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Caught in the vicious circle of catfish
Nguyen Van Hao, a catfish farmer in Cai Be District in the Mekong Delta province of Tien Giang, may have found himself lucky when deciding to become a hired worker on his own farm. The owner of three hectares of ponds fretted about raising catfish this year, having incurred huge losses and still heavily indebted after last year’s dampened prices of the produce, so he has leased out the ponds to others and accepted to raise catfish for them on the basis of product sharing. But Hao may regret his decision, as the price this year is poised to increase sharply due to the anticipated shortfall of catfish for export.
Hao says that by providing hired labor to the renter of his ponds, he will earn VND500 for every kilo of catfish in harvest, which is the safe passage for farmers like him given uncertainties on the catfish market. The farmer says he expects an output of 280 tons of catfish from his ponds this year, so he will earn at least VND100 million from the hired work.
Export markets wider
The market stateside for Vietnam’s catfish products this year will become wider as several more local processors have been allowed to further penetrate the U.S. following recent reviews by the U.S. Department of Commerce towards some local exporters, who earlier had faced punitive tariffs when shipping catfish products there.
Meanwhile, the Russian market for Vietnamese catfish this year will also slam open following an agreement signed in Moscow late last month to resume import of catfish products from Vietnam after a year of disruption. Exports of catfish to other traditional markets like Europe and Japan as well as to new markets are also expected to be strong this year.
However, when outlets for the farm produce are more promising, the country enters the bad circle of material shortfall, which is expected to be more serious than ever.
Production stagnation
Farmer Nguyen Van Hao is luckier than many others, who simply quit raising catfish this year for fear of huge losses after the catfish price fell strongly late last year.
Catfish farming has developed strongly in Tien Giang Province over the past few years with farming areas and output in 2008 reaching 950 hectares and 40,000 tons respectively. This year, though local authorities have plans to raise catfish on 180 hectares, only 120 hectares have been put to use, mainly in Cai Be and Cai Lay districts.
In 2009, around 40% of 6,000 hectares of catfish ponds in the Mekong Delta has been fallowed. A survey of local seafood associations shows that 25% of farming families have gone bankrupt, 30% lost all their capital, and 40% failed to refund bank loans due to last year’s catfish turbulence.
Ngo Phuoc Hau, chairman of the Freshwater Fish Committee under the Vietnam Association of Seafood Exporters and Processors (VASEP), has warned of a serious shortage of material catfish within the first six months with nearly 50% of ponds unfarmed. As a result, up to 100 processing factories in the region with combined designed capacity of 1.5 million tons of seafood products a year are running far lower than capacity.
Many factories in Can Tho City are being operated at 50% to 70% of the designed capacity. Enterprises in An Giang Province, the largest catfish provider of Vietnam, have to lay off many workers due to lack of material. The province makes up 35% of catfish output of the Mekong Delta but 60% of ponds have been fallowed in the current crop.
The country achieves nearly US$1.5 billion from seafood procession each year and may earn more if the industry can avoid the sharp fluctuations of production year after year. Many experts have attributed the problem to the weak connection between farmers, farming areas, and processing enterprises.
Nguyen Huu Dung, vice chairman of VASEP, says it is much easier to establish connection between catfish farmers and processors than in any other industries. “Around 80% of catfish output in the Mekong Delta are provided by big farms with wealthy and knowledgeable farmers unlike other agro and aqua products,” he explains.
Embryonic connection
Since 2005, some models of cooperation between farmers and processors have already appeared in the region to ensure outlets for farmers and material supplies for enterprises. However, such connection has only been maintained by big companies only, such as Nam Viet Joint Stock Co. and An Giang Fisheries Import and Export Joint Stock Co. (Agifish) in An Giang Province, Vinh Hoan Co. in Dong Thap Province, and Hung Vuong Co. in Tien Giang Province.
For example, Hung Vuong Co. has clinched a deal with Thoi An Co-operative, providing feed for farmers and regularly inspect farming techniques. On the other hand, Thoi An’s farmers take charges of farming and receive VND2,500 per kilo of catfish harvested. The co-operative has made stable profit of VND1.5 billion for 1,000 tons of catfish.
Similarly, Agifish has established Agisfish Pure Pangasius Union to purchase clean catfish. Some 32 large farms have joined the union that can meet 70% of material demand of Agisfish.
Deputy Minister of Agriculture and Rural Development Luong Le Phuong at a seminar late last month highly appraised the connection and encourage enterprises to adopt the models. “Exporters should closely combine with farmers as Russia requires enterprises to self supply 30% of material demand to export catfish to its market,” he explains.
VietNamNet, SGT
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