VietNamNet Bridge – The unstable market, the high bank loan interest rates and the material shortage have all become the obsession of seafood companies, even though it is now the most favorable moment for export. Meanwhile, the floor price mechanism has been broken.

Clients choosy, seafood exporters suffer

A director of a big tra fish export company in An Giang province said that the export consignments of tra fish to a business in North Africa has caused a headache for him. Prior to that, the company signed a contract on exporting some consignments of tra fish to the partner worth 300,000 dollars. However, the political problems in North Africa recently have pushed the tra fish consumption into a deadlock.

The importer, after receiving the first consignments which have been unsold, has asked the Vietnamese exporter to ease the sale prices for the remaining undelivered consignments of products. The importer has announced that it would only accept the imports, if the prices are lowered to the levels equal to that offered by other Vietnamese trade companies.

In general, the prices offered by trade companies, which do not have processing factories and use low quality materials, are always lower than the prices set up by big companies which process products with high quality materials.

“The tra fish production costs are about 3.1-3.2 dollars per kilo, while they have requested to lower the price to below 3 dollars,” he complained.

According to Nguyen Van Ky, General Director of Agifish, the public debt crisis in Europe and uncertainties in some countries in the Middle East and Africa in recent months has badly affected the purchasing power and the tra fish prices. Meanwhile, Vietnamese companies, both processing and trade ones, have to sell products as soon as possible, accepting low prices, in order to clear stocks and get money to pay bank debts.

The low export prices offered by the enterprises have influenced the pricing policy of big enterprises which sign big and long term contracts.

However, Ky believes that the situation will not last for a long time, because the materials are nearly running out, while importers would be on the disadvantage when negotiating the prices.

Luong Hoang Manh, Chair of Mekong Seafood Company, said that while the demand for 650-800 gram fish is very big, the demand for big size fish (over 1 kilo) is small, which explains processing factories lack small fish and have redundant big fish.

However, analysts believe that the current situation would change, because fish supply is not profuse any more, and importers would not have many choices. Ky said that only the factories with the capacity of 70-80 tons per day now can operate in a stable mood, partially because they have the material growing areas of their own. Meanwhile, small processing factories which do not have material growing areas are facing big difficulties due to the lack of materials.

As the supply is getting shorter, seafood processing companies are rushing to collect materials, for fear that there would be no fish left to purchase later. In An Giang province, the tra fish price on October 21 climbed to 28,000 dong per kilo.

“From now to the end of the year, the seller would be on the upper hand in price negotiations,” Ky said.

Floor price mechanism fails completely

While most exporters expect the export prices to increase, director of a company in Can Tho has warned companies against buying high and selling cheap.

He said that the tra fish material price has increased to the level which is just 1000 dong per kilo lower than the 5-month record price. Meanwhile, the price of by-products, a source of income that helps enterprises cover expenses, has decreased by 1500-2000 dong per kilo.

“The input price has increased, while the sale price remains at 3.1 dollars per kilo, or 20 cent lower than that of May. Exporters would suffer loss if they sign contracts fist and then collect materials,” he said.

Meanwhile, Truong Dinh Hoe, Secretary General of the Vietnam Association of Seafood Exporters and Producers VASEP, said that the current difficulties have forced some companies to sell at the prices much lower than the floor price of 3.3 dollars per kilo set by VASEP in June.

Source: TBKTSG