To illustrate, in the US AD case on pangasius frozen fish fillets from Vietnam, up until the fifth administrative review of the AD Order, Bangladesh was consistently selected as the surrogate country. The fair value based on the Bangladeshi surrogate values yielded reasonable  AD margins, which was not to the liking of the Petitioners, Catfish Farmers of America (“CFA”).

Therefore, in the sixth administrative review, CFA argued that DOC reject Bangladesh as the surrogate country. In the preliminary results, DOC preferred the Philippines as the surrogate country, citing its superior fish price data. This switch resulted in very high preliminary AD margin. At this point, VASEP’s surrogate value expertdiligently worked in Bangladesh and  discovered a new price data source published by the Bangladeshi Department of Agricultural Marketing (“DAM”) to value whole live pangasius fish. He also persuaded  DAM to officially released its price data along with several clarificatory letters. All of these information were then submitted before DOC.

In the Final results issued in March 2011, in a remarkable turn around, the DOC switched its surrogate country choice back to Bangladesh, citing the robustness of the DAM data for whole fish. As a result, the AD margins in the sixth review swung back to near zero level and the moribund Vietnamese exports to US was reinvigorated.

In the preliminary results of the subsequent seventh administrative review, DOC selected Indonesia as the surrogate country. This time, VASEP’s surrogate value expert undertook extensive field trips in Bangladesh and Indonesia. In Bangladesh, he persuaded the government to publish the DAM data online. In Indonesia, he had the Director General of Indonesian Aquaculture Statistics (“IAS”), Mr. Ketuk Sugama, issue a detailed affidavit, clarifying the IAS data for whole fish.

In an encore, in the Final results issued in March, 2012, the Department switched back to Bangladesh. Commerce was persuaded to make this improbable switch solely on account of new and invaluable information obtained by the surrogate value expert from Bangladesh and Indonesia.

A leading Vietnamese exporter, Mr. Qui of QVD Aquacuture JSC said, “When the Department of Commerce selected the Philippines as the surrogate country in the preliminary results of sixth review, resulting in the levy of very high Antidumping duty, we thought that we had no future in the US export market. But, our Counsel, GDLSK LLP and its surrogate value specialists, Dharmendra Choudhary, worked tirelessly in Bangladesh over several months to obtain official government pricing data.  The DAM fish price data they obtained directly from high levels of Bangladeshi government was instrumental in selection of Bangladesh as the surrogate country in the final results.  Based on this surrogate country change, the Department concluded that Vietnamese exporters had not dumped. A similar situation was repeated in the preliminary results of the seventh review, when Commerce selected Indonesia as the surrogate country. This time, we felt that the world had come to an end and we had no future in the US market. But, based on new information and online DAM data, GDLSK LLP and Mr. Choudhary were again able to convince the Department to reverse its surrogate choice from Indonesia to Bangladesh. This change yielded results demonstrating that we had not dumped in US market and again brought down anti-dumping duties to nearly zero level.”

Notably, Commerce’s final results in the sixth and seventh administrative reviews have also been affirmed by the Court of International Trade (“CIT”).

In recent AD proceedings, DOC has preferred  Indonesia over Bangladesh, not withstanding that Indonesia was not even economically comparable to Vietnam. These decisions are pending in litigation.  For future AD proceedings, VASEP’s surrogate value expert is engaged in a global research to identify the most suitable surrogate country.

In sum, a significant portion of Vietnamese exports to US market is owed to the excellent work of surrogate value experts.

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This article attempts to explain the complicated methodology, further aggravated by an unlawful application, used by the US Department of Commerce (“Commerce”) for determining the AD duties on exports of Vietnamese Basa/Tra fillets to the US market.

In US AD proceedings, the allegation on exporters is that they are engaged in selling goods to the US market at a price that is lower than the fair market value (or, “normal value”) of goods, which causes material injury to the US domestic producers. The normal value of goods is typically the price at which the exporter sells goods in its own home market. However, an exception is made for Non-Market economy (“NME”) countries like Vietnam and China. Pursuant to treating Vietnam as an NME country, Commerce rejects the cost and price data reported from within Vietnam. Instead, under the US law, the agency determines the normal value of Basa/Tra fish fillets by applying a cost construction methodology, wherein it values all of the individual inputs that are utilized in producing fish fillets (whole fish, fingerlings, fish feed, chemicals, labor cost, electricity etc.) based on the prevailing prices in a surrogate country. As such, it is obvious that the choice of a proper surrogate country is the single most important decision that shapes the ultimate outcome in an AD case.

Underthe US law, Commerce is mandated to select a surrogate country to Vietnam based upon two criteria – (a) it should be “economically comparable” to Vietnam in terms of per capita gross national income (“GNI”), and (b) it should be a “significant producer” of comparable merchandise. In the 11^th review, Commerce selected Indonesia as the surrogate country to Vietnam and, consequently, determined the normal value of Basa/Tra fish fillets, by valuing all of the individual production inputs based on the price in the Indonesian market and then aggregated them to obtain the normal value of exported fish fillets. As explained below, Commerce’s preference for Indonesia as a surrogate country is unlawful and is the single most important reason for very high AD duties on Vietnamese fish fillets.

