Production is tough to recover, seafood exports are being interrupted

Processing pangasius for export at Can Tho Seafood Import-Export Joint Stock Company. Photo: VNA

Almost half of orders are late

According to a survey by the Vietnam Association of Seafood Exporters and Producers (VASEP), as of July 2021, the number of orders of firms increased by 10-20% compared to 2020 due to import markets. Exports in the world have been restored. However, right after that, from the beginning of August, the Covid-19 pandemic spread and quickly spread from HCM City to the west, the southern provinces, the Mekong Delta strictly implemented Directive 16, so from transporting materials, to the implementation of import-export procedures, C/O procedures and port procedures have strongly affected the production and delivery progress of firms.

According to Ta Ha, VASEP's pangasius market expert, by the end of August, up to 40-50% of orders were delivered late and about 10-15% of orders were cancelled. In addition, many importers expressed concern they would still keep orders in the immediate future but might consider finding alternative sources of supply.

With the above fact, according to surveyed businesses, in case enterprises are allowed to return to normal production after September 15, the ability to get orders for the year-end holiday season is also very limit  ed.

For the specificity of the seafood industry, the source of raw materials greatly impacts and determines the price of exported products. In the past time, due to the influence of the pandemic, regulations on distance, and limit  ed travel, seafood firms could not mobilise raw materials, and the prices of many seafood products fell sharply, causing people not to continue farming. It is forecasted that the source of raw materials from farming will be 20-30% short and the price of raw materials will increase by 10-20% in the final months of the year.

Marine exploitation raw materials also faces many difficulties as fishermen cannot go to sea to catch fish, fishing ports are also limit  ed or stopped working, it is expected the source of domestically exploited raw materials will fall by 30-40% and the price of raw materials is expected to increase by 20-30%.

In addition, shipping charges of shipping lines are still very high, increasing from 2-3 to 10 times and have not been adjusted appropriately, in addition, placing containers and booking ships also faces many difficulties when firms complete the process. Being completely passive in terms of shipping time and freight, it has greatly affected the transportation plan and the price of seafood products, affecting the business plan, the reputation of firms and the competition of Vietnamese seafood.

Only 30-40% of businesses recover immediately

According to a survey by VASEP by the end of August 2021, only about 30-40% of seafood firms in the southern provinces and cities can operate "three places"; about 30-40% of firms that could not carry out "three on-site" had to stop production, the remaining percentage had to suspend production to reorganise the factory to implement "three on-site".

For factories that can implement the "three-on-site" option, the number of workers can be mobilised from 30-50% of the total number of employees, the rest quit or take unpaid leave, the processing capacity has been reduced. 50-60% reduction compared to before. It is estimated that the overall capacity of the whole region has decreased by 60-70%.

In which, Tien Giang, Can Tho, Hau Giang, Dong Thap are the provinces with the largest number of seafood firms that have completely stopped operating or suspended production to reorganise to implement "three on-site".

In addition, due to the requirements of pandemic prevention and control, many localities have implemented too long distances, workers and workers working "tjree places" have begun to get tired and look forward to going home, so businesses very difficult if you want to continue to do "three on the spot". In addition, the implementation of three on-site has incurred a lot of costs while the production capacity is reduced, so businesses cannot continue to survive much longer without the support of the Government.

According to the survey results of VASEP, only 30% - 40% of firms have enough capacity to resume production immediately after the end of social distancing, the remaining firms are difficult or need a long time to recover. The production recovery of firms is greatly affected by reasons such as: The supply chain of raw materials is broken, or difficulties in transportation; firms lose customers due to the long gap between implementation and delivery schedule. Especially, it is difficult to gather the labor force like the original because workers have not been vaccinated, so they cannot go to production facilities, have returned to their hometown, isolated, or are being treated for Covid-19...

In addition, the policy of many provinces and cities is implementing Directive 16 along with focusing only on anti-pandemic goals, so the ability to recover production is very difficult, if the distance continues until mid-September. The risk of chain break is very high and it is difficult to restore production to normal.