REVIEW OF THE FISHERIES SUPPLY CHAIN IN VIET NAM

REVIEW OF THE FISHERIES SUPPLY CHAIN IN VIET NAM

Vietnam Institute of Fisheries Economics and Planning

REVIEW OF THE FISHERIES SUPPLY CHAIN

IN VIET NAM (draft version)

Report for the project:

“Reforming trade and fisheries policies, re-shaping supply chains and enhancing

consumer demand for sustainable fisheries management”

Component: Subsides & Access agreement

By Pham Thi Hong Van

December 2008

TABLE OF CONTENT

LIST OF ABBREVIATIONS 3

PREFACE 5

I DEFINITION OF THE SUPPLY CHAIN 7

II THE SUPPLY CHAIN OF CAPTURE FISHERIES PRODUCTS 9

2.1 The chart for the supply chain of capture fisheries products and the roles of relevant stakeholders 9

2.2 Benefits and conflicts between relevant stakeholders 18

2.3 Analyze some typical cases 25

2.4 Efficiency and competitiveness of fisheries supply chain 35

III SOLUTIONS FOR IMPROVING SUPPLY CHAIN TO STRENGTHEN COMPETITIVENESS AND SUSTAINABLE DEVELOPMENT 38

3.1 Increasing efficiency and competitiveness of fishing operation phase 38

3.2 Increasing efficiency and competitiveness of fish processing phase 39

3.3 Developing service models 40

3.4 Promoting activities in ensuring consumer right 40

3.5 Promoting management activities and adjustment of government in supply chain of capture products 41

3.6 Promoting communicated atctivities, improving awareness on commercial barriers, food safety and hygiene, product labeled, sustainable product cerification,

for all stakeholders participating in supply chain of marine products including consumers 42

CONCLUSIONS AND SUGGESTIONS 43

REFERENCES 44

LIST OF ABBREVIATIONS

MARD Ministry of Agriculture and Rural

Development

DANIDA Danish International Development AgencyVIFEP Vietnam Institute of Fisheries Economics

and Planning

Executive sumary

Vietnam fisheries characterized by small-scale fisheries with estimatesabout 80% of fishing fleet and catch The report provides the overview offisheries supply chain in Vietnam with the focus given to the case study

of anchovy, and squid in Binh Thuan province The analysis emphasize onnature of supply chain, strengths and weakness of the chain as well as therecommendations for improvement of the chain by enhancing thecollaboration/cooperation not only among small-scale fisheries but alsoamong producers-middle-men and processors The report also indicatesthat the middle-men are the most benefited and lowest risk burden actors

in the chain but indispensable To improve the chain, under the context ofsmall-scale fisheries it not mean the interventions of government shouldeliminate the middle-men just due to its exploitation to the fishers, but thereform policies should be provide toward the fact that facilitating thesupply chain function more efficient by provide market information andservices to improve the food safety and sustainability of the supply chainfor better practices

Consumption is an important link in the production process.Through consumption, the PRODUCTS are converted into MONEY andcreate PROFITS for producers, processing companies and traders

Due to the typical characteristics of the fisheries products andfisheries production in Viet Nam, especially the characteristics of thefisheries products such as the fresh, easy to be rotted; the products arecatched in the offshore areas; the production and trading are small scale,

in the forms of family scale Therefore, the fisheries sector in general andthe capture fisheries sub-sector in particular are the economic sector,which have diverse and effervescent markets for product trading Themarketing of fisheries products also have to go through several links andhave attributes of perfect markets

Due to the importance of the fisheries sector in supplying foods forpeople and balance the trading between the import and export, theGovernment of Vietnam has paid a lot of attentions on maintain thesustainable development of the fisheries sector However, so far, thefisheries markets have not operated in the synchronized system, theproduct price is not stable and in many cases, the price shows the “false”attribute, creating significantly negative impacts on the economiceffectiveness of the fisheries production producers and consumers Thecontinuous research on innovation of the trading policies and productionpolicies in fisheries development is very essential in order to develop thesustainable development of the sector With the supports from UNEP, theRESEARCH project on “Reforming trade and fisheries policies, re-shaping supply chains and enhancing consumer demand for sustainablefisheries development” is implemented for that purpose

