The Vietnamese Seafood Sector: A Value Chain Analysis

Within the Asian region CBI is currently studying the possibilities of developing integrated programmes for the seafood sector for specific countries. This follows up on CBIs current sea-food activities in Indonesia with the Ministry of Marine Affairs and Fisheries (MMAF) and the Surabaya Seafood Centre.

The policy of the Government of Vietnam aims to guide the seafood sector towards a leading world position as seafood exporter and is set out in the fisheries development strategy plan to 2020. An analysis of the plan shows that the focus of the Government of Vietnam is on increasing aquaculture production through diversification while the focus for capture fisheries is on protecting the fisheries resources.

Based on the results of the desk study, which was carried out in phase one of this seafood export VCA, the following subsectors in Vietnam were selected for value chain analysis:

• Shrimp
• Pangasius
• Tuna
• Clams, oysters and mussels

Shrimp Subsector

About 90% of shrimp production in Vietnam is exported. In 2010 the total value of Vietnamese exports was almost USD2bn. In 2010 the EU and Japan were the most important export markets in terms of value. Black Tiger shrimp still accounts for the largest share of shrimp production. However, the share of Pacific White shrimp is increasing rapidly. It is likely that in the coming years more farmers will shift to this non-native species. Five main bottlenecks for the export potential of the Vietnamese shrimp subsector have been identified as a result of the desk study, field work and validation workshop. These are presented in Table 1.

There is considerable overlap between bottlenecks. As a result certain actions can tackle several issues. Most of the solutions to the bottlenecks relate to increased integration and cooperation between public and private actors across the shrimp sector. The most important bottlenecks for exports - traceability, food safety and sustainability - can be solved by increasing control and influence of lead firms over the value chain. Contrary to the problems at the primary production level such as disease and high input costs, these problems are directly related to exports, as non-compliance with traceability and food safety regulations will result in denial of market access, especially by the EU health authorities. This is especially so when exporting to the EU retail market segment where food safety, traceability and sustainability requirements are even stricter and more complex. The only way to achieve increased control in the supply chain is to create a competent base of suppliers who are not too risky to work with for lead firms or by creating cooperatives of small-scale farmers that are not completely dependent on credit systems any-more. This enables them to buy farm inputs while maintaining a bargaining position that enables them to engage in direct relations with shrimp exporters. If Vietnam succeeds in organising its farmers in competent cooperatives that are able to engage directly with exporters, and in convincing exporters to invest in sustainable relationships with shrimp farmers, then the prospects for the sector are very good. However, this process will take time and in the short term attention needs to be given to solutions that can help to improve the current situation by, for example, raising awareness and competencies of middlemen and helping exporters to find partners to invest in sustainable shrimp production.

The export companies in the shrimp subsector are relatively mature. The fact that the exporters that were interviewed and present during the conference have not indicated that market access or market visibility is an issue for them suggests that these exporters are able to position themselves in the international market without additional support. Unless production from shrimp farms increases substantially it is unlikely that the exporters will be stimulated to further increase their export volumes by providing them with market intelligence or sponsoring them for visits to international trade fairs. However, exporters as well as other stakeholders in these subsectors have indicated that they struggle to meet the increasing demand for sustainably produced products. Furthermore, they also find it difficult to find their way through the wide range of diverse standards that apply to different markets within the EU, the US and Japan. Assisting and coaching exporters to identify, prepare and apply for certification schemes such as ASC, ACC, GlobalGAP or Naturland that fit best their product, business model and existing and prospective customers and markets may, if successful, substantially increase the export volume and value of sustainably certified shrimp products.

Pangasius Subsector

About 90% of pangasius production in Vietnam is exported. In 2010 the total value of Vietnamese exports was USD1.4bn. The EU and US are considered to be the most important market destinations for pangasius. Nearly all pangasius are exported as frozen fillets. Five main bottlenecks for the export potential of the Vietnamese pangasius subsector have been identified as a result of the desk study, field work and val-idation workshop. These are presented in Table 2.

Much work needs to be done to link the different actors and supporters in the pangasius sector together. More integration and long-term sustainable relationships between farmers and exporters, but also between value chain actors and BSOs, will benefit everyone. It seems that from the conclusions of the conference and in line with the conclusions in the shrimp sector the future of pangasius will be prosperous if the sec-tor succeeds in making the move towards sustainable production. This must be achieved through improving the capacity and capability of pangasius farmers either through organising farmers horizontally or by increasing the formal relationships between farmers and processors, which will encourage processors to make investments in pangasius farms.

