Seafood exporters look inward as global crisis bites

As the seafood export target for the year is pushed further uphill by falling demand from major markets hit by the global financial crisis, some companies are looking for succor in the domestic market.

They are targeting domestic customers by processing more catfish products to supply restaurants and supermarkets. An executive from the Vinh Hoan Seafood Company said the domestic trend to use processed seafood products was increasing thanks to reasonable prices and increased convenience. Seafood exporters could find stability amid the global turmoil if they know how to exploit the domestic market potential, he said. This year’s export target of US$4.2 billion has become steeper for Vietnam’s seafood industry as the volumes shipped to major markets like the US and EU decline with the fall out of the global financial crisis. The Vietnam Association of Seafood Exporters and Processors (VASEP) says more than 930,000 tons of seafood were shipped in the first nine months of this year, generating $3.35 billion, for a 23 percent year-on-year increase. However, said VASEP Chairman Tran Thien Hai, seafood, one of the country’s main exports by value, was seeing a downward trend in export volume in the fourth quarter. Le Van Quang, chairman of Minh Phu Seafood Joint-Stock Company, said though his company did not have supply problems, it had refused some orders from US importers. “Before [the US recession], they paid for goods immediately after receiving them. But now, they always ask to delay payment as their customers buy goods on one-month credit. How can we dare to sell?” Quang said his company was negotiating better payment terms with importers facing capital shortages as a result of US banks tightening their policies. Ho Quoc Luc, chairman of Sao Ta Foods Joint-Stock Company, said his firm’s South Korean partners had just suspended plans to import goods as the won continued to decline. South Korea’s currency extended its loss this year to 35 percent to become Asia’s worst performer, according to Bloomberg. VASEP official Tran Thien Hai said some foreign customers just ignored contracts signed with Vietnamese exporters though they had earlier given detailed orders. Nguyen Dinh Huan, deputy general director of the An Giang Fisheries Import and Export Joint-Stock Company (Agifish), said though the company was yet to face difficulties in export, he was pessimistic about the near future. “It is certain that purchase orders will be reduced,” said Huan. Vo Thanh Khon, a manager of the Binh An Seafood Company, predicted that some countries would, in response to the economic crunch, re-establish protectionist measures, while consumers would cut their spending. As a result, the Vietnamese fisheries sector would face stiff challenges next year, he said. Minh Phu’s Quang said while input material costs had now increased by 40 percent compared to the beginning of the year, output prices saw no rise, and had actually fallen, in some instances. Hai noted that a kilogram of black tiger shrimp currently sold at only $9.70 against $11 earlier. Enlarging export markets Ho Quoc Luc of Sao Ta said local fisheries should not just focus on big markets like the US and EU, but look for new markets like Islamic nations. He pointed out that Malaysia was a potential market as this country’s annual per capita seafood consumption was expected to reach 61 kilograms by 2010 from the 45 kilograms at present. Nguyen Van Ben, general director of the Vietnam Food Industry Company (Vifon), said the company’s US and EU partners wanted to adjust purchase volumes monthly, and not sign year-long contracts as earlier. The importers also required Vifon to give notice of price increases, if any, two or three months before the effective day with clear reasons. Ben said as demand in traditional markets of Western Europe and North America tumbled, Vifon was trying to penetrate deep into other markets like Japan, South Korea, Singapore, Malaysia, the Philippines, and Eastern Europe. Meanwhile, Vu Thanh Phat, director of Mekong Lotus Company, said increased thrift among US and EU citizens can bring more opportunities for medium-priced Vietnamese seafood products to enter the market. The company has seen that while premium seafood such as tuna and shrimp saw a drop in export volumes, there was greater demand for cheaper seafood like basa catfish and cuttlefish. Source: TBKTSG