background study for global value chain analysis for striped catfish

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BACKGROUND STUDY FOR BACKGROUND STUDY FOR GLOBAL VALUE CHAIN GLOBAL VALUE CHAIN

ANALYSIS FOR STRIPED ANALYSIS FOR STRIPED CATFISHCATFISH

Nguyen Minh DucDepartment of Fisheries Management and Development

Nong Lam University, Thuduc, Hochiminh CityEmail:[email protected]

[email protected]

Presentation at the FAO WorkshopUniversity of Tokyo, Japan, 09-11 Dec, 2010

Prepared by Nguyen Minh Duc 2010 2

Brief on Vietnam fishery export

fishery product exports have increased considerably since 2000 to become a major income earner and one of Vietnam’s major export commodities.

Aquatic exports earned over $1 billion in 2000, $ 2.2 billion in 2003 and $3.36 billion in 2006.

Catfish and shrimp are by far the largest share of aquatic exports, accounting for over 22% and 44%, respectively, of total export earnings in 2006.

Currently Vietnamese fishery products have reached more than 120 countries and territories on five continents.

Japan and the United States are the two largest export destinations, by country, while European Union nations, as a group, had the largest share of exports by volume and the second largest share by value in 2006.


Vietnam's Primary Fishery Export Products in 2006 (value basis)


Vietnam's Fishery Products Export Market, 2006 (value basis)


Mekong Deltamost dynamic aquaculture region of

VietnamThe Mekong delta has 641,350 ha of

freshwater area, which comprises of 67.2% total water surface

most diversified aquatic farming activities and great potential for increasing aquaculture production.

There are a few species, which have been commercially produced in the Delta, such as pangasiid catfishes and black tiger shrimp (Penaeus monodon)


Vietnamese stripped catfish is similar to US catfish

US catfish - are Ictaluridae family, • channel catfish (Ictalurus punctatus) • blue catfish (Ictalurus furcatus) farmed in closed ponds in southern states

Vietnamese catfishare Pangasius family -

basa (Pangasius bocourti) + tra (Pangasianodon hypophthamus) +

farmed mostly in pens and deep ponds along the Mekong River, southern

provinces

http://www.tpwd.state.tx.us/fishboat/fish/images/inland_species/channelcat.jpg


Catfish production reached 1,500,000 tons with

only 6000 haFarm price of catfish was decreasing during

2005-2009, around 15,000 – 17,000 Vietnam dong (~ $0.78-0.84) per kg while the price of exported catfish fillets is 2.3 USD/kg.

12% of farmers get financial loss since 2008. However, farm price is increasing in the last

months of 2010 (~$1/kg) and also exported price ( $2.6/kg) due to lack of harvested fish.

the farming and processing sectors of catfish industry has created 800,000 jobs for farmers in Mekong Delta and many more in inputs supplying sectors.

Catfish production


Pond culture


Catfish processing

The striped catfish is processed mostly in frozen fillets form for exports.

The annual export value is 1.4 billion USD fresh catfish is also exported but the fresh

products mostly for domestic use. The processing sector including 280

enterprises.Following quality standards and improved to

meet global standards on quality, food safety, and environmental conservation.


Rapid growth in catish industry

0

200

400

600

800

1000

1200

1400

2001 2002 2003 2004 2005 2006 2007 2008Year

1000

MT

0

200

400

600

800

1000

1200

1400

1600

Mill

ion

USD

$

Total production

Total exports

Export value


More commercial scales

Year

Prop

ortio

n of

farm

s

38.4

20.9

21.4

7.2

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

2006 2007 2008

> 2.0 ha1.0 - 2.0 ha0.5 – 1 ha

0.3 – 0.5 ha

0.2 to 0.3 ha

0.1 – 0.2 ha0.05 – 0.1 ha

< 0.05 ha

4,696Total

16.8

24.9

23.5

17.7

7,558

16.7

17.3

28

17.3

5,459

≤0.5 ha

<0.1 ha

>0.5 ha


Supply chain in catfish industry


Catfish

farmers

Brokers

Processors

Wholesalers

Inputs supplier

Farmers Collectors Processors Traders

Local

consumers

Provincial extension systemResearch institutions/Universities

Associations

Trade promotion Centers

Retailers

2.2%

4.5%

Export markets

91.1%

8.9%6.7%

91.4%

1.9%

Consumers

Market structure in 2008

Production Input

suppliers-Seed-Food

-Medical chemicals

Source: Loc, 2009

VASEP NAFIQUAD

Banks


Catfish

farmers Processors

Wholesalers

Inputs supplier Farmers Collectors/

BrokersProcessors Traders

Associations

Trade promotion Centers

Retailers

4,6%

9,2%

Export markets

86,2%

13,8%

9,2%

4,6%

77,6%

8,6%

NAFIQUAD Banks

Consumers

VASEP

ProductionInput

suppliers-Seed-Food

-Medical chemicals

Source: N.Khiem and Bush, 2010

Market structure in 2009

Provincial extension systemResearch institutions/Universities

BrokersLocal

consumers


Vietnamese catfish industry has considerably developed since the country joined into globalization and adopted free trade principles

employed almost a million Vietnamese peopleVietnamese producers successfully created low-cost

breeding techniques of catfish in 1998 and developed a catfish breeding industry involving 15,000 families

VN catfish farmers have opted to buy imported pellet feed and also adopted advanced feeding technologies to improve fish meat quality, meeting the quality and taste requirements of US consumers.