The thematic report of “Assessing the fisheries supply chains inViet Nam” within the framework of this research project focuses on theassessment of the supply chain of fisheries products This thematic report

is compiled in order to present the fisheries supply chain, based onanalyzing and assessing the relevant stakeholders in the supply chain andinitiate the solutions for improving that supply chain in order to improvethe competition ability and sustainable development of the fisheriessector

The fisheries supply chain have to include the flow of both thecapture fisheries products and aquaculture products The capture fisheriesproducts have to include the marine fishing products and inland fishingproducts, from production to trading and processing as well as final

consumption at both international and domestics markets However, thescope of this thematic research is limited within the analysis of supplychain of marine fishing products and only analyse and assess the supplychain for the marine fishing products at the final comsumption phase withboth domestic and export products.

To conduct this research, the following basic study methodologieshave been applied:

- Mongraph method

- The consultation method

- The typical survey and investigation methods

- Stakeholders analysis method

- The descrition analysis method

This thematic report contains the main following sections:

I The definition of the supply chaiṇ

II The supply chain of marine fishing products

2.1 The chart of the supply chain for marine fishing productsand the roles of relevant stakeholders

2.2 Benefits and conflicts between relevant stakeholders

2.3 Analyse some typical cases:

- The supply chain of frozen squid

- The supply chain of anchovy

2.4 The efficiency and competitive attributes of fisheriesproducts

III The solutions to improve the supply chain in order to improvethe competition and sustainable development

Conclusions and recommendations

I DEFINITION OF THE SUPPLY CHAIN

A supply chain or logistics network is the system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer Supply chain activities transform natural resources, raw materials and components into

a finished product that is delivered to the end customer In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable

contributions to satisfy their customers

The supply chain with cooperation from all producers in the supplychain in order to ensure that there are no value losses in the case that onelink may work improperly or weakly in this chain

The supply chain is an alliance between the parts of vertical linking

to reach to the better positions on the market The cooperation producesvalues and reduces costs The customers need to direct to the supplychain as the customers require their specific standards The companies inthe supply chain are independent with each other in terms of legal

framework, but become dependant with each other as they have theirgeneral objectives and work to reach those objectives They work witheach other for a long time and discuss and solve their problems together.This is more than long term contracts.

The changes in agriculture in the last decades have shown that thevertical integration in the agriculture is essential for the economicsuccesses Another reason is the increase in the demand for the fulltraceability of the products Developing the supply chain is a method toget the vertical integration in order to combine several individual links towork together to reach the common objectives through the cooperationand dependence with each other while maintaining their independence.The common objectives will maximize the values of all parts in thesupply chain

One supply chain with the fully vertical integration will improvequality, increase effectiveness, and allow creating different products andincreasing profits The main benefits of the supply chain include solemarketing opportunities and the insurance for stable markets as well asopportunities to create higher values from one common market in order tooppose / against the global competition and improve the ability to managerisks

It is ambitous to have in depth analyze and assess the supply chain

of all Vietnamese fisheries within this short research Therefore, thisresearch will assess the supply chain of the marine fisheries products andrelevant stakeholders through analyzing and assessing the fluctuation ofthe product prices and relevant stakeholders

II THE SUPPLY CHAIN OF CAPTURE FISHERIES

PRODUCTS

2.1 The chart for the supply chain of capture fisheries

products and the roles of relevant stakeholders

The typical characteristics of the Vietnamese fisheries sector are

still small scale and being modernized with the participation of several

economic entities, so that the markets for fisheries products in general

and wild fish products in particular are very diverse and effervescent

If only consider the flows of products from fishers to the final-end

comsumers, the values of the fisheries products are increased at several

middle phases, the chart of the supply chain for the marine fishing

products are presented as follows:

THE CHART FOR THE SUPPLY CHAIN OF THE CAPTURE

FISHERIES PRODUCTS

As the characteristics of the Vietnamese fisheries sector are

multi-species and have a short growth cycle, the multi-species catched in one haul

often quite diverse, except some typical fisheries (such as anchovy

gillnet, ) Therefore, normally allmost all the marine fishing vessels havetheir processed products or fresh products to the end customers The

Producers/

fishers Distributors Processors Distributors

end

Final-consumers Distributors

Processors Distributors

middle traders also have multi functions and have to go through severallevels While the supply chain of the non-processed products iscomplicated, the supply chain of the processed products is even moresotisphycated than that The middle traders (except the retailers) oftenpurchase the non-processed products and processed products In order tomake the chart of the supply chain of the marine products become easierand easy to monitor its changes, the supply chain is divided into threephases:

