STATUS OF FISH TRADE AND FOOD SECURITY IN VIET NAM

by

Nguyen Huu Dung
National Director for SEAQUIP and
Secretary General for Vietnamese Association for Seafood Exporters and Producers (VASEP)
Hanoi, Viet Nam

1. INTRODUCTION

With integration into the world economy, Viet Nam’s international trade is rapidly increasing. This is providing both opportunities and challenges for the Vietnamese enterprises and people - not least for the fisheries sector in Viet Nam, which is one of the most important economic sectors in the country. The fisheries sector has a significant impact on the economy as a whole and the millions of people whose livelihood is dependent on the fisheries sector as a source of income, employment and nutrition. The Government has stressed that in parallel with economic development and growth, Viet Nam must also concentrate on food security and poverty alleviation. The Ministry of Fisheries (MOFI) acknowledges the fisheries sector’s important role in this development and, over the past years, aquaculture has proved to be an excellent tool for achieving these goals in rural areas in Viet Nam.

This paper seeks to provide a brief overview of fish trade and its impact on the food security situation in Viet Nam. Firstly, a short overview of the development in exploitation of fisheries resources and international fish trade will be provided in order to give the reader an up to date picture of the current status of the Vietnamese fisheries sector. Secondly, an analysis of the fish trade’s impact on the food security will focus on the areas where international trade has positive effects on the industry as a whole. Finally, the paper will focus on Viet Nam’s participation in the international trade arrangements.

It should be noted that it is a constraint to this analysis, that information on domestic utilization of fish and fisheries products in Viet Nam is very limited.

2. EXPLOITATION OF FISHERIES RESOURCES

Over the past ten years the output of fisheries production has more than doubled. In 2002 the output for the whole sector reached 2 410 900 tonnes, an increase of 5.4 percent compared to 2001 (MOFI, 2003). Figure 2A provides an overview of fish landings in Viet Nam over the last decade. Total fish landings can be divided into two main categories; aquaculture & and inland catches and marine catches.

Figure 2A: Development in total fish landings in Viet Nam 1991 - 2002

Source: MOFI, 2003.

As can be seen from figure 2A, the output for marine catch and aquaculture and inland catch has increased rapidly over the past 10 years. A decline in inshore fishing has been off-set by an increase in off-shore catches so that the overall marine catches continue to increase. The decline in inshore fishing is a result of over exploitation, habitat changes and poor management, which have led to an increase in unemployment in some coastal communities (Oxfam, 2000).

Aquaculture is expanding throughout Viet Nam and it is projected to become the main source for providing raw material for export. Further to that aquaculture plays an important role in the Government’s poverty alleviation strategy. The total area with aquaculture was 955 000 hectares in 2002 up from 626 330 hectares in 1998 (MOFI, 2002). Of the 955 000 hectares, freshwater areas count for 425 000 hectares and brackish and marine water for 530 000 hectares (MOFI, 2003).

3. INTERNATIONAL FISH TRADE

The fisheries sector has developed to become one of the leading sectors in terms of export revenue in Viet Nam. In 2002 the fisheries sector ranked third with a total export revenue of US$ 2 014 million - a 13.31 percent increase over 2001 (MOFI, 2003). In terms of volume the export reached 440 000 tonnes in 2002 up from 358 000 tonnes in 2001 (MOFI, 2003). During the period 1998 to 2001, the export value has doubled. In 2001, it accounted for 11.7 percent of the national export turnover (MOFI, 2003).

The MOFI is expecting that the export figure will increase to US$ 3.0 billion by 2005 and US$ 4.5 to 5.0 billion in 2010 anticipating an annual growth rate between 5 and 9 percent over this period.

In 2002, the product and market strategy has been further diversified and strengthened. The export to the American market has increased significantly and is now the biggest market for Vietnamese seafood export as can be seen from table 3A.

Figure 3A: Development in the Vietnamese seafood export 1992-2002

Source: MOFI, 2003.

This development is closely linked with the implementation of the bilateral trade agreement between the two countries, which was ratified in late 2001. Export to China has increased slightly in value while the Japanese market experienced a small decrease in value. However, both markets remain key markets for Vietnamese seafood export. The EU market accounts for a low portion but is still a important contributor to the success of the Vietnamese seafood industry due to positive feedback from this “hard-to-be” accessed market. Table 3B provides an overview of the main markets for the Vietnamese seafood export.

Table 3B: Main export markets in percent of total export value 2000 - 2002

Source: MOFI, 2003.

The Asian financial crisis in 1997 also severely affected the Vietnamese fisheries sector, as the export in 1997 was very much concentrated on the Japanese market. Consequently, a diversification strategy has been pursued and the obvious results are clearly illustrated in figure 3C.

