Vietnam

From being a minor exporter in the mid-1990s, shipping seafood exports worth less than US$500 million annually, Vietnam's fish exports have risen almost exponentially and now exceed US$2.3 billion a year. This is one of the fastest growing sectors of the economy and domestic consumption and seafood exports continue to increase each year.

According to the Ministry of Fisheries, from 1998 to 2003 Vietnam's total output grew 50 per cent from 1.67 million tonnes (mt) to 2.53mt. In 2004, seafood exports were the fourth largest export after crude oil, garments and footwear, recording sales of $2.36 billion from products including prawns and catfish. The country's largest prawn markets are in the United States and Japan followed some way behind by the European Union (EU), while the major catfish markets are the US, EU, China and Hong Kong.

Wild catch

Wild catch production has grown by 26.5 per cent in tonnage terms climbing from 1.13mt in 1998 to 1.42mt in 2003. Vietnam's 3,260km long coastline and its exclusive economic sea zone, covering about one million square km, have allowed development of an important marine fishing industry, though conservation measures are necessary to protect depleted inshore fish stocks.

Of the 2,030 marine fish species in Vietnamese waters, about 100 are commercially viable. Inshore fisheries remain Vietnam's traditional and major marine sector, with rapid growth during the past 20 years. Most of the country's fishing fleet, which consists largely of small and medium size fishing boats, is engaged in inshore fishing.

According to the Ministry of Fisheries the inshore fishing fleet landed 62 per cent of Vietnam's total marine fishery catch in 2003, while the deepsea fishing fleet landed 38 per cent of the catch. The total number of fishing boats engaged in deepsea fishing at the start of 2004 was 6,258 vessels, which accounted for 25 per cent of the total fleet in terms of boat horsepower.

"Marine fishing is mostly for local consumption," explained Ho Trung, fisheries expert at the Vietnam Association of Seafood Exporters & Producers (VASEP) Ho Chi Minh City branch office, "But tuna is exported chilled to Japan and the US for sushi and sashimi; also, frozen tuna loins are used for canning. All exported tuna are caught in Vietnamese waters. The Vietnamese fishing fleet fishes only in Vietnamese waters."

Conservation

While pleased at the growth of fish production, the government is aware that more needs to be done to conserve marine resources. In a bid to ease pressure on inshore fish stocks the government has launched a programme to encourage fishermen to convert from inshore to deepsea fishing by providing loans and grants to upgrade their fishing vessels.

So far the programme has had only modest success because many inshore fishermen found that switching to deeper waters has not been profitable. The government has been forced to shoulder a sizable debt burden because many fishermen have been unable to repay government loans taken out to convert their fishing operations.

Efforts to control inshore fishing will also be helped by improved registration of catches. The Fisheries Ministry is developing a new data collection system which will be backed by a national fishing vessel and fishing licensing system that is due to be up and running this year. These will produce more reliable statistics on catches and so assist in controlling inshore fishing and in turn efforts to help recovery of depleted stocks.

Aquaculture risks

Aquaculture is the country's fastest growing fish sector. Fresh water aquacultural output has grown the most in tonnage terms (more than doubling from 538,000t in 1998 to 1.11mt in 2003) compared with mariculture and marine fishing. Inland waterways and ponds cover about 1.4 million hectares, creating a large water surface area for further development.

Ensuring sustainable development of the aquaculture sector also is of major importance. Fisheries experts warn that unless the government is able to ensure that growth is well planned and sustainable, then the country could face a decreasing supply of materials for its expanding fish-processing industry. Vietnam is well aware of what has happened in countries such as China, Thailand and Ecuador where rapid, uncontrolled development of aquaculture led to serious environmental problems, large fluctuations in production and quality and disease problems affecting marketing in foreign markets.

Although prawn farms have been established in most provinces along Vietnam's long coastline, most of the officially recorded production of about 180,000t of farmed prawns annually are reared in brackish water and mangrove areas of the southern Mekong Delta region. All prawn farms are operated privately on designated aquacultural land for which the government normally grants user rights for 50 years.

"The weather is not so ideal in northern Vietnam and they have only one prawn harvest of about 10,000t a year," Trung explained. "The central area has semi-intensive production using artificial feed to produce 30,000t per year. About 10 to 15 prawns are stocked per square metre of water surface. The south has intensive and semi-intensive prawn farming. Intensive prawn farming is with 40 to 50 prawns per square metre."

The largest prawn-producing provinces in southern Vietnam are Cau Ma which produces about 60,000t annually and Soc Trang and Bac Lieu which each record an output of 20,000 to 25,000t annually. Other southern provinces produce a combined total of about 30,000t of farmed prawns each year.

"Cau Ma is the biggest prawn-producing area in the Mekong Delta. Many companies are setting up processing and export plants there," Trung said. "There are organic prawn farms as well in Cau Ma. This started two years ago. Some farms in Soc Trang province in the south are trying to do integrated prawn farming, rearing prawns through to processing and export; but they must buy extra stock from other prawn farmers."

Following the rapid development of prawn farming, a number of issues have arisen that Vietnam will need to tackle if the long term prosperity of the prawn farming industry is to be ensured. The government has already introduced a number of measures to prevent the spread of disease from infected, prawn brood stock. Prawn processors have been instructed to begin systematic testing of prawns for banned antibiotic residues. Brussels has bans on certain residues such as chloramphenicol and nitrofuran. The Vietnamese government has also banned their use and requires exporters to test batches of prawns before processing them.

Record keeping of prawn production and sales also is being introduced to comply with new international food safety monitoring standards and to meet traceability requirements in key markets such as the EU and Japan.

