demand for certified and non-certified shrimp products from viet

Demand for certified and non-certified shrimp products from Viet Nam with special reference to Ca Mau Province

Published byDeutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

Registered officesBonn and Eschborn, Germany

Integrated Coastal Management Programme (ICMP)

9th floor, the Landmark, 5B, Ton Duc Thang, Dist 1, Ho Chi Minh City,Viet NamT + 84 838239811F + 84 838239813I www.giz.de/viet-nam http://daln.gov.vn/icmp-cccep.html

As atMarch 2014

AuthorUdo Censkowsky

EditorsNina Seib and Benjamin Hodick

Printing

Graphic & Design Golden Sky Co.,ltd5th Floor, No. 06 Nguyen Cong Tru St., Hanoi., Vietnam Photo credits© GIZ

DisclaimerThe views expressed do not necessarily reflect those of the Vietnamese Government, DFAT or Australian Aid, neither those of BMZ or GIZ.

© GIZ 2014.

On behalf ofGerman Federal Ministry for Economic Cooperation and Development (BMZ) and Australian Government Department of Foreign Affairs and Trade (DFAT)

Publishing licence number:.........

Demand for certified and non-certified shrimp products from Viet Nam with special reference to Ca Mau ProvinceMarket assessment

The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH has been working in Viet Nam for more than 20 years. We currently have around 250 specialised staff deployed across the country, including national and international personnel, Development Advisors and CIM experts.

On behalf of the German Government, GIZ provides advisory services to the Government of Viet Nam and is currently engaged in three priority areas: (i) Vocational training; (ii) Environmental policy and sustainable natural resource use; and (iii) Energy.

GIZ Viet Nam’s main commissioning party is the German Federal Ministry for Economic Cooperation and Development (BMZ). Other commissions come from the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB), the Federal Ministry for Economic Affairs and Energy (BMWi) and the Federal Ministry of Finance (BMF). GIZ Viet Nam is also engaged in various projects co-funded by the Australian Government (Department of Foreign Affairs and Trade – DFAT) and the European Union and cooperates closely with the German development bank KfW.

The Integrated Coastal Management Programme (ICMP) is being co-financed by the German and Australian Governments. In order to strengthen resilience and to reduce vulnerabilities to climate change impacts, the ICMP Programme supports Viet Nam in sustainably managing coastal ecosystems of the Mekong Delta affected by climate change. The Programme is being implemented by GIZ in close collaboration with the Ministry of Agriculture and Rural Development (MARD), as well as several departments of the five programme provinces An Giang, Bac Lieu, Ca Mau, Kien Giang and Soc Trang of the Mekong Delta.

For further information, please visit www.giz.de/en, www.giz.de/viet-nam, and http://daln.gov.vn/icmp-cccep.html.

GIZ in Viet Nam

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Content .....................................................................................................................................................................4List of Tables ............................................................................................................................................................5List of Graphs ..........................................................................................................................................................5List of Figures ..........................................................................................................................................................5Abbreviations .........................................................................................................................................................5

1. Introduction to the market assessment ................................................................................................6

2. Market assessment .....................................................................................................................................102.1 Shrimp production in Viet Nam in 2013 ...............................................................................................................112.2 Shrimp production in Ca Mau Province ................................................................................................................122.3 Organic shrimp production in Ca Mau Province ...............................................................................................132.4 Main export markets ....................................................................................................................................................162.5 Global organic shrimp market ..................................................................................................................................172.6 Demand for non-certified and for certified shrimp products from Ca Mau Province ..........................202.7 PR-Potential for shrimp from Ca Mau Province / Marketing patterns ........................................................262.8 Potential for small-scale farmer CSR projects .....................................................................................................28

3. Marketing concept for shrimp from Ca Mau Province ..................................................................303.1 Use certification for differentiation in global markets .....................................................................................313.2 Combine certification with nature conservation ..............................................................................................323.3 Develop certified supply chains in direct co-operation with buyers .........................................................323.4 Promotion campaign for a Ca Mau organic mangrove shrimp initiative .................................................32

Annex 1: List of interviewees for the market assessment ....................................................................35

Content


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Table 1: Top 10 importing markets Whiteleg Shrimp in 2013 ................................................................................16Table 2: Top 10 importing markets for Black Tiger Shrimp in 2013 ......................................................................16Table 3: The largest shrimp exporters in Viet Nam .....................................................................................................17Table 4: Testing results and rejections and/or complaints of Vietnamese seafood products .....................23Table 5: Two examples of shrimp imports from January 2014 ..............................................................................24

List of Tables

Graph 1: Organic shrimp production per continent in the year 2013.................................................................18Graph 2: Organic shrimp production per species in the year 2013 .....................................................................18Graph 3: Organic shrimp origins in the European market .......................................................................................19

Figure 1: Website WWF Malaysia .......................................................................................................................................21Figure 2: Symposium: Devastating delicacies ..............................................................................................................22Figure 3: Proposal Logo/name Ca Mau mangrove shrimp ......................................................................................33Figure 4: Ca Mau mangrove shrimp SWOT analysis ...................................................................................................34

List of Graphs

List of Figures

ASC Aquaculture Stewardship CouncilBAP Best Aquaculture PracticesBMP Better Management PracticesBRC British Retail Consortium CoC Code of Conduct for responsible FisheriesCSR Cooperate Social ResponsibilityEMS Early Mortality SyndromeFLO Fairtrade labelling organizationFoS Friends of the SeaGIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GmbHGlobalG.A.P. Global Good Agriculture PracticesGMO Genetically Modified OrganismICS Internal Control SystemIE Improved Extensive FarmingIFS International Food StandardsIMO Institute for MarketecologySIPPO Swiss Import Promotion ProgrammeSQF Save Quality FoodVASEP Vietnamese Association of Seafood Exporters and ProcessorsWSSV White Spot Syndrome Virus

Abbreviations

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010101Introduction to the market assessment

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The market assessment study “Demand for certified and non-certified shrimp products from Viet Nam with special reference to Ca Mau Province” has been done in the frame of the GIZ Integrated Coastal Management Programme.The main subject matters of this programme are:

l to strengthen effective coastal governance l to identify and implement technically optimized coastal protection and mangrove rehabilitation

measures (pilot projects) l to support sustainable livelihoods and economic growth including small-scale farmers l to raise awareness for environmental protection.

Shrimp farming is the dominant business activity in Ca Mau Province and is a major source of income for people (including small-scale shrimp farmers). The expansion of shrimp farming in Ca Mau Province contributes to further economic growth, but is also responsible for the decline of remaining mangrove forests in the province.

GIZ published the baseline study “Status of small-scale environmentally friendly shrimp production in Ca Mau Province” in 2013. The study has been done in co-operation with the “Minh Hai Sub-Institute for Fisheries Research” as well as with the Dutch SNV and analysed among others the value chain for various extensive Black Tiger Shrimp production systems in Ca Mau Province1 . Certified (organic) shrimp

1 Certified mangrove shrimp, non-certified mangrove shrimp and other extensive forms of Black Tiger Shrimp production


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performed best in regard to economic results. However, the study identified a number of weaknesses and challenges for the organic shrimp value chain.

The following market assessment aims

l to indicate market demand for shrimp from Ca Mau Province (certified/non-certified shrimp) l to investigate the interest of international buyers in small-scale farmer focused Cooperate

Social Responsibility (CSR) projects l to analyse potential marketing patterns of Ca Mau Shrimp products l to elaborate strategic marketing elements for the promotion of shrimp from Ca Mau

Province.


