Last Updated: 2012-06-28
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HO CHI MINH CITY, June 28 (NNN-VNS) -- Vietnam's Ministry of Finance has sought the Government's approval for a financial package of VND9 trillion (US$440,000) to save the tra fish industry which is reeling from falling prices, rising costs, and lack of export demand.

Price of the fish in the Cuu Long (Mekong) Delta has fallen to around VND18,000 per kilogramme against a cost price of VND24,000, yet demand is low because processors do not have money to buy.

Duong Thanh Thai, a farmer in Dong Thap Province, had seven ponds to farm catfish but two have been closed while two others have unsold tra fish that require 20 tonnes of feed a day.

"I would accept the loss of VND7,000 per kilo, but no enterprise wants to buy fish," he said.

Feed prices increased by 40 per cent this year while the fish mortality rate is 30 per cent, which further pushes up input costs.

Sai Gon Giai Phong (Liberated Sai Gon) newspaper quoted Duong Ngoc Minh, deputy chairman of the Viet Nam Association of Seafood Exporters and Producers (VASEP), as saying: "Tightened credit and high interest rates have forced both processors and farmers to sell at low prices. Increases in expenditures like transport, labour and materials have caused problems for both of them."

Furthermore, exporters are faced with a 50 per cent fall in demand and prices in Europe for their products.

European importers, who used to buy 50-60 per cent of their output, now buy only 25 per cent and pay not more than $2.6 per kilo. For the exporters, the cost per kilo comes to around $3.

Earlier, the State Bank of Viet Nam ordered banks to roll over or extend the period of loans taken by tra fish businesses and farmers.

According to statistics from the Cuu Long (Mekong) Delta Fisheries Association, around 3,900 ha in the region have 1.1 million tonnes of tra fish. In the current scenario, 100,000 tonnes may go unsold.

The dire situation has been caused due to unplanned development. Since 2008 there has been a rush to enter the catfish industry, with the result that the number of processing plants shot up from 30 to hundreds, and area under catfish farms grew at the same speed.

Minister of Agriculture and Rural Development Cao Duc Phat said: "Tra fish prices are down due to an imbalance between supply and demand.

"Supply has increased very fast, and, along with a reduction in international demand, caused prices to drop."

The minister called on banks to ensure that the money they lend to processors is used only for business purposes and not diverted to others.

"VASEP must regularly inform farmers about prices, prevent undercutting, and ensure quality," he said.

Banks have said they are willing to lend to tra fish enterprises, but added that most of them cannot meet loan conditions like having transparency in finance, assets, and viable business plans.

"Banks should provide finance for enterprises but only based on production areas and output of each locality," Huynh Minh Doan, deputy chief of the Southwest Steering Committee, said.

"Besides [related agencies] should set floor prices for raw materials and exports to ensure sustainability of the tra fish industry". -- NNN-VNS