Problems of Vietnam’s fishery sector with respect to
World trade in fish and fishery products has grown rapidly over the last two decades, with export values rising from $15 billion in 1980 to $56 billion in 2001 (Bostock, Greenhalgh and Kleih,
2004) At the same time, the share of developing countries’ has risen n absorb 80% of world imports, with the USA, the EU and Japan as the dominant markets (Lem,
In recent years, the evolving demands for food safety assurance and traceability, especially from major markets like the EU and North America, pose significant challenges for existing exporters and act as a barrier to entry for developing countries such as Vietnam The implementation of stricter quality standards tends to favor nations with advanced infrastructure and larger suppliers with more substantial resources.
Confronted with bird flu an e required exporting countries to adopt agreed inspection, examination and certification procedures, thus imposing more restrictive non-tariff barriers (NTB)
The 1995 Uruguay Round Agreements on Sanitary and Phytosanitary Measures (SPS) and Technical Barriers to Trade (TBT) have transformed international food trade by establishing standards that protect consumer health without discriminating against domestic producers or foreign goods These agreements work together, reinforcing each other to create a balanced framework for global trade.
In recent years, there has been a significant rise in policies related to Non-Tariff Barriers (NTBs), particularly in countries like Vietnam Eco-labelling programs serve as a method for assessing fishery production processes against established environmental standards set by independent third parties When producers or marketers meet these standards, they are granted a license to utilize eco-labels, promoting sustainable practices in the industry.
Vietnam faces significant challenges in meeting SPS and TBT compliance across various export sectors, particularly in fisheries Key issues include the predominance of small and medium-sized enterprises (SMEs) in the sector, many of which struggle with processing technology constraints Additionally, the costs associated with upgrading to meet international standards such as HACCP, ISO, and EurepGAP are burdensome for these enterprises, which are essential for obtaining export licenses to the EU and the USA.
The investigation and assessment of aquatic resources are hindered by limited methods and budget, leading to ambiguous results for policymakers and inadequate national aquaculture development plans Additionally, the statistical issues and insufficient information systems fail to meet requirements, and the lack of updated information restricts sector development, directly impacting farmers, intermediaries, processing plants, and exporters.
Approximately 40% of export-oriented aquatic processing enterprises face challenges due to outdated technologies and inadequate infrastructure, hindering their ability to comply with food safety standards Many entrepreneurs lack essential marketing skills, market insights, and effective management practices Additionally, small and medium-sized enterprises (SMEs) often underestimate the necessity of continuous technological and managerial improvements, which are crucial for reducing production costs and enhancing competitiveness in the market.
Introduction 45
The Mekong Delta in Vietnam is the leading supplier of pangasius species, particularly basa and tra fish, with An Giang province being the primary production center, contributing 70 to 80% of the country's output This sector has significantly impacted rural industrialization and modernization, creating jobs, alleviating poverty, increasing incomes, and supporting the goals of Vietnam's economic transition policy.
In 2004, An Giang province produced 152,507 tons of live fish, marking a 77% increase since 1995, driven by factors such as the high quality and safety of tra and basa fish, their unique flavor and low-fat content, and attractive pricing due to low production costs The province's fingerling socialization program initiated in 1999 further supported fish farming However, challenges arose from dumping accusations by the USA's International Trade Commission (ITC) and technical barriers, leading many fish farmers to abandon their livelihoods, resulting in increased unemployment and financial losses This chapter aims to evaluate the production and consumption landscape before and after the catfish war, analyze the export strategies of Vietnamese pangasius exporters, and discuss the ITC's legal actions against the Vietnamese Association of Seafood Exporters and Producers (VASEP) regarding alleged dumping practices, questioning the validity of these charges and the implications of trade description legislation on the basa brand.
Vietnamese import heaper tha art success of USA catfish produ vincing the USA force e exporters to change the name of the t to “tra” or “basa”
Overview of the catfish war situation 46
In recent years, Vietnamese tra and basa catfish have significantly penetrated the U.S market, with imports reaching 21,000 tons of fillets in 2002 This surge led to a decline in domestic producer prices, dropping from $1.60 per kilogram in January 1997 to $1.20 per kilogram by December 2002, as Vietnamese exports captured 20% of the U.S catfish market In response, on June 28, 2002, the Catfish Farmers’ Association (CFA) and eight seafood companies filed a complaint, arguing that, since U.S catfish accounted for 85.7% of the market, they represented all domestic farmers The lawsuit targeted 56 Vietnamese seafood processors, although some named have no connection to the exported catfish varieties.
