fisheries subsidies, supply chain and certification in … country projects... · 2018-06-07 ·...

FISHERIES SUBSIDIES, SUPPLY CHAIN AND CERTIFICATION IN VIETNAM

SUMMARY REPORT

Photo credits:

Fishing and Fish marketing in Cua Lo, Nghe An province, Vietnam- www.travel.channelvn.netClam harvesting in Ben Tre- WWF - Nguyen Thi Dieu Thuy

The report is prepared by

Tuong Phi Lai, WWF Greater Mekong - VietnamPham Ngoc Tuan, Department of Fisheries Resources Protection and Development, MARDNguyen Thi Dieu Thuy, WWF Greater Mekong - VietnamDuong Long Tri, Centre of Informatics for Agriculture and Rural Development, MARDPham Thi Hong Van, Institute of Policy and Strategy for Agriculture and Rural Development, MARD

This report was produced with support of the United Nations Environment Programme (UNEP) Division of Technology,

Industry and Economics (DTIE).

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LIST OF ABBREVIATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

ACKNOWLEDGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

ABOUT UNEP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

1. OVERVIEW OF FISHERIES MANAGEMENT IN VIETNAM . . . . . . . . . . . . . .15

1.1. Fisheries governance system and related issues . . . . . . . . . . . . . . . . . . . . . . . . . .15

1.2. Fisheries development in Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

1.3. Fisheries management-related issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

2. FISHERIES SUBSIDIES IN VIETNAM: OVERVIEW, ISSUES

AND CHALLENGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

2.1. Overview of fisheries subsidies in Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

2.2. Discussion on key problems/impacts of fisheries subsidies

on resources and trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

2.3. General conclusions on fisheries subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

2.4. Recommendations on subsidies reform: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

3 KEY FINDINGS ON WILD FISH SUPPLY CHAIN IN VIETNAM . . . . . . . . . .35

3.1. Overview of the seafood supply chain in Vietnam . . . . . . . . . . . . . . . . . . . . . . . .35

3.2. Discussion on problems/challenges in seafood supply chains . . . . . . . . . . . . . . . .38

3.3. Recommendations for the improvement of the supply chain . . . . . . . . . . . . . . . . .42

4. KEY FINDINGS ON CERTIFICATION IN VIETNAM . . . . . . . . . . . . . . . . . . . .44

4.1. Certification approaches in Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

4.2. Case studies: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46

4.3. Challenges and opportunities for certification in Vietnam . . . . . . . . . . . . . . . . . . .47

4.4. Incentives for certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

4.5. Recommendation for certification road map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

CHAPTER 5.LINKAGES BETWEEN SUBSIDIES, SUPPLY CHAIN AND CERTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

6. CONCLUSIONS AND RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . .58

6.1. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

6.2. RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59

REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61

ANNEXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63

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LIST OF ABBREVIATIONSAPFIC Asia Pacific Fisheries CommissionFAO Food and Agriculture OrganizationFOS Friend of the SeaDARD Department of Agriculture and Rural DevelopmentDOFI Department of Fisheries, merged into DARD since 2008MARD Ministry of Agriculture and Rural DevelopmentMSC Marine Stewardship CouncilTQCSI International certification of management systemsADB Asian Development BankCITES Convention on International Trade in Endangered Species of Wild Fauna

and FloraCPUE Catch per Unit EffortDANIDA Danish International Development AgencyDARD Provincial Department of Agriculture and Rural DevelopmentDECAFIREP Department of Capture Fisheries and Resources ProtectionDOFI Department of Fisheries (provincial)DONRE Department of Natural Resources and Environment (provincial)EEZ Exclusive Economic ZoneFICEN Fisheries Informatics CenterFSPS Fisheries Sector Program Support (DANIDA/MOFi)GSO Government Statistics OfficeHP Horsepower of Engine (= 0.75 kW)sICZM Integrated coastal zone planning and managementVIFEP Vietnam Institute of Fisheries Economics and PlanningITC International Trade CommissionJICA Japan International Cooperation AgencyMARD Ministry of Agriculture and Rural DevelopmentMOFi Ministry of FisheriesMONRE Ministry of Natural Resources and EnvironmentMPA Marine protected areaMPI Ministry of Planning and InvestmentMRC Mekong River CommissionMSY Maximum Sustainable YieldNAFIQAVED National Fisheries Quality Assurance and Veterinary DirectorateNGO Non-government organizationNOAA United States National Oceanic and Atmospheric AdministrationNORAD Norwegian Development AgencyPPC Provincial People's CommitteeRIMF Research Institute for Marine FisheriesSEAFDEC Southeast Asia Fisheries Development and Economic CommissionSIPPO Swiss Import Promotion ProgrammeTAC Total allowable catchUNEP United Nations Environment ProgrammeVASEP Vietnam Association of Seafood Exporters and ProcessorsVIFEP Vietnam Institute of Fisheries and Economic PlanningVINAFIS Vietnam National Association of FisheriesVCA Vietnam Cooperative AlliancesWCPFC Western and Central Pacific Fisheries CommissionWTO World Trade Organization

WWF World Wildlife Fund for Nature

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ACKNOWLEDGEMENT

This report was commissioned by the Division of Technology,

Industry and Economics (DTIE) of UNEP as part of a Norway-fund-

ed project on "Promoting Sustainable Trade, Consumption and

Production Patterns in the Fisheries Sector". This project aims to

build the capacities of governments, private sector stakeholders and

consumers to promote sustainable fisheries management. Anja von

Moltke from UNEP's Economics and Trade Branch (ETB) is leading

this project. Additional support for this Vietnamese case study was

provided by Katharina Peschen, Sophie Kuppler and Karin Bieri.

This project was also accompanied by Stefanos Fotiou and Wei

Zhao from UNEP's Regional Office of Asia and the Pacific.

The study team was comprised of Mr. Tuong Phi Lai, Mr.

Duong Long Tri, Ms. Pham Thi Hong Van, Ms. Nguyen Dieu Thuy,

Mr. Pham Ngoc Tuan, Mr. Lai The Hung (consultant), Mr. Luong

Thanh Son (consultant) and Ms. Tran Thi Thu Nga (consultant).

We are thankful to Mr. Keith Symington and Dr Le Tieu La,

who were particularly instrumental in initiating and providing guid-

ance for the study. The study team gratefully acknowledges Dr. Chu

Tien Vinh, Dr. Ngo Anh Tuan, and Mr. Thai Thanh Duong, who pro-

vided important directions for the study. The study and report also

benefited significantly from edits and comments provided by Keith

Symington and Dr. Flavio Corsin, both of whom were on the techni-

cal review panel for the study.

There were also inputs provided from provinces visited in Binh

Thuan and Ben Tre provinces. Thanks for all who have attended

workshops in February 2009 in Hanoi to provide comment and feed-

back on the study's findings. Thanks to Mr. Nguyen Quoc Tinh, Ms

Pham Thi Thuy Linh and Mr. Pham Quang Toan for data collection.

Finally we thank UNEP for establishing the enabling program

and supporting the study, as well as providing helpful guidance

throughout all stages of the work.

The responsibility for the report fully lies with its authors. The

report does not represent the views of the United Nations

Environment Programme or of its members.