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10

020202Market assessment

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In spite of the fact that more than 5,000 ha shrimp farming area has been infected by the Early Mortality Syndrome (EMS) the farmed shrimp production in 2013 reached a record high. Vietnamese shrimp farmers produced around 268,000 tons of Black Tiger Shrimp2 (on 600,000 ha farming area) and around 280,000 tons of Whiteleg Shrimp3 (on 66,000 ha farming area). For the first time in the history of Vietnamese shrimp farming more Whiteleg Shrimp than Black Tiger Shrimp has been produced. Growth of Whiteleg Shrimp production is expected to continue in 2014.

From the US-$ 6.7 billion, of Vietnamese seafood export value, about 46% (or US-$ 3 billion) count for shrimp exports4. With US-$ 1.6 billion more than 50% of the shrimp export value is due to increased exports of Whiteleg Shrimp (+113% in comparison to 2012). The major reason for this development has been the decline of production in other competing producing countries like China and Thailand. This resulted into a global shortage of supply and high global market prices5 . In particular, Whiteleg Shrimp has been much in demand as production costs and risks are significantly lower. This offers better opportunities to serve markets where consumers have to economize more. A Vietnamese Association of Seafood Exporters and Processors (VASEP) forecast for 2014 is that the shrimp export value will be again above US-$ 3 billion. The economic situation in major markets like Japan and the U.S. continues to improve. However, VASEP reminds, that this will only be possible if sufficient high quality hatchery seed is available and the use of veterinarian drugs and other chemicals can be controlled effectively.

2.1 Shrimp production in Viet Nam in 2013

2 Penaeus monodon3 Litopenaeus vannamei4 The share of wild caught shrimp can be neglected. 5 Other factors had been „Zero-Tax” policy for the US market, favourable weather conditions, often three instead of two production

cycles and last but not least the improvement of economic situations in Japan, the U.S. and in some European countries in 2013.


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Shrimp production in Thailand and China has still not fully recovered from EMS outbreak. This supports a 2014 scenario with even better sales opportunities for Viet Nam shrimp exporters.

In particular, the Mekong Delta benefits from this upswing where 80% of the aquaculture production takes place6. The aquaculture industry has a strong impact on the livelihoods of the people living in the Mekong Delta and for the whole country.

Today, seafood is Viet Nam’s most important export business. Therefore, any strategic recommendation limiting the shrimp business principally will find no acceptance in Viet Nam and it will not offer a compromise between the strong shrimp lobby and groups supporting the conservation of mangroves in Viet Nam.

In this context, it is important to demonstrate that organic shrimp farming systems can offer more than a stable export business and good income opportunities. Moreover, it should be clear that the conservation of diminishing mangroves cannot rely on market demand for shrimp (“…if there is a demand for certified shrimp we go for more organic and mangrove protecting forms of shrimp production…. if not we let the intensification of shrimp production in Ca Mau province continue”).

2.2 Shrimp production in Ca Mau Province

According to the data of the baseline study, Ca Mau Province had about 296,687 ha for aquaculture, thereof 266,638 ha for shrimp farming7 . In 2012, the vast majority of the shrimp farming area was used for conventional extensive shrimp farming. About 21,791 ha of shrimp farming is used for improved extensive shrimp farming (IE) and about 5,000 ha have been used for intensive shrimp farming. After the successful year 2013 the trend to intensify production in Ca Mau province is going on and is supported by the provincial administration. The province set the target to add another 1,100 ha of intensive shrimp farming in the year 2014 (which has nearly been reached)8 . Also, the area of improved extensive shrimp farming is steadily increasing. In addition, more Whiteleg Shrimp will be produced in Ca Mau Province due to the economic advantages of this species (2.5 to 3 production cycles a year, lower susceptibility with regard to diseases etc.). In 2008, the decision has been taken to allow intensive Whiteleg Shrimp production in the Mekong Delta, if conducted in safe aquaculture zone areas and approved by provincial authorities9 .

On the downside of this development, insidious intensification of shrimp farming in Ca Mau province leads to further mangrove deforestation, increased levels of salinity with negative impacts on rice farming and conflicts between extensive (silvofishery) farms and improved extensive shrimp farms10 .

For many years, the local administration of Ca Mau Province already tries to balance the impact of shrimp farming on mangrove forests11 . But at the same time the authorities need a vital shrimp industry to improve the overall socio-economic situation.

6 The Mekong Delta covers 12% of the countries land area and about 21% of the population lives there. In addition, 90% of export oriented rice production takes place in the Mekong Delta.

7 Total area of Ca Mau Province is about 5,331 km².8 VASEP news reported recently that in Tran Van Thoi District the electricity supply has become a bottleneck for intensive shrimp

farming due to electricity powered aeration systems. 9 Ministerial directive 228/CT-BNN-NTTS dated January 25, 2008.10 After dredging ponds extensive farms are sometimes affected by waste water occurrence.11 In buffer zones shrimp farmers need to comply with minimum ratios depending on the size of the shrimp farm ((according to

Decision No.24/2002QD-UB <3 ha: 40% mangroves/60 % ponds; 3-5 ha: 50% mangroves/50% ponds; >5 ha: 60% mangroves/40% ponds). This regulation has decreased mangrove deforestation significantly.


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2.3 Organic shrimp production in Ca Mau Province

In 2000, Ca Mau Province and VASEP developed one of the first organic shrimp projects in Asia. Even today, organic shrimp farming in Viet Nam exists only in Ca Mau Province. Low-input mangrove shrimp farming is very suitable for organic certification. The most challenging parts of certification are the management of an effective Internal Control System (ICS) and the supply of Black Tiger post larvae from hatcheries approved for organic shrimp farming.

Unfortunately, organic shrimp farming could not expand in Ca Mau Province in the last years. In Viet Nam, the low demand for organic Black Tiger in international markets is often seen as a reason. However, nowadays organic Black Tiger Shrimp are available from many other countries (Madagascar, Mozambique, Bangladesh, India, Thailand and Indonesia). Viet Nam has lost the lead position in this segment over the last 10 years.

It is not part of this assessment to identify the reasons for the mentioned development. But it can be assumed that organic shrimp buyers in Europe ask for more than one supplier of organic Black Tiger Shrimp in a country in order to reduce the risk of supply shortages caused by natural hazards, production problems etc. Furthermore, organic shrimp exporters in Viet Nam have not been successful in the acquisition of new customers in Europe and elsewhere.

The pioneer in organic shrimp exports is Camimex12 . The company is still the most relevant buyer of organic shrimp in Ca Mau Province. Camimex established good and stable commercial relationships with the Swiss retailer COOP. But Camimex failed to acquire other customers buying relevant quantities in Europe13 . Deficits in communication might be an internal reason for not being able to expand organic shrimp sales. Furthermore, Camimex does not actively promote organic Black Tiger Shrimp. At their website the company does not give any English information about the values of their organic Black Tiger project14 .

The second supplier certified by IMO/Naturland is Seanamico15 . This company has not successfully established a relevant trade with organic shrimp in the past and failed to buy organic shrimp from their certified farmers last year (due to the extremely difficult market situation). Besides showing the organic certificates, no additional information is presented by this company either, no story about the values of organic Black Tiger Shrimp farming in the mangroves of Ca Mau Province.