Photo: Le Hoang Vu

There is no dispute that Indonesia is not economicallycomparable to Vietnam and this is why. At the beginning of each review proceeding, Commerce’s own Office of Policy (”OP”) circulates a list of countries that are considered to be economically comparable to Vietnam, based on the per capita gross national income (”GNI”) of individual countries. The OP list circulated at the inception of 11^th administrative review did not include Indonesia since Indonesia’s per capita GNI was far removed from Vietnam’s. As such, in accordance with established law and precedent, Commerce was required to select a surrogate country from the OP list of economically comparable countries that included Bangladesh, the Philippines and India, all of which are not only economically comparable to Vietnam but also significant producers of Basa/Tra fish fillets. All the three countries, especially Bangladesh, afford quality pricing data to enable Commerce determine the normal value of fish fillets with accuracy. This fact raises a serious question as to why Commerce resorted to selecting a non-economically comparable country, Indonesia, as a surrogate country choice. Commerce’s explanations on this issue have been wobbly, unpersuasive and contradicted by its own settled practice and judicial precedent.

The history of the AD proceeding on Vietnamese fish fillets shows that for over 10 years, up until the 8^th administrative review, pursuant to the consistent selection of Bangladesh as the surrogate country, Commerce had determined the normal value of Vietnamese Basa/Tra fish fillets based on the Bangladeshi price data. It needs to be underscored that during this period, both Bangladesh and Indonesia were on the OP list of economically comparable countries and yet, Bangladesh was consistently preferred over Indonesia. Over this time period, although AD duty rates were being levied on Vietnamese exports, such rates were nonetheless somewhat reasonable and not punitive, as a result of which a fine balance was struck between the trade remedy tools and the overarching objective of ensuring a free and fair international trade. The ultimate beneficiaries were US consumers who could buy Basa/Tra fish fillets at affordable prices, instead of having to pay monopolistic and exorbitant prices. Imports from Vietnam also sustained thousands of jobs in the supply chain, from Vietnam to the US market. The only aggrieved party was the US domestic industry.

Having essentially failed in their endeavor to stanch the Vietnamese imports even after numerousAnti-dumping reviews by Commerce, the domestic US farmers in Mississippi, Arkansas and Louisiana and their association, Catfish Farmers of America (CFA) went on an overdrive and sought to change the rules of the game overnight. Having lost all the earlier battles on merit, in the 8^th administrative review, the CFA brought enormous pressure to bear upon Commerce,compelling it to change its investigation team that had all along been handling this case very diligently. However, CFA still faced a major hurdle in its objective to force a methodological change in order to achieve a very high AD duty ratebecause Indonesia had beensummarily removed from the OP list of economically comparable countries in the 8^th review. Even so, CFA doggedly lobbied Commerce to switch over the surrogate country from Bangladesh, an economically comparable country, to Indonesia, an economically non-comparable country. Vietnamese exporters and their association (VASEP), who strongly resisted CFA’s unlawful arguments in support of Indonesia, were shocked when Commerce, in March 2013, chosea moribund Indonesia over Bangladesh as the surrogate country to Vietnam. This switch in surrogate countries heralded an era of unreasonably high and, arguably, punitive rates of AD duties on Vietnamese Basa/Tra fillets exporters.

Commerce’s choice of Indonesia was patently unlawful for several reasons. First, it is indeed inexplicable that Commerce suddenly had an epiphany regarding Indonesia, only after the country had been expressly removed by the agency itself for failing to meet the criteria of economic comparability. Second, even leaving aside the issue of a lack of economic comparability, Commerce’s proffered reasoning in selecting Indonesia over the settled choice of Bangladesh – that Indonesia alone afforded reliable price data for whole fish while Bangladeshi price data was unreliable – was unpersuasive and contrary to a mountain of evidence placed before the agency. The Indonesian Aquacultural Statistical (IAS) data, which was used to value whole fish, was excoriated by the then Director General of IAS, Mr. Ketuk Sugama. In a signed affidavit that was placed before Commerce, Mr. Sugama explained that the IAS data mirrored price data of several disparate species of fish grown by several aquaculture methods other than by pond (as in Vietnam), and was distorted by retail prices for processed fish. In contrast, VASEP had placed several official letters from Bangladeshi government officials, demonstrating the high quality of Bangladeshi DAM wholesale price data for pond grown pangasius hypophthalmus species (which was equivalent to pond grown Basa/Tra). Even so, Commerce unreasonably rejected the DAM data by simply relying upon certain self-serving affidavits provided by CFA’s paid consultants thatfalsely claimed DAM data to include prices of dead fish,while it blindly accepted the IAS data, totally ignoring Mr. Sugama’s authoritative affidavit. VASEP has challenged this decision before the US Court of International trade and the final outcome is still awaited.