The crux of the investigation appears to lie in the conclusion that the USA investigators will draw regarding the nature of Vietnam’s economy, as well as whether the dumping b
“catfish” solely to Ictalurids grown in the USA, so especially because the ed fish was much c n the local counterp
This is the first cers in con Congress to
24 www.aseanfocus.com/asiananalysis/article.cfm?articleID=7
25 The Mississipi-Mekong Catfish war, www.peoplesfoodsovereignty.org/docs/doc9.htm
Figure 4.1 Tra and basa fish fillets nt of Commerce (DOC) announced s determination in the inquiry into the status of Vietnam as a non-market economy country or a
The investigation into Vietnam focuses on frozen fish fillets, specifically regular, shank, and strip fillets, as well as portions, regardless of whether they are breaded or marinated The species involved in this inquiry include Pangasius bocourti and Pangasius hypophthalmus, commonly referred to as Pangasius.
Pangasius micronemus, commonly known as frozen "basa" and "tra" fillets in Vietnam, is classified under tariff article codes 0304.20.60.30, which pertains to frozen catfish fillets.
0304.20.60.96 (Frozen Sole Fillets, NESOI), 0304.20.60.43 (Frozen Freshwater Fish Fillets) and
0304.20.60.57 (Frozen Sole Fillets) of the Harmonized Tariff Schedule of the United States
On November 8, 2002, the Import Administration of Departme it market economy country under USA antidumping and countervailing duty laws Meanwhile the
DOC also said that Vietnam offered subsidies to fish producers, resulting in market distortions
The Department of Commerce (DOC) determined that the export price of Vietnamese frozen tra and basa fillets was lower than the production cost, leading to an increase in tariffs from 37% to 53%.
Some Vietnamese exporters must bear an unjust tax level shown in table 4.1
Table 4.1 Anti-dumping duty levied by the DOC
Vietnamese Exporters Anti-dumping Duty Anti-dumping Duty
Source: VASEP, Final determination in the Anti-duping duty investigation of certain frozen fish fillets from
The dumping charges have shocked the VASEP, the Vietnamese Government and practically all those familiar with the catfish industry in Vietnam, including the USA Embassy and a number of
Many USA businesses are establishing a presence in Vietnam, which has transitioned from a centrally planned economy to a market economy since 1986 Today, Vietnam operates as a market economy, supported by the International Monetary Fund (IMF) and the World Bank, making it an attractive destination for foreign investment.
Vietnam's agricultural and fishing sectors have faced significant challenges due to the bank's structural adjustment regime, which has eliminated even minimal subsidies previously available Despite being labeled as a non-market economy, Vietnam continues to engage in mutually beneficial trade with the USA The ongoing dumping investigations and anti-dumping measures are unfortunate, but they do not hinder the potential for positive trade relations between the two nations.
3 Vietnam - USA bilateral trade agreement p market economy was one of the preconditions of the USA-Vietnam Bilateral Trade Agreement
(BTA) that was signed by the two countries in 2001 And in any case compared with the US,
Vietnam lacks the financial resources to offer its productive sectors the same level of subsidies and support that the United States provides to its producers.
From an economic standpoint, the assertion that Vietnam is not a market economy is unfounded Although Vietnam has not fully transitioned into a market economy, its domestic tra and basa market exhibits numerous traits of a competitive market, where supply and demand significantly influence market outcomes Furthermore, theoretically speaking, Vietnam's economic dynamics suggest a movement towards market principles.
V can be conveniently applied to many transitional economies (including China and the East
European countries) with potentially harmful consequence for free trade 27
On July 13, 2000, USA and Vietnamese negotiators signed a sweeping bilateral trade agreement
The Bilateral Trade Agreement (BTA) between the USA and Vietnam took effect on December 10, 2001, after both Congress and the Vietnamese National Assembly approved it This agreement allows the USA to grant Vietnam temporary most-favored nation (MFN) status, which will significantly lower tariffs on a majority of imports from Vietnam.