(1) The values of products in the fishing production phase

(2) The values of products in the middle phase: the product values

of middle products will include the values of processedproducts and non-processed products

(3) The values of products at the consumption phase

2.1.1 The products flow in the fisheries production phase and relevant stakeholders

In order to understand clearly the relevant stakeholders in settingvalues for fisheries products in fishing production phase, it is necessary toknow some typical forms in organizing marine fishing production Themarine fishing has the participation of several economic components,including households, cooperatives and enterprises Each economicentities has several forms of production and supply: only conducts thefishing activities, or doing both fishing activities and processingactivities The prices of capture seafood are set by the two parties: sellersand buyers

The sellers may be:

(1) Vessel owners: including two categories:

+ The vessel owners are also fishers: this is small scale fishers–scale, the vessel owners hire some labours to go with them on board andthey decide how to sell their products by themselves

+ The vessel owners are not fishers: this is the enterprises scale,each owner has several vessels, the owners hire the captain and fishers to

go fishing The owner will decide how to sell their products

(2) Vessel owners are fishers: there are two categories:

+ In the case that the marine fishing enterprises, who are household– scale, have capital contributions from their shareholders for equipmentpurchasing The owners and shareholders go fishing and decide how tosell their products together

+ Fishing cooperatives with contract for the fishing vessel team:The vessels and their equipments are belonged to the cooperatives butfishing activitires are given to the fishing feets members , the operationalcosts for fishing and product selling are responsibilities of the fishingvessel team who hire the vessels from the cooperatives by contract Themarine fishing vessel renters have responsibilities to payback their rentsfor the fishing cooperatives.

(3) The cooperative manager board: the fishing cooperatives often

have manager board, who are elected by the cooperative members andrepresent for all members The manager board decides all the activities ofthe cooperative All the vessels, equipments and operation costs for onefishing boat trip are borne by the cooperative, the fishers sailors onlyhave responsibilities to operate the fishing activities The product selling

is decided by th cooperative manager board

(4) The middle men (nau vua 1 in Vietnamese): Middle men is a

person or enterprises, who buy or sell the fishing products as a bridgebetween the fishers and the other middle trading parties or processingplants The middle men may invest capitals for the vessel owners or they

have their own vessels and processing plants (ALMRV project – Research

on middle men, 2005)

The buyers may be:

(1) The consumers: direct selling of catch from fishers to the endconsumers is not common in Vietnamese fisheries for export purposes,but often associated with the fishing products catched by the small engineboats, which land on local small landing sites Those boats have a part oftheir products sold to the local poeple in the hamlets near the landingsites

(2) The retailers: direct selling of catch from fishers to the endconsumers is not common either, but often associated with the fishingproducts catched by the small engine boats, which land on local smalllanding sites Those boats have a part of their products sold to the smalllocal traders and then those traders sell products to the local markets(commune or district level)

(3) The wholesalers: they are categorised in different forms withdifferent scales of activities:

+ The small scale wholesaler: there are a number of wholesalersproviding products for the retailers and restaurants They are middletraders, who have small trading shops at the markets They often havefinancial relationship with the vessel owners as well as their customers

1 Local name of middle men

+ The wholesalers, who are primary middle men: they are people,who have direct relationship in buying products of the fishers and thentransfer to the other buyers, but mainly transfer to the secondary middlemen (inside or outside their province) and processing companies.

(4) Processing companies: Nomarlly the processing companies alsoask their staff to the fishing ports or local landing sites to purchasematerials directly from the vessel owners in order to reduce their costs ofmaterials compare to buy through several levels of middle men

(5) The cooperatives for marine fishing marketing services: thesecooperatives provide necessary services for marine fishing activities such

as buying fishing products at the sea (instead of landing sites or fishingports) Those cooperatives have functions as primary middle men, butthe investment capitals are contributed from a group of members

The product values are determized through the product prices Atthe fishing production phase, those values are set through the mutualagreement between the vessel owners and buyers, including the vesselowners, who have financial relationship with the middle men (such asborrow loans, equipment investment, get the operation costs in advancefor a sea trip…) The products prices are set under these ways:

a) Packages trading of fishing products:

The vessel owners sell all their products to the buyers (bothcategorized and uncategorized products) with the agreed prices, whichwere set at the time of product delivery The payment is doneimmediately in the cases of irregular buyers, small scale and scattered Inthe cases that the buyers are regular customers (e.g middle men andcooperatives) the payment will be done after about 7 – 10 days

b) Selling fishing products through middle men: The middle menare middle mediators between the vessel owners and the buyers (whohave demands for the product buying) The middle men are responsible toreach the price agreement between the vessel owners and the buyers, usetheir prestige to pay for the successful deals to the vessel owners Afterreal payment completed, those middle men will enjoy a part ofcommissions from the product prices, about 100 – 1,000 – 3,000 VND/kg

2of products, depending on the high or low purchased prices Sellingproducts through middle men have two forms:

b.1 The relevant parties without financial relationship: for theproducts that are limited supply, the middle men reduce the amount ofcommissions that the vessel owners get back (in comparison with themarket prices) With the products that are over – supply, the middle men

2 17,480 VND =1 USD at reporting exchange rate

only purchased when the vessel owners run out of products and increasethe amount of commissions (in comparison with the market prices).

b.2 The relevant parties with financial relationship: the amount ofcommissions will be set according to the markets’ prices If the vesselowners, who have financial relationship with the middle men, find out themarkets / buyers to sell their products with higher prices, they can stillsell their products to that strange markets / buyers However, in thesecases, the vessel owners still have to pay the same amount of thecommissions for the middle men, who have financial relationship withthem

However, the price agreement here has relative meaning since thefisheries products characterised of to be easy to be rotted and quickly getrotten as well as the seasonal products In addition, the storage equipment

on the boats is rudimentary, so that the products can not be stored forlong time after landed This means that the vessel owners are often losers

in the price setting agreement, especially at the main fishing seasons orthe times that many vessels landed at the same time with mass

productions This is a crucial issue that requires the proper macro mechanisms from the government in order to reduce the risks for the vessel owners and fishers, who directly invested in marine fishing operation.

In addition, there are several channgeles asscoaited with exsiting supply chain

of seafood in Vietnam 1> Poor cooperation between stakeholders among the supply chain before and under the present financial crisis; middle-men and processing/exporting enterprises are the most benefited group (see the analysis

of value chain) reported by the fishers and government officers 2> Fishers, middle-men, fishing ports/landing sites are almost have poor concern about the resources and environmental aspects and traceability of the products; profits, prices and market are the most concern of these groups among supply chain 3> Processing plants, exporters and consumers concern a lot on the quality of the seafood products but they cannot influence through the existing supply chain which considered no one manage the supply chain and no one ensure the traceability of seafood

The food safety issue is an urgent issue that need to be mentioned

in this period As the storage equipment is rudimentary, the input costsare increased rapidly, while the prices of output products increase slowly,the revenues may not compensate for the input prices On the other hand,

as the processing factories are not difficult when buying materials, thevessel owners often use the cheap and low quality chemicals andmedicines to maintain the fresh products, ignore the regulations on foodsafety

Besides that, the issues of traceability and certification forsustainable products of marine fishing are very difficult to implementedunder the current supply chain, except the fishing products of mollusk

species, which distribute concentrated and less or un-migrated such asclam, scallop…

2.1.2 The product flow in the immediate trading phase and relevant stakeholders

The values of marine fishing products in the middle stages oftrading, including the processing phase are the most fluctuated andcomplicated In this satge, any parties involved in will conduct twofunctions of buying and selling and their activities are very diverse.According to the chart of the supply chain of marine fishing products, theinvolved parties may be categorized as the follows:

(1) The wholesalers, includes:

The small scale wholesalers: they are middle traders for marine

fishing products They have relationships with many relevant parties such

as vessel owners, retailers, middle men, processing companies, but they

do not have relationships with the consumers These small scalewholesalers purchase the production of the vessel owners and middle menand then sell those products to the retailers and processing companies

The middle men at different levels: The primary middle men, who

often have their shops or facilities at the fishing ports or landing sites, arethe direct buyers, who buy products directly from the vessel owners orengage in fishing by themselves The primary middle men have veryclose relationship with the secondary middle men, who often own shops

or facilities in the big cities The secondary middle men often have closerelationship with the primary middle men in order to get easy to buyfishing products They also have close relationship with the small scaletraders, who trade the fresh products as well as the processing plants inorder to get easy to market their products