At present the following companies in Ca Mau Province hold organic certifications: l Seanamico: 343.14 ha certified area, estimated crop in 2013: 279 tons P. monodon and 215

tons wild shrimp (Pink/White); 173 farmers (with some bigger farms).

l Camimex: 3,339.40 ha certified area; estimated crop in 2013: 715 tons P. monodon and 851 tons wild shrimp (Pink/White); 730 farmers (less than the years before with over 800 farmers).

l Minh Phu: is not certified yet, but expects organic certification in the year 2014. With entrance of the largest shrimp exporter of Viet Nam into the organic shrimp export, it can be expected that promotion of organic shrimp from Ca Mau Province in global markets might improve.

12 Certified by Naturland/IMO13 Theoretically, Camimex might have an exclusivity contract with COOP, which prohibits sales to other retailers. But COOP is not

known to have such policies outside of Switzerland. 14 http://www.camimex.com.vn/index.php?route=common/home 15 http://www.seanamico.com.vn/en/certificates.html


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The baseline study conducted by GIZ and partners identified a number of problematic issues in the organic supply chains in Ca Mau Province: l According to small-scale farmers, the distribution of economic benefits of organic shrimp

farming is not fair and against agreements between farmers and processors (Example Camimex share of 20% premium between supply chain actors: 5% Camimex, 2% for collectors, 6% for farmers, 7% for back up)16 .

l The regular shrimp price is higher t han the organic shrimp price (Camimex policy to avoid mixing of organic and conventional shrimp).

l Impenetrability and/or missing comprehensibility of the certification system (with regard to certification status, distribution of economic benefits, etc.).

l Weaknesses in the Internal Control System. l Insufficient training and capacity building and/or extension services systems. l Organic farmers are dropping out from the organic programme.

In spite of the fact that organic mangrove shrimp farming brings the highest profit of 48.3 million dong/ha, the author has doubts if organic shrimp farming is a suitable model for sustainable shrimp farming in Ca Mau province.

A good part of the described problems is related to the weaknesses of the Internal Control System (ICS) managed by Camimex and/or Seanamico. However, all relevant certification schemes such as Best Aquaculture Practices (BAP), GlobalG.A.P., and in future also the Aquaculture Stewardship Council (ASC) require a group certification approach. Companies involved will face the same challenges of quality

16 However, Camimex pays for ICS management and international certification. Farmers have no additional costs.


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assurance and transparency in small-scale shrimp production as organic certifiers. Viet Nam has a long experience in introducing international standards to small-scale shrimp (and/or pangasius) farmers, for instance Better Management Practices (BMP), GlobalG.A.P. or Code of Conduct for responsible Fisheries (CoC). Always, the industry complained about the difficulties to introduce such standards into the reality of small-scale shrimp (and/or pangasius) farming in Viet Nam.

In particular in Ca Mau Province with remote shrimp farmers, mobile collectors, collection centres, wholesalers and processors it is indeed a big challenge to define a separate line for one certification scheme (if organic or any other scheme). Camimex did quite well in establishing an ICS system for organic small-scale shrimp farmers which has been the only one for years world-wide.17

It is difficult to comment on commercial agreements, as not all facts are known. It is not surprising that organic farmers dropped out in 2013 as the year has been more than difficult due to a global shrimp shortage and with all time high prices. But at least for the Camimex farmers, it can be stated that for more than 10 years stable sales for above average prices could be generated and at the same time the impact of Camimex shrimp farmers on mangrove deforestation has been “zero” (unlike the impact of other shrimp farmers).

Regarding all the problems related to ICS, the author suggests developing 100% organic shrimp farming clusters. By establishing 100% organic shrimp farming clusters in selected areas of Ca Mau Province, the following problems could be avoided: l Separation of organic and non-organic shrimp on mobile collector’s boats is possible but not

controllable; l Separation of organic and non-organic shrimp at one collection centre is possible and

controllable but difficult to manage; l The need to pay less for organic shrimp to farmers18 in order to avoid fraudulent behaviour.

On the contrary, organic farmers need to get more for organic shrimp and need to understand better that their way of extensive and mangrove protecting shrimp farming is appreciated by global seafood buyers and consumers in many parts of the world.

The “100%-policy” would be helpful for any other certification scheme too (ASC, BAP) as separating products of two or more quality schemes is a real bottleneck in Ca Mau Province.

The “100%-policy” goes hand in hand with groups interested to protect mangrove forests at least in selected areas of Ca Mau Province. The provincial administration could define areas which play a specific role in coastal protection, areas with a higher biodiversity, or areas in buffer zones around Mui Ca Mau National Park19 as areas where shrimp farming needs to follow organic rules and strict compliance with mangrove protection rules. It would also be a possibility to declare a whole area as “organic” and not only a single shrimp farm. Such a pre-condition would open many new opportunities for promotion of a product20. And, it would help to establish effective measurements for a long term protection of an endangered natural habitat.

17 Nowadays, in India and Bangladesh similar systems are in place.18 This Camimex policy is mentioned in the baseline study. 19 Or Cape Ca Mau National Park20 Also in other value chains, such as sustainable tourism, or forest and timber products


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Table 2: Top 10 importing markets for Black Tiger Shrimp in 201322

2.4 Main export markets

The total export value in 2013 has been US-$ 3 billion. The three most important shrimp importing countries (regions) in 2013 were the United States with 27% (+83%) of the total export value, Japan with 23% (+15%) and the European Union with 13.6% (plus 23%). With 12.7% China has outrun South Korea (7.4%) for the first time. In the context of this assessment, it is more important where the main market destinations for Black Tiger Shrimp are and how these markets will develop in future.

Table 1: Top 10 importing markets for Whiteleg Shrimp in 201321

Black Tiger Shrimp are mainly sold to countries without well-established markets for organic shrimp or shrimp origins from sustainable aquaculture at the moment. Only Switzerland, Germany and France are exemptions among the ten most important importing countries for organic Black Tiger Shrimp.

In addition, Black Tiger Shrimp are less favourable for the highly competitive markets, especially in Europe. But also in the United States it remains unclear to what effect high retail prices for shrimp will change consumers’ preference for this product category23. In Japan, for example, consumers have bought less shrimp as prices have doubled within one year24 . Therefore, it is unclear if Vietnamese sales for Black Tiger Shrimp continue to reach the same volumes. If the trend to sell more Whiteleg Shrimp is continuing (and all forecasts support this prediction) and Black Tiger Shrimp are too expensive for major markets, the question arises in mid to long term, how to keep small-scale Black Tiger Shrimp farmers in business. Not all areas can be converted to Whiteleg Shrimp farming. Any strategy to keep Black Tiger Shrimp (and small-scale farmers) in the business must allow paying higher prices for Black Tiger Shrimp.

21 Source and table from VASEP’s 2013 Vietnamese Seafood Report22 Source and table from VASEP’s 2013 Vietnamese Seafood Report23 Shrimp are the most important seafood category in the U.S.24 Japanese traders report a decline of sales of about 20% to 30% in the first months of 2014.