26 www.ita.doc.gov/media/FactSheet/0603/catfish_final_061703.html
Professor Binh Tran-Nam from the Australian Taxation Studies Program at the University of New South Wales played a crucial role in facilitating Vietnam's accession to the WTO by significantly liberalizing its economy and aligning it with international standards The Bilateral Trade Agreement (BTA) was designed to last for three years and would automatically renew unless either party provided a 30-day termination notice This agreement aimed to reduce non-tariff barriers across various products, enhance foreign investment in the service sector, and simplify investment regulations.
As of December 2001, all domestic enterprises are permitted to engage in trading activities without explicit restrictions, allowing them to compete for participation in purchases or sales according to customary business practices Additionally, tariff reduction commitments under the BTA will see a decrease of 20 to 75 percent over a period of three years, with an exceptional extension to six years for 11 specific tariff lines.
The agreement mandates the gradual elimination of nearly all non-tariff barriers on imports and export restrictions that conflict with GATT regulations Phase-out periods range from 3 to 5 years for 64 agricultural import items, starting from December 2001, while a 10-year period is designated for 5 tariff lines of sugar Additionally, a 4-year phase-out applies to 44 out of 69 agricultural products facing quantitative import restrictions.
The Bilateral Trade Agreement (BTA) incorporates international regulations, including those from the World Trade Organization (WTO), while acknowledging Vietnam's developmental challenges by allowing a transitional period for compliance with certain standards Notably, the BTA offers a more liberalized framework than the WTO, featuring commitments such as the reduction of import tariffs, phased elimination of quantity restrictions, and liberalization of trading rights to enhance market access Over the next 3 to 7 years, Vietnam will progressively lower tariff rates, particularly in the agricultural sector, and will grant all Vietnamese companies, as well as U.S individuals and firms, the right to freely import and export products, with exceptions for specific restrictions or state trading enterprise reservations.
Vietnam's state trading enterprises are committed to conducting purchases and sales based solely on commercial considerations such as price, quality, availability, marketability, and transportation conditions Additionally, Vietnam ensures that U.S enterprises are provided with adequate opportunities to engage in these transactions.
Current import tariffs apply to 195 agricultural products among 244 HS 8-digit items, with several key products facing non-tariff barriers These barriers include licensing requirements from the Ministry of Trade for items like vegetable oil, as well as stipulations for local material area development, particularly for products such as milk and vegetable oil.
4.4 Growth of the Vietnamese pangasius industry and its changes
Growth of the Vietnamese pangasius industry and its changes 50
Vietnamese pangasius, including the basa and tra species, is a popular freshwater fish known for its delicate texture and white flesh The majority of production comes from tra fish, which are primarily farmed in ponds and cages along the Mekong Delta tributaries Growing market demand has significantly boosted the development of basa and tra fish farming, although production in cages saw a decline after 2004 as pond farming areas expanded.
In 2000, there was a significant rise in catfish production, primarily due to the increasing number of fish farmers engaging in catfish culture This trend will be explored in more detail later.
A re a of po nd a n d v o lu m e o f c a g e r a ised t ra
The volume of cage-raised Basa and the number of cage-raised Tra are determined by the area of the pond measured in hectares Additionally, the volume of cage-raised Tra is quantified in cubic meters, alongside the number of cage-raised Basa and its corresponding volume in cubic meters.
The Provincial Department of Fishery in the Mekong Delta, encompassing An Giang, Can Tho, Dong Thap, Tien Giang, and Vinh Long provinces, reports that basa fish are exclusively raised in net cages anchored in rivers, while other fish are cultivated in both ponds and cages Notably, the share of live basa fish production significantly declined from 42.2% of the total output in 1997 to just 1.29%.
005, while the share of the pond tra in the total quantity produced was 56% in 1997 and roduced and th
Unlike the ecological characteristics of the e tra fish has b th
In 2005, the production of tra fish rose to 89.3%, driven by advancements in farming techniques These improvements made pond-raised tra fish more profitable compared to basa fish, leading to a significant increase in tra production.