Figure 3C: Export of Vietnamese fisheries products by main markets 1997-2002

Source: MOFI, 2003.

The fisheries products for export can be divided into four main groups as listed in table 3D. In 2001 export measured by volume and value increased for all product groups except the value of dried fisheries products as compared to 2000. Frozen shrimps are the major product for export and accounted for 44 percent of the total export value in 2001 (VASEP, 2002).

Table 3D: Total export of fisheries products from Viet Nam 2000 - 2001 (1000 tonnes & mill. US$)

Source: VASEP, 2002.

As table 3E illustrates then the fisheries sector has also managed to diversify its export in terms of main groups of fisheries products. The portion of value-added products has been increased dramatically from 17.5 percent to 35 percent during a four-year period from 1998 to 2001 (DANIDA, 2002).

Table 3E: Major export markets for main groups of fisheries products in 2001 (mill. US$)

Source: VASEP, 2002.

Statistics on seafood import are not very detailed and it is therefore difficult to undertake a comprehensive analysis. Due to rapid increase in seafood export as well as domestic consumption, import of seafood raw material and processed seafood products are also on rise. The total import for 2001 was according to statistics 7 700 tonnes whereas the import for the period January to September 2002 stood at 13 800 tonnes. China, India and Taiwan (DANIDA, 2002), are the originators of the majority of import.

Given the continuous increase in seafood export with the target for 2005 being US$ 3 billion, it is clear that the raw material base in Viet Nam cannot alone be developed to cover the growing demand. Therefore it is anticipated that by 2005 import of raw material for processing will cover 10 to 15 percent of the demand (MOFI, 2002). If the export target is achieved this would then correspond to an annual import of seafood raw material alone for processing in the range of 60 000 to 90 000 tonnes (DANIDA, 2002). Additionally, there is the import of seafood products for the domestic market, which also is set to increase.

4. EMPLOYMENT AND DOMESTIC CONSUMPTION

The MOFI estimates that in 2001 about 3.4 million people were directly involved in aquaculture activities and in capture fisheries (FAO, 2001a) and this number is increasing especially as aquaculture activities are expanding in rural areas throughout the country. The total number of people active in the sector is still increasing. Rice farmers are increasingly introducing fish in their rice fields and in mountainous areas more and more carp is cultured in small ponds often situated next to the farmhouses. In coastal areas where the culture of rice, as a result of low soil fertility and the sandy soil does not bring much profit and the price of salt is decreasing constantly, many rice and salt farmers are changing to shrimp culture. Open access regimes and low investment needed facilitate the entrance of thousands of new laborers in these activities every year. The MOFI estimates that currently the fisheries sector offers direct employment to about four percent of the population. However, the total number of people dependent for their livelihoods on the fisheries resources and aquatic resources as a whole is much larger (FAO, 2001b).

Fisheries and aquatic products are an indispensable part of domestic food supplies for the whole country, providing more than 30 to 40 percent of the protein in Vietnamese diets (Oxfam, 2000). MOFI estimates that between 60 to 70 percent of the cultured and caught fisheries products are consumed domestically (DANIDA, 2002). Home consumption of fish in Viet Nam was estimated by FAO at 17.4 kg per capita per year in 1997, an increase of 68.3 percent compared to the consumption in 1992. Of this 17.4 kg about 5.7 kg is freshwater and diadromous fish (FAO, 2001a). The National Institute of Nutrition in Hanoi estimated that annual fish consumption per capita in Viet Nam at 18.5 kg in 1995 (FAO, 2001a). A recent survey undertaken jointly by Food and Agriculture Organization (FAO), MOFI and Danish International Development Agency (DANIDA) indicates that the actual domestic consumption could be much higher than the above-mentioned estimates (DANIDA, 2002). A continuous increase in the total domestic and per capita consumption of fish is observed in all three surveys.

Fish marketing patterns in Viet Nam are rather complex, because of the large range of geographical areas served, the assortment of products offered, the large number of traders active in the sector, the seasonality of production, and the various linkages (direct and indirect) between producers and consumers. A large share of the marine catch products has a low economic value and is sold on the domestic market. Marine products of high economic value are mainly exported, especially tuna, shrimp and squid. Of the aquaculture products most shrimp (black tiger) and catfish are exported, while carp is consumed primarily domestically.

5. INTERNATIONAL FISH TRADE’S IMPACT ON FOOD SECURITY IN VIET NAM

The current growth in the fisheries sector, which is closely linked to the growing export, is having a substantial impact on development in food security in Viet Nam as both coastal and non-coastal regions are engaged in production, processing, consumption and exporting of fisheries products. In this respect aquaculture is identified as a sub sector with significant potential for further improving the food security situation and alleviating poverty.