In the meantime, carrying forward its unlawful practice to select an economically non-comparable country, Indonesia, as the primary surrogate country to Vietnam, Commerce has continued to levy prohibitively high levels of AD duties in the 9^th, 10^th and 11^thannual reviews. VASEP has filed Court appeals against subsequent decisions by Commerce.

Recently, there was a sliver of good news for the distressed Vietnamese exporters. On March 30, 2016, the US Court of International trade ruled in favor of VASEP on the issue of surrogate country (sustaining Commerce’s choice of Bangladesh) and the overall reliability of the Bangladeshi DAM data, in the appeal filed by CFA against the final results of the 7^th administrative review. It is to be seen to what extent this decision will aid VASEP in future litigations.

Even while the Vietnamese exporters have been grappling with the vagaries of the annual review cycles of Anti-dumping proceedings, CFA has continued to create additionalnon-tariff barriers against exports of Basa/Tra fillets from Vietnam. Pursuant to CFA’s lobbying efforts, beginning from March 1, 2016, all exports of Basa/Tra fillets have been subjected to stringent USDA Food Safety and Inspection Service (“FSIS”)regulations. The USDA-FSIS equivalency standards and nation-wide inspection/certification regime are extremely complex and will be a challenge for Vietnam and fish fillet processors to comply with. Fortunately, an 18 month transitional period intervenes before these standards kick in with full force.

The same, however, cannot be said about the Anti-dumping proceedings, which are going to stay in place for a very long time. Therefore, it is extremely important for VASEP and the Vietnamese government to take up the issue of surrogate country selection with the US government. The US government should be informed that Commerce’s practices on this issue are internally inconsistent. In a parallel ongoing Anti-dumping proceeding on another seafood product – frozen shrimp – from Vietnam, Commerce continues to select Bangladesh as the surrogate country. This fact suggests that the choice of Indonesia as the surrogate country in the fish fillets case is not based on merit; instead, it is a result-oriented choice, designed solely to drive up the margins of AD duties. The Vietnamese government should also consider using leveragefrom the new relationships and dynamics surrounding the Trans Pacific Partnership (“TPP”) against Commerce’s unjust and unlawful practicesin the Vietnamese fish fillets Anti-dumping case.

(Dharmendra N. Choudhary is a Washington DC based International Trade Attorney with the law firm of GDLSK LLP. He is a longstanding Counsel to VASEP).

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Lack of detailed planning

To date, only a handful of provinces, including An Giang and Soc Trang have approved their specific planning for Tra fish farms while the remaining Tra fish farming provinces have not detailed the planning. Dong Thap province, home to the largest Tra fish breeding area in the Mekong Delta, expects to approve the detailed zoning in June this year whilst Can Tho city and Hau Giang province have just set their hand to the work.

The verification and granting of code numbers for Tra fish farms are delayed as no detailed planning is devised. Therefore, localities have promoted the registration of commercial Tra fish farming for their farmers in order to evaluate the output. Many Tra fish breeders in Dong Thap and An Giang provinces have not yet approached the registration.

The planning, the commercial Tra fish registration, and the code granting are the basic requirements processors and exporters must meet when making the registration of export contracts with the VPA. From June 1, 2105 onwards, the export contract registration will still be implemented as before because the requirements are not fully met, thus having no significant impact on the restructuring of the Tra fish sector and the improvement of product quality.

Impoverished Tra fish farmers are still struggling to stay in the aquaculture – Photo: Huy Hung

According to local officials, the compulsory application of the VietGAP standards as from December 31, 2015, which was prescribed in the Decree, made it hard for all Tra fish farms to comply. Dong Thap province now has the largest Tra fish farming area in the Mekong Delta under the VietGAP standards, with a total of more than 560 ha. Meanwhile, An Giang province is piloting the VietGAP application and Hau Giang province is appraising the funding of about VND 4 billion for the same work.

The biggest difficulty in expanding the application of the VietGAP standards is how to change stakeholders’ mind on the work, said VPA Vice Chairman Vo Hung Dung. He noted it is unusual to refuse to practise VietGAP standards which help confirm the quality of Tra fish products. It is not true that Tra fish raised under the VietGAP model will be appreciated but accepted by markets, and the new perception is that no VietGAP no purchase.

Tra fish value continues to fall

VPA Vice Chairman Dung also said that Tra fish firms are facing expanding inventory because of the sluggish exports. He explained that the deferment of implementing Decree No. 36’s regulations on moisture content and glazing rate created no positive signs for the market. The decree defines that the maximum moisture content of Tra fish products is 83% while the glazing rate is 10%. The application of the rules was scheduled to start on January 1, 2015 but it was put off till June 1, 2016 at the proposal of many businesses. Many  attendees agreed that the deferment had not been able to help the Tra fish sector escape from the crisis. Meanwhile, consumers remain skeptical of Tra fish products as no quality improvements have been made.