Figure 4.3 Share of basa and tra raised in pond and cage (% of total quantity) (1997-2005)
Tra raised in pond Tra raised in cage Basa ource: Provincial Department of fishery in the MD ( An Giang, Can Tho, Dong Thap, Tien Giang and Vinh ong province)
Figure 4.4 Pangasius culture in fence and cage
Figure 4.5 Pangasius raised below the cage protected by net
Floating cages anchored on river
Fence close to the bank of river
Floating cage below and pangasius protected by net
Figure 4.6 Pangasius cultured in pond he total production area (pond and fence) of basa and tra fish in the MD has been increasing sius (1997-2005)
T continuously at an average annual growth rate of 32.8% from 1997 to 2005, in contrast to the average annual growth rate of raw material fish of 13.5% (see figure 4.7)
Figure 4.7 Farming area and yield of panga
Source: Provi D nc f fis the n G Can ong T Tie a Lo vin
Many processing plants have been established outside the MD region, particularly in areas like Ho Chi Minh City and Giang, despite the existing processing capacity within the MD for sustainable fish.
Departmen nd Vinh t o hery ng pro in ce)
Between 2003 and 2005, there was a significant imbalance in the supply of raw materials and the processing demand for fish, highlighting critical growth challenges faced by companies in the industry.
Minh City, but the selling price of the fish farmer at the farm gate has not improved much, due to the increased transportation cost
Figure 4.8 Live pangasius and processing capacity in the MD (1997-2005)
Yie d of live pangasius Proce ssing Capacity
Source: Provincial Department of fishery in the MD (An Giang, Can Tho, Dong Thap, Tien Giang and Vinh Long province)
The rapid growth of farm-raised pangasius is largely driven by the expanding export market, which comprised nearly 90% of the total live pangasius quantity in 2005, a significant increase from 35% in 1997 This surge in export volume has led to a corresponding rise in both the farming area and raw material availability for pangasius production.
Figure 4.9 Share (% of quantity) of export and domestic market of pangasius (1997-2005)
Market share for export Market share for domestic consumption
Source: Provincial Department of fishery in the MD (An Giang, Can Tho, Dong Thap, Tien Giang and Vinh Long province)
The USA and Chinese catfish are a different species from the Vietnamese pangasius, namely
Pangasius spp and Ictalurus punctatus, respectively As a result of Vietnam’s successes in the
The USA market has successfully expanded into the EU and neighboring countries, including China, Thailand, and Malaysia, prompting Vietnam's competitors to diversify their catfish production Notably, the Chinese catfish has emerged as a significant contender in this competitive landscape.
USA imports of Chinese catfish expanded more than fivefold between 2005 and 2006 and the than twofold
The United States has seen an increase in imports of catfish from Thailand, particularly frozen fillets Among these, Vietnamese frozen pangasius fillets have consistently been a significant import, highlighting the growing demand for this product in the U.S market.
2002 cause of to o h fr et y half 2004, USA imports of fr ietnam n fillets incre g 00 furthe 006 catfish imports b nt ori t 999
Cou 99 0 1 02 0 00 005 06 h the tnam leadin 1999 until 20 6 The atfish ar betw en the A and d a cut tal imp rts in t e USA om Vi nam b about After ozen V ese pa gasius ased a ain in 2 5 and r in 2
Table 4.2 US y cou ry of gin (in ons), 1 -2006 ntry 19 200 200 20 20 3 2 4 2 20
Source: Catfish market report – May 2007, www.globefish.org/index.php?id883
Total Vietnamese pangasius exports have increased from 425 tons in 1997 to 27,987 tons in
Before the catfish war in 2002, Vietnam's pangasius exports were modest, but by 2006, they surged to 286,600 tons, valued at approximately 736 million USD This growth indicates a significant increase in the presence of pangasius products in international whitefish markets, particularly within European retail chains Post-catfish war, the European Union became the largest market for Vietnam's pangasius exports, especially notable in 2006.
Figure 4.10 Vietnamese pangasius exports in hereas the USA accounted for more than 50% of Vietnam’s pangasius expo
Source: VASEP and www.fishtenet.gove.vn
28 http://www.eurofish.dk/indexSub.php?id265
In 2007, pangasius was exported to over sixty countries, highlighting its global reach, particularly in markets like China, Hong Kong, Singapore, Canada, Mexico, Russia, the EU, and Eastern European nations This trend indicates the EU's growing significance as a key market for pangasius.