The present document is only a summary, the specific reports

are available in Vietnamese at: www.vifep.com.vn

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ABOUT UNEP

United Nations Environment Programme

The United Nations Environment Programme (UNEP) is the overall coordinating envi-

ronmental organization of the United Nations system. Its mission is to provide leadership

and encourage partnerships in caring for the environment by inspiring, informing and

enabling nations and people to improve their quality of life without compromising that of

future generations. In accordance with its mandate, UNEP works to observe, monitor and

assess the state of the global environment, improve the scientific understanding of how

environmental change occurs, and in turn, how such change can be managed by action-ori-

ented national policies and international agreements. UNEP's capacity building work thus

centers on helping countries strengthen environmental management in diverse areas that

include freshwater and land resource management, the conservation and sustainable use of

biodiversity, marine and coastal ecosystem management, and cleaner industrial production

and eco-efficiency, among many others.

UNEP, which is headquartered in Nairobi, Kenya, marked its first 35 years of service

in 2007. During this time, in partnership with a global array of collaborating organizations,

UNEP has achieved major advances in the development of international environmental pol-

icy and law, environmental monitoring and assessment, and the understanding of the sci-

ence of global change. This work also supports the successful development and implemen-

tation of the world's major environmental conventions. In parallel, UNEP administers sev-

eral multilateral environmental agreements (MEAs) including the Vienna Convention's

Montreal Protocol on Substances that Deplete the Ozone Layer, the Convention on

International Trade in Endangered Species of Wild Fauna and Flora (CITES), the Basel

Convention on the Control of Transboundary Movements of Hazardous Wastes and their

Disposal (SBC), the Convention on Prior Informed Consent Procedure for Certain

Hazardous Chemicals and Pesticides in International Trade (Rotterdam Convention, PIC)

and the Cartagena Protocol on Biosafety to the Convention on Biological Diversity as well

as the Stockholm Convention on Persistent Organic Pollutants (POPs).

Division of Technology, Industry and Economics

The mission of the Division of Technology, Industry and Economics (DTIE) is to

encourage decision makers in government, local authorities and industry to develop and

adopt policies, strategies and practices that are cleaner and safer, make efficient use of nat-

ural resources, ensure environmentally sound management of chemicals, and reduce pollu-

tion and risks for humans and the environment. In addition, it seeks to enable implementa-

tion of conventions and international agreements and encourage the internalization of envi-

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ronmental costs. UNEP DTIE's strategy in carrying out these objectives is to influence

decision-making through partnerships with other international organizations, governmental

authorities, business and industry, and non-governmental organizations; facilitate knowl-

edge management through networks; support implementation of conventions; and work

closely with UNEP regional offices. The Division, with its Director and Division Office in

Paris, consists of one centre and five branches located in Paris, Geneva and Osaka.

Economics and Trade Branch

The Economics and Trade Branch (ETB) is one of the five branches of DTIE. ETB

seeks to support a transition to a green economy by enhancing the capacity of governments,

businesses and civil society to integrate environmental considerations in economic, trade,

and financial policies and practices. In so doing, ETB focuses its activities on:

1. Stimulating investment in green economic sectors;

2. Promoting integrated policy assessment and design;

3. Strengthening environmental management through subsidy reform;

4. Promoting mutually supportive trade and environment policies; and

5. Enhancing the role of the financial sector in sustainable development.

Over the last decade, ETB has been a leader in the area of economic and trade policy

assessment through its projects and activities focused on building national capacities to

undertake integrated assessments - a process for analyzing the economic, environmental

and social effects of current and future policies, examining the linkages between these

effects, and formulating policy response packages and measures aimed at promoting sus-

tainable development. This work has provided countries with the necessary information and

analysis to limit and mitigate negative consequences from economic and trade policies and

to enhance positive effects. The assessment techniques and tools developed over the years

are now being applied to assist countries in transitioning towards a green economy.

During the past decade, ETB has intensively worked on the issue of fisheries to pro-

mote integrated and well-informed responses to the need for fisheries policies reform.

Through a series of workshops, analytic papers and country projects, ETB particularly seeks

to improve the understanding of the impact of fisheries subsidies and to present policy

options to address harmful impacts.

Project on "Promoting Sustainable Trade, Consumption and Production Patterns in the

Fisheries Sector" (2006-09)

This Norway-funded project is led by ETB and implemented in cooperation between

the Economics and Trade Branch (ETB) and the Sustainable Consumption and Production

Branch (SCP). It aims to assist and strengthen the capacities of governments and stakehold-

ers to promote the sustainable management of fisheries and to contribute to poverty reduc-

tion. It further seeks to promote the role and capacity of the private sector, including indus-

try, financial institutions, local fishing communities to adopt appropriate environmental

standards and practices in their operations, and encourage the creation of public-private

partnerships that develop effective marketing strategies for a sustainable production and

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consumption of fish products.

The work consists of a set of national and international capacity-building initiatives

focusing on promoting fisheries subsidies reform at national and international level, as well

as voluntary private sector initiatives, including certification and sustainable supply-chains.

The work carried out within this frame includes analytical studies on issues discussed at the

WTO, as well as on challenges and opportunities of voluntary private sector initiatives;

country projects for capacity building and awareness raising at national level; and work-

shops at international and regional level to support trade negotiators and raise awareness

among national policy-makers, as well as among private sector representatives.

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EXECUTIVE SUMMARY

The aim of the summary report on fisheries subsidies, supply chain and certification inVietnam is to describe the process of the project, highlight main findings and conclusionsfrom the technical reports, discuss how these link together and provide follow-up activitiesand policy recommendations.

The study found that Vietnamese subsidies have been much smaller compared to otherforeign subsidies. While most subsidies of Vietnam on fisheries management were appro-priately aligned with WTO negotiations on fisheries subsidies, policies on fuel, credits forvessel building, infrastructure, tax and vessels renewal and upgrading are still debated andrequire further consideration.

Subsidy policies on fuel and vessel renewal, upgrading and infrastructure have focusedon solving short-term issues (and are not likely to remain in the long-term). These subsi-dies, however, have focused more on production or quantity promotion and have negativeimplications for sustainability. Indeed, most of the Vietnamese subsidies, although limited,had many negative consequences that were not addressed or managed. The findings showthat where fisheries subsidies have existed, they have qualitatively impacted on overfish-ing, both directly and indirectly.

Related to this, the supply chain of seafood in Vietnam has not been effectivelydesigned and operated and has not contributed to the sustainability of the sector. Problemsinclude resources protection, limitations in traceability, food safety issues and lack ofbranding/eco-certification. Also, the coordination of the seafood supply chain as a whole isnot effective and the roles of different actors along the supply chain related to the resourcesresponsibility are not clear.

The study highlighted that middlemen are particularly critical and both a potentialavenue for positive reform as well as a challenging obstacle for improving the sustainabil-ity of the seafood supply chain as a whole. Only a small adjustment in the middlemen sys-tem may provide a large impact to make the sector more effective and sustainable. A smallintervention (e.g. market incentives) might lead to big impacts for the whole system interms of resources protection, food safety, traceability, and marketing relations.

The study confirmed that environmental certification such as MSC is already showingpromising results in Vietnam as a way to improve sustainability of the fisheries sector. Itshould continue to be used and more formally linked to sector strategies and policy dia-logues including those addressing subsidies. However, the government and supply chainactors need to pay more attention to the MSC.

Other key conclusions and recommendations of this study include:

¢ The open access regime is the key problem leading to overfishing and over-capacity inVietnam and this can be understood as a lack of management and a need for reforma-tive change. Therefore, fisheries co-management regimes (or any forms of rights-based fisheries management) can help reform the fisheries sector.

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¢ A legal framework on fishing rights granted to local fisheries associations will supportbetter governance of the sector and address problems of middlemen, enhance theeffectiveness of the seafood supply chain in Vietnam and support certification andbranding.