TOP 10 LARGEST IMPORTING MARKETS OF VIETNAM WHITELEG SHRIMP IN 2013

No. Markets Value (US$) No. Markets Value (US$)

1 The U.S. 589,722,692 6 The U.K 51,584,535

2 Japan 322,980,719 7 Canada 47,573,414

3 South Korea 179,924,816 8 Australia 38,886,545

4 China & Hong Kong 87,715,470 9 Belgium 31,748,339

5 Germany 51,849,792 10 France 21,963,939

TOP 10 LARGEST IMPORTING MARKETS OF VIETNAM BLACK TIGER SHRIMP IN 2013

No. Markets Value (US$) No. Markets Value (US$)

1 Japan 293,955,881 6 Canada 73,227,418

2 China & Hong Kong 281,311,926 7 Switzeland 44,545,931

3 The U.S. 228,847,006 8 Germany 38,636,635

4 Australia 82,078,873 9 South Korea 29,235,460

5 Taiwan 74,188,668 10 France 24,621,337


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25 Potential production is not equal to the real production but an estimation done based on average yields and certified acreage.

The lion’s share of Vietnamese exported shrimp volumes are block frozen. The remainders are for processed and canned shrimp. Buying companies in Europe mentioned that a good part of the Vietnamese shrimp processing industry needs larger investments in order to keep pace with state-of-the-art processing (e.g. to comply also with increasing food safety and quality assurance requirements but also to get more orders for value-added shrimp).

About 250 Vietnamese companies are exporting shrimp. The ten largest shrimp exporters have realized 42% of export shrimp value in 2013, thereof Minh Phu is by far the largest with about 14% of the total.

Table 3: The largest shrimp exporters in Viet Nam

2.5 Global organic shrimp market

In 2013, a shrimp pond area of 21,564 ha has been certified organic world-wide. Altogether, a potential production of 16,310 t25 of organic shrimp is estimated. A clear shift of organic shrimp production from Latin America (above all Ecuador, where organic shrimp farming started in 2000) to Asia took place in the last four years. Consequently, more organic Black Tiger Shrimp are available on the market. Today, Bangladesh has the largest organic shrimp pond area after Viet Nam. So far, no organic Whiteleg Shrimp has been certified in Asia. In extensive Asian production systems different shrimp species than Black

TOP 10 VIETNAM BLACK TIGER SHRIMP EXPORTERS IN 2013

No. Companies Value (US$) No. Companies Value (US$)

1 Minh Phu Seafood Corp 411,596,277 6 Trang Khanh Co.,Ltd 86,079,377

2 Stapimex 158,769,336 7 Utxi Co 81,067,441

3 Quoc Viet Co., Ltd 147,807,861 8 Vina CleanFood 72,687,969

4 Auvung Seafood 104,807,861 9 Sea Minh Hai 61,599,230

5 Fimex VN 102,963,656 10 Anh Khoa Co.,Ltd 58,943,501


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Graph 2: Organic shrimp production per species in the year 201328

0,00 5,00 10,00 15,00 20,00 25,00 30,00 35,00 40,00 45,00 50,00 0,00 10,00 20,00 30,00 40,00 50,00 60,00 70,00 80,00 90,00

82,91

16,53

0,56

46,33

42,77

10,91

in % of total organic shrimp production 2013 in % of pond area 2013

Others L vannamei P. monodon L vannamei P. monodonOthers

In 2013, only a part of the total organic shrimp production has been sold as organic products, a significant share is said to be sold into conventional markets. Out of the estimated 16,310 tons of organic shrimp produced worldwide, around 10.000 tons are sold in the European market with Germany (approx. 3,500 t), France (approx. 3,000 t) and Switzerland (approx. 1,000 t) being the leading single markets. Other countries with established markets for organic shrimp are the United Kingdom, Austria, Benelux, Italy and Denmark. Spain, the largest shrimp importer in Europe, has no market for organic shrimp.

Organic shrimp from Viet Nam are imported to Germany and Switzerland directly. German importers distribute a smaller part to other European countries.

Interviews with European buyers have shown that organic Whiteleg Shrimp are on demand and the available quantities are limited. Only lately in the year 2013, retailers have adjusted consumer prices

26 P. indicus, M. monocerus, P. setiferus etc.27 GIZ study 2014 „Wirkungsanalyse – Erzeugung und Zertifizierung von Öko-Garnelen“.28 Besides the European production of Marsupenaeus japonicas, also other shrimp species grown together with Black Tiger Shrimp

have been calculated in regard to percentage of total organic shrimp production but not in regard to percentage of pond area.

In % of estimated harvest volumes 2013 In % of certi�es organic pond area 2013

Latin America Europe Asia Africa Latin America Europe Asia Africa0 10 20 30 40 50 60 0 10 20 30 40 50 60 70 80 90

34,0614,56

0,56

78,28

6,61

0.37

49,32

16,25

Tiger Shrimp are grown in the same ponds with Black Tiger Shrimps26, which are also sold to European markets. The relationship between production area for organic Black Tiger Shrimp and output per hectare underlines the “land-intensive” form of organic Black Tiger Shrimp production. While all other parameters of low input organic shrimp farming show a significantly lower ecological footprint, more land is needed to produce one unit of shrimp.

Graph 1: Organic shrimp production per continent in the year 201327


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29 Germany has about 7 billion EUR retail sales (second largest single market for organic food in the world), France about 4 billion EUR and Switzerland about 1.2 billion EUR.

30 Except from in California where a labelling of fish as organic is not allowed in principle.

The leading European importers from Viet Nam said that their existing organic suppliers (in Viet Nam and elsewhere) could handle the expected growth in organic sales. Assuming an organic market growth of 5% (conservative estimation) in the three leading organic shrimp markets Germany, France and Switzerland, additional 500 tons of organic shrimp would be sufficient.

All European importers confirmed that new organic producers and/or significantly higher production of Black Tiger Shrimp will face difficulties in the core markets and can only be supported if new clients enter into distribution of organic Black Tiger Shrimp.

Besides increasing marketing efforts in Europe, where the largest organic shrimp markets have evolved in the last years, marketing should be focused more on underdeveloped markets for organic shrimp. At first, the United States, Canada and Australia offer opportunities.

The U.S. market has absorbed about 20,000 t of conventional Black Tiger Shrimp in 2013. Viet Nam should set the target to sell 5% of this amount in organic quality within the next two years and 10% within the next five years (2,000 tons of organic Black Tiger Shrimp). The United States have the largest organic food market in the world with retail sales of about 22 billion EUR29 in the year 2012. Unlike the European Union, the U.S. National Organic Programme does not have any approved standards for organic aquaculture. As a consequence, the national organic logo cannot be used for imported organic seafood certified Naturland or other certification bodies. However, selling organic shrimp using for instance alternatively the Naturland logo is possible in the U.S. market30 .

for conventional and organic shrimp according to increased purchase prices on global markets. In April 2014, it will be seen if organic consumers accept the higher prices or if organic sales will decline. In all cases, it will be more challenging to sell organic Black Tiger Shrimp production (all sizes) than Whiteleg Shrimp to European buyers.

Graph 3: Organic shrimp origins in the European market

Organic shrimp Imports from Third Countries

Bang

lade

sh

Cost

a Ri

ca

Ecua

dor

Indi

a

Indo

nesi

a

Mad

agas

car

Moz

ambi

que

Thai

land

Viet

nam

Belgium x

Denmark x

Germany x x x x x x

England x

France x x x

Italy x

Netherlands x x

Austria x

Switzerland x x

Source: EU OFIS database extract Nov 2013


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2.6 Demand for non-certified and for certified shrimp products from Ca Mau Province

In all major markets for Vietnamese shrimp besides probably South Korea and China, certification of seafood has become increasingly important. Certification of shrimp on all chain levels (inputs, farmers, processors) has become compulsory. National surveillance systems and/or registration of exporters on the EU-approved seafood exporters list are not sufficient anymore. Successful market development is becoming more and more based on private certification schemes. Unfortunately, relevance of certification schemes is differing from market to market.