5.1. Focus on Sustainable Aquaculture

In recent years attention has been drawn to the role of sustainable aquaculture as part of the national poverty alleviation strategy. This has led to the formulation of the Sustainable Aquaculture for Poverty Alleviation Strategy (SAPA), which addresses the issue of poverty alleviation and the improvement of the livelihoods of people living in rural areas and the fundamental role of aquatic resources management in sustaining poor people’s livelihoods. Experiences gained during the last decade in Viet Nam and other countries shows that the development of aquaculture can make a significant contribution in the development of the rural areas, not only via a higher income to the rural households than common rice culture, but also enrich the households own food consumption pattern. While real revenues from rice cultivation have increased by 21 percent over the period from 1993 to 1998 then real revenues from aquaculture rose by 55 percent over the same period (MOFI, 2001). Overall there has been a dramatic improvement in incomes of rural households, which has risen by 61 percent from 1993 to 1998 (MOFI, 2001).

The importance of aquaculture in poverty alleviation is also highlighted in the Comprehensive Poverty Reduction and Growth Strategy adopted by the Government in May 2002.

Aquaculture in Viet Nam, in contrast to many countries, is performed as family-scale operations. The operations are characterized by low-input use and requirements, including land resources with rather low productivity, but environmental benign and providing a relative high economic efficiency. As previously mentioned, more than 700 000 people are directly involved in aquaculture activities in Viet Nam. Commonly 80 percent of the households in coastal communities get their income from fishing while almost everybody relies on fish captures for food consumption, as coastal communes commonly have little agricultural land (MOFI, 2001). As inshore fishing has declined significantly over the past decade, the government has taken a number of measures to support aquaculture development in coastal areas as well as in inland areas. In 1999 the Government approved a development plan for aquaculture for 2000 to 2010. The objective of the development plan is to ensure food security for Vietnamese people and sufficient raw materials for processing and export. The programme expects aquaculture to contribute 60 to 65 percent of total production of aquatic products by 2010 (MOFI, 2001).

The export driven seafood processing industry in Viet Nam is clearly stimulating the expansion of aquaculture, especially shrimp and catfish farming, and will generate income and employment throughout the entire value chain. Thus, the livelihoods of communities through direct involvement in aquaculture production would be stabilized, as well as for those who provide services to aquaculture. The rapid expansion of aquaculture in Viet Nam is clearly illustrated in figure 5.1.A, which shows the development in investments in aquaculture over the past three years.

Figure 5.1.A: Investments in aquaculture 2000 - 2002 (bill. VND)^[14]

Source: MOFI, 2003.

5.2. Improved Product Quality

Requirements on product quality, especially in terms of hygiene and safety conditions, are getting stricter in export markets noticeably in the EU and North American markets. This is one of the major challenges for the Vietnamese seafood industry in ensuring the competitiveness in the international markets.

The strict international food-hygiene safety standards have been one the main concern of MOFI and attention has been given to the following tasks:

• Establishing and promulgating the national legal framework including food-hygiene standards meeting the standards of the importing countries;

• Establishing and strengthening the capabilities of hygiene safety control agencies;

• Guiding fisheries enterprises to repair and upgrade workshops, renovate equipment and technology, organize training courses in the implementation of promulgated food-hygiene safety standards.

As a result the food-hygiene safety standards have improved considerably in most of Viet Nam’s 260 processing enterprises. To date 68 enterprises have received the EU Code compared to just 18 in 1997, and 32 other establishments have been listed and proposed by NAFIQACEN to receive EU code. 132 enterprises are implementing HACCP (Hazard Analysis and Critical Control Point) and meet the requirements of the American market (MOFI, 2003).

5.3. Increased Investments in the Fisheries Sector

The success of the fisheries sector primarily driven by the increasing export, has led to a significant increase in the total investment in the sector. The mobilization of capital clearly indicates the restructuring taking place in the sector. Public investments are low and continue to decrease. In 2002 only 8.9 percent of the total investments came from the state budget (MOFI, 2003). Capital raised in the debt market finances the majority of the investments, but an increasing share is financed by re-investing profits indicating an increasing profitability in the sector. In 2002 re-investments accounted for 25.9 percent of the total invested capital an increase of 23.8 percent compared to 2001. Foreign investment has also started to flow into the fisheries sector mainly in processing activities. This is an important development, as foreign investments tend to bring in modern technology and know-how.