(2) Hotels and restaurants: The system of hotels and restaurants is

an important immediate parties in trading seafood to the end consumerswith both processed and non- processed products The hotels andrestaurants mainly have relationships with the small scale seafood traders

in order to buy products with both processed and non- processed products

to serve their customers

(3) The processing companies and system of processed productconsumption (companies, agents, wholesalers, detailers, hotels andrestaurants…) are also an important immediate parties in the supply chain

of the seafood The rate of marine fishing products, which are put in theprocessing factories to increase the value – added of the fishing products,creating more attractive products for the end consumers and meet thedemands of the markets, is increased The processing enterprises,

including frozen processing, dry processing, fish source processing,processing for export and domestic consumptions all are places topurchase a huge amount of the marine fishing products to provide theinput materials for processed products In order to purchase the inputmaterials, the processing enterprises set trading relationships with themiddle men, vessel owners and smaller traders After the process ofdevelopment to increase the value – added for the marine fishingproducts, the system of marketing for marine fishing processed productsbecome diverse and dynamic as the one of the fresh fisheries products Inthis system, the middle men do not have an important role as in theproduction phases, but several relevant parties have appeared and becomeimportant parties in the marketing system They are a system of fisheriescompanies, who trade processed products; and agents as well ascompanies, who import fisheries products from foreign countries

(4) For the dried fisheries processed products, there are stillexistences of the system of middle men, who trade the dried fisheriesprocessed products for domestic and export markets The system ofwholesale and detail trading of fisheries processed products is still existed

in order to supply goods to supermarkets, restaurants, hotels and schools,

… They are system of trading fisheries products to the end foreign anddomestic consumers

(5) The marine fisheries service cooperatives: The fisheries servicecooperatives in this stage also have the same role with the one of the firstclass middle men They purchase marine fishing products and then sell tothe processing companies and also to other middle men

(6) The retailers: normally the retailers are the final middle traders,who transfer the goods to the end consumers In the supply chain of themarine fishing products, as the marine fishing have characteristics ofsmall – scale and “fisheries for people”, the retailers may be the primarytraders to transfer products to the end consumers Here, the retailers may

be categorized into three groups depending their positions in the tradingsystem: (a) The group of direct trading products from the vessel owners

to the end consumers; (2) the group of trading fresh seafood from theother traders to the end consumers; (3) the group of transfer processedproducts from the other traders and the agents of processed seafood to theend consumers

The prices of seafood in this immediate phase of trading is morerelatively stable than the ones in the production phase in terms of timeand prices The product prices in these cases are agreed through phonenegociation; the costs of transportation are borne by the sellers; thepayment will be made after 7 - 10 days of trading, even after 15 days in

the cases that the purchased products are fresh or as input materials forprocessing companies; even after 15 – 30 days in the cases that thepurchased products are processed and for export.

In this stage, the buyers are also sellers They have sufficient andbetter information on markets, so that they get less risk than the vesselowners and the primary middle men in the production stages Currently,this stage of trading is total dominated by the private parties, only a smallpart is managed by the fisheries cooperatives There are alomost nosupport from the government in this stage, except some limitted trainingcourses and communications on food safety issues and environmentprotection

This stage also gets risks on food safety issue As the purpose ofstoring fresh products, the processing companies lack equipment tocontrol the material quality and the traceability for the products is notconducted properly, the food safety issues are still existed and createnegative impacts on the consumers In the trend of global integration,with more strict requirements on food safety, the unsolved problems infood safety insurance, traceability and certification for marine fishingproducts will effect directly to the economic efficiency and prestige of themarine fishing production phase – an important link in the supply chain,which create motivations for marine fisheries economy developement

Currently, the labelling issues of the seafood products are gettingpaid much attention in this phase, especially with the processed fisheriesproducts of processing companies However, this is a big challenge formarine fishing products in both domestic and foreign markets This isalso an issue impacting significantly the competition ability of marinefishing products in the context of global integration

2.1.3 The supply product to the end consumers

The end consumers of marine fishing products include bothdomestic and foreign consumers In the scope of this research, asmentioned above, we only focuses on analyzing and assessing the supplychain of marine fishing products to the end consumers for the domesticconsumption products and to importers for the export products

Go through many phases in the supply chain of the marine fishingproducts, these marine fishing products are consumed by the endconsumers by various ways They may be divided into two groups asfollows:

(1) Non – processed products (group 1): the product values of thenon – processed products in the immediate trading stage is not added, butmaintained or reduced However, the prices of those non – processed

products are increased regularly through each trading stage as the cost ofstorage and preservation as well as the costs of transportation for thoseproducts The group of non – processed products, which goes to the endconsumers or importers, includes products for domestic and foreignconsumption.