Processing plants have improved technology to meet hygiene and food safety at a reason ces based on market oriented approach
− The sh rather than for poultry meat
“emerging market” for pangasius products, representing 43% of Vietnam’s total export volume (EU-25) in 2006, equivalent to 123 thousand tons (with EU-15 accounting for 33%, equivalent to
Vietnamese exporters have effectively navigated the challenges posed by the catfish trade dispute with the USA, quickly establishing a presence in new markets Notably, Russia represents a significant market, accounting for 15% of exports, which translates to approximately 43 thousand tons Additionally, during the first half of 2007, total pangasius exports to the EU-25 surged by 48%, with a notable increase to 38.5% in exports to the European Union.
15) Some of the reasons that are responsible for the higher growth rates during the recent years are:
The collaboration between fish farmers and processing plants hinges on their adherence to SQF 1000 and SQF 2000 standards, respectively This partnership ensures that fish products are free from prohibited antibiotic residues, such as chloramphenicol and malachite green, thereby promoting safe and high-quality seafood.
− An increase in international demand due to consumers substituting fish for meat meals
− able price, concomitant with diversifying products and expanding market pla bird flue outbreak in Asia has driven Europeans to opt for fi
Table 4.3 Share of Vietnam’s pangasius exports by countries of destination (% in quantity),
Source: nd s Scien nolo ic
VASEP a Fisherie tific-Tech gical Econom Information 30 ood The
29 SQF stands for Safe Quality F SQF P is a fully i ed fo y management protocol designed specifically for the food with a n at all link foo
The SQF 1000 Code is a HACCP (see footnote 13) based supplier assurance code designed specifically for primary
Introduction 76
Market chain analysis is a crucial step in understanding the stakeholders, activities, buyers, and consumers involved in a specific market By identifying the optimal market chain for a client, valuable insights can be gained about the actors who purchase products This comprehensive view of the market chain is particularly beneficial for policymakers and is essential for designing and implementing effective business strategies Market chains, also known as market channels or value chains, involve various actors at each stage, with costs incurred and value added at every transaction.
The performance efficiency of a market chain is a result of ho organized and also how well the chain is supported by a rang
(BDS) Business services include research entities, organizations, transporters, local administration, marketing increased more effectively by improving or gaining access individual or group of actors in the market chain
The trade dispute between Vietnam and the USA has significantly impacted pangasius production in the Mekong Delta, leading to notable changes in the pangasius market and its supply chain dynamics.
Defining the market chain 76
Chapter 5 Market chain of pangasius in the Mekong Delta
Market chain analysis is a crucial step in understanding stakeholders, activities, buyers, and consumers, providing valuable insights for identifying the most effective market chain for a specific client This analysis is particularly beneficial for policymakers, as it aids in the strategic design and implementation of enterprises Market chains, also known as market channels or value chains, involve various actors, and at each stage, transactions incur costs while adding value.
The performance efficiency of a market chain is a result of ho organized and also how well the chain is supported by a rang
(BDS) Business services include research entities, organizations, transporters, local administration, marketing increased more effectively by improving or gaining access individual or group of actors in the market chain
The research on pangasius production in the Mekong Delta highlights significant changes in the pangasius market due to the trade dispute between Vietnam and the USA, as discussed in chapter 4 This dispute has notably impacted the market channels associated with pangasius trade.
The value chain encompasses all activities necessary to transform a product or service from its initial conception to its final delivery to consumers (Kaplinsky, 2004) While it can be illustrated in a simplified model, as shown in figure 5.1, actual value chains are typically much more complex and extensive.
The concept of a simple value chain was developed in the 1960s and 1970s to analyze the development of mineral-exporting economies, gaining popularity in the 1990s largely due to Michael Porter's work on value chains and national capacity upgrading Value chain analysis categorizes primary activities into five key areas: inbound logistics, operations, outbound logistics, marketing, and service These activities are essential for strategic planning, resource management, technology development, and procurement, forming the core components of the production link in the value chain.