VN catfish processors have learned catfish fillet techniques from an Australian importer and used processing equipments purchased from the US for their production, following the quality control protocols of HACCP, SQF and Global GAP

Vietnamese catfish industry globalization


Increase in catfish exportsPrior to 1998, the time Vietnam join into APEC,

export volume of tra and basa to US market was 200 metric tons

In 2002, after the US and Vietnam signed the Bilateral Trade Agreement (BTA), the export volume increased to more than 8.000 metric tons


Although exporting catfish even before 1995, the tremendous spurt in exports to US came in 1999 when raw seafood tariffs dropped to zero

reached a volume of 18.3 million kilograms of catfish to the US, which is valued at $55.1 million in 2002 after the bilateral trade agreement between US and Vietnam was signed in December 2001.

Increase in catfish exports


Involving into trade protection policy from the USUS labelingUS antidumping


Price effect of the US barriers Labeling lawUS fillets production increased but its price still decreased,

in contrast to Vietnamese products

Unit 1999 2000 2001 2002 2003 2004 2005

Vietnam fillets price $/lb. 2.04 1.52 1.26 1.29 1.21 1.15 0.93

US fillets price $/lb. 2.76 2.83 2.61 2.39 2.41 2.62 2.67

Antidumping tariffs $/lb. -- -- -- -- 0.64 0.61 0.49

US farm price $/lb. 74 75 65 57 58 70 72

US imports from VN Mil. Lbs 2 7 17 10 4 7 17

US fillets production Mil. lbs. 120 120 115 131 125 122 124

US farm production Mil. lbs. 597 594 597 631 661 630 601


Since1980, US producers have been continuously seeking a trade protection

Byrd Amendment 2000 (cancelled since 2008) allowed the petitioners in AD suits get disbursement from tariff revenue

From 1980 to 2004, the US investigated 1092 antidumping cases of which 461 lead to a tariff

Trade effects Antidumping measures


Effect of the US catfish antidumping with linear regression for an equation system

US

priceVN

priceUS

demandUS farm

pricePRELIM 0.002 -0.004 0.012 0.004

(0.657) (-0.106) (0.582) (0.643)FINAL 0.006 -0.029 0.031 0.006 (2.531) (-0.963) (1.824) (1.167)*: Absolute value of t- ratio is in parenthesis

More info at Duc, NM (2007)


Effects of AD measures on fish market shares in US market

ImportedSalmon

ImportedTilapia

ImportedCatfish

US DomesticCatfish

Antidumping

measures0.036(2.37)

0.053(3.83)

-0.038(3.82)

-0.032(2.93)

*: Absolute value of t- ratio is in parenthesis

More info at: Hong, TTK, Duc, NM and H. Kinnucan (2008)


Other non-tariff barriers from the US

Oct 2005, “Sales Ban” order in Alabama, Mississippi, Georgia and Louisiana

May 2008, US Farm Bill 2008, catfish quality must be strictly controlled before imported to the US


Total exports EU Japan US

1997 425 54 0 55

1998 2263 188 22 261

1999 1715 192 91 903

2000 3,689 19 28 3,191

2001 10,955 140 9 7,765

2002 27,980 2,979 632 4,361

2003 33,304 7,388 464 1,929

2004 82,962 23,637 932 3,010

2005 140,707 55,172 579 8,623

APEC join

US-VN BTA signed

Vietnamese Catfish Exports (Unit: metric ton)

Diversification of export market

US antidumping measures issued


0%

20%

40%

60%

80%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008

Year

Mar

ket s

hare

by

valu

e

USA EU China ASEAN Russia Other

Diversification of export market


RegulationThere are now more strictly regulations

related to environment protection, quality control and health/sanitary guarantees.

more and more non-tariff barriers to international trade, such as anti-dumping measures and sanitary requirements.

WWF in European countries put the fish in a ‘red list’, recommend consumers not to buy for environmental natural conservation.

=> New regulation and policy expected released in 2011


Data availability

Data for domestic value chain is not availableAlthough out-up-date, may use the dataset on

VN catfish exports to study


THANK YOU!THANK YOU!

background study for global value chain analysis for striped catfish

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