Similar to the shrimp subsector, the export companies in the pangasius subsector are relatively mature. The fact that the exporters that were interviewed and present during the conference have not indicated that market access or market visibility is an issue for them, suggests that these exporters are able to position themselves in the international market without additional support. Unless production from shrimp farms increases substantially, it is unlikely that the exporters will be further stimulated to increase their export volumes by providing them with market intelligence or sponsoring them for visits to international trade fairs. However, exporters as well as other stakeholders in these subsectors have indicated that they struggle to meet the increasing demand for sustainably produced products. Furthermore, they also find it difficult to find their way through the wide range of diverse standards that apply to different markets within the EU, the US and Japan. Assisting and coaching exporters to identify, prepare and apply for certification schemes such as ASC, ACC, GlobalGAP or Naturland that fit best their product, business model and existing and prospective customers and markets may, if successful, substantially increase the export volume and value of sustainably certified pangasius products.

Tuna Subsector

Vietnamese exports of tuna can generally be divided into canned tuna and frozen tuna products. In 2010 the total export value of canned tuna was expected to be over USD175m. The export value of frozen tuna in 2010 was USD103m. The US, EU and Japan are the most important markets for Vietnamese tuna. Six main bottlenecks for the export potential of the Vietnamese tuna subsector have been identified as a result of the desk study, field work and validation workshop. These are presented in Table 3.

The majority of the bottlenecks occur at the stage of the fishing fleet and the fish landing sites. Most of the small fishing vessels depend on the middlemen. In 2010 Vietnamese exporters exported about 80,000 tonnes of frozen and canned tuna, while only 37,000 tonnes of tuna were caught by the domestic fishing fleet. Data from VASEP show that Vietnam imported more than 52,000 tonnes of tuna in 2010, while in 2009 42,000 tonnes of tuna was imported from several countries. Vietnamese processors/exporters seem to be more dependent on imported tuna than on the raw material supplied by the domestic fleet. An important aspect for importing tuna from Vietnam is that tuna caught by Vietnamese vessels has lower import tariffs than tuna that has been caught by foreign vessels. Is has been estimated that up to 50% of the catches cannot be sold to processors/exporters because the quality of the tuna has deteriorated due to insufficient cold storage facilities. Keeping in mind the lower tariffs for Vietnamese-caught tuna, processors should have an interest in improving the quality of the catches. Therefore the position of the fishing fleet within the value chain needs to be strengthened. The recently formed Vietnam Association of Tuna (VINATUNA) can contribute to the strengthening of the position of the fishing fleet. To maintain the quality of the tuna after it is caught, significant investments must be made and it is not certain whether the government will be able to provide the requested support. Also, the steps Vietnam is currently taking to obtain full membership in the WCPFC is an important improvement for the tuna sector.

Besides increasing imports of tuna from foreign vessels, production from the municipal fisheries may be increased substantially by reducing post-harvest losses. Besides increasing production there is also a large potential to stimulate exporters to source from sustainable sources, to support hand-line fishermen and to get involved in initiatives to promote sustainable tuna fisheries. However, for tuna this is a delicate issue because it is a migratory species with uncertain stocks. In order to increase the exports of sustainable certified products, an approach similar to that used for pangasius and shrimp is logical. There are examples of sustainable initiatives in the tuna sector to source tuna from small-scale fishermen that use sustainable catch methods. These kinds of initiatives can easily increase the export volumes and values of sustainable tuna products. However, exporters must be made aware of the market potential for sustainable certified tuna.

Clams, Oysters and Mussels Subsector

Oysters and mussels are not yet exported, and about 80% of total exports of bivalves consist of hard clams. Other exported species are scallops and blood cockles. In 2010 the total export value of clams was USD45m. The EU is the most important export market for Vietnamese clams. Eight main bottlenecks for the export potential of the Vietnamese clams subsector have been identified as a result of the desk study, field work and validation workshop. These are presented in Table 4.

Most of the bottlenecks are related to the management of collection and farming of hard clams, and the provision of seeds for clam production. The removal of these bottlenecks will most likely be the responsibility of the government authorities although the further development of co-management also is mentioned as a possibility. The position of the middlemen can prevent processors from cooperating more directly with clam producers. Nowhere are middlemen mentioned as an operator that can contribute to removing bottlenecks. Emphasising the role of middlemen and stimulating them to participate in value chain discussions may promote increased value chain cooperation. When exporting companies have more control of their sourcing they may be able to establish relationships with importing companies in the EU and the US, because these companies often require a stable supply of products.

The production of clams, oysters and mussels is facing severe constraints, but there are many opportunities to stabilise and increase production. Contrary to the other subsectors, clams, oysters and mussels from Vietnam are not yet major export products to the EU market. Although the fact that a Vietnamese clam supplier has now obtained MSC certification represents a major achievement, Vietnamese clams are relatively new in the EU market. Contrary to the other subsectors, exporters also indicate that they lack sustainable relationships with EU buyers and are not fully aware of the marketing potential in the EU. In order to increase their export volumes and value to the EU market they need additional support to visit trade fairs and meet more potential buyers in the international market. This is only the case for the SMEs and not for the larger exporters that export multiple products and are more consolidated in the international market.

Further Reading You can view the full report by clicking here.

January 2013