Nguyen Thi Thanh Binh, a Vietnamese representative at the US-based non-profit organization Global Aquaculture Alliance (GAA), said the US and the EU consumers commented the content of water in Vietnam’s Tra fish products is too high. She added her patrons complained that the pieces of Tra fish they bought in the past shrank less than those of today when cooked.

Transparency and support urged

VPA Vice Chairman Ho Van Vang said domestic processing and exporting enterprises now live up to 75% of their total demand for raw materials, while the remaining 25 percent is satisfied by farmers. Vang asserted that material Tra fish provided by farmers must undergo very strict control by processing enterprises, so if the quality of Tra fish products is poor and disparaged by consumers, these businesses are to blame.

Chairman of the An Giang Fisheries Association Le Chi Binh explained that if poor-quality Tra fish are still bought by factories, there must be some problem with the input purchase.

Head of the Dong Thap Sub-department of Fisheries Le Hoang Vu said enterprises reacted to moisture content and glazing regulations as they had believed that they were really forced to comply with the rules. Hence, the enhancement of transparency and support is an urgent need. The Vietnamese representative at the GAA said that the non-profit organization agreed to fund a project designed to help Vietnam improve shrimp quality but it did not approve a similar project for Tra fish due to a lack of transparency. The EU market demanded that the net weight of Tra fish products (the total weight of Tra fish fillets after the glazing layer is removed) must be printed clearly on the label with certificates of shipments enclosed.

Deputy Director of the An Giang provincial Department of Agriculture and Rural Development Doan Ngoc Pha said if the quality of Tra fish products is confirmed to serve the export, businesses can sell them to any overseas market. He also suggested the Government set forth policies to support high-quality products under Decree No. 36. Nguyen Anh Khoa, a representative of the Vietnam General Department of Fisheries, said his agency is on the track to enhance product transparency and support high-quality products so as to build a national brand name for Tra fish.

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Both farmers and co-operatives are working half-heartedly. The head of Thoi An Tra fish Co-operative – Nguyen Ngoc Hai said that his unit this year focuses on expanding self-contained breeding areas to better meet its processing plant’s demand for material Tra fish because its partners bought less.

Export volume of Tra fish to some major markets is on downward – Photo: Phan Thanh Cuong

Deputy Secretary General of the Vietnam Association of Seafood Exporters and Producers (VASEP) Nguyen Hoai Nam said the export prices of Vietnam’s shrimp and Tra fish products posted estimated respective falls of 30% and 18%. Vietnam’s Tra fish firms had no choice but to reduce the prices as currencies in many export markets devalued sharply against the dollar.

Some exporters said that Tra fish prices fell because the consumption annually declines at this time. So, processing enterprises buy fewer material Tra fish. On the other hand, the foreign exchange rate experienced various fluctuations the first months of this year, causing adverse impacts to Vietnam’s export activities, including Tra fish shipments. Experts revealed that processing enterprises give their whole mind to harvesting their farm-raised Tra fish these days, thus refusing to purchase fish from farmers. As a results, household breeders encounter again difficulties in selling their products.

Over the past five years, each component of the Tra fish value chain has run into difficulties. Up to 80% of all of the Tra fish firms face hardships. Both breeders and businesses are taking a pessimistic view. According to deputy head of of the Party Central Committee’s Economic Commission Le Vinh Tan, the Tra fish consumption of Vietnam’s major markets is on a downward trend whilst there are an increasing number of trade barriers set by big importers. Besides, the Tra fish sector meets with various difficulties emerging from unfair competition among enterprises and farmers, harming the prestige and brand name of the fish. This is the corollary of overheating Tra fish development.

VASEP General Secretary Truong Dinh Hoe said that the State Bank of Vietnam has loosened its foreign currency management policy, which is expected to have positive impacts on the country’s exports. Farmers and businesses should keep patient to wait the green light from importers so that they will not miss a great making-money opportunity when export markets post increased Tra fish prices and a higher demand for the food. It is necessary to further promote linkage between exporters and breeders while anticipating trends and calculating cost prices.

Is it advisable to integrate farming households into a co-operative, ensure product consumption, and determine prices? The head of the Thoi An Co-operative said that it is useful for farmers to join in a co-operative, but they do not control selling prices themselves while the cost prices remain high. So, the whole society’s attention is needed to help farmers resume production, enabling them to keep their mind on price negotiation.

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The Directorate of Fisheries and the representatives of the Global Aquaculture Alliance (GAA) in Vietnam – which builds the Best Aquaculture Practices (BAP) standards – are working on the mutual recognition between BAP and VietGap standards. This is to create “clean” products with food hygiene and safety assurance and develop a stable market. In this way, the relevant parties will review and consider how to compare the provisions to control the regulations of these two standards. This must be done quickly and clearly for public announcement. Once achieved, the recognition will allow the VietGap products to be exported to the whole world, and mark the implementation of Decree No.36/2014/ND-CP on April 29, 2014, by the Government concerning Tra fish production, processing, and sale.

