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 Typical cases analysis 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 production phase 38
3.2 Increasing efficiency and competitiveness of processing phase 39
3.3 Developing service models to ensure the transparence of price and food quality
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

supply chain function more efficient by provide market information and
services to improve the food safety and sustainability of the supply chain
for better practices.
4
PREFACE
Consumption is an important link in the production process.
Through consumption, the PRODUCTS are converted into MONEY and
create PROFITS for producers, processing companies and traders.
Due to the typical characteristics of the fisheries products and
fisheries production in Viet Nam, especially the characteristics of the
fisheries products such as the fresh, easy to be rotted; the products are
catched in the offshore areas; the production and trading are small scale,
in the forms of family scale. Therefore, the fisheries sector in general and
the capture fisheries sub-sector in particular are the economic sector,
which have diverse and effervescent markets for product trading. The
marketing of fisheries products also have to go through several links and
have attributes of perfect markets.
Due to the importance of the fisheries sector in supplying foods for
people and balance the trading between the import and export, the
Government of Vietnam has paid a lot of attentions on maintain the
sustainable development of the fisheries sector. However, so far, the
fisheries markets have not operated in the synchronized system, the
product price is not stable and in many cases, the price shows the “false”
attribute, creating significantly negative impacts on the economic
effectiveness of the fisheries production producers and consumers. The
continuous research on innovation of the trading policies and production
policies in fisheries development is very essential in order to develop the
sustainable development of the sector. With the supports from UNEP, the
RESEARCH project on “Reforming trade and fisheries policies, re-
shaping supply chains and enhancing consumer demand for sustainable

and 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 fisheries
products
III. The solutions to improve the supply chain in order to improve
the competition and sustainable development
Conclusions and recommendations
6
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.
(
An example of a supply chain
( />In each supply chain, except from producers, one member is the
buyer of the previous member and also is supplier for the later member.
All the members of the supply chain have the same purposes and work
together in order to reach those purposes / objectives. Each member will
contribute his / her values at the last link of the chain via his / her
contributions to satisfy their customers.
The supply chain with cooperation from all producers in the supply
chain in order to ensure that there are no value losses in the case that one
link may work improperly or weakly in this chain.

the product prices and relevant stakeholders.

8
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 species catched in one haul
often quite diverse, except some typical fisheries (such as anchovy
gillnet, ). Therefore, normally allmost all the marine fishing vessels have
their processed products or fresh products to the end customers. The
9
Producers/
fishers
Distributors
Processors
Distributors
Final-
end

+ The vessel owners are also fishers: this is small scale fishers–
scale, the vessel owners hire some labours to go with them on board and
they 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 equipment
purchasing. The owners and shareholders go fishing and decide how to
sell their products together.
10
+ Fishing cooperatives with contract for the fishing vessel team:
The vessels and their equipments are belonged to the cooperatives but
fishing activitires are given to the fishing feets members , the operational
costs for fishing and product selling are responsibilities of the fishing
vessel team who hire the vessels from the cooperatives by contract. The
marine fishing vessel renters have responsibilities to payback their rents
for the fishing cooperatives.
(3) The cooperative manager board: the fishing cooperatives often
have manager board, who are elected by the cooperative members and
represent for all members. The manager board decides all the activities of
the cooperative. All the vessels, equipments and operation costs for one
fishing boat trip are borne by the cooperative, the fishers sailors only
have 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 bridge

(4) Processing companies: Nomarlly the processing companies also
ask their staff to the fishing ports or local landing sites to purchase
materials directly from the vessel owners in order to reduce their costs of
materials compare to buy through several levels of middle men.
(5) The cooperatives for marine fishing marketing services: these
cooperatives provide necessary services for marine fishing activities such
as buying fishing products at the sea (instead of landing sites or fishing
ports) . Those cooperatives have functions as primary middle men, but
the investment capitals are contributed from a group of members.
The product values are determized through the product prices. At
the fishing production phase, those values are set through the mutual
agreement between the vessel owners and buyers, including the vessel
owners, who have financial relationship with the middle men (such as
borrow loans, equipment investment, get the operation costs in advance
for 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 (both
categorized and uncategorized products) with the agreed prices, which
were set at the time of product delivery. The payment is done
immediately in the cases of irregular buyers, small scale and scattered. In
the cases that the buyers are regular customers (e.g middle men and
cooperatives) the payment will be done after about 7 – 10 days.
b) Selling fishing products through middle men: The middle men
are middle mediators between the vessel owners and the buyers (who
have demands for the product buying). The middle men are responsible to
reach the price agreement between the vessel owners and the buyers, use
their prestige to pay for the successful deals to the vessel owners. After
real payment completed, those middle men will enjoy a part of
commissions from the product prices, about 100 – 1,000 – 3,000 VND/kg
2