Stakeholders are defined as individuals or groups that are affected, either positively or negatively, by proposed policies or services The World Bank categorizes stakeholders into two types: primary stakeholders, who are directly impacted, and secondary stakeholders, who are indirectly affected Additionally, stakeholders can include those with technical expertise or connections to organizations, as well as various intermediary or representative bodies that often advocate for public interests.
Differentiating between primary and secondary stakeholders is essential, as the stakeholder approach assigns distinct roles to each group Understanding these differences enhances stakeholder engagement and strategic decision-making.
The of d pop valu classifie mar hum diffe
The org by stak inte inte
So e: K y, 2 04 ol nt nt to en
Wo der ion ion p ta
Th ar an e ho ti e e d co ld on
Eco-ary systems play a crucial role in maintaining environmental balance They serve as essential frameworks for understanding the interactions between various organisms and their habitats These systems are vital for promoting biodiversity and supporting primary ecological functions By recognizing the importance of these interactions, we can better appreciate the significance of conservation efforts and sustainable practices in preserving our natural world.
MARKETING anticipated that p g, planning and management, whilst secondary stakeholders have a less active role (Sevaly 2001)
The diversity of primary and secondary stakeholders in the pangasius farming is illustrated in table 5.1
Figure 5.2 illustrates the value chain before and after the "catfish war" between Vietnam and the USA, highlighting its significance for policymakers in aquaculture development The changes in stakeholder interactions are evident, as the intermediate trader (IT) played a crucial role in product distribution prior to the conflict However, post-war dynamics shifted, leading to a diminished role for the IT, which transitioned to a broker, while the exporting and processing company (EPC) began directly sourcing products from fish farmers.
Table 5.1 Primary versus secondary stakeholders
− Aquaculturi ts (local, non-local, Private entrepreneur, corporate etc.) s
− Fingerling or fry producers and suppliers
− Drug, chemical and equipment manufactures and suppliers
− Extension agents (government and private)
− Aquaculture researchers (government, university, institute)
− Contributors to financial or technical resources (government, donors, banks other sponsors)
− Public interest represented by environmental groups
− Fishers (where juveniles for aquaculture are sourced from the wild or where there is market competition between wild-caught and farmed species)
Since the conclusion of the catfish war, fish farmers have gained significant advantages from various capacity-building initiatives, technology extensions, and access to market information This support is provided not only by government entities but also by private sector organizations, including private export companies and feed factories As a result, fish farmers have successfully increased their output, with hatchery services for fingerlings, feed, and aquatic drugs reaching a total of 54.4 million.
From 1998 to 2001, the production of fingerlings in Vietnam increased significantly, reaching 174 million, despite a drop to 122 million in 2002 due to the catfish war Hatchery production maintained a high percentage, with artificial fingerlings accounting for over 90% of the supply, while the use of wild fingerlings nearly vanished This technological shift has transformed the Vietnamese pangasius industry by ensuring a reliable source of fingerlings to meet demand, stabilizing resources, and minimizing the environmental impacts associated with previous overfishing practices Additionally, fishing activities on rivers have been shown to disrupt water flow and boat traffic systems.
In 1995, a fingerling socialization program started in the
Since the introduction of artificial fingerling technology, fish farmers have gained a more flexible and reliable source of fingerlings, moving away from the previous dependence on wild-caught specimens This advancement has significantly improved the availability of fingerlings for aquaculture, enhancing the sustainability and efficiency of fish farming practices.
An Giang province, known for its advanced farming of tra and basa fish, stands out as a leader in modern aquaculture and the implementation of innovative technologies The region excels in the production of fingerlings, contributing significantly to the growth of the aquaculture industry.
F are involved through formal contract farming transfer, aquacultur a
Before the catfish war, fish producers struggled with limited market organization and communication, despite their connections with government organizations for capacity building and technology transfer However, post-war, the landscape has transformed significantly, with fish producers now benefiting from enhanced support through various government programs, including credit initiatives.