Small scale Tra fish farmers face difficulties when switching to VietGAP model – Photo: Duy Khuong

Tran Thanh Hai, Manager of Can Tho Seafood Branch: VietGAP application can’t be done overnight

Clean and safe production is the obvious trend agriculture in Vietnam and the rest of the world is  reaching out to. So Tra fish farming must comply with the VietGAP model to gain the basic standard assurance in order to penetrate the most difficult markets. The enterprises are perfectly able to apply the VietGAP standards into the Tra fish cultivation and processing; but it is not the case for farmers as it is quite difficult for them to switch from the traditional farming to the VietGAP model. Their facilities (ponds, sewage treatment basins, and production practices) were established years ago, so the high cost of building another production system under the VietGAP model will be a problem for farmers.  Many of them do not have enough money to transform their existing system. On the other hand, the price for certification has not been managed; while that of material Tra fish which has not been recognized is still low. The development of the VietGAP model has not been enthusiastically responded to by farmers or assured. This cannot be implemented overnight, it needs time.

Ho Van Vang, Vice Chairman of Vietnam Tra fish Association: Overcome difficulties to approach certificate

In 2015, the VietGAP standards will be made known to every farming individuals and households by Vietnam General Department of Fisheries. The provincial People’s Committees and Ben Tre Aquaculture Branch continue to give instructions to the localities for the plan implementation. Any difficulty must be solved upon requests from households and farm owners. Farming facilities, which have already been granted VietGAP certificates, should be directed to the BAP and GlobalGAP standards to meet market’s requirement and regulations. However, the certification must be granted together with assistance and preference as many VietGAP farming facilities fail the higher standards. BAP and GlobalGAP will bring farmers the obvious benefits, so the competent authorities should develop the policies to help farmers overcome difficulties when their VietGAP farming facilities are applied for higher standards. In this way, the benefits will come closer to farmers. The purchasers and processors must study the requirements to buy Tra fish at reasonable price, so that the production chain will bring benefits to all. 

Nguyen Van Hong, Chairman of Tan Phat Fisheries Cooperative: Standardized farming more effective

As many as 5.5 hectares of Tra fish farming area have been applied with the VietGAP model in Tan Phat Fisheries Cooperative since the plan was started. The fish is now sold at 22,800 – 23,000 VND per kilogram, from which the farmers will have profits of 1,000 – 1,500 VND per kilogram. At its peak, the cooperative stocks about 800,000 fingerlings on the monthly basis, harvesting 300 tons per each. However, it is quite difficult to apply other standards such as GlobalGAP and BAP as the local farming areas are scattered. The VietGAP model requires the farmers to strictly follow its regulations of diary, medicine and feed, but the fish price is not higher than usual. However, standardization will push the sale of fish. If the farmers are given assistance or advices of standards by national authorities or enterprises, they will receive more benefits from GlobalGAP and BAP application as their fish will meet typical requirements of the market.

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In all seafood exports in 2014, Tra fish went down from 26% in 2013 to 22% (1.76 billion USD) with shipments to the EU falling 10.7% and the US, 11.5%.  The drop in the export value is mainly attributed to the increasingly fierce competition and tax fluctuation.

2015 is expected to be harsh with the implementation of a series of hindrance policies. The United States Department of Commerce (DOC) has just released the POR10 with anti-dumping tax imposed on frozen Tra fish fillet almost twice that of the initial review. If the export value to the US keeps declining 11.5% as in 2014, it will deal a heavy blow on Vietnam’s Tra fish.

The Tra fish farming area is projected to reach 5,500 ha and yield around 1 million tons. However the sale would be difficult.

Favorable global market

The dream of global market is not as beautiful as roses, it always comes with thorns. To penetrate into markets, Vietnam needs to sign commercial agreements as keys to overcome formidable tariff barriers imposed by developed countries.

Vietnam is planning for deeper integration in 2015 with further agreements to be signed and implemented. It is an important milestone for Vietnam to sign the TPP agreement with 11 other Asia-Pacific countries with a combined population of 790 million who make up 40% of the global GDP and one-third of the global trade value. The establishment of the ASEAN Economic Community (AEC) in 2015 will create a lot of changes in the manner of operation in the region.

Tra fish export faces more challenge to meet 2015 target – Photo: Ngoc Trinh

Accordingly, competition will turn into mutual cooperation. Vietnam then should hold a bigger role in the community. The common market of 600 million people and a combined annual GDP of 2 trillion USD would become a big cake.

Vietnam’s seafood export value reached 7.9 billion USD in 2014 against 6.2 billion USD in 2012, with major importers being the US, the EU, Japan, and Korea.

The participation of the US, Japan and Korea in the Trans-Pacific Strategic Economic Partnership Agreement (TPP) as well as the free trade agreements (FTA) Vietnam will sign with the EU, Japan, Korea, and the Customs Union of Russia, Belarus, Kazakhstan will help ensure the sale of Vietnam’s products.

