(seafood.vasep.com.vn) Accumulating 6 months, Vietnam's shrimp export turnover was 2.3 billion USD, up 31% over the same period last year. In the second half of the year, many economic fluctuations affected exports in general and the shrimp industry in particular. Mr. Ho Quoc Luc, Chairman of the Board of Directors of FIMEX VN (HOSE: FMC) answered the interview about the shrimp industry in general and strategies of FIMEX VN.
- What did you think about the current global shrimp market?
- “Currently, the global shrimp production is over 5 million tons/year, the average growth rate is 5%/year. The shrimp farming powerhouse is Ecuador, India, Vietnam and Indonesia. Regarding processing, Vietnam and Thailand are the two countries with a high level of deep processing.
Besides being a large shrimp farming country, China is also a large shrimp importer and exporter. At the same time, China has the world’s highest domestic shrimp consumption”.
- Could you position Vietnam's shrimp in the global market?
- “The annual growth rate of Vietnam's shrimp industry is about 8%, higher than the world average. Vietnam continues to maximize its strengths of meticulously processed shrimp and deeply processed shrimp. Currently, Vietnam is maintaining its leading position in the Japanese, Korean, UK and Australian markets. In addition, the industry is also increasing its market share in the EU (second largest shrimp supplier after Ecuador) and gradually increasing its competitiveness by rising production.
Vietnam is also trying to maintain the market share in China. China mainly imports preliminarily processed shrimp for domestic consumption. Besides, the Vietnam’ shrimp industry needs to maintain market share in the US, focusing on deep processing. Currently, Vietnam's market share in the US is about 10%. Vietnamese shrimp exports in the second half of 2022 would not prosper as the first months of the year but equivalent to the same period in 2021”.
Mr. Ho Quoc Luc answered the interview regarding the shrimp export potential in 2023
- How did you evaluate the export situation in the second half of 2022?
- “The export situation in the last 6 months of 2022 is not favorable for Vietnamese shrimp. Tensions between Russia and Ukraine hinder some of the world's industries, including the seafood industry. Moreover, the lasting high inflation in major markets reduces the purchasing power of customers. Besides, in the first 6 months of 2022, these markets increased imports but consumption is slowing causing high inventories. While suppliers such as Ecuador and India have quite good output and start boosting exports to major markets (especially the US market) , Vietnam's shrimp farming this year is not as good as it should be due to diseases,causing production to decrease.
The above factors will cause shrimp exports in the last 6 months of the year to not be as strong as the first 6 months but can only be on par with the same period last year. The whole 2022 shrimp exports can still grow to around more than 4 billion USD.”
- Could you forecast the shrimp exports situation in 2023?
- “The shrimp export potential in 2023 will depend much on the world economic situation. Should the conflicts between Russia and Ukraine end, the world economy will recover, shrimp consumption will definitely increase. In that context, Fimex VN is confident to achieve an annual growth rate of at least 10%.
The high cost of farmed shrimp in Vietnam leads to a high price of processed shrimp, so enterprises need to find a niche market, which is to focus on deep-processed shrimp.
Currently, shrimp farming output is lower than last year, but Vietnam is shifting to the high-end market, the processing speed is not as fast as normal processing. Therefore, the amount of raw shrimp material is basically at a moderate level.”
- Was Vietnam afraid of other suppliers, Ecuador for example?
- “Forecasts of Ecuador's shrimp increase by one-and-a-half years after 3 years (2023-2025) are just an assumption for an absolute optimal situation. In fact, this probability is not feasible.
Each country has its own strengths. Vietnam grew shrimp exports by 8%, focusing on high market segments. Ecuador’s segmentation is the lower segment of the market. Each country has its own market share, there is sometimes overlap but not the same. Due to high processing, Vietnam remains in its leading position in some of the top markets, such as Japan and Korea.”
- In your opinion, what were the challenges as well as the advantages of Vietnamese shrimp exports from now until the end of the year?
- “ Vietnam can choose to boost exports to the more favorable markets. Vietnamese shrimp is actually dominating the high-end market segment quite well.
The disadvantage turns into an advantage. In the last 6 months of the year, the amount of farmed shrimp is decreasing, leading the total shrimp export turnover not to grow as expected. But shrimp prices remained high, which will create the motivation for farmers to increase stock next year.
The target market of Fimex VN in 2023 would be Japan
The main challenges are the high cost of farmed shrimp, the very slow activity of coding the farm for traceability, and the low area of ponds meeting ASC standards. The objective disadvantage is the global inflation situation.
Instead of focusing on the Chinese market, Fimex VN intends to shift to the Japanese market.”
- What was the strategy of Fimex VN in the current context?
- “The company has a market strategy for each stage. Besides expanding shrimp farming activities, Fimex VN has been redirecting the market for two years now, with good initial results. The company increases profit margin by investing in farming shrimp. Despite the difficulties, this year, Fimex VN will complete the target, especially the profit target.”
- Fimex VN recorded an increase of 45% in profit in the first 8 months of the year over the same period. In August only, sales reached 22 million USD (520 billion VND), double that of August 2021. What helped Fimex VN achieve the above results?
- “ In my opinion, the revenue and profit of Fimex VN are the result of the right market strategy in each period and the expansion of shrimp farming activities.
Japan is closer than the US. Therefore, the freight is low along with quick payment. This market requires deep and meticulously processed products that match Fimex's strengths. In the context that raw materials are not abundant, the processing goods exports to the Japanese market will not be affected.”
- China was a big market. Did Fimex VN intend to increase exports to this market?
- “China is the world's largest shrimp consumption market. China has thousands of large processing factories. They import preliminarily processed shrimp from all over the world, mainly from Ecuador, India, and Argentina for reprocessing, domestic consumption and re exporting. They focus on buying black tiger shrimp in Vietnam because cooked shrimp have an eye-catching red color. Black tiger shrimp is the strength of Ca Mau and Bac Lieu, not Soc Trang province,so Fimex VN does not place much emphasis on this market. In 2025, Fimex VN will have a profit of 500 billion VND.”
- Fimex VN has just acquired a farming area of 203 hectares in Soc Trang province and plans to put 100 hectares into operation by the end of 2023. How did the expansion of the farming area affect Fimex's development strategy?
- “The expansion of farming areas is part of the 2021-2025 strategy. This is not only to convince the high-end distribution systems that Fimex VN controls the whole process of product formation. Besides, the expansion of farming areas will be a major business segment, reducing costs and increasing the overall operational efficiency of Fimex VN.
The coming years would experience the acceleration of Fimex VN. By 2025, Fimex VN will achieve export turnover of 300 million USD and profit of 500 billion VND.”
Compiled by Thuy Linh