The non – processed products, which are consumed domestically

normally go to the end consumers from the retailers, small scale agents,supermarkets, restaurants, hotels, schools; only a few products from smallscale vessel owners, who fishing in the near shore areas The prices ofproducts at the end consumption phase depend on the distance of producttransportation, the number of immediate trading stages and the values ofthe products These prices are mainly decided by the sellers Theconsumers often accept the prices that are set by the sellers Theconsumers only influence the product prices once those prices increasedtoo high, exceeding their level of expenditure power In that case, theconsumers will limit their expenditure and at the macro level of theeconomy, the consumers may influence the product prices to limit theprice increase or decrease The product prices once go through onemiddle trading stage such as the retailers, normally increased at least by10%

The non – processed products, which are exported to foreign countries normally go to the importers through the unofficial export

channels (small volume channels) The non – processed products go tothe importers mainly from the wholesale traders, only small amount ofproducts go directly from the vessel owners through the ways of directpurchases right on the sea The prices of products sold to the importersare normally decided by the importers

(2) Processed products (group 2): With the processed products,their values are added through processed and due to the transportationand trading costs, their prices are also increased significantly at eachstage of processing and trading The group of processed products, whichgoes to the end consumers or importers, includes products for domesticand foreign consumption

The processed products, which are consumed domestically

normally reach the end consumers from the detailers, small scale agents,supermarkets, restaurants, hotels and schools The prices of products atthe end consumption stage depend on the values of the processedproducts (quality and category of the products), distance of producttransportation and the number of middle trading stages These prices arealso mainly decided by the sellers The consumers often accept the pricesthat are set by the sellers The consumers only influence the product

prices once those prices increased too high, exceeding their level ofexpenditure power In that case, the consumers will limit theirexpenditure and at the macro level of the economy, the consumers mayinfluence the product prices to limit the price increase or decrease

The processed products, which are exported to foreign countries

normally reach the importers from the processing companies/plants andfisheries exporters (direct export), some products from the fisheriesexport companies or entrusted export companies The dried seafoodproducts sold to the importers by the middle men, who collect productsfor drying to export The middle men have to use their prestige in tradingand discuss the prices between the dry processing companies with theimporters The prices of processed products sold to the importers arenormally decided by the importers However, the powers of the importersfor price setting for the processed marine fishing products are not asstrong as the non – processed export marine fishing products This isexplained as the processed products may be stored in a longer time incomparison with the non – processed products In addition, the demandsfor the processed products are increasing; therefore, the processingcompanies and middle men have advantages in getting price agreementwith the importers

2.2 Benefits and conflicts between relevant stakeholders

- The vessel owners :

The above analyses have focused on the less advantage of themarine fishers such as the vessel owners in setting the product prices forthe marine products A majority of normal marine fishers, who do nottake part in trading fishing products, enjoys the least amount of profitsand have the least amount of accumulated capitals from selling theirproducts They are easy to get risks from natural calamities, limitedresources and the market fluctuation They are the most vulnerable partyfrom those threats In addition, they do not have much accumulatedcapitals, so that they normally have to borrow loans from the middle men

to continue their production and then become dependant on the middlemen easily

For the vessel owners, who do not have to borrow loans from themiddle men, they still have to depend on the middle men in marketingtheir products A majority of the vessel owners can not sell their productsdirectly to the customers as they are not familiar with making deal, poorcompetent in trading and do not have frequent customers In addition, asthe marine products are diverse, the vessel owners can not categorizetheir products right on their vessels, while their customers only buy theseparate products

For this, the worse sea trip for the vessel owners is the one withoutcatchs or have a few harvests In this case, the vessel owners will getlosses as they have to bear the costs for the sea trip In other cases, thevessel owners are successful to catch a huge amount of products, but theyare still worry on marketing those products They may not sell all theircatches as the supply exceeding the demands during the main fishingseasons, most boats fish similar species at the same time, same fishingground In that case, due to poor facilities for storing, the marine fishingproducts can not be stored and even when they are sold with low prices,the vessel owners still get losses (revenues can not compensate for costs).