Boost competitiveness and value

A trade agreement is not a miracle to Vietnam as after signing the deal, the country has to go into competition with existing members of that commitment for the same preference. Meanwhile, those members might reach other agreements with other partners, which causes a never ending  competition. Such agreement will create a prerequisite for Vietnamese enterprises to enter a fair playground where discrimination treatment no longer exists.

However, Vietnam is clearly benefiting from tax reduction and tariff policies as it is fresh to the international integration. Vietnam’s seafood export turn-over  will rise.

But according to some experts, the turnover increase does not mean that it would bring more interests, since agreements will boost trading so that partners of Vietnam will deeply penetrate into its economy and has a role to play in the local market. If Vietnamese enterprises take the initiative for the input of the traditional product Tra fish but gain low profit, it means the integration fails to achieve its high efficiency. Furthermore, if farmers have to import fingerlings or feed, they will earn low profit.

As for glazing matter, Vietnamese enterprises have been struggling to meet requirements on the glazing rates (glazing water over total weight) of exported Tra fish which must comply with regulations of the importers. In other cases, glazing water must be less than 10%, or water content does not exceed 83% of the net weight of the product (total weight of Tra fish fillet after removal of glazing layer).

Researchers perceive that advanced technology has been slowly applied on Tra fish in years; while the shrimp industry has seen more foreign participation in the cultivation and export.

Tra fish enterprises and farmers should team up to build a trade mark and credibility of this product on the basis of the new science and technology research and modern business principles.

Many experts and traders hold that the Tra fish industry is dominated by Vietnamese companies (with 90% market share), therefore they should build technology, standards, trademark, and product diversification to customers’ taste. Comparied to imported white meat fishes or tilapia, Vietnam’s Tra fish has not been widely advertised and suitable standards and trademark not built over the past 20 years, and this holds back Tra fish development.

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It is viewed by retailers as an additional assurance that the products they are sourcing are safe to eat, respect animal health and welfare and have minimal negative impacts on the environment and society. We at GAA believe at the farm level there are many benefits associated with responsible aquaculture practices such as higher survivability of each grow-out cycle or the need for less therapeutants because of a well-documented animal health and welfare plan.We will be working to help Pangasius farmers identify a business case for responsible practices through training in conjunction with the Viet Nam PangasiusAssociation (VNPA). Additionally, the Global Aquaculture Alliance has is piloting group certification and just initiated the iBAP program to help small farmers achieve Best Aquaculture Practices (BAP) certification.

Traceability helps manage product flows effectively – Photo: Ngoc Trinh

3^rd party certification as a pre-requisite is now the norm with many retailers, however bear in mind certification only facilitates it does not guarantee market access. BAP or other 3^rd party certifications are just one of the factors retailers consider when sourcing product. Quality is another critical factor.

Farms meeting VietGAP regulations will be well positioned to pursue BAP certification as they will have a much better awareness of responsible aquaculture practices on an operational level. The Global Aquaculture Alliance (GAA) has signed an Memorandum of Understanding  (MoU) with the Viet Nam Pangasius Association (VNPA). As part of the MoU, GAA will provide training in jointly with VNPA to help Pangasius farms build upon VietGAP and incorporate the addition responsible practices necessary for BAP certification.

Sustainability needs to be defined first. For our purposes let’s define it as economically viable along with minimal negative environmental and social impacts. We have heard that perhaps approximately 20% of the Pangasius sector in Vietnam is 3^rd party certified. This leaves 80% without 3^rd party certification. We have much work to do reduce the potential for disease and the negative cumulative impacts of the Pangasius sector. This will necessitate including the remaining 80% of non-certified farms. GAA welcomes VietGAP as a positive development to build a foundation of responsible practices for the entire Pangasius industry in Vietnam. We are looking forward to working closely with VNPA to engage this 80% and build uppon VietGAP to achieve BAP certification. On an economic level, 3rd party certification schemes such as BAP help facilitate market access which contributes to economic sustainability. Thus economic sustainability is dependent upon building market demand for safe, environmentally and socially responsible quality Pangasiusproducts.

The intention of Decree 36 is to help improve the image of Pangasius in the marketplace, which is a right action. The BAP certification program assists in creating a positive image through stringent food safety, animal health and welfare, environmental and social standards for feed mills, hatcheries, farms and processing plants. Furthermore, the use of additives is strictly addressed as a food safety issue in BAP standards. The entire Vietnamese Pangasius sector will need to address both to improve the overall image of Pangasius.

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Dong Thap Province has the largest Tra fish farming area in the Mekong Delta. According to the decision on Tra fish planning of the Minister of Agriculture and Rural Development dated September 11, 2014, the surface water of Dong Thap will be 1,500 hectares in 2015 with a yield reaching 370,000 tons; and 2,000 hectares with 500,000 tons by 2020.