Preparation of baby fingerling in floating seed bags for release into the pond
Releasing fingerling slowly fter the catfish war
- From natural source and artificial M
- Decrease in basa culture, but D ages,
Increase in tra culture in c t ponds
- Individual producers with Fi ith good
- The IT as main play - T slowl appears in chain
-Informal contract betw - F cont arming based on
- The EPC with unstable ra T at material input source p
- Single product with single market Diver ti pr d e.g the USA arket et : A
Figure 5.2 Th ar ages oach zatio er in chain een fish w e value chain of pangasius product before and a
The industrial sector is experiencing a significant increase in market share, particularly in IT and related fields The formal floor price for materials has been established, which is essential for organizations involved in the agricultural sector This development aims to enhance the efficiency of the supply chain and improve the quality of agricultural products By focusing on these advancements, the industry can better meet the growing demands of the market while ensuring sustainability and innovation in agricultural practices.
PC urc uct d sifica pen estic with e iffe st rent on of ration arket able iati ra on odu
EU, once w m ct an ASE rne erial new
Building Capacity and Technology Transf
-Universities/Institutes: Can Tho University, A Giang University, Research Institutes -VASEP, NAFIQAVED, DARD, DOF, EPC, Feed Company
-Donors/Projects: DANIA, FAO er n Policy framework
-Ministry of Fishery, VASEP, N -Provincial authority: PPC, DA DOT, DONRE
-BARD, BSP, Banks of Join St Commerce
-Ro lan ast ads d, w ruc
, br ate tur idg r, te e a es, lec ans serv nd ferr om ser ies mu vice pr
, public nication tion mea ices, packaging, ovision utilities,
-Insurance, tr porta ns, environment maintenance
Service feed an aquatic dr of d ugs
Government and private organizations play a crucial role in enhancing aquaculture through capacity building, technology transfer, and the implementation of credit programs However, there is a significant challenge due to poor market information, which hinders the development of effective market information systems Strengthening the linkage between the Extension and Production Committee (EPC) and fish producers is essential, as current connections are weak and limit the potential for growth in the aquaculture sector.
Figure 5.3 Pangasius fingerling in the An Giang province
Source: Department of Agriculture and Rural Development – Project of Tra and Basa Development of An Giang Province 2003-2005
Market channel of pangasius and its change 85
ter the US embargo was lifted in 1995 and with the Bilateral Trade Agreement of 2001 between
Between 1997 and 2002, South Africa and Vietnam capitalized on low production costs, including affordable labor and inexpensive fingerlings, particularly in the frozen panga industry However, during this period, there were no clear connections among fish farmers, the Export Processing Companies (EPCs), and the overall aquaculture sector, which severely limited technology transfer, aquaculture extension, and capacity building efforts Consequently, the lack of collaboration hindered the potential growth and development of the industry.
Many business promotion programs by EPCs focused on capacity building through extension services, credit support, and contract farming to meet the necessary quality for processing Simultaneously, efforts were made to align products with international standards and enhance market channels for catfish traders, bridging gaps between producers and consumers The integration of IT in business functions facilitated the collection of data and improved logistics, streamlining the process from gate to market This approach not only supported industry development but also fostered communication among farmers and the local IT sector, enhancing overall productivity and efficiency.
Before the catfish war, the pangasius tunnel experienced significant challenges The collecting function of the Information Technology (IT) system was essential, yet the Fishery Federation (FF) encountered numerous disadvantages, including issues with contractual agreements and communication links between the Engineering Procurement Construction (EPC) and the FF.
- The risk of price instability was a continuous threat to the FF, depending on the IT rather
When purchasing live fish from fish farms (FF), the lack of real quality evaluation criteria by the importing traders (IT) leads to a predominantly negative perception of pangasius quality Consequently, fish farms suffer financial losses as the selling price does not reflect the true value of their pangasius Additionally, local farmers often hesitate to engage directly with the export market, further complicating their ability to maximize profits.
- The FF had few opportunities to look out for external markets, and showed little motivation to improve the fish quality
- The transfer of farming technology from the EPC to the FF was very small, due to very limited co than on the EPCs
- The selling price of the FF depends and is usually controlled by the IT who always tries to push the buying price down
The financial capacity of IT to pay the FF after purchasing the product was frequently constrained, leading to delays in payment Some IT entities attempted to negotiate longer payment terms with the FF.
Before the catfish war, the IT's share of the gross marketing margin was 12.12%, significantly higher than the 2.9% recorded afterward, indicating a notable shift in profitability dynamics for the FF.