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 costs
are 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, the
vessel owners often use the cheap and low quality chemicals and
medicines to maintain the fresh products, ignore the regulations on food
safety.
13
Besides that, the issues of traceability and certification for
sustainable products of marine fishing are very difficult to implemented
under the current supply chain, except the fishing products of mollusk
species, which distribute concentrated and less or un-migrated such as
clam, 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 of
trading, including the processing phase are the most fluctuated and

of the seafood. The rate of marine fishing products, which are put in the
14
processing factories to increase the value – added of the fishing products,
creating more attractive products for the end consumers and meet the
demands 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 to
purchase a huge amount of the marine fishing products to provide the
input materials for processed products. In order to purchase the input
materials, the processing enterprises set trading relationships with the
middle men, vessel owners and smaller traders. After the process of
development to increase the value – added for the marine fishing
products, the system of marketing for marine fishing processed products
become diverse and dynamic as the one of the fresh fisheries products. In
this system, the middle men do not have an important role as in the
production phases, but several relevant parties have appeared and become
important parties in the marketing system. They are a system of fisheries
companies, who trade processed products; and agents as well as
companies, who import fisheries products from foreign countries.
(4) For the dried fisheries processed products, there are still
existences of the system of middle men, who trade the dried fisheries
processed products for domestic and export markets. The system of
wholesale 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 and
domestic consumers.
(5) The marine fisheries service cooperatives: The fisheries service
cooperatives in this stage also have the same role with the one of the first
class middle men. They purchase marine fishing products and then sell to
the processing companies and also to other middle men.

control the material quality and the traceability for the products is not
conducted properly, the food safety issues are still existed and create
negative impacts on the consumers. In the trend of global integration,
with more strict requirements on food safety, the unsolved problems in
food safety insurance, traceability and certification for marine fishing
products will effect directly to the economic efficiency and prestige of the
marine 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 getting
paid much attention in this phase, especially with the processed fisheries
products of processing companies. However, this is a big challenge for
marine fishing products in both domestic and foreign markets. This is
also an issue impacting significantly the competition ability of marine
fishing 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 both
domestic and foreign consumers. In the scope of this research, as
mentioned above, we only focuses on analyzing and assessing the supply
chain of marine fishing products to the end consumers for the domestic
consumption products and to importers for the export products.
Go through many phases in the supply chain of the marine fishing
products, these marine fishing products are consumed by the end
consumers by various ways. They may be divided into two groups as
follows:
16
(1) Non – processed products (group 1): the product values of the
non – processed products in the immediate trading stage is not added, but
maintained or reduced. However, the prices of those non – processed
products are increased regularly through each trading stage as the cost of
storage and preservation as well as the costs of transportation for those

and 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 at
the end consumption stage depend on the values of the processed
products (quality and category of the products), distance of product
17
transportation and the number of middle trading stages. These prices are
also mainly decided by the sellers. The consumers often accept the prices
that are set by the sellers. The consumers only influence the product
prices once those prices increased too high, exceeding their level of
expenditure power. In that case, the consumers will limit their
expenditure and at the macro level of the economy, the consumers may
influence 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 and
fisheries exporters (direct export), some products from the fisheries
export companies or entrusted export companies. The dried seafood
products sold to the importers by the middle men, who collect products
for drying to export. The middle men have to use their prestige in trading
and discuss the prices between the dry processing companies with the
importers. The prices of processed products sold to the importers are
normally decided by the importers. However, the powers of the importers
for price setting for the processed marine fishing products are not as
strong as the non – processed export marine fishing products. This is
explained as the processed products may be stored in a longer time in
comparison with the non – processed products. In addition, the demands
for the processed products are increasing; therefore, the processing
companies and middle men have advantages in getting price agreement
with the importers.

products 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 economic
efficiency 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 not
suffer 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 the
vessel owners. Therefore, the middle men only get losses when the vessel
owners do not have ability to pay the loan back or the middle men
absolve the vessel owners from their debt.
+ The processing companies/plants: may get benefits when the
prices of input materials are low, while the contract of buying materials
has been signed in advance. However, they also may get losses when they
can not buy the input materials for their production. In this case, they still
have to bear the invisible depreciations for their equipment investment
and even get penalty due to failure to fulfill the signed contract.
If the vessel owners can not store and preserve their capture
products effectively or they use the illegal chemicals to preserve their
products, several relevant stakeholders will be suffered such as the
processing companies will get losses and the health of the consumers will
be effected; and in the near future this will create negative impacts on the
vessel 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 from
the product trading as they suffer less risk in the supply chain of the
marine fishing products. The reason is that they have sufficient
information and follow their principles: sell their products with the prices
19

