Vietnam – 30% of seafood companies on the verge of bankruptcy

VietNamNet Bridge – The information about the bailout worth 9 trillion dong has not revived catfish farmers and seafood companies. The capital shortage and the price decrease have been described as the pincers’ jaw that crushes the industry.

Prices on the decrease

After hitting the 27,000-28,000 dong per kilo threshold in April 2012, the catfish price has been decreasing dramatically in Mekong Delta provinces, thus putting farmers on the tenterhooks.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the first and second class catfish materials in An Giang province have dropped by 500-1000 dong per kilo, now selling at 20,000-22,000 dong per kilo.

With the feed price having increased by 15-20 percent and the catfish price decreases, farmers now incur the loss of 2000-3000 dong per kilo. It is estimated that 30-40 percent of farmers have to give up farming.

Nevertheless, the catfish price decreases have been attributed not to the oversupply, but to the seafood companies’ lack of capital, which makes it impossible for them to collect materials for processing.

Doan Van Trung in Binh Hoa commune of Chau Thanh district in An Giang province said he has sold 300 tons of tra fish at 23,000 dong per kilo, while the production cost is 25,500 dong, thus incurring the loss of 600 million dong.

Duong Ngoc Minh from VASEP said though catfish has been sold at the prices lower than the production costs, seafood companies still don’t have money to buy fish. Only 20 percent of seafood companies can exist and develop well, while the other 80 percent have been existing on the scanty bank loans. Of these, 30 percent of enterprises are on the verge of bankruptcy.

Meanwhile, the General Department of Customs has reported the 1.2 percent catfish export turnover decrease by September 15 in comparison with the same period of 2011. In the first nine months of the year, Vietnam exported 4.5 billion dollars’ worth of seafood products.

Dong Thap province has reported that 80 hectares of catfish farming ponds have been left idle since farmers have given up farming for fear of loss, while 400 seafood companies have gone bankrupt.

Analysts believe that the number of businesses to go bankrupt would increase further towards the end of the year. Once businesses leave the market, this may make the whole catfish industry collapse, because of which farmers would suffer. Catfish is now one of the main sources of income for Mekong Delta’s farmers which bring billions of dollars a year.

Businesses run out of patience

While farmers and seafood companies are getting exhausted, the bailout remains on paper.

It seems that businesses and farmers now want to flee from the market rather than staying to wait for new capital opportunities, because they have got too tired that they want to let things run their course.

Nguyen Minh Toai, Director of the Can Tho Department of Industry and Trade, said the department only received the notice from the central bank introducing some commercial banks that can provide loans with preferential interest rates on September 18.

Mai Thi Anh Tuyet, Director of the An Giang provincial industry and trade department, said instead of the expected legal document guiding the disbursement of the 9 trillion dong bailout, the department has received a document on the policies to support the livestock and aquaculture industries. Meanwhile, catfish farmers and seafood companies are getting exhausted because of the thirst for capital.

Nam Phong

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