The catfish war significantly transformed the marketing channel, altering both farming technology and consumption patterns With market liberalization, small-scale fish farms were largely supplanted by larger operations with robust financial resources Consequently, the role of the intermediary traders diminished, as evidenced by the shift in sales distribution—post-war, 81.3% of live pangasius was sold directly to exporters, while only 18.7% went through intermediaries This evolution fostered greater synergy between fish farms and exporters through contract farming, leading to a more efficient market channel structure.
- Production by the FF is market oriented
- Small scale farmers were replaced by large scale farmers who can meet the EPC’s contract farming conditions both in terms of quantity and quality
- Large scale farmers can easily apply the modern farming technology
Direct selling to the EPC allows the FF to bypass IT's price negotiations and quality assessments of live fish, effectively diminishing the IT's bargaining power and lowering its marketing margin As a result, the marketing margin for the EPC has seen an increase.
Large-scale farming by individual fish farmers in the same region generates significant external economies of scale, enhancing production efficiency and benefiting from local authority services such as aquaculture extension programs, capacity-building initiatives, and environmental management and control.
Figure 5.7 The market channel of pangasius a r the catfish war
Source: Survey conducted in 2006 war, see n ct ted the fo fte
Table 5.3 Marketing margin of the economic agents in market channel before and after catfish war
Description FF IT EPC REB R
Distribution rate of marketing margi before catfish war (%) n 12.12 60.70 21.60 5.58
Distribution rate of marketing margin after catfish war (%) 2.9 81.88 12.89 2.33
Source: Survey conducted in 2003 and 2006, FF = fish farmer; IT = intermediate trader; EPC = export processing Company; REB = Restaurant/eating bar; R =Retailer
After the catfish war the Vietnamese pangasius industry received lessons and gained experience
The Vietnamese pangasius industry successfully reorganized its supply chain from farming to the consumption market, implementing changes swiftly and in harmony By adjusting supply at the farm gate and diversifying into higher value-added products, the industry expanded sales into new export markets, such as the EU and ASEAN, thereby reducing its heavy reliance on the USA market Consequently, just one year after the onset of the trade dispute with the USA, the industry demonstrated a significant recovery.
The primary components driving the production cost of basa and tra catfish are feed, fingerlings, and aquatic drugs The ongoing catfish war has significantly impacted the production expenses associated with tra cultivation.
- The FF is using m better quality of the end produ
The rising prices have surpassed the production capabilities of livestock feed companies, leading to increased demand from fish farmers This situation has resulted in higher costs for quality fingerlings, while the original supply remains constrained.
The value and composition of fish raised in cages and ponds have undergone significant changes, as illustrated in Table 5.4 These changes are primarily attributed to the increased use of industrial feed, which promotes faster growth and enhances overall fish quality The rising demand for farming feed has further contributed to this shift in aquaculture practices.
- An increase in fingerling causes an increase in
- At present, many farmers are entering the pangasius market and start production
Consequently there is an increase in the demand for feed, fingerling, aquatic drugs and labour, which in turn leads to higher prices of these inputs
Table 5.4 Structure of production cost of raw material
Before the catfish war After the catfish war Description
Value (VND/kg) Percent (%) Value (VND/kg) Percent (%)
Source: Survey conducted in 2003 and 2006
Other costs: business registration tax, marketing
Conclusion 89
This chapter demonstrated how stakeholders in the pangasius market value chain in the Mekong Delta (MD) adapted to a changing external environment, enhancing their competitive power and collaborating to overcome various technical and trade barriers in the global market.
The trade dispute with the USA fostered a beneficial synergy between the FF and the EPC following the catfish war Despite the FF adopting modern technology to enhance pangasius product quality and lower production costs, there has been a significant rise in input prices, particularly for feed, fingerlings, and aquatic drugs.
In light of recent developments, it is crucial for policymakers in Vietnam to conduct a comprehensive analysis of the pangasius industry to formulate effective policies for its sustainable development This includes reorganizing quality farming areas through strategic master plans to balance pangasius supply with demand, enforcing strict ecological regulations, and enhancing communication among fish farmers regarding advanced farming techniques, market information, and rural credit Additionally, fostering partnerships between fish farmers and companies through contract farming will be essential for the industry's growth.