The author wants to emphasize that the question is not whether shrimp should be certified or not. It is of utmost importance that small-scale shrimp farmers improve their group certification skills and get the needed support for training and extension services. Moreover, exporters should carefully analyze which kind of certification does bring a substantial premium for the benefit of the whole supply chain and/or opens doors to non-explored markets.

Retail groups all over the world prefer to buy certified seafood products either from fisheries or from aquaculture origins as part of their corporate responsibility strategy. Moreover, sometimes sourcing from certified sources can be seen as a strategy to appease strong environmental groups such as WWF and Greenpeace31 and to guarantee a higher product quality. Above all, in some European countries and in the United States, the pressure built up by NGO’s is an important public driver of changes in seafood sourcing32 . Nevertheless, it can be expected that in the mid to long run other seafood markets will be influenced in a similar way. For example, WWF has started campaigning in Malaysia and publishes a seafood consumer guide which is adapted to local seafood consumption patterns.

31 Examples are: ranking of German retailers done by Greenpeace, consumer seafood guides done by Seafood Watch in the United States or initiating Aquaculture Stewardship Council (ASC) to promote sustainable aquaculture practices done by WWF.

32 Besides WWF or Greenpeace asking the industry to improve production, there are also some NGOs trying to ban any shrimp production e.g. Environmental Justice Foundation, Swedish Society for Nature Conservation etc.


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Regarding the European market, retailers already require a third party certification. Besides working with certified seafood processors (counting on IFS/BRC certification), retailers do also prefer certified shrimp farms. At the moment, shrimp buyers in Europe work with GlobalG.A.P. and BAP certification and for sustainability markets with Friends of the Sea and EU organic (basically Naturland certification). Other relevant food quality standards are SQF 2000 (factory) and/or SQF 1000 (farm).

In Viet Nam, 16 shrimp farming operations are at the moment BAP certified by the Aquaculture Certification Council, thereof three operations in Ca Mau province33 . Not surprisingly, above all the more important shrimp exporters count on BAP certification (e.g. Minh Phu, Quoc Viet, Stapimex and Utxi Co.). The same is true regarding Friends of the Sea (FoS) certification, which is done basically for the Swiss market. Four companies count on FoS certification (again Minh Phu, Quoc Viet as well as Minh Hai Seafood and Clean Seafood). Two of the four FoS certified farming projects are located in Ca Mau province. Looking into organic certification, only two mid- to small-sized exporters of shrimp (Camimex and Seanamico) count on a valid organic certification. From the second half of 2014 onwards Minh Phu – market leader in shrimp exports – might join this business. All organic projects are located in Ca Mau province.

Besides independent certification and labelling schemes, buyers have developed own sourcing criteria. The U.S. retailer Whole Foods for example has developed a strict standard for extensive shrimp farming34. Whole Foods is also winner of the 2013 seafood sustainability ranking in the U.S. done by Greenpeace international35 . According to not confirmed information, Whole Foods buys Black Tiger Shrimp in Viet Nam. An independent auditing company audits Vietnamese suppliers on whether they comply with the Whole Foods standard. Also, a Japanese Fair Trade Organization sells so-called “eco-shrimp” to Japanese consumers for more than a decade36 .

33 Quoc Viet, Camimex, Cadovimex34 Whole Foods Standard http://www.wholefoodsmarket.com/sites/default/files/media/Global/Core%20Value/WholeFoodsMarketQS_Farmed-finfish- shrimp_Jan1-2014.pdf 35 http://www.greenpeace.org/usa/Global/usa/planet3/PDFs/oceans/CATO%20VII.pdf36 http://www.altertrade.co.jp/english/02/esh_e/esh_01_e.html

Figure 1: Website WWF Malaysia

10

2.6 Demand for non-certified and for certified shrimp products from Ca Mau Province

In all major markets for Vietnamese shrimp besides probably South Korea and China, certification of seafood has become increasingly important. Certification of shrimp on all chain levels (inputs, farmers, processors) has become compulsory. National surveillance systems and/or registration of exporters on the EU-approved seafood exporters list are not sufficient anymore. Successful market development is becoming more and more based on private certification schemes. Unfortunately, relevance of certification schemes is differing from market to market. The author wants to emphasize that the question is not whether shrimp should be certified or not. It is of utmost importance that small-scale shrimp farmers improve their group certification skills and get the needed support for training and extension services. Moreover, exporters should carefully analyze which kind of certification does bring a substantial premium for the benefit of the whole supply chain and/or opens doors to non-explored markets. Retail groups all over the world prefer to buy certified seafood products either from fisheries or from aquaculture origins as part of their corporate responsibility strategy. Moreover, sometimes sourcing from certified sources can be seen as a strategy to appease strong environmental groups such as WWF and Greenpeace31 and to guarantee a higher product quality. Above all, in some European countries and in the United States, the pressure built up by NGO’s is an important public driver of changes in seafood sourcing32. Nevertheless, it can be expected that in the mid to long run other seafood markets will be influenced in a similar way. For example, WWF has started campaigning in Malaysia and publishes a seafood consumer guide which is adapted to local seafood consumption patterns. Figure 1: Website WWF Malaysia

Regarding the European market, retailers already require a third party certification. Besides working with certified seafood processors (counting on IFS/BRC certification), retailers do also prefer certified shrimp farms. At the moment, shrimp buyers in Europe work with

31 Examples are: ranking of German retailers done by Greenpeace, consumer seafood guides done by Seafood Watch in the United States or initiating Aquaculture Stewardship Council (ASC) to promote sustainable aquaculture practices done by WWF. 32 Besides WWF or Greenpeace asking the industry to improve production, there are also some NGOs trying to ban any shrimp production e.g. Environmental Justice Foundation, Swedish Society for Nature Conservation etc.


22

Figure 2: Symposium: Devastating delicacies

Shrimp buyers are preparing to switch gradually to ASC certification from the moment on ASC certified shrimp will be available. ASC certified seafood products are seen to take the same route than wild caught seafood products certified by Marine Stewardship Council (MSC). The MSC certification scheme is dominant in Germany (3,270 labelled products), the United States (635 labelled products), Australia (193 labelled products) and Japan (148 labelled products). In South-Korea, only four seafood products carry the MSC label37.

In many European countries, for example, retailers are buying with preference ASC certified Tilapia and Pangasius. Also in Japan, AEON Group has introduced the first ASC certified salmon38. All of the mentioned markets have a stake in importing Vietnamese Black Tiger Shrimp.

In principle, one can state that independent sustainability certification is already part of the daily work of a handful of leading Vietnamese shrimp exporting companies. However, only a minor share of Vietnamese shrimp production (roughly estimated between 2 to 3%) is certified by one of the mentioned sustainability standards (BAP, Organic, FoS).

In future, the share of shrimp from sustainable sources certified by one or more private labelling schemes will increase continuously. Above all, ASC certified shrimp from Viet Nam will increase the share of certified shrimp in the next 3-5 years to over 10%. Also, the share of organic shrimp will increase, provided that new professional companies like Minh Phu will enter the business.

