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Rough seas ahead for Vietnamese seafood exporters

Monday, January 11, 2016, 15:40 GMT+7
Rough seas ahead for Vietnamese seafood exporters
Workers work at a seafood processing company in the Mekong Delta city of Can Tho in this photo illustration.

Vietnam’s seafood industry must improve its competitiveness if it is to reach its US$7-billion export goal this year, a challenge given a 15.5 percent year-on-year drop in exports last year, according to the Vietnam Association of Seafood Exporters and Processors (VASEP).

The year 2016’s goal is a 12.5-percent reduction against the $8-billion target of 2015, the VASEP said.

The Southeast Asian country last year earned $6.7 billion from exporting seafood, equal to 84.5 percent of 2014’s exports, according to the VASEP.

The year 2015 was the first time export revenues from the two major seafood items, shrimp and catfish, had dropped, the association said.

While shrimp exports fell 25 percent year on year, from the record of $4 billion in 2014 to about $3 billion in 2015, catfish shipments were also estimated to have experienced a 10-percent year-on-year decline, it added.

Moreover, the decrease was not only in export value, but also in market share across some of the main export markets including the U.S. and the European Union (EU) with a 1-2 percent fall from 2014.

In addition, the rate of returns of Vietnamese seafood shipments also rose in 2015, according to the VASEP.

In only the first nine months of 2015, the number of seafood shipments to be returned due to high rates of residues in antibiotics and micronutrients, along with other types of contamination, was equivalent to the rate recorded in 2014.

Among them, 27 consignments were rejected by Japan, and similar moves taken by authorities in the EU, the U.S. and other overseas markets, the association said, citing a report of the Ministry of Agriculture and Rural Development.

In the U.S., shipments of Vietnamese fish and shrimp detected with high antibiotic residues increased six times compared with 2014.

Food safety authorities in Australia, the EU, and South Korea also issued warnings about applying stronger measures like checking all products imported from Vietnam, and said they would consider stopping the import of Vietnamese seafood if the number of violations in antibiotic residues and other kinds of contaminants continued rising.

Tough time ahead

During 2016, the VASEP estimates that Vietnam's shrimp will still be affected by widespread price cuts from its competitors, and that exports of seafood to the U.S., the biggest market for the Southeast Asian country, will face more hurdles.

According to a preliminary ruling of the U.S. Department of Commerce on anti-dumping duty during the latest review, the POR11, for the period of August 2013 to July 2014, tax rates for two Vietnamese leading catfish exporters, Hung Vuong and Thuan An, were at $0.36 per kg and $0.84 per kg respectively, the VASEP said.

Meanwhile the common rates for the remaining 16 countries were at $0.6 per kg. Although this is only a preliminary ruling and was lower than the rates regulated by the POR10, it was still very difficult for Vietnamese enterprises to sell their catfish to the U.S. at competitive prices considering the newly-imposed anti-dumping duties, according to the VASEP.

In addition, Vietnamese catfish exporters are facing new regulations in exporting products to the U.S. from September 2017.

Allowed 18 months for a transitional period after the U.S. Farm Bill takes effect, Vietnamese seafood entering the U.S. will be required to follow the regulations of the Food Safety and Inspection Service (FSIS) under the U.S. Department of Agriculture, instead of being overseen by the U.S. Food and Drug Administration (FDA) as was the case previously.

The food safety standard regulated by the FSIS is very different from what was applied by the FDA, which will take Vietnam many years of effort to fully adapt to, the VASEP said.

The FSIS requires a review of 100 percent of imported products starting September 2017, instead of inspection on only one percent of the imports as the FDA did previously.

What is more, the FSIS has strict regulations at each production stage, like the sources of breed and feed, checking for antibiotic and veterinary drug residues, transportation, and processing at factories, which all hikes the cost of production in Vietnam.

It also stated that foreign aquaculture techniques must be as good as those applied in the U.S. before a firm is allowed to export its products to the U.S. market, which means Vietnamese companies must register and prove that their seafood farming culture is similar to that in the North American country, the VASEP said.

The FSIS usually takes at least eight years to consider recognizing similar standards for meat and poultry exporters to the U.S., and no Southeast Asian country has ever achieved similar certification in the meat and poultry sector, the association said.

The U.S. Farm Bill was proposed in 2008, in the context of catfish shipments from Vietnam, China and some other countries already accounting for over 75 percent of sales to the U.S., which at that stage had pushed American catfish farmers and processors to the brink of bankruptcy, the VASEP added.

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