Seafood exports plummet under social distancing regulations
The lack of input materials and workers, the increase in production costs, and failure to fulfill orders of partners all have pushed seafood companies into a deadlock. Seafood exports have plummeted.
According to Vietnam Association of Seafood producers (VASEP), 19 southern and south central privinces are the major production areas of the seafood industry, which make up 90-95 percent of the country’s total seafood export turnover.
However, during the two months of social distancing, only 30 percent of seafood processing factories in the region could maintain production, running production in accordance with the ‘three on-the-site’ principle. About 70 percent of enterprises could not satisfy the requirement and had to suspend production.
As a result, the average production capacity of the region fell to 30-35 percent only. The figure was less than 20 percent for catfish processing. This was blamed on disrupted supply chains, the lack of workers and insufficient materials for production.
Meanwhile, production costs increased sharply because of high expenses on anti-pandemic measures.
VASEP reported that production cost per product following the ‘three on-site’ principle has increased by 10-25 percent, depending on product and processing scale.
It is estimated that one enterprise would incur a loss of 30 percent a month if maintaining the ‘three on-the-site’ production with just one third of designed capacity, and it would incur a loss of 50-55 percent a month if suspending production.
According to the association, as of July 2021, export orders had increased by 10-20 percent compared with 2020 thanks to increased demand from some markets.
However, social distancing which began in late July disrupted supply chains. As processing workshops lack materials, the delivery delay is up to 40-50 percent and 10-15 percent of orders have been canceled.
Seafood export turnover in August, which decreased by 28 percent compared with the same period last year, clearly reflected the impact of the pandemic on the seafood sector.
The exports of shrimp, pangasius, tuna, octopus, crab and fish all decreased by 20-33 percent compared with the same period last year.
Compared with July 2021, when export turnover increased thanks to stored materials, export turnover in August decreased by 31 percent. Of this, the shrimp export turnover dropped by 36 percent, catfish 31 percent, tuna and other fish 25 percent, and octopus 23 percent.
The exports to all markets in August decreased by 16-50 percent compared with August 2020. The exports to China and Japan dropped by 36 percent, to the EU 32 percent, while the figure was 16 percent of the US and Russian markets.
Year-end sale season
Seafood companies all complained that they are exhausted after a long period of social distancing and need to resume production in September. If they do this after September, there will be no more opportunity to get orders for the year-end sales season.
Le Van Quang, CEO of Minh Phu Seafood, said the market is expected to be bustling this year end, when demand increases on holidays. Clients have urged the company to delivery goods, so that they can sell for Christmas holiday. If the company cannot deliver goods, clients will cancel the orders and shift to buy products from India, Thailand and Indonesia.
Quang stressed that if the company loses customers, it will take at least 3-5 years to restore the markets. In order to maintain production and delivery products on schedule, his enterprise has to apply the ‘seven green’ principle, and pay more for materials to encourage farmers to begin hatching shrimp immediately in early September.
Ho Quoc Luc, president of Sao Ta Food, thinks there is no need to worry about losing potential export markets, because Vietnam’s rivals are also facing difficulties.
He said enterprises need to be cautious when increasing the workforce. He hopes the Government prioritizes vaccinating workers of seafood companies.
If Vietnam does not focus on removing the IUU (Illegal, unreported and unregulated fishing) yellow card and violations continue, it is very likely that the EC will switch from yellow card to red card.
Vietnam’s fishery exports are on the way to fulfil the target of US$8.5 billion in value in 2021, after hitting more than $4 billion in the first half of this year,