Heavily indebted
The name that has been mentioned in most of the discussions recently is Bianfishco, a seafood company in Can Tho province. Bianfishco has become famous after it was discovered as being indebted 1500 billion dong to fish farmers.
Vinacafe Buon Ma Thuot, a well known company, is incurring the debt of 2 trillion dong in total to its partners, which has forced the company to consider selling its assets to pay debts.
Doan Trieu Nhan, former General Director of Vinacafe, noted that in the coffee industry, the enterprises with bigger exports face higher risks of falling into insolvency. It is highly possible that many other coffee export companies have also been over head and ears in debt, but they have not declared their status.
The business risks such as the high interest rates and exchange rate fluctuations, plus the mismanagement have been cited to explain the businesses’ heaping debts.
Le Chi Binh, Deputy Chair of the An Giang Seafood Company, said that purchasing under mode of deferred payment to use partners’ capital has become a bad habit of export companies for the last many years.
Meanwhile, insiders have said incurring debt – the domino effect – began in 2008 already, when the global economic crisis occurred, while the domestic economy suffered from the high inflation.
At that time, in order to sell products, farmers had to accept to get payment later. However, the farmers have not taken back their money since then.
Do Xuan Mai, the owner of a veterinary medicine shop in Long Xuyen City of An Giang province, said he is now on the tenterhooks, because he still cannot collect 4 billion dong from farmers. The problem is that his debtors – farmers – have also been miserable because they cannot recover debts from seafood processing companies.
Mai said that 10 out of the 25 clients, have escaped, which means that he has lost 1.5 billion dong.
“I think that tra fish farmers, feed suppliers, medicine sellers and processing companies all owe money to each other,” Mai said.
Regarding Vinacafe Buon Ma Thuot, Nguyen Cong Hoang, Deputy General Director of Vinacafe, which has stakes in Vinacafe Buon Ma Thuot, said that the exchange rate fluctuations, the high finance costs due to the high loan interest rates all have led to the unprofitability.
Farmers suffer
A lot of tra fish farmers said that in the past, seafood companies made payment 30 days after the deliveries. Later, they paid after 45 days, and then 3-4 months.
Hai Than, a tra fish farmer in Long Xuyen district of An Giang province, said he has sold the fish cultivated on 2.5 hectares of ponds, earning 16 billion dong. The buyer promised to make payment after 30 days.
Than said that he has to borrow money from banks to pay for feed, medicine. The bank loan interest alone costs him 300 million dong (2 percent per month). Therefore, if processing companies delay the payment, farmers would get less profit, and they would take loss if they cannot get money within six months.
Binh said he has warned farmers against dealing with the companies with problematic financial situation. However, farmers nowadays do not have many choices in the context of the tra fish price decreases.
Source: TBKTSG
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