"Achilles heel" of Vietnamese shrimp

According to the Association of Seafood Exporters and Producers (VASEP), shrimp export turnover in May 2023 reached 331 million USD, down 28% over the same period last year. In general, in the first 5 months of 2023, Vietnam's shrimp exports reached about $1.4 billion. Vietnam's shrimp exports have been declining since August 2022 and have lasted until now.

"Catch disease" weak competitiveness in shrimp exports from Vietnam

According to Mr. Le Van Quang - Chairman of the Board of Directors, General Director of Minh Phu Seafood Corp, the shrimp industry is facing great pressures of the market such as the global economic recession, purchasing power reduce. Shrimp prices decreased due to oversupply, the profit margin of enterprises decreased.

However, the core problem of Vietnam's shrimp industry today is competitiveness. Mr. Le Van Quang analyzed and compared the cost of shrimp production among 3 competitors, namely Vietnam, Ecuador, and India, the cost of farmed shrimp in Vietnam (4.8 - 5.0 USD/kg) was higher. 100% compared to Ecuador (2.3 - 2.4 USD/kg) and 30% more than Indian shrimp (3.4 - 3.8 USD/kg).

The success rate of Vietnamese shrimp is less than 40%, lower than that of Ecuador (90%) and India (60 - 70%). The survival rate of Vietnamese shrimp in commercial culture is low because it has not actively selected and produced shrimp seed with good resistance to adverse environmental conditions.

The root of the above situation is due to the characteristics of shrimp farming in Vietnam, which is small-scale farming, with households, each raising only 1-3 hectares, and there is no separate water supply and drainage channel. Therefore, the survival rate of shrimp is low. It is the small shrimp farming that also makes it very difficult to invest in infrastructure, roads and traffic for the farming area.

“Vietnam farmed shrimp has a density of up to 250-500 shrimp/m2, India 60 shrimp/m2 while Ecuador only 20-30 shrimp/m2. Shrimp farming in Vietnam has a high density, higher than the ecological capacity and pond management capacity, leading to great risks. The price of essential materials for shrimp farming is higher than it actually is when it comes to shrimp farmers ,” said Mr. Le Van Quang.

Another problem reported by businesses is that shrimp farming with antibiotics costs about 10 trillion VND per year. This expense is incurred in the cost of taking samples for antibiotic control at the farming area, in the factory, before entry, and in the storage time. Of course, these costs add up to the price of shrimp. It is this situation that causes Japan to inspect 100% of goods from Vietnam while India and Thailand are not.

Enhancing competitiveness, a vital factor

In the early 2010s, Vietnam was only behind China and Thailand in shrimp production. Currently, Ecuador, India and Indonesia have surpassed Vietnam. The market is increasingly demanding high requirements such as clean products, traceability, sustainable models, and ensuring the welfare of farmed shrimp. This leads to additional costs or is not feasible with the current business model.

The production of black tiger shrimp in Vietnam - which is the native species with the leading production in the world - has barely increased. In 2022, black tiger shrimp will only account for 25% and the remaining 75% will be whiteleg shrimp. Without investment, Vietnam misses the opportunity to increase competitiveness.

Mr. Vo Van Phuc - Chairman of the Board of Directors, General Director of Vietnam Clean Seafood Joint Stock Company - assessed that the crisis in the world will never stop. Therefore, the consumption market will be difficult, plus the strategic challenge of cheap shrimp supply, while oversupply makes the price of finished shrimp low, even lower than the price of raw materials. Therefore, shrimp farmers suffer losses and shrink, affecting the scale of the shrimp industry.

With the high price of domestic shrimp, exporters will tend to use imported raw materials from outside. This means that it will encourage competitors to develop the shrimp farming industry, and at the same time will destroy the domestic shrimp industry and affect the domestic shrimp price.

"Need a revolution to reduce costs and increase productivity in the field of shrimp farming, in which, emphasizing the role of businesses", said Mr. Vo Van Phuc and said that in the coming time, businesses need to change thinking about how we can have strong investment in farming area. This is the premise to solve the challenge of raw material cost. At the same time, it proves to buyers that Vietnamese businesses do genuine, serious business, certified farming areas, have traceability and origin.

Besides, the State has a big role to play in developing the shrimp industry. Accordingly, it is necessary to plan favorable infrastructure for the farming area, such as roads, irrigation canals, land accumulation, and other infrastructures and have policies to support farmers to avoid losing a farming profession. .

Currently, Vietnam's processing capacity is among the top in the world, but rivals Ecuador and India are also campaigning and striving and can catch up with Vietnam. While India and Ecuador have many strengths in shrimp farming, if they develop well in the processing stage, only 10 years from now, Vietnam will hardly be able to compete.

The seafood industry sets a target for the period of 2023 - 2045, improving the value and competitive advantage of Vietnam's shrimp industry on the basis of profitability, sustainability and consumer credibility.

Vietnam's shrimp industry is forced to jump into the race in terms of quality and price. In the new context, Mr. Tran Van Pham - Chairman of the Board of Directors of Soc Trang Seafood Company - said that VASEP needs to pay attention to the whole shrimp value chain, besides, it is necessary to promote the attention of the Government so that it can be provide appropriate and timely development, support and investment policies to develop shrimp farming.

At the same time, VASEP needs to step up further in the fight against impurity injections, antibiotics, etc. in the shrimp industry.

Besides, forecasting for the shrimp industry is very important and vital. Therefore, VASEP, in addition to information about the domestic situation, needs to update more information about the situation of rival countries such as prices, farming output, exports of India, Ecuador, Indonesia... as well as Update the developments of import markets such as the United States, Korea, Japan, EU, Australia... for businesses.