Can you say what difficulties Vietnamese aquaculture enterprises are facing right now?

The biggest difficulty that both farmers and aquaculture enterprises are dealing with is a lack of cash to maintain production.

While the prices of materials and food have increased, many farmers, who have raised their catfish for four or five months at this point (not big enough to sell), have run out of capital. If they cannot borrow money from the bank, they will have to borrow from other sources at high interest rates.

Because it’s difficult to borrow cash at the moment, many farmers are selling young fish to get quick access to capital.

Farmers are looking to sell their products while many export processing enterprises do not have enough money to buy them. Enterprises are suffering losses just to keep up processing activities to meet previously signed contracts.

Will enterprises suffer from the decreasing price of aqua-products material when farmers quit aquaculture?

Right now, the trouble for export processing enterprises is the lack of money to buy materials, not a lack of sources. If the lack of money is not improved, however, they do run the risk of not having enough crops next season.

Aquaculture requires a great sum of investment capital. If farmers suffer losses in one or two succeeding crops, it is difficult for them to invest in the next crops.

What should enterprises do to overcome these difficulties?

The first thing is to meet the cash needs of enterprises. They should have enough capital to buy materials from farmers, pay their workers and meet other production costs.

VASEP has asked the State Bank to publish guidelines for commercial banks, asking them not to increase interest rates and to offer enough capital to enterprises to facilitate their purchase of aqua products from farmers.

At the same time, we should find a solution to reduce indirect costs and service expenses for aqua-product export enterprises. Input expenses and transport expenses have increased considerably.

For example, we should clarify which expenses should be paid by State management agencies and which should be paid by enterprises.

Besides, the Government should have concrete policies to make it easier for enterprises to buy more imported aqua-products to process and export again.

This is a potential solution because processing enterprises in Vietnam are only operating at 50-70% of their capacity. If we import more materials to utilise the full capacity of these enterprises, the added value and export turnover of the aquaculture sector will be much more.

China, for example, last year exported more than US$9bil in aqua-products because they had imported $5bil in material, especially materials they could not raise in the country or could not raise on a large scale.

The biggest challenge for Vietnamese aqua-product processing and exporting enterprises is complicated customs procedures, especially procedures dealing with waste materials leftover from processing. That’s why each year, Vietnam imports only $200mil worth of materials.

What should Vietnam’s aqua-product sector do to stay intact in the long term in face of these challenges?

Though the sector has exported to 130 markets in the world with a total yield of 1mil tonnes of materials worth around $4bil ($3.8bil last year), the method of operation between farmers and enterprises has been on a small scale, based primarily on quick cash exchanges. That’s why these relationships have seriously suffered with a lack of cash today.

Obviously, we need to replace today’s payment methods by more advanced ones, which have been applied in other countries.

That’s the way of linking persons in the production line (to create a value series) with vertical relationships, in which the bank will be responsible for supplying credit to processing enterprises.

The enterprises can oversee producers, food suppliers and healthcare providers for sea animals for aqua-product farmers. The enterprises can then buy the final product from the farmers.

This relationship would reduce the role of cash in direct payments, and instead use bank transfers between persons in the banking system.

If applied widely, this economic model could not only help farmers and enterprises to improve the method of production, but also would be a more objective method in pursuing economic activities.

The model could also help with sustainable development, like ensuring food security in the whole production process, protect the environment, regulate the demand-supply relationship on the yield and value, address potential personal conflicts early on and secure social responsibility of enterprises and farmers.

Some enterprises have already applied this model including Agifish An Giang. VASEP has encouraged and supported farmers and enterprises to establish vertical connections.

In the long term, a close relationship with farmers will be a key factor in the sustainable development of the aquaculture sector.

Source: Viet Nam News