Private certification schemes will become more important than bilateral and/or multilateral agreements between governments. Looking at the value chain, traceability between shrimp farmers, collectors and

37 All figures are sourced from www.msc.org on 1st March 2014.38 http://www.asc-aqua.org/index.cfm?act=update.detail&uid=189&lng=1


23

processors will remain the most challenging bottleneck39. Traceability is the key of all major private sustainability labelling schemes. Discussions on how to introduce traceability in traditional shrimp value chains like in Viet Nam do have a long history40.

Sustainability certification will not replace severe food safety and quality assurance requirements in all major buying countries/regions. In particular, surveillance of a shrimp value chain involving several producer groups has a strong disadvantage: such a value chain has a higher risk of non-conformities of single members of the producer group than a centrally organized shrimp farming operation with one management. Even in low input aquaculture, many potential risks do exist and testing results in Japan, United States and European Union do speak a clear language.

Table 4: Testing results and rejections and/or complaints of Vietnamese seafood products

In this survey done by UNIDO in 2011, Viet Nam seafood export showed high numbers of complaints in all major markets. Japanese importers are less focused on certification, but much more on quality of products and testing results. They send experts to the farms in order to do risk assessments and they do own pre-shipment analyses in the ports. In all cases, they want to avoid any residue findings. The latter would have the consequence to get the name of the supplier as well as the own companies name published by the Japanese MHLW.

39 http://borlaugleap.org/sites/default/files/files/publication/Tran%20N%20et%20al-%20GVC%20for%20shrimp%20in%20Vietnam.pdf

40 See one example only: http://www.icafis.org/index.php/news/97-isitpossilbe

Japan EU United States Australia

Bacterial contamination 145 127 961 121

Other contaminants 1 24 209 13

Additives 32 33 120 0

Pesticide residues 50 4 0 -

Adulteration/missing document 0 7 103 2

Hygienic condition/controls 23 20 981 1

Mycotoxins 7 0 - 0

Packaging 2 2 0 -

Veterinary drug residues 297 172 170 44

Labelling 0 2 349 77

Heavy metals 0 61 0 7

Others 6 6 21 1

Other microbiological contaminants 0 26 - -

Total 563 484 2,914 266

Source: UNIDO dataset and analysic, based on EU RASFF, US OASIS, AQIS, and Japannise MHLW data


24

In Table 5 the author has intentionally selected two large export companies in order to show that quality assurance is not only an issue with small exporting companies.

Besides certification costs additional costs for testing (lab costs, longer warehouse stays and related storing costs due to testing in Vietnamese ports) are a matter of concern of Vietnamese exporters.

Currently, the Vietnamese government is promoting VietGAP certification for aquaculture farms. By 2015, VietGAP certification for Pangasius is said to become compulsory. In Soc Trang Province the local administration has started to introduce VietGAP to shrimp farmers recently42 . With VietGAP the administration aims, among others, at reducing the challenge of handling too many different certification standards43 .

In interviews done with shrimp importers and retailers in Europe44 a clear answer has been given by nearly all interviewees in regard to the origin of shrimp. Unanimously, buyers said that the story matters and not the country (and often even not the species). As long as the principle ideas behind a supplying project are in line with the general consumer perception, the country of origin does not matter. Principle ideas are above all: social aspects respected, income generation realized and nature destruction/deforestation of mangrove avoided.

Asked, what kind of “critical” questions regarding social and environmental aspects consumers have raised, the majority of the interviewees said that consumers are not really asking specific questions. Consumers do show more specific concerns after critical media reports, but only temporarily. Concerns expressed by consumers are above all the use of antibiotics, long distance transport, mangrove conservation and the use of GMO in feed. Some buyers explained that the consumers trust their products more because they use the Naturland logo.

Discounters said that their consumers are less informed and less interested in detailed information about social and environmental aspects. Some buyers said that consumers are sometimes more interested in the safety of raw shrimp, than in social or environmental aspects. Other consumers pay attention on shrimp being deveined and find shrimp with intestines disgusting.

The particular importance of mangroves (or shrimp production in a mangrove forest) as well as the involvement of small-scale farmers make Black Tiger Shrimp from countries like Viet Nam more favourable to tell a story behind the product. However, pricewise most of the buyers do not see a scope for higher prices on the market (except two buyers).

41 Public data published by Japanese Ministry of Health, Labor and Welfare (MHLW): http://www.mhlw.go.jp/english/topics/importedfoods/

42 http://www.seafood.vasep.com.vn/Daily-News/53_9072/Soc-Trang-Farming-shrimp-under-Viet-GAP.htm43 The government is also involved in developing a joint shrimp standard for all ASEAN countries.44 Telephone interviews have been done with 14 importers, processors and retailers in Germany, Belgium, France and

Switzerland.

Table 5: Two examples of shrimp imports from January 201441

ITEM EXPORTING COUNTRY

NAME OF MANUFACTURERS SHIPPER ARTICLE

CONTENTS OF

VIOLATION

QUARANTIN STATION

NAME OF IMPORTERS

CAUSE OF VIOLATION

DISPOSAL OF THE CARGO REMARKS Publication

day

Frozen food

served without

heating : F COOKED

SUSHI VANNAMEI

SHRIMP

Vietnam

QUOC VIET SEAPRODUCTS

PROCESSING TRADING AND

IMPORT-EXPORT CO.,LTD.

Art.11(2)

violation of compositional

standard (enrofloxacin

0.02 ppm detection)

tokyo FUJI CORPORATION

we directed abandonment

or return of the cargo

(the whole quantity is

kept)

ordered inspection

Source: UNIDO dataset and analysic, based on EU RASFF, US OASIS, AQIS, and Japannise MHLW data


25


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2.7 PR-Potential for shrimp from Ca Mau Province / Marketing patterns

Extensive Black Tiger Shrimp production in Ca Mau Province is very suitable to create convincing public relation strategies. The various aspects of Black Tiger Shrimp production address all “buzzwords” of state-of-the-art sustainability marketing: l Social aspects (e.g. small-scale production, household production, income generation) l Environmental aspects (e.g. mangrove protection, biodiversity conservation, low environmental

impact of extensive shrimp farming, low carbon production) l Health aspects (e.g. “low to zero-input” farming system, natural product, no residues)

Combining the various aspects along the value chain in order to build up one “holistic” marketing strategy might lead to a strong, but not unique story. Traditional and/or extensive Black Tiger Shrimp farming systems are still in place with the same or similar patterns in other Asian countries (e.g. Bangladesh, Indonesia and India). But, compared to other traditional shrimp farming systems in Asia, Ca Mau Province has the largest shrimp production in a “silvofishery system”. In addition, Ca Mau Province is still home to about 50% of the Mangrove forests in the Mekong Delta and home to one third of the total Mangroves in Viet Nam45. This is the strongest asset Ca Mau Province can use in the promotion and marketing of organic shrimp46.

Last but not least, Ca Mau Province and intact mangrove areas along the coastline have a fundamental stake in coastal protection. The impact of cyclones, tsunamis etc. are well known in Asia, the United States and the European Union due to various natural hazards in South-East Asia and related broad media coverage. In this context, a shrimp farming system that is less detrimental for the existing mangrove eco-systems does offer opportunities for a differentiation strategy in global markets. Highlighting that extensive shrimp farming contributes to coastal protection can make a clear difference to other shrimp origins.

However, the continuous expansion of shrimp production in Ca Mau Province as well as the creeping intensification of the former extensive production47 type will reduce opportunities and aggravate the task to develop credible marketing strategies for Ca Mau Province. It is obvious that any strategy to promote extensive shrimp production in Ca Mau Province (even with some social and environmental add-on criteria) would be counteracted by mangrove deforestation and/or intensification in the direct neighbourhood. When developing a promotion concept for sustainable shrimp production it is of utmost importance to consider this aspect. Otherwise, credibility of any sustainability campaign for shrimp from Ca Mau Province might be at risk.