The following parties may get direct influences from the economicefficiency of the fishing production of the vessel owners:

+ The middle men: they may not get profits, but they do not have

to spend costs for the sea trip of the vessel owners, therefore, they do notsuffer from losses In fact, all the investments that the middle men spend

in the sea trips of the vessel owners are the loans that they provide to thevessel owners Therefore, the middle men only get losses when the vesselowners do not have ability to pay the loan back or the middle menabsolve the vessel owners from their debt

+ The processing companies/plants: may get benefits when theprices of input materials are low, while the contract of buying materialshas been signed in advance However, they also may get losses when theycan not buy the input materials for their production In this case, they stillhave to bear the invisible depreciations for their equipment investmentand even get penalty due to failure to fulfill the signed contract

If the vessel owners can not store and preserve their captureproducts effectively or they use the illegal chemicals to preserve theirproducts, several relevant stakeholders will be suffered such as theprocessing companies will get losses and the health of the consumers will

be effected; and in the near future this will create negative impacts on thevessel owners themselves as no body want to buy their products

+ The management agencies: will collect fees and taxes

- The middle traders (buying and selling) :

The middle traders, who get the highest amounts of benefits fromthe product trading as they suffer less risk in the supply chain of themarine fishing products The reason is that they have sufficientinformation and follow their principles: sell their products with the priceshigher than the prices they have purchased the goods However, in order

to follow this principles successfully, the middle traders have to be

dynamic and think thoroughly to follow the competitive rules of themarkets in order to get success in the trading.

Those middle traders, especially the middle men may get somefollowing risks:

+ Lost their investment capitals for the vessel owners in case thefishing production of the vessel owners is poor, the vessel owners losetheir profits or they have accidents, without ability to pay their loansback

+ Their capitals are arrogated by the other secondary middle men

or fisheries processing companies or no payments of those back to theprimary middle traders In some cases, the middle men may lose hundred

of millions VND as the outside provincial processing companies are lost

in their bussiness, so that they have no ability to pay for input materialsthey provided)

+ The vessel owners, who got the investment capitals of the middlemen, run-away from payingback In some cases, the middle men may lose

a billion VND invested in the fishing production of the vessel ownersoutside the province as those vessel owners never comback the ussualfish landing sites

+ With the middle men, who conduct the “packages trading”, may

be obliged by the secondary middle men and the processing companies toreduce the purchased prices lower than the prices that they buy theirproducts from the vessel owners This may happen in the cases that thenumber of fishing vessels landed in the port is high or the quality of theirproducts is low

The other parties (retailers, small scale traders, supermarkets,agents, restaurants, ) may also be lost in the trading However, the mainreason is that they lack experiences in bussiness or poor skills inbarganing

The persons, whose economic benefits are directly effected fromthe bussiness of the middle traders, are vessel owners, processingcompanies, domestic consumers and importers, who import freshproducts If the system of the middle traders operates properly andregularly, the markets for the products will be stable and the vesselowners and fishers can also operate stably and regularly, creating thebenefit balance between the relevant parties and will be foundations fordevelopment In contrast, if the system of the middle traders do notoperate properly and regularly, the supply chain for the marine productswill be messy The product prices may get too high or too low in

comparison with the product values in the supply and demand markets.This may make the vessel owners go bankcrupt

If the middle traders can not store and preserve their purchasedproducts effectively or they use the illegal chemicals to preserve theirproducts, several relevant stakeholders will be suffered such as theprocessing companies will get losses and the health of the consumers will

be effected; and in the near future this will create negative impacts on themiddle traders themselves as no body want to buy their products So far,many fisheries middle traders have not upgraded to become tradingcompanies or enterprises although they have wide geographical areas fordoiing bussiness (more partners) and big amount of capitals The reasonsmay be due to their traditional culture of doing business, always behave

in individual spirit Another reason may be that they do not understandthe Business Law clearly, so that they are flinch to meet difficulties andworry when conducting the accounting and financial procedures andadministration management once they become companies or enterprises