¢ Cooperation between two institutions (Vietnam Fisheries Association (VINAFIS) andthe Vietnam Association of Seafood Exporters and Producers (VASEP)) should bestrengthened to improve the supply chain and certification promotion and enable thevoices of fishers and processing plants to influence decision making on fisheries subsi-dies.

¢ Buyers and processors have almost no links directly to producers and this is a major gapin supply chain management as a whole. The establishment of supply chain partner-ships (e.g. contract systems) and the development of cooperatives etc. that contributeto better validation and more sustainable exploitation of the resources are critical forreforming subsidies policy and improving supply chains.

¢ Subsidy-based sustainability should be adopted by changing from fisheries production-based models into value-added based models. The investment sector can aim to attractforeign investment in appropriate services. Examples include support for storage andpost-harvest processing to improve food quantity, the provision of tax preference forresponsible vessels and/or support for their direct involvement in sustainability pro-grams (e.g. by-catch reduction, EBM).

¢ Fisheries subsidies could be provided for the whole supply chain system, addressingthe key issues that make the supply chain ineffective and unsustainable (e.g. capacityof the recording on traceability or poor trade responsibility due to the absence of alegal contract system in seafood marketing).

¢ Civil society organizations (fisheries cooperatives/associations/clubs etc.) can beempowered and strengthened to support fishers to have more power to bargain anddeal with other stakeholders. They can also help to clarify the responsibility in termsof marketing, trade and resources.

Understanding subsidies, supply chain dynamics, and the role of environmental certifi-

cation (and how these can be inter-linked positively) is paramount to achieving sustainable

fishing. Thus, the study provided a good initial platform for discussion and its findings pro-

vide opportunities for ensuring that fisheries subsidies have a positive impact on sustain-

ability. In addition to understanding these linkages and applying this understanding strate-

gically, cooperation between the government, the private sector and fishing communities is

equally crucial to reaching this goal.

These elements can be linked to providing "good" subsidies that demonstrably improvemanagement. Properly applied, subsidies can help realize the more efficient use ofresources and lead to a reduction of post-harvest and energy losses. They can help increasefood safety and improved traceability throughout the supply chain. They can be used tomore effectively implement sustainability projects such as by-catch reduction and EBMprograms (techniques rarely supported otherwise due to their cost). They can also be usedto promote and advance environmental certification.

The findings and facts of the study may not reflect all developing countries or small-

scale tropical fisheries, but the lessons learned from Vietnam's case study could be shared

and may partly contribute to the reform of fisheries sectors for other countries concerned.

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BACKGROUND ON THE UNEP PROJECT

The study on "Reforming trade and fisheries policies, re-shaping supply chains and

enhancing consumer demand for sustainable fisheries management: Country project VIET-

NAM" was coordinated by the Vietnam Institute of Fisheries and Economic Planning

(VIFEP). The study is supported by the project "Promoting Sustainable Trade, Consumption

and Production Patterns in the Fisheries Sector" implemented by the United Nations

Environment Programme (UNEP) Division of Technology, Industry and Economics (DTIE).

The goal of the overall project is to develop a set of national and international capacity-

building activities aimed at improving the sustainable production and consumption of fish

and fish products. The focus is on promoting sustainable fisheries subsidies reform at

national and international level and assisting countries and private enterprises in identify-

ing markets for sustainable fish products. In this context, the Vietnam country project aims

to support public and private sector stakeholders in assessing policies, voluntary actions and

investment that can promote sustainable management in the fisheries sector.

The project commenced in July 2008 in collaboration with various organizations both

at central and provincial levels. At the central level, VIFEP, the Department of Capture

Fisheries and Resources Protection (DECAFIREP) and the Fisheries Information Center

(FICEN) were the main responsible parties for project implementation under VIFEP coor-

dination. At the provincial government level, the Department of Fisheries (DARD) in Ben

Tre and Binh Thuan contributed to the project and facilitated public consultations with the

private sector including fishers, processing plants, export companies, and fisheries associa-

tions on the policy analysis components. WWF Vietnam is a main partner in the project and

provided overall coordination with VIFEP, liaison with UNEP, technical input and commu-

nications. Other stakeholders were also involved in the project including middlemen, fish-

ing port representatives, marketing professionals, traders and related services for the fish-

eries sector.

Several activities have been conducted under the project including direct meetings,

workshops, field visits and interviews with related stakeholders. Two case studies have also

been conducted in Binh Thuan and Ben Tre provinces in cooperation with Binh Thuan and

Ben Tre DARD.

Among the project's outputs are three technical component reports (subsidies, supply

chain and certification) as well as a framework document that identifies linkages and poten-

tial synergies for reformative approaches. These aim to provide advice to Vietnamese

stakeholders and to complement existing initiatives by the Government of Vietnam, WWF

Vietnam and the private sectors.

As well, two technical workshops and a validation workshop have been organized as a

forum for exchange on the project's findings and for consultation between related stake-

holders related to fisheries subsidies, supply chain and certification.

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PROJECT IMPLEMENTATION PROCESS

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Activities Description Key conclusions/findings/

impacts

Inaugural workshop (14 August 2008)

32 participants mainly from the central level including the

private sector

Identification of institutions involved in the project

implementation, focus of the

project and information

needs

Case studies in Binh Thuan

and Ben Tre

Meetings with stakeholders

in Binh Thuan (24 Nov

2008)

Meetings (2) with local fishers

(30 participants) and overall

stakeholder group meeting (20

participants)

SWOT of the fisheries

subsidies and supply chain,

challenges for fisheries

sustainability

Meeting with stakeholders

in Ben Tre (16 Dec 2008)

Meetings (2) with local fishers

(30 participants) and overall

stakeholder group meeting (20

participants)

SWOT of the certification

process, challenges for

small-scale fisheries (e.g.

Ben Tre clam) access to

MSC

Survey and interviews in

Binh Thuan and Ben Tre

Key informal interviews with

key stakeholders (18

participants) and survey by

standard questionnaires (32 participants)

In-depth-information and

quantitative data which

could not be collected from

the consultation meetings.

Two case study reports on

Ben Tre clam certification

and fisheries subsidies and

supply chain for

squid/cuttlefish, anchovy

and scallop fisheries in Binh

Thuan

As described above Involvement of local

stakeholders in policy

analysis

Three technical reports on subsidies, supply chain and

certification

As described above Involvement of central related stakeholders in

policy analysis through the

study

Two-day technical

workshop in Ha Noi

(24-25 February 2009)

35 participants from the central

and local level plus regional

fisheries organizations (e.g.

SEAFDEC), NGOs (WWF and

WorldFish), civil societies

(VASEP) and the private sector

Sharing outcomes/findings of

the study and collection of

feedback

One day validation

workshop in Ha Noi

(3 July 2009)

41 participants from the central

and local level plus civil

societies (VASEP, VINAFISH,

VCA), the private sector and

NGOs (WWF)

Forum for exchange on the

project's findings related to

fisheries subsidies, supply

chains and certification.

Table 1: Introduction of activities conducted under the project

The inaugural meeting confirmed VIFEP, FICEN/ISCARD, DECAFIREP and VASEP

as the focal organizations involved in the project, given links to the roles and functions of

the organizations and information availability. Also, the meeting concluded that the two

case studies should focus on: 1. Ben Tre clam (certification); and 2. Binh Thuan anchovy,

pharaoh cuttlefish and Chlamys nobilis scallop fisheries (subsidies and supply chains).

These fisheries were suggested due to the fact that anchovy and cuttlefish are potential can-

didates for entering the MSC certification process (as per WWF/VASEP study), and since

pharaoh cuttlefish is a key export species in most fishing areas in Vietnam (i.e. representa-

tive of the Vietnamese fisheries supply chain).

