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Rising costs harming seafood firms in VN

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Production costs are increasing, causing difficulties for Vietnamese seafood producers. THOI BAO KINH DOANH/VIET NAM NEWS

Rising costs harming seafood firms in VN

Rising production costs are harming the competitiveness of Vietnamese seafood products, according to experts. These include the prices of feed, material input, electricity and labour.

The average retail price for power increased 8.36 per cent last Wednesday, according to the Ministry of Industry and Trade.

The hike means that electricity bills have risen from 1,720 dong (7.49 US cents) per kWh to 1,864 dong, excluding VAT.

Power tariffs for businesses and industrial zones are now divided into two levels – 3,076 dong per kWh for peak hours and 970 dong per kWh for off-peak hours.

Vietnam Pangasius Association chairman Duong Nghia Quoc said the increase in power prices has worried pangasius fish producers because rising input costs will impact production and selling prices.

Quoc was quoted by the Nong Thon Ngay Nay newspaper as saying that at present, electricity consumption for farming and processing of aquatic products as well as operation of aquatic feed factories is significant.

Competition at home and abroad is also becoming increasingly fierce.

For instance, a pangasius fish processing factory with medium capacity in Dong Thap province usually pays 10 billion dong for electricity each month. With the latest increase in power prices, factories will be paying many times more.

Freezers and air conditioning systems at seafood processing enterprises, especially factories processing seafood products for export, accounts for over 85 per cent of total power consumption, he said.

The pangasius fish industry has suggested that the electricity sector should consider and adopt reasonable policies to create favourable conditions for production, especially in the agricultural and fishery sectors.

Electricity prices should increase according to a schedule with an initial surge rate of three to four per cent, followed by suitable changes. An immediate price increase of 8.36 per cent is a shock to enterprises, according to Quoc.

The state should offer preferential loans for businesses to convert old electrical equipment to new machines, as well as promoting the use of renewable energy resources, he said.

Many businesses want to use clean energy but for a large factory, the investment cost for clean energy could be as high as 10 billion dong, or even 30 billion dong. Facing difficulties in production, businesses are already struggling to get credit or attract investment.

Quoc said businesses will have to increase the price of products due to higher production costs. If pangasius fish consumption is slow, meaning the products are stocked for longer, selling prices will increase due to fees paid for warehouses.

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