- The processing companies/plants

In the fisheries supply chain, the processing plants are the secondphase to increase the product values through their production Currently,almost all processing companies have been equitized or becomeprivatized, so that they all conduct marketing research, createrelationships with their partners and making right decisions in investment

in order to ensure the effective businesses

Through the processing phase, the product values of the marineproducts are fluctuated rapidly, seen via the signals of prices The prices

of outputs are normally increased by 2 – 3 times than the ones of inputmaterials depending on the processed products

The processing companies may get some following risks:

+ Overdue payment from buyers

+ Overdue delivery of processed products to their customers, sothat the customers may deduct their payment to the processingcompanies

+ The processed products do not meet the safety and qualityrequirements as low quality input materials Therefore, the markets do notaccept those processed products, the processing companies may lose theproduction and transportation costs

If the processing companies do not store their products properlyand conform strictly to the food safety regulations, the consumers and

importers will be effected and the processing companies may also gobankcrupt as the consumers will deny to buy their products.

The persons, whose economic benefits are directly effected fromthe bussiness of the processing companies, are vessel owners If theprocessing companies are failed, the pressure on the prices of marineproducts at the fishing production phase is higher The second party,whose economic benefits are also effected, are consumers When theprocesses products become rare, the consumers have to buy thoseproducts with higher prices

- Importers

The importers are also a parties, who get significant benefits fromthe product trading and get less risks than the middle traders They knowmarketing information and always follow the principles of the middletraders: “sell their products with the prices higher than the pusrchasedprices”

The persons, whose economic benefits are directly effected fromthe bussiness of the fisheries importers, are vessel owners and the exportprocessing companies If the importers operate regularly and effectively,this will make the marine vessel owners and export processing companiesoperate effectively and stably In contrast, if the importers failed, this willinterrupt the operation of the processing companies and vessel owners Ofwhich, the export processing companies are the parties, who are effectedthe most from the business of the importers

- The Government

Currently, the prices of the marine products are “floating” in theforms of perfect competition: there is no monopoly and intervention fromthe government The Government agencies only implement theirfunctions on state administration management to the trading andproduction activities and food safety according to the existing laws andregulations They include the ministries at the central level and theprovincial departments at the local level including Ministry of Industryand Commerce, Ministry of Agriculture and Rural Development(MARD), the General Department of Custom The Ministry ofAgriculture and Rural Development have the following agencies,responsible for its various fields:

+ Department of Fisheries Resource Protection and Exploitation: isresponsible for vessel registration, licensing and guiding the operations offisheries resource protection and exploitation; managing the infrastructuresystem, which is invested by the state budget for marine capture; guiding

and leading the activities of storm and flood prevention and avoidance forthe marine capture vessels…

+ The Department of Fisheries Product Quality Insurance andSafety: is responsible for guiding and managing the food safety issues forthe marine products and fisheries processing

+ The Department of Agriculture and Fisheries Processing andSalt: is responsible for guiding and managing the issues related to themarine capture product processing

Besides that, there are other supportive organizations underMARD, which have related to the marine fisheries management anddevelopment, including the Department of State Inspection, ResearchInstitute of Marine Fisheries (RIMF), The Vietnam Institute of FisheriesEconomics and Planning (VIFEP)

The relevant stakeholders of the Government, although do notintervene directly to the issues of setting the prices for fisheries products,they have indirect interventions on those issues via their regulations onfisheries production and trading activities

The government agencies get salaries from the State budget; theassociated departments still have other incomes from their specializedmanagement activities Thus, the government agencies will get benefitsfrom the fisheries production, processing and trading of the marineproducts via tax and fee collection from those activities

The management agencies of the government are striving to findout solutions to develop the sustainable fishing production and marketingand reduce the risks for the fishers as this is the first important phase inthe fisheries product supply chains Those fishers and vessel owners arethe persons, who have to bear the most risks in the fisheries productsupply chains Those solutions also help to stabilize the prices of themarine products for domestic consumption

Currently, the marine fishers are enjoying some direct supportivepolicies such as: resource tax exemption, income tax exemption, fuelprice supports as rapid increases in fuel prices in 2008 They only have topay business tax Besides that, they also have some indirect supports fromthe government such as building up the necessary infrastructure items(fish landing sites, fisheries ports…), get loans with preferential interestrates for offshore vessel construction, some training courses on technicalissues and product storage techniques, some technologicaldemonstrations

Besides that, the management agencies of the government are alsopaid a lot of attentions on meeting the requirements of the World Trade