This conflict is known in Viet Nam already and government officials try to balance the diverging interests between the shrimp farming industry and stakeholders interested in nature conservation, coastal protection and biodiversity. The latter are not only environmental groups but also business-minded stakeholders (e.g. tourism industry, forest industry).

In this context, the question which sustainability certification is the right one for approaching international markets is of secondary importance. Sustainability certification needs to be seen only as an additional tool to differentiate in markets. Much more important is how the economic, the social and the environmental performance of shrimp farming systems really are and, how they will be communicated.

45 Not surprisingly, the Selva Shrimp standard -developed in 2012- is focusing exactly on the forest character of Ca Mau province. However, the latter has still no market importance.

46 Shrimp-rice farming systems in Ca Mau Province cannot be seen as a unique feature as shrimp-rice farming still exists in other provinces in Viet Nam, but also in competing Asian countries (e.g. India). Nevertheless, shrimp-rice farming systems offer also various starting points for creating convincing marketing stories (e.g. food security).

47 http://www.seafood.vasep.com.vn/Daily-News/53_9190/2014-Ca-Mau-to-develop-more-industrial-shrimp-farming-areas.htm


27

Concerning the economic performance, extensive shrimp farming systems have less business risks for small-scale producers (e.g. lower susceptibility for diseases resulting in continuous and stable shrimp yields; no or much lower feed costs48 resulting in less problems with debts; no or much lower investment costs than for improved systems using electricity; aeration systems etc.). All in all, fewer dependencies from collectors, processors and/or feed mills do exist in extensive shrimp farming49 .

Partly, a life cycle assessment methodology (LCA) can be used to compare the performance of the different shrimp farming systems. For setting up long-term development plans for shrimp aquaculture in Ca Mau Province, it is of much more value to get concrete figures on the impact of the different production methods. However, social aspects and biodiversity aspects, for instance, cannot be satisfactorily covered by current LCA methodologies and do need further assessments.

Interviews with organic shrimp importers and private label processors done in the course of this assessment50, as well as screening claims on organic shrimp packages found in European retail shops have shown that the front page of organic shrimp packages contains: l The organic label, often two organic labels (EU organic label and Naturland label). l The statement “from organic aquaculture”. l Other information related to the product specification (counts, sizes, species, value adding). l A picture showing a shrimp dish or only the shrimp itself (and not a picture from the production

region, a pond with mangrove trees etc.).

Not a single product sample offered an additional claim highlighting one important aspect of the organic production system (e.g. Non-GMO feed or mangrove protection, animal welfare etc.). Importers, asked why they are not using any prominent claims on the front site of the package, answered that consumers are not interested in detailed information.

From time to time, consumers do question the effects on mangroves and/or to a lesser extent social justice. This can be interpreted in two ways: either consumers have a high trust in organic labels, or they have no time and interest to investigate every single product in detail and trust in the work of environmental groups and consumer protection organizations. Nowadays, European organic food consumers are more familiar with the organic food regulation and know that using the term organic (biological, ecological, bio etc.) on food products requires compliance with the organic food regulation and is based on regular inspections. On the back site of the package additional information about some core values of organic aquaculture is sometimes published. Often the information is presented in (very) small letters.

Another answer given by the importers has been that organic shrimp products have to follow typical labelling formats used in frozen seafood counters. Much more than 50% of shrimp (and nearly 100% of organic shrimp) are sold as frozen shrimp in most of the European countries. In some countries, thawed shrimp are offered in fresh fish counters to a certain extent, a business segment particularly interesting for large sized Black Tiger Shrimp.

Many importers use different organic shrimp sources for the same final product. Consumer have to be informed about the potential sources (countries) used for this product according to labelling regulations in Europe. Therefore, importers prefer to provide general information on consumer packages, only declaring the possible countries of origin. Otherwise, they would have to renew packaging material

48 Shrimp feed has to be imported (about 50%), it is more expensive than in competing countries and production in Viet Nam is controlled to a large extent by foreign suppliers (CP, Grobest, Uni-President etc.).

49 The mentioned chain actors often give loans to farmers. The higher the intensity of production, the higher the dependencies are. 50 See Annex 1


28

every time in case of suppliers’ changes. Consequently, no specific information on the supplier in the country of origin is given either.

Some retailers have developed informative leaflets and/or brochures in order to give a more detailed description about organic aquaculture as well as about concrete sourcing projects. The best example is COOP Switzerland.

2.8 Potential for small-scale farmer CSR projects

Large retail groups distribute most of the imported shrimp within Europe. Nowadays, all retailers have developed so-called Corporate Social Responsibility (CSR) systems. As part of their CSR system retailers have defined sourcing policies for all food and non-food products (including seafood). Suppliers have to comply with sourcing policies of retailers. One typical procedure is that suppliers have to fill in and sign a supplier’s questionnaire focusing on social and environmental criteria set by the retailer (a kind of self-declaration).

Often, sourcing policies contain quite general criteria (e.g. supplier needs to comply with all national laws and regulations). However, for some product categories like seafood, criteria set by retailers are more precise and strict. In regard to wild caught fish many European retailers accept only origins with a MSC certification (if available). In regard to aquaculture, some retailers recently have started to accept only ASC certified origins for Pangasius and Tilapia (e.g. Ahold in The Netherlands). Other farmed fish and shellfish species (including shrimp) will follow in future.

Seafood is one of the core fields of activities of European NGO’s like WWF and Greenpeace. Therefore, nearly all retailers do ask for a third-party certification nowadays. In case of frauds or negative media reports about a specific seafood product they can shift responsibility upon certification bodies.

Principally, retailers do expect that compliance with basic social rights is given for certified shrimp (ASC, Naturland, BAP, and GlobalG.A.P.) on farm level as well as in shrimp processing plants. Premium prices are then given for a certain certification scheme (above all for organic shrimp) and not for a small-scale or large-scale operation. The Swiss COOP, for instance, pays a 20% premium for organic shrimp to Camimex as already said. Originally, 10% have been foreseen as an incentive for the small-scale shrimp


29

farmers. They are not paying into any social funds to improve the living conditions of small-scale shrimp farmers.

Products from social and/or ecological projects without any certification or at least independent verification are an exception. In particular, for seafood, such CSR projects will not face a broad acceptance on the European market. Nevertheless, retailers are interested in getting a good product and a good story in order to differentiate from their competitors. Therefore, the combination of independent third party certification (organic, ASC or others) with additional criteria defined for a specific sourcing project (e.g. “…for every kg of shrimp sold from this project we invest XY cent into an school funds used for education of shrimp farmers children...”) is more likely to find the interest of European retailers.

The Fairtrade Labelling Organization (FLO) attempted to launch Fairtrade standards for shrimp aquaculture twice without success51. The official argument has been that the interest of the retail trade has not been strong enough. However, a handful of retailers expressed their interest in a Fairtrade certification.

Summarizing what has been said before the potential for small-scale shrimp farmer CSR projects is given, but only in combination with an internationally accepted certification. Various social aspects could be highlighted in such a CSR project (providing additional funds for education, health services, village infrastructure etc. apart from paying farmers a premium for a certified quality of shrimp). However, in most of the cases small-scale shrimp farmers prefer a higher price for a certified production. And, the higher the premium is the more motivated farmers are to comply with certification requirements.

