to cut down their spending amid the prolonged economic turbulence.

Therefore, Vietnamese exporters, who cannot boost sales in the EU market, have started to turn to the US market as an alternative choice, according to Thoi Bao Kinh Te Sai Gon newspaper.

"The shift may do harm than good, Nguyen Thi Hong Minh, former deputy minister of Agriculture and Rural Development (MARD), who had returned from a fact finding trip to Mekong Delta, told the conference.

Regional seafood companies have told me that they are considering exporting to the US market to offset the decreases in the exports to the EU, Mr Minh said at the conference held by the Vietnam Association of Seafood Exporters and Producers (VASEP).

Vietnamese seafood companies now tend to choose the US market since they heard that exporters would enjoy lower tax rates when entering the US.

The lowered tax rates for enticing local exporters were decided by the US Department of Commerce (DOC) after the seventh administration review (POR7) in March 2012.

The massive exports to the US may trigger new waves of anti-dumping lawsuits raised by the American farmers associations, Mr Minh said.

Relevant agencies need to monitor this movement as it may pose a new threat for more anti-dumping lawsuit against Vietnamese catfish in the US, Mr Minh added.

Nguyen Thanh Bien, deputy minister of Industry and Trade, said no intervention will possibly result in more risks for the next anti-dumping review for catfish exports.

VASEP has predicted a bad picture for local seafood sector in 2012.

An article published on VASEPs official website said the 11 percent growth rate in the first four months of 2012 and 0.9 percent growth rate in April are the lowest growth rates in the last three years, which can truly reflect the real difficulties of the industry.

Capital and material shortages, plus the increasing input costs and the narrowed export markets, all are the big challenges seafood companies are facing.

The exports of shrimp and catfish, the two main seafood export items, have begun decreasing since April.

Especially, shrimp exports dropped by 6.5 per cent to $163.2 million, and black tiger shrimp exports dropped by nearly 22 per cent owing to spreading epidemics and the low demand for high-grade products.

Catfish exports also brought $143.6 million only, a decrease of 0.9 per cent in comparison with the same period of the last year.

Analysts have warned that catfish exports would decrease further, if enterprises and farmers still cannot access bank loans.

The seafood exports to the EU decreased by 12 percent in the first four months of the year, of which shrimp and catfish exports were down by 30 per cent and 14 per cent respectively.

According to VASEP, the export turnover of catfish to EU, mainly in Spain, the Netherlands, Germany and Italy, was over $169 million in the years first five months, down 14 per cent from the same period last year.

Meanwhile, the export turnover to the US in the period reached $127.6 million, up 44 per cent year on year.

Seafood processors will fall short of 40 percent of catfish materials starting from the third quarter this year, said VASEP.

VASEP vice chair Duong Ngoc Minh said multiple farmers and catfish trading firms are now indebted to banks, letting alone the existing debt chains, of which processing plants owes money to farmers who owes money to feed suppliers.

Therefore, the chance for new investments in catfish cultivation in a seeable future is becoming unrealizable.

Between 20-30 per cent of catfish processing and exporting companies are on verge of bankruptcy this year due to a serious shortage of capital and materials.

According to the VASEP, the Viet Nam Development Bank (VDB) has advocated the associations proposal of offering urgent financial support to catfish companies.

There were only 473 companies involved in seafood exports during the first five months of this year, down significantly from 800 companies in the same period last year, according to VASEP.

Some US lawmakers, including Senator John McCain, have spoken out against the US Department of Agriculture (USDA) for adding its proposal on additional catfish inspection program for imported catfish into the US Farm Bill.

US Food Safety quoted McCain as saying that if the proposal is passed, Vietnam, which is the largest catfish exporters in the world, will sue the US to the World Trade Organization because the US has erected unjustified trade barriers.

In 2010, the US imported $ 185 million of catfish from Viet Nam.