However, the data by the Dong Thap Department of Industry and Trade showed that the total Tra fish farming area was 2,036 hectares with a yield of 373,232 tons at the end of last year. These figures are obviously higher than what are planned for 2020 in area and yield. Additionally, in all farming area in 2014, 930 hectares of them was planned, occupying nearly 45.7% of the total area, reports the department.

An inspection team of the Standing board of the People’s Council of Dong Thap Province came to check how the public land of some districts were used and managed at the end of March 2015. They discovered it was quite common that the land was leased for Tra fish cultivation outside the planning. The case was observed in Tan Cong commune, Tam Nong district, with 270 hectares and in Cao Lanh, nearly 300 hectares.

The Dong Thap Department of Industry and Trade predicted this will lead to the unstable quality, prices and supply of materials.

Short of capital for closed farming system is a main problem – Photo: Le Hoang Vu

Many farmers have not reared Tra fish by themselves but cooperated with enterprises and farms. Some Tra fish exporting and processing enterprises teamed up with farmers to ensure the sale, and some built their own farming areas. Many enterprises do have the feed processing facilities for Tra fish, and they are developing the close system from production to exporting and processing in order to enhance their competitiveness and benefits. This movement is giving a push for the Tra fish industry to overcome the spontaneity; and on the other hand causing pressure for planning adjustment.

The People’s Committee of Dong Thap province’s Tan Hong district last year asked the provincial Department of Agriculture and Rural Development to make the planning on another 36 hectares of Tra fish farming area of Hung Ca Limited Company in a written document. These include two farming areas in Tan Cong Chi and Tan Ho Co communes where the ponds have already been constructed but over a half of them had not been converted from rice planting to aquaculture.

Enterprises cry short of capital

The close production system requires a great amount of money, while many enterprises are not developed, and this leads to a shortage of capital. Quite a few enterprises are suffering from bad debts, failing to find out business options and access loans from banks. This pushes their business to a nominal operation or even suspension.

According to the Dong Thap branch of the State Bank of Vietnam, as many as 2,018 farmers applied for loans in 2011, and only 1,326 in 2014, a decrease of  34.3%. Meanwhile, the number of enterprises making loans remained at 32. The total funding for Tra fish farming and processing in 2014 saw a 2.4-fold surge against 2011.

Dong Thap Province recorded a Tra fish export turn-over of 541 million USD in 2014, increasing 13% against the 475 million USD in 2011. Obviously, the rise in export turn-over was not correlative to the cultivation investment fund, which was mainly attributed to the ineffectiveness of processing enterprises. Only 40 percent of their capacity was used in 2011, reports the Department of Industry and Trade; and it reached only 50.85% in 2014. In all the 20 processing enterprises, nine had used 19.42 percent of their capacity by the end of 2014 and became weaker. Farmers and enterprises have been struggling in applying for loans and clearing debts since 2012 while the bad debts rose, remarks the Dong Thap branch of the State Bank of Vietnam. Furthermore, more sale contracts between enterprises and farmers have been broken.

It is incentive for Tra fish production to be switched from farmers to enterprises but the implementation is not smooth in deed. There will be many difficulties in planning, so both enterprises and farmers have to overcome tough hindrance and challenges of capability, psychology, and management. Clearly, the planning will not be carried out in a voluntary manner. In spite of approval, it is a long way to achieve the spectacular result.

Some enterprises exit the dependence on Tra fish material – Photo: Gia Bao       

Rays of hope

Commercial banks granted Hung Ca Limited Company in Dong Thap and Thuan An Trading Service Production Company in An Giang loans in accordance with the Tra fish value chain in the middle of 2014. This move was a test to resolve difficulties in raising funds for the Tra fish industry. Hung Ca received a loan worth 1.401.45 trillion VND by the end of last year, and Thuan An 235 billion VND.

Hung Ca and Tra fish farmers entered into two kinds of contract: grouping agreements and three-party contracts with the latter performed by Hung Ca, farmers, and the feed enterprises. In this way, the farmers were provided with sufficient feed and made payment after the harvest. Hung Ca bought all of the Tra fish material at the market price. With the grouping agreements, Hung Ca invested into ponds and covered all the expenses and technique, while the farmers focused on cultivation and the benefit would be divided as agreed upon.

As for the three-party contracts, Hung Ca teamed up with 20 farmers with an annual interest predicted over 1 billion VND. In the grouping agreements, Hung Ca cooperated with 306 farming households, each earned more than 400 million VND annually. By the end of last year, the company paid over 355 billion VND of its debts.

The banks remarks that the biggest benefit is that farmers do not have to worry about investment for the fries, feed, veterinary medicine, and that the sale of their fish is ensured by enterprises. This helps boost the development of the rural area in a more dynamic and sustainable way.

The planning will be promoted to improve the Tra fish quality should enterprises and farmers cooperate closely for mutual benefit. According to the survey of the local Industry and Trade office, most of the farming areas owned by enterprises are working well and easily enabled for science and technique application in aquaculture. The facilities are invested synchronously so that the farming areas will meet VietGAP, GlobalGAP, and ASC standards.

