Eearning Trillions of VND from Shrimp Heads and Fish Tails

9:20:46 AM | 11/11/2024

While the price of 1 kg of shrimp hovers around 20 USD, the value of 1 kg of chitosan—extracted from shrimp—can soar to 500 USD. This highlights a significant challenge within the seafood processing industry.

Vinh Hoan stands out as a leader in this sector, employing a sustainable, closed-loop farming model with five subsidiaries focused on various aspects of aquaculture. These include pangasius seed production, aquatic feed, and the extraction of gelatin and collagen, along with a fertilizer production arm. Notably, the gross profit margin for the collagen and gelatin factory can reach up to 30%. Chairwoman Ms. Truong Thi Le Khanh emphasizes that optimizing production processes and minimizing waste enables the company to maximize profits.

Vinh Hoan's circular economic model not only enhances the processing of high-value products from by-products but also supports Vietnam's Net Zero goals. Many prominent seafood companies, such as De Heus, Minh Phu, Thang Long, Vietnam Food, and Skretting, are investing in R&D for aquaculture and seafood processing to lower emissions in line with international commitments.

Promoting the circular economic model over a linear one is seen as a crucial strategy for balancing economic growth with environmental sustainability. Vietnam aims to achieve 10 billion USD in shrimp exports by 2030—three times the current value—projecting an output of approximately 1.1 million tons. The estimated shrimp by-product volume stands at around 500,000 tons. Mr. Phan Thanh Loc, Chairman of Vietnam Food Joint Stock Company, notes that shrimp by-products can yield 20-30 times more value in the pharmaceutical sector or 15-20 times more in the functional food industry. With a shrimp production forecast of over 1.2 million tons in 2023, the potential for increased value from by-products is significant.

Vinh Hoan's circular model has led to remarkable results, with revenue from the collagen and gelatin segment experiencing a compound annual growth rate (CAGR) of 21% from 2018 to 2023, contributing 7% to total revenue in 2023. In contrast, fishmeal and fish fat fetch prices of only 1.2-1.5 USD/kg, while collagen production can yield 15-20 USD/kg for finished products. Overall, leveraging by-products could enhance the value of Vinh Hoan's pangasius farming and processing chain by 15-25%.

Similarly, PAN Group Joint Stock Company is embracing sustainability as a cornerstone of modern agriculture, investing in a recycling production model. By collaborating with a shrimp shell processing company, PAN Group has transformed what would have been costly waste management for over 7,500 tons of shrimp heads and shells into an additional revenue stream of 15 billion VND.

Vietnam generates approximately 170-180 million tons of agricultural by-products annually. With the right processes and technologies for recovery and recycling, these by-products could offer substantial economic benefits while also mitigating environmental waste. The seafood industry aims to ensure that by 2030, all by-products from shrimp and fish processing will be repurposed for circular production.

The experience of Vietnam Food, which processes 35,000-50,000 tons of shrimp by-products each year—boosting their value by 6-8 times—serves as a valuable lesson. Mr. Loc stresses the need for innovative initiatives and a comprehensive industry ecosystem to promote growth. "We believe that today's waste is tomorrow's resource. Achieving this requires strong governmental support, as it represents a new industry," he concludes.

Source: VGP