The consultation meeting in Binh Thuan province concluded that subsidies in the fish-

eries sector were limited compared to other sectors and subsidies that participants were

aware of in other countries (e.g. Thailand, Malaysia). In the context of open access and

small-scale fisheries in Vietnam, middlemen are a key actor in the seafood supply chain

and need to be influenced to improve the sustainability of fisheries through supply chain as

a whole.

The consultation meeting in Ben Tre province concluded that Ben Tre clam have more

advantages compared to other small-scale fisheries in Vietnam in terms of effective man-

agement systems, community management (through cooperatives) and clearer fishing

rights. Stock status information and catch data, as well as the willingness of the local gov-

ernment and fishers to improve the sustainability of the fishery were also considered to be

the key factors leading to the success of the Ben Tre clam MSC process (i.e. Full

Assessment under MSC and recommended for certification).

The surveys in Binh Thuan and Ben Tre provided in-depth information and quantita-

tive data which could not be collected from the consultation meetings.

The two case studies on Ben Tre clam certification and fisheries subsidies and supply

chain for squid/cuttlefish, anchovy and scallop fisheries in Binh Thuan provided opportuni-

ties for local officials and stakeholders to be more actively involved in the project through

policy analysis and other aspects of concern for the study related to sustainability.

The three technical reports on subsidies, supply chain and certification provided oppor-

tunities for central officials and related stakeholders including WWF to be actively involved

in the project through policy analysis and feedback/input related to fisheries sustainability.

The two-day technical workshop provided a platform for both central and local stake-

holders including the private sector to discuss issues related to the focus of the study and

links to sustainability of the sector, as well as to identify key recommendations for improve-

ment.

The validation workshop was organized to provide a key message to the policy makers

at the ministry level as well as to exchange feedbacks among various stakeholders related

to the study findings and recommendations.

METHODOLOGY OF THE STUDY

Tools/methods used in the study

The main methods and tools used in this research included the review of current infor-

mation on subsidies policies and governance issues, key informal interviews (senior

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experts) and stakeholders' analysis and workshops at the central level. In addition, two case

studies in Binh Thuan and Ben Tre province on fisheries subsidies & supply chain (anchovy

and squid/cutter-fish) and certification (hard clam) were conducted to provide more specif-

ic information at the local level. The field studies included key informal interviews, a sur-

vey by questionnaires, local meetings by PRA and workshops. The key tools and methods

used in the study are summarized below:

¢ Monograph method: collection and collation of relevant information and relatedresearch from various institutions in Vietnam including MARD

¢ Expert consultation: key informal interviews, consultation meetings and/or e-mailinglist (MARD, DARD and related departments)

¢ Stakeholder analysis: key informal interviews, consultation meetings and/or e-mailinglist (MARD and related departments)

¢ Questionnaire interviews

¢ PRA: key informal interviews, group discussion

¢ Strengths, Weakness, Opportunities and Threats analysis (SWOT): management, sub-sidies, supply chain and certification

Scope

Due to the limited time and resources, the study focused on key issues as described

above and could not cover all aspects of fisheries subsidies, supply chain and certification

in Vietnam. For example, although, aquaculture subsidies are much higher than in fisheries,

they are not covered in this study.

Concerning subsidies, under the UNEP project scope, this study focused on

Vietnamese government support, not taking into account ODA, loans and grants by donors

or foreign countries e.g. DANIDA, NORAD, ADB, World Bank etc. in fisheries (as these

are not directly related to the WTO negotiations on fisheries subsidies). Further, the inter-

sector support under the Vietnamese government is also not covered in this study.

With regard to supply chains, the study focused more on specific domestic actors across

the supply chain, from main producers to processing plants in Vietnam as well as middle-

men (traders), retailers and domestic consumers. Buyers (importers, wholesalers, retailers)

and end consumers in importing countries were not under the scope of the study in terms of

primary data collection. However, some aspects related to the supply chain as a whole are

analyzed.

In reference to certification, Ben Tre clam is the only fishery that has to date formally

entered the MSC process, including pre-assessment and full-assessment. Therefore, the

study focused more on the process and lessons learned from this fishery based on Ben Tre

DARD and WWF's experience. Other certification schemes in Vietnam are also identified

e.g. the government certification system. However, emphasis is put on the MSC since it is

the largest existing certification scheme and is well- recognized by buyers in many coun-

tries.

14


1. OVERVIEW OF FISHERIES MANAGEMENT IN VIETNAM

1.1. Fisheries governance system and related issues

At the central level, the Ministry of Agriculture and Rural Development (formerly

called Ministry of Fisheries) is responsible for fisheries governance. Under MARD,

DECAFIREP is the focal agency responsible for capture fisheries state- management

including capture fisheries and resources management e.g. vessel registration, control,

monitoring and resources management. In collaboration with DECAFIREP, the Department

of Science, Technology and Environment is in charge of state-management of science,

technology and environment of the fisheries sector. The Department of Agriculture,

Forestry, Fisheries and Salt Processing and Trade is responsible for seafood processing and

export. The National Agro-forestry and Fisheries Quality Assurance Department

(NAFIQAD) is responsible for quality control, seafood inspection and food safety insurance

in alignment with the Animal Health Department on chemicals and animal health control in

seafood. The Informatics Centre for Agriculture and Rural Development- ICARD provides

information and statistics on fisheries for MARD leaders.

Academically, under MARD, the Research Institute for Marine Fisheries-RIMF is

responsible for marine resources assessment, fishing ground identification and forecast.

The Vietnam Institute of Fisheries Economics and Planning-VIFEP is responsible for fish-

eries policy, planning study and advice for MARD on fisheries development in general

including subsidies. Similarly, at provincial level, the Department of Agriculture and Rural

Development (DARD) and its sub-organizations are responsible for the same MARD func-

tions at the provincial levels.

Among MARD and its system, at central level, the Ministry of Environment and

Natural Resources (MONRE) is the focal agency on environment and natural resources.

MONRE has recently formed the Department of Seas and Islands which is responsible for

marine environment governance and functions of policy making and plan development for

integrated costal zone management (ICZM). The Ministry of Commerce and Industry (MoI)

is responsible for international trade and WTO affairs. The Division of WTO under the

Department of Multiple Boundary Trade falls under MOI. The Ministry of Finance is

responsible for state-finance management and decision-making on proposals of subsidies

from other ministries including MARD (fisheries subsidies) to the prime minister for

approval.

In terms of resources management, the governance system has been set-up from the

central to the provincial level. However, the decentralization of the top-down system is still

limited. It has been noted that presently there have been plenty of conflicts or gaps and poor

15


communication related to the governance structure of capture fisheries. The roles and

responsibilities of various organizations are not clear, especially after the MOFI/MARD

systems were merged in 2006. For example, concerning the Sea Turtle Action Plan, MPAs

and the Bycatch Observer Program etc., DARD officials usually reported that they were not

aware of their activities, roles and relative functions. There has generally been so much

attention to extension programs and technical matters that administration is relatively lack-

ing etc. In addition, due to the poor budgeting regime for the fisheries governance system

work, the numbers of officials working in fisheries management is very limited. Only 700

government officers supervise more than 1 mill km2 of EEZ and 95,000 sea-fishing -ves-

sels (Vu Van Tam, 2009). Also, there is a lack of equipments e.g. patrol boat, fuel for patrol,

uniform cloths etc. Hence, the patrolling and controlling activities are poor, resulting in a

lack of capacity to fully address unsustainable practices including IUU fishing.