While investments in the processing industry appear to be slowing down, the investments in aquaculture are rapidly increasing as mentioned previously. Total investments in aquaculture increased by 84 percent in 2002 as compared to 2001 (MOFI, 2003). An important observation is that initial large-scale investments in the processing industry, sparked by a high export demand, are now resulting in a fast growing demand for raw material from aquaculture and thereby stimulating the expansion of this sub-sector in Viet Nam. The development in investments in the fisheries sector is illustrated in figure 5.3.A.

Figure 5.3.A: Total investments in sub-fisheries sectors 2000-2002 (bill. VND)

Source: MOFI, 2003.

Improved access to credit schemes has also given many poor households the opportunity to enter the fisheries sector and primarily aquaculture where the entry costs are low.

5.4. Human Resource Development

The increased employment within the sector notably in aquaculture production and the processing industry means that a significant number of low-skilled people are being employed and receives further education and training.

The development of human resources is particularly important for the continuous improvement of the environmental standards and food-hygiene safety standards in the entire value-chain. Extension activities have been speeded up also with support from international donor funded projects. Until now the success has been remarkable and ongoing extension projects are to be further expanded.

Projects focusing on the development of environmental sustainable management in particular related to aquaculture activities have also resulted in improved management systems. However, overall the awareness of environmental protection remains low. In freshwater fisheries as well as in costal areas aquatic resources are under threat from environmental degradation, over exploitation and poor management practices. This poses a significant risk to not only the environment but to the fisheries sector as a whole and notably the export.

5.5. Improved Product and Market Diversification

The increased product and market diversification which has taken place in recent years has made the fisheries sector less risk adverse to fluctuations in the international market and changes in consumer behavior in foreign markets. More focus on food-hygiene safety standards and high-value added products has also increased the demand for Vietnamese fisheries products resulting in a higher turnover and consequently increasing employment and income for people working in the fisheries sector.

Increased export earnings have also made it possible to better promote Vietnamese fisheries products in overseas markets as well as in the domestic market. In 2002 an export fund was established with this objective in mind.

6. INVOLVEMENT IN REGIONAL AND GLOBAL TRADE ARRANGEMENTS

Since 1986, when Viet Nam embarked on a process of renovation (doi moi), the country has quickly moved towards a market economy. This progress has been marked by Viet Nam normalizing relations with the USA (1994), membership in Association of Southeast Asian Nations (ASEAN) (1995), and the signing of the bilateral trade agreement with the USA (2001). Further discussion about Viet Nam applying for membership in the World Trade Organization (WTO) is ongoing.

The benefits of this ongoing integration are obvious in the fisheries sector, which is largely export driven. Lower import tariffs in mainly the American and Chinese (mainly in the southern border provinces) markets have contributed to the accelerating growth in the export of fisheries products to these two markets. Lower import tariffs for fisheries products in Viet Nam, also means cheaper import to supplement the raw material input for the processing industry as well as processed fisheries products for the domestic market. This is of major importance as it is foreseen that the import of seafood raw material will increase sharply in the coming years in order to meet the demand for Vietnamese fisheries products from export markets.

MOFI has signed a number of agreements and memorandum of understanding in the area of fisheries cooperation. MOFI has also promoted international cooperation activities under the framework of FAO, ASEAN and the Mekong River Commission among others.

VASEP also has entered into agreement of cooperation with many sister organizations in the region and over the world, and became known in the world seafood market as the leading organization of the Vietnamese fisheries sector. In November 2002, together with sister organizations from Thailand, Indonesia and Malaysia, VASEP has jointly established the ASEAN Aquaculture Federation (AAF). The aim of the new organization is to enhance the sustainable growth of aquaculture production in ASEAN, and to cooperate with each other in all activities to safeguard the aquaculture industry for the benefit of ASEAN farmers and processors.

BIBLIOGRAPHY

DANIDA. 2002. Current trends in the Vietnamese seafood industry. Hanoi.

EU. 2002. Sanitary and phytosanitary measures in the fishery sector in Viet Nam. European Commission. Hanoi.

FAO. 2001a. Fisheries marketing and credit in Viet Nam. Project document. Hanoi.

FAO. 2001b. Fisheries marketing and credit in Viet Nam. Project inception workshop. Hanoi.

MOFI. 2001. Sustainable aquaculture for poverty alleviation - strategy and implementation. Agriculture Publishing House. Hanoi.

MOFI. 2002. Preliminary summary of three-year implementation of seafood export development programme. Hanoi.

MOFI. 2003. Progress report 2002 and workplan 2003. Ministries of Fisheries. Hanoi.

Oxfam. 2000. Finding a balance between riches and ruin, by Martinelli, Anne. Hong Kong.

VASEP. 2002. Statistics provided by VASEP. (Primary source is the Vietnamese Custom Authorities). Hanoi.