Shrimp supply chain at risk of disruption

Disruption of the whole chain

Currently, the social distancing measure under Directive No.10 of the Prime Minister have been imposed in 19 provinces and cities in the Southern region and as effective as it would be. However, these measures have had negative impacts on the seafood production and processing, especially the shrimp supply chain.

According to Minh Phu Seafood Corporation, the enterprises operating in the shrimp industry suffer the most. The factories that do not meet the requirements for “three on the spot”, have to suspend operations.

The rest factories which meet the requirements for “three on the spot” are able to operate at 25-50% capacity while production costs increased by 70% excluding the costs of raw shrimps. As a result, the quantity of shrimps purchased for processing fall sharply, leading a decrease of 20-30% in prices of raw shrimp

“Facing with that situation, shrimp farmers have sold out and not keep shrimping. Therefore, the disruption risk of the shrimp supply chain is more obvious than ever”, said Le Van Quang, Chairman of Minh Phu Seafood Corporation.

In addition, the supply chain of shrimp seeds, feed, chemicals, microbiology and warranty and repair services for the shrimp industry has been disrupted, causing a lot of difficulties for shrimp farmers.

Because of social distancing measures, there are shortages of workers for harvesting shrimp as well as transporting shrimps from ponds to processing factories. There are even many ponds that are not harvested, causing dead shrimps in the ponds.

Meanwhile, recently, manufacturers of package, chemicals, spices and ingredients , mostly located in Ho Chi Minh city, have not been not able to operate.  Although the shrimp processing factories made plans for storage in advance, because of prolonged social distancing period, up to now they have not had enough materials and ingredients for production.

According to Le Van Quang, Minh Phu Seafood Corp.’s frozen warehouses are now full, hence it will be impossible to freeze raw shrimps in the coming time.

Shrimp industry lags behind the market

According to the report by the Directorate of Fisheries under the Ministry of Agriculture and Rural Development, although in the first eight months of the year, brackish water shrimp production increased by 1% compared to the same period in 2020, the prices of commercial shrimp have decreased by VND10,000-VND20,000 over the same period last year, even more than VND20,000 in some areas.

Shrimp processing plants in Ca Mau, Soc Trang and Bac Lieu, the three provinces leading in shrimp production in the country, expressed that facing with the complex situation of the Covid-19 pandemic, the provinces have imposed the social distancing measures under Directive No.16 , resulting in the difficulties in goods circulations, seed buying and selling as well as harvesting. In addition, the plants have to lower production capacity by 60-70%.

In Hau Giang province, most of seafood plants have closed because of failing to meet the requirements for “three on the spot” production, facing the lack of workers and difficulties in travel. Many plants located in “red zone”, hence workers from “green zone” were unable to come to work.

At first, some plants tried to implement “three on the spot” solution to maintain jobs for workers and comply with the agreements the contract. However, in recent days, they must suspend operations due to high costs of accommodations for workers, salaries, food, healthcare and testing expenses

In Da Nang, after the social distancing measures imposed, all seafood processing plants shut down. Some enterprises planned to implement “three on the spot” to continue production. However, there was a severe shortage of worker for deep processing.

Some shrimp enterprises in Da Nang decided to resume operations but they only bought raw shrimps for processing peeled and deveined (PD) shrimps. However, the prices of Vietnam’s PD shrimps can’t compete with the same products of India or Ecuador in the market.

According to many shrimp processing and export enterprises, Vietnam’s shrimp industry has lagged behind the market because of the Covid-19 pandemic.

From September to the end of the year is the time shrimp processing plants enter the peak of buying raw materials, processing and exporting. However with the current situation, it is certain that shrimp supply will be turned over and in shortage until the end of the year, even extending to 2022.