High cost of raw materials hits seafood sector

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam is expected to earn US$4.5 billion from seafood exports in 2010, up US$200 million over last year. However, the domestic seafood sector is suffering a severe shortage of raw materials, including key items such as shrimp and tra fish. The growing demand for raw materials has forced farmers to harvest early and some have shifted to raise other aquatic species.

At present, seafood processing plants in Ca Mau are operating at only 50 percent of their full capacity. Fourteen out of 26 of these plants have had to reduce or suspend production. In An Giang, 23 tra fish processing plants have had to reduce their production capacity by 40-50 percent due to a shortage of raw materials. About 60 percent of tra breeding farms are empty as local farmers suffered heavy losses and did not have the capital to reinvest.

Therefore, importing raw materials has become a popular choice for many businesses. However, by doing this, production costs increase and local businesses will have to rely on foreign markets a lot more. Furthermore, domestic businesses also have to face tough competition from foreign rivals on the international market.

The Ministry of Agriculture and Rural Development predicts that to boost exports, Vietnam will have to increase its seafood imports by 8-10 percent a year.

4-5 million m³ of timber imported annually

Last year, Vietnam’s wood output reached 3.88 million m³. To meet the increasing demand for export products, the country also had to import 4 million m³ of wood.

The Vietnam Wood Processing Association calculates that Vietnam will have to spend US$3 billion, US$4.5 billion and US$7 billion importing timber in 2010, 2015 and 2020, respectively. Accordingly, the country will import approximately 4-5 million m³ of timber each year.

Nguyen Ton Quyen, deputy head of the Vietnam Wood Processing Association, says that to increase the quality of wooded products and deal with the shortage of timber, it is essential to select good woods and choose better methods to plant trees, with a focus on planting traditional varieties such as eucalyptus, even mango and durian.

Shortage of raw cashew nuts

According to the Vietnam Cashew Association (Vinacas), the domestic cashew sector is facing a shortage of nuts to process as the 2010 crop output has fallen by 15 percent, or 50,000 tonnes less than last year’s crop.

This was mainly due to the prolonged hot and sunny weather which stunts the plant growth, especially when it flowers, which subsequently results in fewer tonnes per acre.

With a 15-percent decrease in the cashew output, Vinacas forecasts that this year the country will have to import 300,000 tonnes of raw cashew nuts, 50,000 tonnes more than 2009. The price for cashew nuts will also increase in the next two or three months as many countries have suffered from drought, while the demand for cashew products is rising sharply in the US and Europe.