Seafood exports forecasted to prosper in the fourth quarter

Growth opportunity

Along with many other industries, seafood is affected by the Covid-19 pandemic. According to the General Department of Fisheries, export of many products dropped sharply in August 2021. Total production in August is estimated at 801.4 thousand tons, down by 2.6% over the same period, and is the first decrease in 2021. However, the growth momentum of the first 7 months helps to accumulate the total production volume by the end of August 2021 to reach nearly 5.7 million tons, up by 1.4% over the same period in 2020 and accounting for 66.2% of the 2021 plan.

Although the seafood industry still has its difficulties, Mr. Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Food Joint Stock Company, said that Vietnam still has many growth opportunities towards the end of the year. The reason being major shrimp exporting countries such as India and Indonesia have been disrupted by the Covid-19 pandemic. This causes the supply of shrimp in the world market to decrease, leading to higher consumption of shrimps.

"Shrimp farmers are very active currently. They have a quick response to the market. If the pandemic is controlled, I believe businesses and production households are ready to farm during the off-season, accept and overcome risks to wait for shrimp prices to increase in the following months," said Mr. Luc.

Besides the off-season, the Chairman of Sao Ta Food Joint Stock Company speculated that some large seafood processing and exporting companies still have a reserve of semi-finished shrimps for the fourth quarter. This source is accumulated during the peak season (May to July). "I believe large businesses now reserve about 1,000 tons of this type of shrimp. They have enough experience and bravery to overcome difficulties," Mr. Luc continued.

One of the reasons why Mr. Luc believes in the recovery is that the seafood supply is currently not completely cut off. Not to mention, in many provinces of the Mekong River Delta (the Mekong Delta), a large number of workers are returning to work due to the pandemic. Seafood processing and exporting businesses in pandemic-free areas can utilize this resource, rotate with the number of workers who are following the "3 on-site" at facilities, to accelerate production speed. With just one successful off-season, the seafood industry will reach the target export turnover of 8.8 billion USD in 2021.

Sharing the same view with Mr. Luc, Director of the General Department of Fisheries Tran Dinh Luan said that the Ministry of Agriculture and Rural Development and the General Department are actively informing and communicating ideas to farmers, controlling the disease while also creating a mechanism to resolve problems and promote people to maintain aquaculture and fishing.

"People need to be informed in a timely manner, that the market's demand is very large. Especially in the upcoming Lunar New Year, orders may come in abundance. We need to prepare for stocking a few months in advance. Otherwise, the seafood industry may suffer double damage: unable to take advantage of markets with a supply shortage and lack of assurance for a new production cycle, "said Mr. Luan.

Compared to the first period when the southern provinces and cities were social distancing, businesses and processing facilities here have all found ways to adapt and receive support from the Government. In the future, the shrimp industry will receive a 10% discount on electricity prices for 3 months starting from September 2021. In addition, Resolution No. 105/NQ-CP was issued on September 9, with the goal of focusing on restoring and developing production and business activities of businesses, cooperatives, households and promptly resolve difficulties, obstacles and bottlenecks hindering production activities.

According to Resolution 105, at least 1 million customers who are businesses, cooperatives, and business households that are entitled to credit policies, while resuming operation for this majority. In addition, policies on tax payment extension, exemption and reduction of taxes, fees, land rents, and policies to support employees and employers... are also favored for this target group. This is considered a lever for the seafood industry in the fourth quarter of 2021.

The Mekong Delta to prepare for the scenario immediately

Vietnam Association of Seafood Exporters and Producers (VASEP) forecasts that the seafood industry will not be able to recover in September 2021. There are four reasons for this statement. Firstly, the prices of shrimp, pangasius, and many other products still drop simultaneously, causing confusion among farmers. Some households in the Mekong Delta have stopped farming shrimps in recent years.

Secondly, all business production costs increased. During the pandemic, in addition to on-site meals and accommodation for workers, processing facilities also have to bear health care, testing and scheduled medical examinations costs. In addition, transportation and circulation costs also skyrocketed due to different regulations in localities.

Third, workers' psychology is currently unstable. Most of their health suffered because of the "3 on-site" period lasting over 2 months, and they also miss their family. As a result, risk of technical errors increases, and workers' skills in the chain are not uniform.

Finally, most seafood businesses currently follow "3 on-site" with a small operating scale, with labor capacity at only about 30-40%. Yo return to 100% or more, the business needs at least half a month to a month.

"We are not afraid of losing potential export markets, because our strong competitors also face difficulties. The problem lies in how to utilize this opportunity," said Chairman of Sao Ta Food Joint Stock Company Ho Quoc Luc.

In addition to ensuring sufficient raw materials for domestic consumption and export, Mr. Luc warns businesses to be careful with increasing labor force in the coming time. This is a difficult task, because the pandemic has not been completely controlled. In theory, production will recover quickly when overtime and labor increase, but to fulfill the dual goals set by the Government, including pandemic control and worker safety, there should be a clear direction by levels of 30%, 50%, 70%...

Soc Trang, where Sao Ta Food Joint Stock Company shut down its factory, has announced the milestone of September 15th - returning to a new normal situation. Mr. Luc expressed: "We are handling the synchronization from raw materials, input materials, even market research to adapt to the new habits of consumers. When restaurants and collective kitchens are yet to open, the planning must be detailed."

The immediate goal of the seafood industry is to maintain supply chain, from farming to processing. Director of the General Department of Fisheries Tran Dinh Luan suggested three solutions: Requesting seed and animal feed establishments to reduce prices to stimulate demand. Implement technical measures such as seeding with low density, raising shrimps to large size to ensure the source of raw materials for the plant continuous operation. Prepare scenarios for Mekong Delta provinces after September 15th.

"The fisheries industry has difficulty in traveling to guide production. Therefore, we have increased working remotely, via online meetings, and tried to be as detailed as possible with communes and hamlets. All specific instructions on techniques, transportation and circulation are recommended to minimize risks and costs incurred during production. The most important goal we aim for, is to ensure sustainable income for farmers and production cycle," said Mr. Tran Dinh Luan.

To accomplish these, heads of the seafood industry commit to propose to ministries, departments, branches, and localities, especially the Mekong Delta provinces to agree on production plans, ensuring the most favorable conditions at the start of a new cycle.

Meanwhile, Mr. Ho Quoc Luc expressed his wish for the Government to promote and have a preferential mechanism for vaccination in seafood businesses. "It must be safe to produce. Therefore, as long as workers are vaccinated against Covid-19, we are also more secure," he emphasized.