Summary of pangasius’s farmer needs assessment in Mekong River Delta, Vietnam

During August and October 2023, the Netherlands Embassy in Vietnam commissioned Agriterra Vietnam in collaborated with the International Collaborating Centre for Aquaculture and Fisheries Sustainability (ICAFIS) to conduct an in-depth assessment of the needs of smallholder pangasius farmers in 2 selected provinces (Can Tho and Vinh Long), which are reported as the top leading pangasius production areas in Vietnam. This mission aimed at gaining a comprehensive understanding of the aquaculture farmers’ challenges in the improvements in water quality and efficiency, reducing disease-related expenses in fish farming, minimizing the use of antibiotics, fostering technological innovation, and implementing a stratification process for agriculture and more importantly is to identify their specific needs towards ultimately arriving at uncovering potential opportunities for enhanced involvement of farmers in sustainable aquaculture production supply chains. As a result, key findings over pangasius – were identified afterwards, laying a concrete foundation for several substantial conclusions as the following.

• Production area: The average production area per household (HH) in 2022 was 3.14 ha, 325 tons/ha/harvest. The area of small-scale HHs only accounted for 20-30% of the total area, mainly concentrated in provinces such as Vinh Long, Can Tho, Tien Giang, and Hau Giang.
• Labor size: The average size of a pangasius farming HH was 4.2 people/HH. The number of workers per household participating in pangasius was 1.7 people.
• HH income: The 2022 average profit per HH of surveyed was VND 1,042 million. Nonetheless, there was a need for a huge investment capital averaging 26.96 billion/year, and the profitability rate is only 4%/10 months or about 5%/year.

The average investment cost household was 8.56 billion VND/ha/harvest, so each HH needs 26.96 billion VND/harvest for their average area of 3.14ha. 

Investment structure: Fixed costs (1%); Variable costs (99 %) (including (i) Feed (84%) (ii) Seed (8%); (iii) Drug and chemicals (3%) and (iv) Bank loan interest was 2%).

Feed cost was the dominant factor of HH. Currently, most of the ingredients for pangasius feed are imported, and prices have increased due to fluctuations in the world markets, causing the selling price of pangasius feed to continuously increase

• Access to seed: 100% HH bought fingerings from local seed production households without quality certification. The survival rate of surveyed farming was only about 52%, a big drop compared to in the previous years (about 62% in 2019) and even 90% in some years. Pangasius fingerling quality was problematic because of seed degeneration, decreased growing rate, increased mortality, and deformity rates over time due to lack of quality control, reuse of seeds and increasingly polluted water environment.
• Access to feed: 100% of HHs used industrial feed purchased from local agents. 82% of HHs bought feed on deferred payment. Currently, the FCR in pangasius farming tends to increase to 1.7-1.8 compared to in the past (1.2-1.4). There are currently an estimated number of 30 factories supplying feed to pangasius farming HHs.
• Access to drugs and chemicals: 91% of farmers bought drugs and chemicals at local agents; 53% bought on deferred payment. Approximately 50-60% of farmers used drugs and chemicals empirically. By 2022, over 500 supplier companies were providing drugs and chemicals to farmers. Farmers have difficulties choosing appropriate drugs and chemicals to improve farming efficiency, The quality and origin of drugs and chemicals for farming are also very complex and unclear.

Technology in the pangasius farming industry is less diverse and innovative than that in shrimp farming. Among all aspects, the proportion of new feed-related technologies is 50%, wastewater sludge management is 27%, followed by disease prevention and treatment technology (16%), and biological products to improve the environment, farming environment and fish health (16%), disinfection technology (11%), and water treatment technology (11%).

Farming HHs’ access to new technology through the direct introduction by sales staff from companies (43% of pangasius farming households). In addition, surveyed results showed most farming HHs access new technology through informal channels and from other farmers; official channels from schools, research institutes, cooperative alliances, and NGOs have been playing a very limited role.

Keys incentive for farmers 1) Know-how on technology (45%, 2)  Investment capacity (35%) and 3) Technical capacity (25%)

The average investment cost /household was 8.56 billion VND/ha/harvest, so  each HH needs 26.96 billion VND/harvest for their average area of 3.14ha. 

Investment structure: fixed costs (1%) and variable costs (99 %) (including 1) Feed (84%) 2) Seed (8%) 3) Drug and chemicals (3%) and 4) Bank loan interest was 2%).

Current bank loans only met 45% of the HH’s total investment needs and were mainly provided by state-owned banks (Agribank and ViettinBank). Pangasius HHs often access bank loans with higher interest rates than normal mortgages. In addition, local agents also pre-financed farmers, about 81.8% of feed costs that are paid by households in the form of deferred payments to agents.

Strong access to technical training: 86% of farmers participated in at least one training course with main training topics including: 1) Disease management (86%) 2) Effective feeding management (80%) 3) Applying sustainability standards (75%) 4)  Control quality of input (60%) 5) Adapt to climate change (45%) 6) Market information (43%). Nevertheless, no farmer had ever access to training on business plans and financial management.

Pangasius farms in the Mekong Delta employed very high production intensity, a high stocking density (60 fingerling/m2), and stocking fish in deep and concrete ponds, with a high level of water exchange daily.

90% of farmers accessed information through local TV and seminars; and 80% via training courses. 84% of farmers applied farming quality standards, mainly VietGAP standards (84%) and ASC standards (6.8%).

The assessment indicates that pangasius farming sector remains problematic due to its lack of cooperations among farmers, cooperatives, and processing facilities; 82% of small-scale pangasius farming households said they did not participate in any local collaborative groups or cooperatives. Fish purchasing companies often paid a max of 10% when sourcing fish, the remaining 90% was paid in instalments within 1-2 months.

98% of households signed purchase contracts with businesses, sold fish to processing enterprises and mostly complied with the quality conditions required by the business set forth in the contract. Processing companies have built raw material areas accounting for 65-70% of the company's output needs. Processing companies only sourced 30 - 35% input material from farming households in the form of signing direct purchase contracts when the fish reached the required size.

By July 2022, the MRD had 100 enterprises and pangasius processing facilities, with the capacity to process pangasius for export and about 124 by-product material processing facilities with a capacity of 1.5 - 2 million tons of raw pangasius/year.