However, Mekong Delta authorities recommend enhancing the association and cooperation so that the planning will be made successfully. As stipulated in Decree 36, the Vietnam Tra Fish Association is playing its initial role as a bridge to connect the factors of the Tra fish value chain. Once the planning is done well and aquaculture and processing linked closely, it will be a basis for the modern industrial zone of Tra fish production to be founded.

The post Difficulties in Tra fish planning appeared first on 007win.com Uy tín Chất lượng An toàn Bảo mật.

Tra fries mainly come from Dong Thap, An Giang and Tien Giang provinces and Can Tho city in the Mekong delta with sufficient quantity but low quality. The price has dropped and fluctuated recently, so incubation and cultivation facilities have not been upsized yet. Scattered production makes it difficult to control the quality.

Most of the Tra fries have been produced and provided spontaneously in the delta in the absence of a comprehensive development. The quality of Tra fries has seen a fall over the past few years (high rates of deformity and survival, undergrowth, vulnerability to diseases). Besides, there is no difference in the prices of genetically improved and local baby fish. Farmers, therefore, do hesitate in investing into proper incubation of the genetically improved baby fish. Most of the facilities ignore the standard production system for immediate benefit (such as fatten performance, gonadotropic hormone abuse, unselected fish broodstock, unsuitable spawning size…)

Incomplete farming technologies

It is quite normal for every farming household to find tens of fish dead in the intensive farming ponds on a daily basis. However in these years, farmers built deeper ponds with a higher stocking density while lower-quality fries and outdated farming technologies have caused higher rates of mortality, diseases and antibiotic use. As a result, the production cost rose while the food hygiene and safety were poorly controlled.

Farmer Nguyen Van Doi in Tan Phong commune, Cai Lay district (Tien Giang province) said that the price of veterinary medicine for Tra fish is now topping 1,000 dong per kilogram against 600 dong a few years ago. Farmers who are short of experience and technology suffer heavy losses as their production cost rose to 23,000 – 24,000 dong per kilogram.

Many diseases cause damage to Tra fish, but ways to prevent and cure them remain an unanswered question to scientists, and this hikes production cost for incubation and veterinary medicine while lowering the effectiveness of feed usage.

Tra fry quality management needs to be tightened – Photo: Le Hoang

Vice President of the Tien Giang Fisheries Society Phan Huu Hoi said intensive Tra fish farmers often buy cheap fries with low traceability and without careful examination. Fish are stocked at a high density, such as 100 per square meter, with a calculation in mind that some of them will die and this will reach a suitable rate when harvest comes. The ponds, as a result, become unmanageable and environment polluted, causing diseases outbreak, leading to a high production cost. Almost all farmers do not build treating ponds, and disposed water directly goes to the surface sources, bringing the pathogen to the ponds.

First step

Low quality of baby Tra fish and outdated technology push up the farming cost, reduce the efficiency, and cause negative impact on the whole production chain and sustainability of Vietnam’s Tra fish industry. Truong Thi Le Khanh, Chairwoman of the Board of Directors of Vinh Hoan JSC, one of the leading Tra fish producers and exporters, said improvement of the quality of fries and advanced technology application is the first step in Tra fish restructuring.

In her opinion, the implementation of a project to improve the quality of the parent fish by means of genetics selection by the Ministry of Agriculture and Rural Development (MARD) is extremely necessary, and this must be carried out on a long-term basis, not in a short-term manner as it is now. The quality and traceability of fries are hard to control as they are bought from various farmers and facilities. Provincial authorities should reserve some land, build facilities, and work out policies on rental fee exemption and tax preference to encourage skillful farmers to rent for fingerling nurseries. As a result, enterprises can buy qualified fries without antibiotics at reasonable prices and farmers get benefits from their work. This is also a basis for enterprises to advertise the safe nursery system. An other noteworthy point is that the standard for fries has not been set up by the Government.

MARD should work with enterprises to increase the farming density to over 40 fries per square meters and apply advanced technologies to increase the yield and effectiveness. Meanwhile the feed quality and cultivation technique should be improved in order to reduce the FCR to 0.2 (under 0.2 kilogram of feed for one kilogram of fish). As much as 100 million USD will be save should the FCR reaches 0.2.

Associate Professor and Doctor Do Thi Thanh Huong (Aquaculture Faculty of Can Tho University) said that intensive ponds now stand at 4 – 4.5m in depth with a density of around 100 fish per square metre, and yet the water change is done partly in accordance with tidal changes. Tra fish live mainly in the surface water (0.5m), that is why the oxygen deficiency at rush hour (2 – 9h) or at deeper water layers is unavoidable. Once the dissolved oxygen level is low, fish must swim up and get oxygen at the surface water, where they lose their energy and growth rate. Farmers, therefore, should install air bubbling systems in the water increase the oxygen level, reduce the toxic gas discharge, energy waste and stress, improve growth rate, increase farming density, yield and feed efficiency.

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