Seafood companies overcome challenges

Raw material concerns

So far, seafood processors in Binh Dinh province have to grapple with persistent challenges such as shortage of raw materials, backward processing methods, and limited kind of products. In which, low supply of raw materials for processing plants is the most concerning issue of all local seafood companies.

To keep processing operation, many processors are looking to buy raw materials from outside sources at prices 5 – 10 times higher than those in domestic market. As the result, seafood companies could ensure their operations and keep markets and traditional partners. Currently, 40 percent of raw fish needs of Binh Dinh processors come from foreign countries.

So far, Binh Dinh Fishery Joint Stock Company (Bidifisco) has imported over 200 MT of raw marine fish from other Asian markets. Therefore, during the time of low supply in Binh Dinh, the firm still ran its fish processing chain, assuring jobs for more than 400 workers.

“If the lack of raw materials is still persistent, seafood companies may risk losing customers’ confidence. It means they will get no orders in next year’s harvest season. Particularly, the U.S. and the EU importers always remind their Vietnam suppliers about raw material issue because they are afraid that unstable supply will influence on delivery schedule,” said Cao Thi Kim Lan, Director of Bidifisco.

These recent days, other processing companies in Binh Dinh province are focusing on build cold stores to stock raw materials. According to Banh Quang Ha, Director of Quy Nhon Frozen Seafoods Joint Stock Company (Seaprodex 16), in 2011, the company invested VND2 billion to establish new cold store for raw materials. In main season, it plans to accelerate to purchase and stock raw materials for use in low supply time, ensuring effective business and jobs for labours. Shrimp harvestis not currently in full swing, but Seaprodex 16 has got enough raw materials for its 300 workers.

New market expansion

In addition to finding stable raw material supply and exploiting traditional markets, Binh Dinh province’s seafood companies are turning to new markets. “Recently, local seafood processors focus on trade promotion and international market development. 90 percent of seafood products made in the province are shipped abroad. However, to reach sustainable development, companies need to diversify product chain and shift to further processed products, especially frozen seafood and ready-to-eat items, in compliance to modern technologies.

“Exporters had to deal with stricter requirements and cruel competition in importing markets, so besides remaining business with traditional buyers, Seaprodex 16 has been enhancing trade promotion and new markets development. The company signed contract with some new buyers and produced value-added products to supermarket chain in order to improve competitiveness,” shared Seaprodex 16’s director. “As the result, in 2011, it reached US$5.6 million of export value, a 20 percent growth from the previous year. In the first quarter of 2012, Seaprodex 16 has generated US$1.5 million, up 30 percent over the same quarter of 2011.”

So far, other seafood processors in Binh Dinh have singed long term supply contracts. In the coming months, demand for seafood from Asian and European countries is predicted to go up. Because of diseases spread in livestock and poultry species, consumers in these markets are turning to seafood products which are believed to be safer. It must be a chance for Vietnam exporters to boost their business abroad.

To catch the chance, Binh Dinh Department of Industry and Trade highlights that it is important to invest in fisheries sector to get breakthrough in export. So, in the 2012 – 2020 period, the province will exploit all production capacity of local current processing plants, as well as build new processing plants in Phu Cat and Hoai Nhon districts with overall capacity of 5,000 – 6,000 MT per year and a plant in Quy Nhon with capacity of 4,000 MT per year.