"There is a disease problem with some brood stock because Black Tiger prawns are caught wild. If you can control the brood stock they have a better health status as they are pathogen-free," Trung said. "Brood stock produce fry just one or two times after their capture. The management of the fry is strictly controlled by the government as sometimes fry are moved from central to southern Vietnam. To move fry to other prawn farms requires a certificate that they are free of pathogens and antibiotics. A prawn hatchery must have authority before it can sell fry to prawn farms.

"Every factory must buy testing equipment to test prawns before they come to their factory. We must spend more money as the EU has zero tolerance for antibiotics," Trung said, noting that Vietnamese prawn farmers now have greater awareness of the problem and the need for testing and inspection before their prawns are processed.

"We are trying to introduce better safety control and product traceability. Importers require prawn processors to have records to trace their prawn origin. We did not do this before. Record keeping is still beginning among exporters supplying Europe. The Japanese market also has started asking for product traceability records now."

Home processing

Vietnam's prawn-processing and packing companies are mostly privately owned and include a number of former state-owned plants that have been privatised. The nation's 10 largest prawn-processing and packing companies are all privately owned. The number of foreign-owned prawn processing and packing plants is thought to number fewer than five plants, most being recent startups.

In addition to exporting about 180,000t of, mostly frozen, prawns annually Vietnamese prawn farmers also produce for the domestic market. No official figures are kept for local prawn consumption which VASEP estimates could be as much as 50,000t a year. There should be no antibiotic residue problems in domestic market supplies since prawn farmers and processors are required to follow the same inspection procedures for exported products.

In 2004, the United States and Japan each took about 40 per cent of Vietnam's prawn exports while the EU took about 10 per cent. However, following the US government's decision to impose anti-dumping taxes earlier this year, Vietnamese exporters are targeting EU countries as US imports are likely to be lower this year.

"It's not so easy to forecast prawn exports for this year as the US anti-dumping measures started in February 2005," Trung said. "There is a 4.5 per cent anti-dumping tax on Vietnamese prawns, but this will be reviewed in 2006 when the duty will either be raised or lowered. Vietnamese exporters also must pay a continuous bond, but US prawn importers do not known how much they will import as it depends on the tax level after the review. Many processing plants are [focusing now on] European markets. Our prawn yield can increase by 10 per cent to 15 per cent in [the]future but the export markets will still be the same size."

Cat-fight with US

To find out more about Vietnam's new markets following the US government's decision to impose anti-dumping measures on certain Vietnamese imports go to www.worldfishing.net/783

Cat-fight with US

Vietnam's catfish exports also have grown rapidly during the past decade. However, following the US government's decision to impose anti-dumping measures on Vietnamese catfish imports, exporters have started targeting the EU. The quality of Vietnamese catfish continues to improve, however they are facing competition from Thailand, Indonesia and Bangladesh which are developing commercial catfish industries.

Vietnamese experts forecast that fish farms will produce 500,000t of catfish in 2005, which would be a hefty 66 per cent increase compared with 300,000t last year. Considerable production growth potential remains. The Ministry of Fisheries has set an ambitious annual production target of one million tonnes of catfish exports by 2010. That could earn the country some $800 million in sales revenue.

The US was traditionally the largest importer of Vietnamese catfish, and then in 2003 the US government imposed a 40 per cent import tax and customs bond requirements as part of anti-dumping measures. This followed complaints from US catfish breeders that they were being outpriced by low cost imports.

"The catfish import duty is very high and some companies cannot export to the US, so they export to Europe and other countries," Trung said. "They are expanding these markets, but it took more than a year to find them. Spain, Germany, Italy and the UK are our main European markets.

"We are changing to Europe with some success. Catfish fillets are being accepted as they are easy to cook. Most exports are frozen fillets. Sales to Europe are increasing, but they cannot substitute for the US market."

With catfish production growing, export prices have dropped recently due to some exporters breaking an agreement made by Vietnamese catfish exporters earlier in 2005 that set a $2.90 per kg floor price for catfish exports. The aim was to support local catfish producers. Unilateral price cutting has forced other Vietnamese catfish exporters to follow suit, with some catfish farmers being hit by sharp revenue losses as a result.

Catfish exports to Europe are subject to the same inspection and test regimes as prawn exports, to ensure that all catfish shipments are free of antibiotic residues. "There are no antibiotic problems for catfish as we can control them," Trung said.

Catfish farming is concentrated in southern Vietnam, upstream from the Mekong River delta where catfish are reared either in river cages or ponds. All catfish farms are run as private enterprises and of the 300,000t produced each year 60,000t (20 per cent)are consumed locally in Vietnam.

"Catfish take from six to eight months to reach one kilo to 1.3kg in weight which is large enough for processing, mainly fillets, [and] the processing plants can [also] do dice cut on skewers," Trung said. "Some fillets are breaded. Some catfish processors do catfish and prawns but mostly catfish only. Some prawn processors also want to do catfish," he added.

A key element in the growth of the country's fish processing industry is the general availability of low-cost labour. Not only are companies handling more processing of own raw material, a growing number are processing imported frozen fish for re-export.

"Importers want to bring material into Vietnam for processing and re-export," Trung said. "Subcontracted processing has happened for about five years but now it is increasing as some companies have found Vietnamese workers skilful, hygienic [and there is] modern technology including steel belt freezers."

Today, 153 fish processors have EU code approval for supplying used goods to the EU, though this is not needed for exports to the US and Japan. They are being subcontracted for filleting, breaded products and squid rings. Japanese and European importers are mainly turning to Vietnam because their own factories cannot cope or they are moving production here from other processing centres for cost savings for filleting etc. Frozen product is imported, thawed, filleted, refrozen and re-exported.

"There is a good future for fisheries. It is important for stable production and safer for higher value added products for processing. That is the way to development," Trung said.