The rules and regulation system is part of the Law of Fisheries (2003) but the enforce-

ment is very poor due to the above mentioned reasons. In particular, as the budget for gov-

ernance is limited under the open access regime, it is very difficult to properly manage fish-

eries resources.

In Vietnam, fisheries resources management identifies only fish resources and fishers

as targets of management (i.e. not supply chains). With the recent introduction of the

ecosystem based management (EBM) approach in the fisheries sector, habitat protection is

under more consideration, for example with the formulation of the MPA network (15 MPAs

were proposed under DECAFIREP, MARD) in 2006. However, progress in utilizing MPAs

as a fisheries management tool has been limited due to a variety of factors including lack

of an overall MPA enabling legislation, inadequate budgets and resources, lack of commu-

nity-based management and poor integration between relevant authorities (WWF, 2008). In

addition, the new Biodiversity Law supports habitat protection and regulations on coastal

development etc. However, since it is new a great deal of effort to bring the Law into life

is needed.

In terms of fisheries subsidies, VIFEP, the Department of Finance and DECAFIREP

are responsible for studies and advice to MARD on fisheries subsidies and related issues.

Subsidies can also be developed from the bottom-up approach through the functions of the

provincial and/or the local Peoples Committees (PPC/DPC) and DARD. Those institutions

can submit proposals for subsidies and ask for the support of MARD and the central gov-

ernment on the urgent issues. Recently, the subsidies strategy for Pangasius consumption

aligned with a Steering Committee was formed, but a similar system has not been formu-

lated for capture fisheries products.

In terms of general fisheries, in 2006 a National Steering Committee for Sustainable

Development was formed under MOFI (later MARD) but the mechanism has not worked

properly. Theoretically, two meetings would have been organized per year to advise the

MOFI/MARD minister. However, due to the low budget, the fact that work was not full-

time based, the concurrent undertaking of a number of tasks and the ad hoc management,

there have been few significant briefings or records submitted to the MARD.

For supply chains in capture fisheries, no organization is fully responsible for coordi-

nation and no-single organization of the government is fully responsible for the institution-

16


alization of regulations and responsibilities of actors in the seafood supply chain. Most of

the processing plants or exporting companies can develop the supply chain for their own

system, but there is limited innovation. All of the seafood processing plants are sourcing by

conventional ways, purchasing raw materials from middlemen with various sources and

with limited traceability.

FICEN/ISCARD and VIFEP have conducted studies on supply-chain of seafood, the

role of middlemen, co-operatives in fisheries marketing and management, but have not

especially looked at the supply chain as a whole. The findings of these studies indicated that

in the context of small-scale fisheries, the role of middlemen is crucial and irreplaceable in

terms of gathering raw materials, providing fishers an easy access to markets and re-distrib-

uting seafood products. Co-operatives could be additional or alternative ways to improve

the supply chain to be more effective and reduce the negative aspects of middlemen (fish-

ers in constant debt and obligation to middlemen who provide them money to fish or

upgrade vessels and gears; lengthened supply chains, more complicated traceability etc).

However, cooperatives also have their own issues e.g. weak management capacity, diffi-

culties in consensus building and limited influence on the local government. In addition,

GTZ has been doing some work related to the Pangasius value chain review and improve-

ment but Pangasius is a farmed fish species, not capture fisheries. Hence, there are no suc-

cess cases of good supply chains of Vietnamese seafood that have been recorded and

shared.

Presently, VINAFIS and VASEP have functions related to linking producers and the

rest of the stakeholders along the seafood supply-chain. However, there has been limited

success due to several reasons. The cooperation from producers, middlemen, traders, pro-

cessing plants, wholesalers, retailers and end consumers is very poor. In the future, these

organizations can play a more important role in linking actors in the supply chain through

lobbying the government for related rules and regulations or setting up their own rules and

regulations which were agreed by their members.

In terms of certification, NAFIQAD is leading seafood safety and hygiene certification

and VietGAp aquaculture in collaboration with the Department of Aquaculture and the

Vietnam Association of Seafood Exporters and Producers - VASEP. There is no organiza-

tion actively engaged in eco-labeling for capture fisheries from the central government

side. It is suggested that DECAFIREP should propose to MARD that it should ask for this

function since it is the right organization to take this to talks, but now the agency is very

weak in certification capacity: understanding and promotion. By then, DECAFIREP should

be strengthened for its capacity in seafood eco-labeling and certification e.g. MSC under

DANIDA funded project (FSPS II).

In relation to civil societies, at the central level, VASEP is a strong professional organ-

ization in seafood export and processing in Vietnam. Also, the Vietnam Chambers for

Commerce and Industry-VCCI is a professional organization responsible for the private

sector related to trade and industry in general including seafood enterprises. However, it

has been noted that VASEP and VCCI focus more on the processing and exporting compa-

nies rather than on small-scale fishers. Also, relations between VASEP and VINAFISH are

17


still limited in linking fishers to processing plants. The cooperation between the two insti-

tutions should be strengthened to improve the supply chain and certification promotion and

enable the voices of fishers and processing plants to influence decision making on fisheries

subsidies.

18


Policy support

Technical and communication support

Remark: VINAFIS and VCA provide technical and communication support (dash arrow) onlyand coordination/links between fishing companies and cooperatives are based on their ownrules and regulations agreed by its members

A general schematic structure for fisheries management in Vietnam is outlined inFigure 1 above. DECAFIREP is the central agency responsible for capture fisheries man-agement including vessel management, logistics, fisheries inspection and resources conser-vation. DECAFIREP is under control and supervised by the MARD minister. Other institu-tions under MARD have joint management with DECAFIREP in related issues e.g. seafoodsafety under control by NAFIQAD and seafood processing and trade under DAFFS.However, the cooperation/communication between DECAFIREP, VASEP and VINAFIS onresources management, fisheries production and processing and exports is limited.VINAFISH is relatively week in resource management and VASEP is only focused on pro-cessing and export.

At the provincial level, DECAFIREP is fully responsible for fisheries management atthe provincial boundary, through its sub-departments. Sub-DECAFIREP is also jointly man-

Figure 1. Management structure of fisheries resources management in Vietnam

aged with other institutions. However, as a local fisheries management institution at thefield level, Sub-DECAFIREP collaborates with the Coast Guard and Marine Police to con-trol illegal fishing and foreign vessels operation in Vietnam's territorial seas.

Seafood trade management is more complicated. At the central level, the Ministry ofCommerce and Industry (MOIT) is fully responsible for trade management includingseafood. However, as the sector management agency under MARD, the Department ofAgriculture Forestry and Fisheries Processing and Trade is newly formed with focus onstate management of seafood trade and processing. NAFIQAD is responsible for food safe-ty issues and data on import/export is managed by the Custom Office.

With regard to WTO issues including TBT, SPS, subsidies and CountervailingMeasures, the Department of Commerce and Industry Policies for Multiple Boundariesunder MOIT is responsible for this as the state-management agency. However, VCCI andVASEP - civil societies with a non-profit base - are very strong in seafood trade.

At the provincial levels, under PPC there is DOIT that is responsible for trade andindustry management at the provincial. However, there is no organization at DARD thatfocuses on seafood trade. Only VCCI and VASEP have branches at the ecological-econom-ic regions e.g. Mekong but not at the provincial levels. Also, the Small-Medium EnterprisesAssociation has many seafood companies as members.

Depending on the provinces, the cooperation among those institutions related to tradeand processing at the central and local levels is limited and not formalized.