barganing.
The persons, whose economic benefits are directly effected from
the bussiness of the middle traders, are vessel owners, processing
companies, domestic consumers and importers, who import fresh
products. If the system of the middle traders operates properly and
regularly, the markets for the products will be stable and the vessel
owners and fishers can also operate stably and regularly, creating the
benefit balance between the relevant parties and will be foundations for
development. In contrast, if the system of the middle traders do not
operate properly and regularly, the supply chain for the marine products
20
will 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 purchased
products effectively or they use the illegal chemicals to preserve their
products, several relevant stakeholders will be suffered such as the
processing companies will get losses and the health of the consumers will
be effected; and in the near future this will create negative impacts on the
middle traders themselves as no body want to buy their products. So far,
many fisheries middle traders have not upgraded to become trading
companies or enterprises although they have wide geographical areas for
doiing bussiness (more partners) and big amount of capitals. The reasons
may be due to their traditional culture of doing business, always behave
in individual spirit. Another reason may be that they do not understand
the Business Law clearly, so that they are flinch to meet difficulties and
worry when conducting the accounting and financial procedures and
administration management once they become companies or enterprises.
- The processing companies/plants
In the fisheries supply chain, the processing plants are the second

- Importers
The importers are also a parties, who get significant benefits from
the product trading and get less risks than the middle traders. They know
marketing information and always follow the principles of the middle
traders: “sell their products with the prices higher than the pusrchased
prices”.
The persons, whose economic benefits are directly effected from
the bussiness of the fisheries importers, are vessel owners and the export
processing companies. If the importers operate regularly and effectively,
this will make the marine vessel owners and export processing companies
operate effectively and stably. In contrast, if the importers failed, this will
interrupt the operation of the processing companies and vessel owners. Of
which, the export processing companies are the parties, who are effected
the most from the business of the importers.
- The Government
Currently, the prices of the marine products are “floating” in the
forms of perfect competition: there is no monopoly and intervention from
the government. The Government agencies only implement their
functions on state administration management to the trading and
production activities and food safety according to the existing laws and
regulations. They include the ministries at the central level and the
provincial departments at the local level including Ministry of Industry
and Commerce, Ministry of Agriculture and Rural Development
(MARD), the General Department of Custom. The Ministry of
Agriculture and Rural Development have the following agencies,
responsible for its various fields:
+ Department of Fisheries Resource Protection and Exploitation: is
responsible for vessel registration, licensing and guiding the operations of
fisheries resource protection and exploitation; managing the infrastructure
system, which is invested by the state budget for marine capture; guiding

Currently, the marine fishers are enjoying some direct supportive
policies such as: resource tax exemption, income tax exemption, fuel
price supports as rapid increases in fuel prices in 2008. They only have to
pay business tax. Besides that, they also have some indirect supports from
the government such as building up the necessary infrastructure items
(fish landing sites, fisheries ports…), get loans with preferential interest
rates for offshore vessel construction, some training courses on technical
issues and product storage techniques, some technological
demonstrations.
Besides that, the management agencies of the government are also
paid a lot of attentions on meeting the requirements of the World Trade
23
Organization (WTO) and over come the trading barriers as well as the
requirements on food safety issues in all phases of the production
process: from production to processing and trading of the marine
products. They initially supported for development the certifications and
trade mark license for seafood products, which are processed with the
input materials from the marine products such as Phu Quoc fish source,
Ben Tre clam. However, due to the limitations of the resources and the
diversity of species and small scale attributes of the fishing activities, the
promotion of the trade mark and certification for marine products is still a
challenge for production, processing and trading, especially in the areas
of traceability and certification of origin for marine products.
The operation of the government has macro – level impacts on the
benefits of relevant stakeholders in the fisheries supply chain. The
markets have their “invisible hands” influencing the relevant stakeholders
and the government has its “visible hands” via its policies to control the
sustainable development of the markets as well as ensure the benefits
equally for the relevant stakeholders.
However, due to the limitations of the available resources, the

domestic markert but no consumer seafood association, the domestic
consumers are usually passive. The most important enfluencing factors
are the effectiveness of the operation of the vessel owners, the trading of
the middle traders, processing companies and the government. Any
decision made by those relevant stakeholders will also have influences on
the benefits of the consumers: whether they can purchase high quality
products with reasonable prices or low quality products with high prices.
It can be said that, in the supply chain of the marine products, all
relevant stakeholders has “organic relationships” with each other,
although they may be weak or strong and direct or indirect relationships.
Besides that, although the conflicts of benefits among the relevant
stakeholders is temparary and in the short term, they are still relatively
balanced in the long term. This will create vitality for the markets in the
natural laws. In order to maintaim the sustainable balance in the
development trend, the roles of the government in management and
control the markets is very important, directing the relevant stakeholders
in the supply chain of the marine products operating in line with the
socialism – market economy– oriented mechanism.
2.3 Typical cases analysis
The qualitative analysis of supply chain and relevant stakeholders
in the supply chain of marine capture fisheries products has been
mentioned above. Survey outputs of the typical fisheries including squid
and anchorvy fishery in Binh Thuan shown both quantitative and
qualitative proofs for analyses and assessments of the supply chain of
capture fisheries.
2.3.1 Supply chain of squid and stakeholders
There are several squid products such as raw products, processing
for exported products, dried squid exported products and squid products
consumed by domestic markets . The supply chain of squid can be
figured out as follows: