Short-term Prospect of Vietnam’s Agricultural and Fisheries Exports

Despite the short-term approach of price competition among agricultural exports, this is quite common in Vietnamese enterprises. Rather than compete on quality or brand, enterprises are now scrambling to compete on price. This approach decreases the profitability of businesses and manufacturers. The biggest losses are suffered by the agricultural economy with the biggest labour proportion in Vietnam. It will also obstruct economic growth.

Instability in catfish industryAs one of the main seafood exports Vietnam, after 12 years of development (2000-2012), fish farming area increased from 1,200 ha to 5,600 ha in 2012, production increased from 37,500 tonnes to 1.3 million tonnes, the export value increased from US$40 million to US$1.74 billion. Favorable natural conditions, the innovative, quick application of technical advances in breeding and feeding, the dynamics of the export processing enterprises in accessing and diversifying markets, receiving support from a number of state policies, local authorities and industry made the leap development of Vietnam catfish industry.However, in the recent years this industry has emerged many signs of instability such as declined area and volume, imbalance of supply and demand, weak competitiveness, unstable prices and unfair competition.

Elements of unfair competition are apparent when the number of participating companies engaged in catfish exports soared to hundreds units. Catfish manufacturers and exports are racing each other to offer dumping to win every sales relation. The Vietnam Association of Seafood Exporters and Producers (VASEP) recommended that catfish export price must be at least US$3/kg to ensure interest. As scrambling for customers, many businesses offer prices from US$1.8 to US$2.3/kg. This has led to prices of raw materials and domestic catfish industry profitability continued to decline.

Rice export: Amount increased, turnover decreasedAccording to the Ministry of Agriculture and Rural Development (MARD), in the 1^st quarter of 2013, Vietnam's rice exports reached 1.4 million tonnes, worth over US$616 million, an increase of over 34 percent in volume but fell almost 6 percent in value compared to the same period. The situation is the actual consequences of the race to lower export prices to win contracts in the first months of the year. The record low price in the contract makes domestic rice prices reduce, creating the general price level.

To cope with this situation, the Vietnam Food Association (VFA) has regulated to control export floor price to control rice price reduction. For this year's crop, the floor price applied to 5 percent broken rice is US$410/tonne and US$365/tonne for 35 percent broken rice. However, despite the provisions of the floor price, the companies have signed export contracts with lower prices as long as they can sale products. In this situation, the Ministry of Industry and Trade also admitted that the price of 5 percent broken rice is currently at US$395/tonne, lower than the US$40-50/tonne compared to India and Pakistan. Compared to the same period in 2012, prices decrease an average US$44.5/tonne.

Decreased rice prices make the government purchase temporary storage of rice to save its price and early public procurement temporary storage problem but the impact is not effective. Profit of farmers –important subject and last figure in rice production chain has not reached the target of 30 percent as the government has proposed.

Nguyen Thanh