51 The author of this study wrote the first standard draft on behalf of Fairtrade Foundation (UK) in 2004. http://www.fairtrade.net/fileadmin/user_upload/content/2009/standards/documents/2011-09-12_Draft_Fairtrade_Standard_for_Shrimp_Small_Producer_Organisatio....pdf

30

030303Marketing concept for shrimp from Ca Mau Province

31

At the moment, organic shrimp bring the highest premium. But in spite of the fact that organic markets are growing continuously, total organic shrimp markets are still small (less than 1% of the total shrimp market world-wide).

Therefore, an organic project focusing on new clients in Europe and the U.S. market should start with a small pilot project for organic shrimp farming in Ca Mau Province. All farmers need to convert to organic shrimp farming in that area targeting a minimum of 100 to 300 tons of Black Tiger Shrimp. The area shall be of specific importance for coastal protection against floods and storms.

The area should be selected as a nucleus with the intention to expand organic production around this nucleus hand in hand with growing organic shrimp markets and sales . In addition, the area shall be in a good distance to a collection centre or processor (logistic aspects are important). The nucleus area shall not be too large in order to avoid a high percentage of organic production in the nucleus area which cannot be sold as organic. Another reason for starting small is to prepare annual updates of the project progress (e.g. Year 1 300 tons, Year 2 600 tons, Year 3 900 tons etc.).

The differentials in the market will be: a) The first 100% organic shrimp production region.b) Full traceability guaranteed as all farmers in one area are registered as organic farmers (avoidance

of two separate product qualities and all related problems).

3.1 Use certification for differentiation in global markets


32

3.2 Combine certification with nature conservation

The project managers should invest in assessing shrimp farming areas carefully in the beginning. Existing mangrove area per farm, quality of mangroves on the farm, total number of farms in the area and total mangrove coverage in the nucleus area are some of the main parameters to be assessed and recorded in order to define a baseline.

The differentials in the market will be:a) The project secures an area of XY hectares of mangroves.b) The project secures income for XY farmers at the same time.c) In case organic farmers need to plant new mangroves: the mangrove area has been expanded

in the nucleus area by XY%. d) Together (old and newly planted mangroves), the project makes a carbon fixation of XY tons of

carbon dioxide per annum possible.

In a second step, an additional source of income can be generated by the development of a Payment for Ecosystem Services scheme. The most practical way would be to get a certified carbon credit project53

and sell carbon credits besides shrimp (and other certified mangrove products).

3.3 Develop certified supply chains in direct co-operation with buyers

After the farmers in the nucleus area have concerted to organic shrimp production and/or after implementing the group certification system, potential buyers should be invited to visit the nucleus region. This should be the start in developing long-term partnerships with potential buyers. Buyers need to understand that the project aims at supplying organic shrimp and at the same time at creating additional values. These assets can be used for marketing and differentiation in their respective home markets.

Additional values are above all mangrove conservation and reforestation as well as active contribution to coastal protection and to a green coastal belt which reduces damages due to natural hazards (like in 1997 caused by typhoon Linda/Openg)54. Moreover, the potential to get organic shrimp plus carbon credits may be of specific importance for some retailers (not only in traditional markets for organic food). Buyers might be interested to invest additional money into mangrove reforestation (and/or carbon credits). Appropriate areas outside of the shrimp farms should be included in a mangrove reforestation and management plan.

3.4 Promotion campaign for a Ca Mau organic mangrove shrimp initiative

Such a strategy needs the support and full backing of the local administration of Ca Mau Province. First of all the Province would have to define that in some areas all producers have to follow organic production rules, because the areas have been selected for creating effective natural buffer and mangrove protection zones.

As long as no export markets are developed yet, the Province in co-operation with international donors needs to cover additional costs for certification, implementation of an Internal Control System as well as promotion costs (flyer, articles, website etc.). A logo and name for the shrimp initiative should be developed and the logo/name registered by Ca Mau Province in major shrimp markets world-wide.

53 Using a voluntary carbon credit scheme.54 Several thousand people died, the Ca Mau fishing fleet and 200,000 homes have been destroyed.


33

Figure 3: Proposal Logo/name Ca Mau mangrove shrimp

This name/logo can only be used by registered (and certified) Vietnamese shrimp exporters. The latter have to sign a sub-license agreement with the Province of Ca Mau (owner of the name/logo). It should be evaluated if it is possible to apply for a Protected Geographical Indication (PGI) in order to draw more attention to the region and to be better prepared for international competition.

The local administration should invite shrimp processing companies to participate in processing and exporting organic shrimp from the nucleus area. In order to increase sales, it is better not to rely on the performance or non-performance of one exporter only. Depending on the size of the nucleus area, Ca Mau Province can increase the number of companies stepwise. Companies benefitting from the Ca Mau organic mangrove shrimp initiative could refund a part of the development costs spent by Ca Mau Province55 . Buyers in the U.S., Europe or elsewhere can use the name/logo Ca Mau Organic Mangrove Shrimp® but are not forced to do it.

The government should appoint a marketing agency experienced in seafood promotion abroad (e.g. VASEP). This agency should be asked to promote the “100% organic mangrove shrimp initiative” world-wide, as well as to provide marketing and communication materials for registered Vietnamese shrimp exporting companies.

The following SWOT analysis summarizes the strengths and weaknesses of such an initiative. Global trends in the major retail markets support such a strategy and offer various opportunities for the Ca Mau shrimp industry. With a local government and a handful of processors/exporters committed to the success of this project, it is likely that such a strategy will find acceptance on international markets. In particular, all areas not suitable for more intensive shrimp farming (either Black Tiger or Whiteleg Shrimp) will benefit. Only a declining global economy, in particular in major markets for shrimp from Viet Nam, will stand against a successful market implementation.

55 Refunding could be based on a specific fee per ton of exported organic shrimp sold from the project region.


34

Figu

re 4

: Ca

Mau

man

grov

e sh

rim

p SW

OT

anal

ysis


35

Company/Organisation Description Website

Aldi Nord Germany Discount Retailer www.aldi-nord.de

Alnatura Germany Organic Speciality Retail Trade www.alnatura.de

Coop Switzerland Retailer www.coop.ch

Delhaize Belgium Retailer www.delhaize.be

Dennree Germany Organic Speciality Retail Trade www.dennree.de

Erich Geiger e.K. Germany Importer/Private Label www.fischgeiger.de

Escal France Importer/Private Label www.escal.fr

Follow Fish Germany Importer/Private Label www.followfish.de

Lidl Germany Discount Retailer www.lidl.de

Marinex Switzerland Importer/Private Label www.marinex.ch

Naturkost Elkershausen Germany Organic Speciality Retail Trade www.naturkost-

elkershausen.de

Norma Germany Discount Retailer www.norma.de

ÖkoFrost Germany Importer/Private Label www.oekofrost.de

OSO France Importer/Private Label www.madagascar-gambas.com

Ristic AG Germany Importer/Private Label www.ristic.com

Tegut Germany Retailer www.tegut.com

Uhrenholt A/S Denmark Producer www.uhrenholt.com

WAB International Trading GmbH Germany Importer/Private Label www.wab-trading.com

Annex 1: List of interviewees for the market assessment

Department of Agriculture and Rural Development of

Ca Mau Province

demand for certified and non-certified shrimp products from viet

Documents