Minh Phu shrimp king’s losses and the worry of VN seafood industry The semi-annual financial statements of the Minh Phu Seafood Corporation show that the largest shrimp exporter in Vietnam is now an unprofitable business, causing concern in the fisheries sector. Le Van Quang, Chairman of Minh Phu Corporation, said the currencies of Indonesia, India and Thailand, the main rivals of Vietnamese shrimp, were devalued strongly so their exports are much cheaper than Vietnamese goods. Therefore, the volume of Vietnam's exports has fallen recently. Businesses had to reduce purchases of inputs and also exports. Thus, they did not earn profits or even had losses. Caption: In the January-August period in 2015, Vietnam’s shrimp export to the US reached only $370 million. In fact, companies from India, Indonesia and others offered shrimp to the US market at the reduction of 30% in the first half of 2015. This was reflected in the second quarter business results of Minh Phu and it did not surprise experts. Minh Phu incurred losses of nearly VND15 billion ($680,000) in the second quarter this year and its profit for the first half is just VND11 billion (nearly $500,000), less than 1% of the target. As it had to slash exports while having to purchase shrimp from farmers in order to maintain the stability of raw material areas, Minh Phu’s inventories rose sharply, from VND4,451 billion (over $200 million) to VND6,173 billion ($300 million). Long-term debt of Minh Phu in the first six months also soared from VND500 billion (nearly $25 million) to VND2,975 billion (nearly $300 million). A major shareholder of Minh Phu said that, after many discussions with company leaders, he was assured that this company could not realize its annual plan, which was approved by shareholders. Through the story of Minh Phu, one can see the bigger issue of Vietnam's shrimp industry on the world market: competitiveness. Data from the customs agency shows that in the January-August period of 2015, Vietnam’s seafood exports reached $4.2 billion, down 17.2% from the same period last year. Export revenue of the four key fishery products fell from 6.5% to 28%, of which shrimp saw the biggest drop (-29%). Shrimp exports accounted for 43% of the export value of the fishery sector, with over $1.8 billion, down $2.6 billion from the same period in 2014. Notably, shrimp exports to the US, the largest market, decreased to 51%. The reduction was 18% for the Japanese market and 24% for China. In addition to the impact of exchange rates, according to the Vietnam Association of Seafood Exporters and Producers (VASEP), the competitiveness of Vietnamese shrimp is weak because of the high production costs. For example, the production cost for 1kg of shrimps (100 shrimps/kilo) in India and Indonesia is around $2.5, while it is $3.5 to $4 in Vietnam. To remove the burden for businesses, at a meeting of the Ministry of Agriculture and Rural Development (MARD) last week, a series of recommendations were made. VASEP proposed to lower short-term interest rates for businesses to below the ceiling rate of 7%/year and to increase credit limits and the lending period. MARD was asked to implement solutions to lower the production cost of shrimp. But experts said that in the present context these solutions were not easy to implement and required a long time. More likely, shrimp companies have to wait for better signs from the market. On September 7 the US Department of Commerce (DOC) announced the final result of the 9th period of review (POR9) on anti-dumping tariffs imposed on Vietnamese frozen shrimp products exported to the US market from February 1, 2013 to January 31, 2014. It was good news for the shrimp industry of Vietnam that the average tariff has been reduced to 0.91 per cent from 0.93 per cent in the POR9's preliminary result released on March 3. Minh Phu Seafood Corporation would face an anti-dumping tax rate of 1.39 per cent, instead of the previous rate of 1.5 per cent, while the tariff imposed on Thuan Phuoc Seafood and Trading Corporation has been raised to 1.16 per cent from 1.06 per cent. Fimex Vietnam would enjoy zero anti-dumping duty, while 32 other Vietnamese exporters would have to pay a 0.91 per cent duty. The POR9's average tariff dropped from the POR8's average duty of 6.37 per cent. The tariff cut was expected to accelerate Vietnamese shrimp exports to the US after a hefty slump in the first eight months of this year, according to VASEP. In July, VASEP had forecast that Vietnam's total shrimp export could reach $3.2 billion this year, dropping by almost 18 percent compared to the previous year due to low export prices, exchange-rate fluctuations and competition from other exporters, including India, Thailand and Ecuador. Na Son, VNN