19


Policy support

Technical and communication support

Figure 2: Management structure of seafood trade in Vietnam

Remark: VCCI and VASEP provide trade and communication support only (dash arrow) andcoordination/linking between seafood processing plants and seafood export companies arebased on their own rules and regulations agreed by its members

1.2. Fisheries development in Vietnam

Table 2: Fisheries development in Vietnam (2000-2008)

20


Year Total yield

(mill. Tons)

Capture fisheries

(mill. Tons)

Aquaculture

(mill. Tons)

Exported value

(bill. USD)

2000 2.00 1.28 0.72 1.48

2001 2.23 1.35 0.88 1.78

2002 2.41 1.43 0.98 2.01

2003 2.54 1.43 1.11 2.20

2004 3.07 1.92 1.15 2.40

2005 3.43 1.99 1.44 2.74

2006 3.69 2.00 1.69 3.36

2007 4.15 2.05 2.10 3.76

2008 4.58 2.13 2.45 4.51

Source: annual report of the Ministry of Agricultural and Rural development and the Ministry

of Fisheries

During the last several years, along with the overall development of Vietnam, the fish-

eries sector has made great progress in terms of output and remains a very important sec-

tor of the economy. The average growth rate was 7.9 % per year - contributing greatly to

the industrialization and modernization of the agriculture and rural sectors. Since 2006,

Vietnam has been ranked among the top 10 leading exporting countries in fisheries over-

all. Marine fish-catches increased from 0.7 mill tons in 1990 to 2.1 mill tons in 2008 and

employed 700 labors directly and 1.5 mill labors indirectly.

In 2008, the total production of both capture fisheries and aquaculture in Vietnam was

4.85 million tons, with exports valuing about 4.51 billion USD. There were 130,000 fishing

vessels of which 95,000 marine fishing vessels were recorded in 2008.

Table 3 Export quantity of some key species originating from capture fisheries in Vietnam

Products Export quantity

(tons)

Tuna 52.842

Squid/cutter fish and octopus 82.199

Marine fish 241.769

Wild Shrimp (not farmed shrimp) 48.381

(SOURCES: VASEP, 2007)

Due to the poor statistical system, the project team cannot get the data on catch from

the MARD system due to the fact that it is only aggregated by commercial group rather than

categorized by each species individually.

However, 86% of vessels are small-scale with engine power less than 90 CV. IUU, no-

traceability and poor food safety are critical problems of fisheries in Vietnam led by over-

capacity and open access regime.

21


(SOURCE: MOFI, 2006)

Figure 3. Fisheries total capacity and Catch Per Unit Effort of Vietnam from 1985-2005

During the 20 years between 1985-2005, CPUE has dropped from 1.11 ton/HP/year to

0.35 ton/HP/year indicating the poor status and/or serial depletion of the stock. It can be

stated that Vietnam fisheries are in a state of over-capacity and in most cases overfishing.

Table 4: Indicators of overfishing in Vietnam

Type of stocks Stock (tons) TAC (tons) Catch (tons)

Marine Fish 4.180.000 1.700.000 1.422.300

Crustacean 44.402 15.272

Cephalopods (cutter-fish;

octopus) 123.200 49.250

442.000

Total 4.225.634 1.720.197 1.864.3 00

(SOURCE: MARD AND GSO, 2006)

The figure shows that the catch in 2006 was 1.864.300 tons which was more than the

recommended Total Allowable Catch (TAC) of 1.720.197 tons. The total catch in 2008 was

much higher: it was 2.1 million tons which is in excess of the TAC of 1.72 mill tons, imply-

ing overfishing in Vietnam.

Under the Master Plan of Fisheries Development of 2010, a target of only 50,000

marine fishing vessels operating in 2010 was highlighted. However, as of December 2008

(and following a more systematic nationwide inventory) 123,610 vessels are estimated to

be in operation. Although the Master Plan aims to reduce the number of fishing vessels con-

siderably, fishers can upgrade several small-vessels to larger vessels/large-scale to fish off-

shore, or stop fishing to seek other jobs. However, the enforcement of the Plan is very poor

and the goals of reducing the number of vessels to 50,000 will be un-achievable. Also, it

should be noted that the vessel-reduction goal, even if achieved, may not mean capacity

reduction (for example if the boats are converted to bigger offshore boats with large capac-

ity). It is important to note that the Master Plan does not advocate "capacity reduction" per

se, just vessel reduction.

However, over-capacity and over-fishing are not solely problems in Vietnam. Other

problems e.g. IUU, food safety, un-traceability, un-branded and inefficient uses of

resources are also observed which threat the sustainability of the sector, not only in terms

of resources, but also trade aspects.

Table 5. Record of destructive fishing cases in Vietnam (1998-2007)

22


No. of records 1998-2000 2003 2007

Explosives 1792 84 37

Electrics 15658 2530 1069

Poison 106 60 15

(SOURCE: NADAREP NEWSLETTER NO. 3, 2008)

1.3. Fisheries management-related issues

As mentioned above, fisheries management in Vietnam faces several problems e.g.

overfishing, over-capacity, conflicts with other sectors, IUU, poor food safety, poor trace-

ability etc. They can only be solved through the adoption of ecosystem based fisheries man-

agement with focus on co-management, MPA and ICZM. Sufficient resources in place are

also needed to achieve these objectives, as well as overall vessel-reduction, effort control

and capacity management as listed in the Master Plan.

Issues of fisheries management in Vietnam

¢ Open access regime is a key problem leading to overcapacity and overfishing which

needs to be more significantly addressed. Due to open access, every one can access

fishing areas and there is no effective mechanism to control fishing entry. Therefore,

too many people, but not enough fish leads to competition and destruction of fisheries

resources and habitats and contributes significantly to IUU (illegal, un-reported and un-

regulated) fishing.

¢ Under the current system of state-management, there is a shortage of resources (HR,

finance) to effectively manage, monitor, enforce and regulate fisheries, There is also

a lack of management information (number of vessels, position of operation, catch,

CPUE) and a shortage of officials (quantity and quality). These issues cannot be solved

quickly without a reform of the system.

¢ Poor enforcement of the law and legislations is commonly observed and there is a poorresponse of fishers to regulations.

¢ These all lead to poor food quality and safety and there is no brand or international rec-ognized eco-labeling that was adopted in Vietnam. This is a threat to the sustainabili-ty of the sector.

In addition, poor statistical data, limited potential for improved management systems,

poor transparency etc. are problems that ultimately reduce the potential for future sustain-

ability of the sector.

Co-management can support to solve those problems through:

¢ Shifting from open access to rights based fisheries (group users right system); fishersbecome more responsive if the fishing right is granted (related to long term benefits)

¢ Support to mobilize resources (HR, financial) from the society for better managementof fisheries (especially local level)

¢ Support to develop the management information system (No of vessels, position ofoperation, catch, CPUE)

¢ Reducing the management cost of the government through active participation of thelocal community to fisheries management

¢ Enhancing the enforcement of the law and legislations

¢ Strengthening the involvement of other stakeholders to participate in the fisheriesmanagement instead of the government only

If the change from an open access to a rights based fisheries management system

through co-management regimes in Vietnam takes hold, it can solve many of the above

mentioned problems. As long as the fishing rights are granted to the coastal fishers to man-

age, they will have more responsibility to conduct appropriate practices, ensure traceabili-

ty, food safety and control the access of new vessels. They will also have more power to

bargain with other actors along the supply chain, especially middlemen.

Ecosystem based fisheries management through the Marine Protected Area network

and/or harvest refugia could be an additional approach which the Vietnamese government

is promoting. Since 2006, the Master Plan of 15 MPAs has been formed in Vietnam. The

network covers about 10% of Vietnamese EEZ along the coast of Vietnam including

islands. However, to date only 4 MPAs have an official designation.

