Catfish farmers. (Photo: Worldofpangasius)

Pangasius companies on the verge of bankruptcy

VIET NAM
Wednesday, April 11, 2012, 02:40 (GMT + 9)

Many seafood companies and farmers in Can Tho and Soc Trang provinces are worrying about bankruptcy. The main reason is a dearth of capital, which means seafood companies are buying fish from farmers as they try to use farmers’ capital for their business.

Meanwhile, farmers must borrow money from banks to cover feed and other costs, and often sky-high interest rates are involved.

If commercial banks stop disbursing money for fear of the risks, analysts have warned, the result could be the collapse of a host of seafood companies and farming households.

The Vietnam Association of Seafood Exporters and Producers (VASEP) said the establishment of various tra fish (pangasius) processing factories in the Mekong Delta has bred wastefulness for enterprises and an imbalance in the material supply and demand. Unhealthy competition among companies combined with a capital shortage has led to dismal conditions, VietNamNet Bridge reports.

VASEP informed that 80 per cent of tra companies had to reduce processing capacity and many have shut down.

While the US remains the market with the highest demand for pangasius fillet products and offers good prices, some Vietnamese enterprises still must pay high anti-dumping tax rates of 53-63 per cent. Moreover, exporters have been warned that they stumble across bigger obstacles when competing with products from Cambodia, Thailand, Malaysia and Bangladesh.

In addition, aquaculture feed expenses have risen by 16-30 per cent over the last year and enterprises have had to pay spring for many other costs, including fees for certificates, food hygiene inspection and taxes. Electricity and fuel price increases have also led to higher production costs and thus lessened the competitiveness of Vietnam’s tra products.

Some bankers have cautioned that firms with weak financial capability which have been relying on bank loans would suffer given the current circumstances.

In An Giang province, there are 17 companies running 21 seafood processing factories with an average capacity of 12,500 tonnes per day -- but the factories lack materials. The fish ponds developed by the companies only make up 34 per cent of the total aquaculture area and provide 61 per cent in output.

Meanwhile, in Ca Mau province, the provincial Association of Seafood Exporters and Producers (CASEP) said there are 34 shrimp processing factories, of which only 40 per cent have turned profits while 30 per cent are on the verge of bankruptcy; the rest are in dire straits. About 40,000 factory workers’ jobs are in jeopardy.

To make matters worse, processors now cannot collect materials from farmers because the latter fear processors will refuse to pay debts, just like An Khang and Binh An (Bianfishco) have.

Lieu Cam Hien, deputy director of the Vinh Long provincial Department for Agriculture and Rural Development, said Bianfishco’s insolvency has encouraged farmers to demand immediate payment on deliveries.

Related articles:

- Tra farming in trouble due to shortage of capital
- High seafood demand and low supply bring opportunities for aquaculture

By Natalia Real
editorial@fis.com
www.fis.com

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