23


2. FISHERIES SUBSIDIES IN VIETNAM: OVERVIEW, ISSUES AND CHALLENGES

2.1. Overview of fisheries subsidies in Vietnam

In order to understand fisheries subsidies in Vietnam, it is better to visualize the wholecontext of the economy policy and external factors of the country historically and see howit impacts on the fisheries sector and the subsidies policies.

Vietnam has conducted economic reform since 1986, shifting from a central economyplanning into market-oriented strategies which also provide a new environment for fish-eries development. Since 1995, after bilateral economic agreements with the US, theexport of seafood to the EU and Japan also expanded.

Table 6: Vietnamese macro-driver influence on fisheries investment and trade

24


Mile-stone Description

1986 Economic reform: from a central planning economy to a market

oriented economy, which allows seafood export to non-communist

countries (e.g. Japan)

1994 Removal of the embargo by the US

1996 Bilateral Economic Agreement with the US: creates a huge way for

exporting seafood to the US, the EU and Japan

1999 Enactment of the Law on Business (1999) which provides more

freedom to allow the formation of private enterprises (before only the

state-owned enterprises were formed and in operation)

2007 Vietnam access to the WTO (led to removal of seafood export reward)

2008 Fuel prices rocketing

INFLUENCE ON SUBSIDIES

The economic reforms of "Doi Moi" paved the way for seafood exports to meet a grow-ing demand of the global seafood (before 1986, Vietnam mainly exported limited quanti-ties of seafood to the Communist countries). The reform policy in 1986 also allowed theseafood sector to access non-communist societies. Therefore, the investment actors, includ-ing government support for fisheries, increased. The Vietnamese Government started towitness the huge demand for seafood that increased globally and recognized the opportuni-ty for Vietnamese seafood to access the world market. Thereby it was triggering subsidies.Also, the presence of fishers and fishing in the South China Sea is considered to be of greatgeo-political importance. It is also important for border security. Therefore, as with nearbycountries (China, Malaysia, Philippines etc.), the subsidization of fishing was pursued as ameans to maintain at-sea presence and border security.

The Bilateral Economic Agreement with the US (1996) opened the door for seafoodaccess to three key markers: The US, the EU and Japan. Before, the export quantity wassmall and limited by the embargo of the US. Since 1995, a huge subsidy was provided by

the government including direct supports e.g. credits, fishing ports, and indirect information,administrative etc.

In 2003 Vietnam developed the new Law on Cooperatives which promotes collectiveeconomic sector development, different from State-owned enterprises. The law and relat-ed policies encourage people including fishers to form cooperatives and get certain prefer-ential support from the government in terms of access to land, to credit and administration.The new law created a more favorable environment (i.e. less influence of government onco-ops, and freer mechanisms) for more cooperatives being formed. As a result, the num-ber of weak or bankrupt cooperatives has reduced, but effective and profitable co-opera-tives increased. However, privately-owned fisheries are still dominating in Vietnam.

Support policies and WTO Rules

The analysis of the suggested subsidies policies against the provisions of the Chair'sDraft shows that several exemptions could be applied to the Vietnamese case. Theseexemptions are either due to the fact that subsidies promote more sustainable fishing (e.g.switch in gear type), or fall under Special and Differential Treatment for DevelopingCountries (e.g. vessel modernization or infrastructure). However, according to the Chair'sDraft, some basic management conditions should be fulfilled in all cases where a countrywants to subsidize (Art. V). This also applies to developing countries and includes: scientif-ic assessments and capacity/effort managing measures that can be controlled by relevantinternational organizations (such as FAO), vessel registries and other elements based oninternationally recognized best practices.

Government support to the fisheries sector in Vietnam

Table 7: Overview of the Vietnamese government support/investment in the fisheries sector

25


Year Projects/programs Sources of

information

Total value

1997-

2001

Credit for off-shore fishing program MOFI 1300 bill VND (~94

mill USD)

1996-

2000

Government subsidies for basic

infrastructure of the fisheries sector

(included all above);

Of which for capture fisheries

(estimated 30%):

MOFI 1.750.600 mill VND

525.180 mill VND

2000-

2005

Government subsidies for basic

infrastructure of the fisheries sector

(included all above);

Of which for capture fisheries (25%):

MOFI 6.830.910 mill VND

170.978 mill VND

2005 Removal of resources tax (2-10%

depending on the level of catch and

gear types) and revenue tax

The "Chair's Draft" has been published by the Chair of the WTO Rules Negotiating Group, Ambassador Guillermo Valles, in November 2007. It is currently

being discussed in the Rules Negotiating Group, but divisions between WTO member states persist and a consensus on major points has to be found before

suggested provisions might become binding trade law. Available under:

http://www.unep.ch/etb/events/FishSubsidies29jan08/chair%27s%20text%20on%20fish%20subs.pdf

(SOURCE: MOFI, 20001, 2006 & UPDATE 2008)

According to Sumaila and Pauly 2006 (eds.) Vietnam fisheries subsidies were$316,633,000 USD in total. Subsidies amounting to only $48,537,000 US are good subsi-dies, those amounting to $ 268,096 are bad subsidies and the amount for ugly subsidies is0. (the concepts of "good, bad and ugly subsidies" are presented in Annex 5). The follow-ing subsidies are considered good subsidies: fisheries management, legislation, statisticalinformation program, assistance for entering into sustainability projects (e.g. by-catchreduction), MPA, sciences e.g. selected fishing; insurance for vessel and fishers, support incase of storm and disasters, extension; fishing storm shelters and fish auction. Bad subsidiesare: removal of resources tax and revenue (2005). Ugly subsidies are: fuel subsidies (short-tem 2008-2009); credits for off-shore fisheries (lacking mechanisms to ensure does not vio-late the coastal fishing plans).

Introduction of key government support or subsidies in the fisheries sector in Vietnam

¢ Government management support for fisheries: including administration and inspector

system, fishing gear management, employment and labor management, inspections

and monitoring; other programs to support capture fisheries, e.g. project of marine fish-

eries information (total: 450 billion .VND); objective: improved management & effi-

ciency;

¢ Budget for resource protection, e.g. development of MPAs or coral reef systems;

¢ Scientific research for fisheries management, e.g. resource state and fishing grounds,

models for management, application of advanced science and fishing technology (most

institutes are self-financed but fisheries-related projects are funded by the public budget);

Since 2005, there have been no resource and no revenue tax for fishing companies (2-10% depending on the fisheries). Further, there has been a 50%-cut in the registration taxfor the construction of new vessels & purchase of new machines for offshore fishing. During1990-1998 there was a regulation of resources tax and fishers did only have to pay 3-10%of the normal rate depending on the gear types. In 1998, it was re-adjusted to 1-2% exceptfor fishing of endangered high value species such as sea-cucumber and pearl oyster. In2005, the resource tax for fisheries has been removed. There are two main reasons: 1. dueto the poor database system on the number of vessels updated, the government could notcollect the tax of fishers; 2. as more than 80% of fishing vessels are small and those fishersare poor, the removal of the tax is also considered as supporting the poor and aims to reducepoverty. Due to the fact that data on vessels are not updated and monitored, the governmentcould not collect the vessel safety registration fee.

26


2008 Fuel subsidies for fishing vessels

due to an increase in the fuel price

NADAREP/MARD 1600 bill VND

(~91 mill USD)

2006 –

2010

Fishing port and storm shelter

centre program

MOFI 1934,1 Bill VND

(~ 150,693,250

USD)

2009-

2012

Fisheries Information Management MARD 450 billion VND

(~ 26,5000,000

USD)

2005-

2015

Fishing port, landing sites, fish

market

MARD 3044,5 bill VND

(~ 169,000,000

USD)

Today, off-shore fishing does not have to pay resources tax within the 5 initial years,and enjoys a reduced (50%) tax after 5 years.

¢ Preferential capital support for offshore fisheries: 1300 billion VND capital creditfunded with preferential interest by the government (0.81% per month, 50% lower thancommercial bank) from 1997-2001 for fishers with specialized skills and managementknowledge in offshore fishing;

¢ Investments in fisheries infrastructure: port infrastructure, equipment to transfer catchand load ice, fresh water etc.; anchorages and storm shelters; ports sometimes includ-ing communication infrastructure for weather and market conditions; collection ofcatch data;

¢ Fuel cost support: Support of fisheries and other services on the sea, total support in2008: 1600 billion VND (91 mill USD), support according to the vessel power (threecategories);

¢ Fisheries training and extension program: training for fishermen at the National Centrefor Agriculture and Fisheries Extension with regards to technology for efficientexploitation (incl. avoiding young stocks), storage and quality and changing careerfrom inshore to offshore fishing or aquaculture; investment from 2001-2008: 180 bil-lion VND for the fisheries sector, of which 18 billion VND for capture fisheries.

¢ Building and buying new vessels, renewing machines (decision No. 289/Q?-TTg):Support for building new vessels (70 million VND/year) and renewing machine powerfrom 90HP (18 million VND/year); duration: 2008-2010; for vessels with 40-90 CV: 10million VND/year

¢ Insurance support for vessels and fishers (decision No. 289/Q?-TTg): Support of vesseland accident insurance by covering 30-100% of insurance costs; duration: 2008-2010;

¢ Calamity Support: Support to overcome consequences of natural catastrophes, mainlystorms, including sanitary care and credits with preferential interest rates for boatrepair.

27


BOX 1. Definition of subsidy (in WTOChair Draft TN/RL/W/213 30November 2007)

1.1 For the purpose of this Agreement, asubsidy shall be deemed to exist if:

(a)(1) there is a financial contribution bya government or any public bodywithin the territory of a Member(referred to in this Agreement as"government"), i.e. where:

(i) a government practice involves adirect transfer of funds (e.g. grants,loans, and equity infusion), potentialdirect transfers of funds or liabilities(e.g. loan guarantees);

(ii) government revenue that is other-wise due is foregone or not collected(e.g. fiscal incentives such as taxcredits) ;

(iii) a government provides goods or serv-ices other than general infrastructure,or purchases goods;

(iv) a government makes payments to afunding mechanism, or entrusts ordirects a private body to carry out oneor more of the type of functions illus-trated in (i) to (iii) above which wouldnormally be vested in the govern-ment and the practice, in no realsense, differs from practices normal-ly followed by governments; or

(a)(2) there is any form of income orprice support in the sense of ArticleXVI of GATT 1994;

and(b) a benefit is thereby conferred.

2 In accordance with the provisions of Article XVI of GATT 1994 (Note to Article XVI) and the provisions of Annexes I through III of this

Agreement, the exemption of an exported product from duties or taxes borne by the like product when destined for domestic consump-

tion, or the remission of such duties or taxes in amounts not in excess of those which have accrued, shall not be deemed to be a sub-

sidy.

3 A benefit is conferred when the terms of the financial contribution are more favourable than those otherwise commercially available to

the recipient in the market, including, where applicable, as provided for in the guidelines in Article 14.1.

2.2. Discussion on key problems/impacts of fisheries subsidies on resources and

trade

A summary of the discussion points/comments as highlighted in the course of this study:

¢ The abolishment of the natural resources tax reduces operation costs, increases the

income/revenue and allows for the accumulation of vessels and employees. With

regard to the social dimension, it creates inequalities amongst fisheries communities

with different levels of exploitation. It also results in reduced awareness and obliga-

tions of fishers to contribute to the development of society and the country.

¢ A 50% tax cut for the registration of new vessels and renewing machines for offshore

fishing, promotes offshore fishing, supports the privatization of previously govern-

ment-dominated offshore fishing and increases the number of vessels with more than

90 CV power.

¢ The seafood export reward has been applied since 1999 and closed in 2006 just after

Vietnam accessed to the WTO.

¢ Preferential capital support 97-01 had the following impacts. 1,365 new offshore ves-

sels have been built, allowing for more modern techniques and more efficient exploita-

tion (73,128 vessels in 2001). It also led to problems. The recovery rate of the loans

was low since only weak conditions existed for the application. It was only partly effec-

tive for the promotion of offshore fisheries since the criteria of expertise were not con-

sistently applied. There was also a lack of skills/training/storage space/infrastructure to

cope with the increased number of vessels/catch. The objective of reducing pressure

on near shore resources was barely met. Some offshore vessels go back to the near

shore to fish which puts more pressure on the coastal resources.

¢ The infrastructure increased. There are 66 new or upgraded fishing ports in 27 coastal

provinces, as well as 16 storm shelter places. Some ports are efficiently operating, oth-

ers have weak management and logistic services and are thus less efficient. The tempo

of the transfer improved and therefore there is improved post-harvest treatment.

Shelter places contributed to risk reduction. There are also the following problems.

There is no regulation to force vessels to land at official landing sites or fishing ports,

hence, it is difficult to control seafood quality. In addition, in most cases, the issues of

food safety control have not been considered in the design and construction of fishing

ports and landing sites. Hence, poor facilities at the fishing ports lead to a need to sub-

sidize more to provide upgrading.

¢ Fuel subsidies reduced the operating cost and vessels that stayed in ports/landing sites

during the fuel price increase could operate again. Profitability was re-established and

economic consequences for the processing of industry & other post-harvest services

were countered. The positive effect was that in order to get support, owners registered

the vessel (previously over 30,000 small vessels were not registered). The problems

were that there was a slow subsidy process and complicated initial procedures for

recipients. The division of subsidies into three groups led to partly unfair results. There

are also a certain number of un-used and small vessels that re-operate and exert more

pressure on the coastal overfished resources.

28


¢ The extension program increases productivity but also the knowledge on more envi-

ronmental friendly techniques. It is rarely practical since fishermen cannot afford the

recommended technology. The support is insufficient and unable to motivate fishers to

change their fishing gear toward more friendly practices.

¢ The building/buying of new vessels has merely been used since the costs of new

machines/vessels by far exceed the support given and the loans from commercial

banks are restricted. Therefore, it does not have any impact.

¢ Insurance support for vessels/fishers reflects the concerns of the government on social

aspects of the fisher community. It has a great impact on the happiness of the fishing

communities.

¢ Calamity support reduces losses and related properties However, some problems in theprovision of the support occurred recently.

There are several subsidies that have been analyzed above, but this study has identified 3additional government support programs leading to large impacts on fisheriesresources and seafood trade:

¢ Export promotion program (including export reward end in 2006) to meet the demand

of foreign markets also partly led to overfishing. Due to a high demand of seafood and

good prices on the market, the Vietnamese government promoted the seafood export

program since 1995 with a focus on processing plant development (with some prefer-

able supports). The policy has a great achievement in terms of export quantity and

value, but also exhibited unforeseen side-effects. Due to the fast development of the

processing plants, the shortages of raw materials for processing continues to occur

which has lead to an imbalance of raw materials supply and processing capacity.

According to VASEP, presently, the seafood processing capacity of Vietnam is 5.0-6.0

mill tons of raw materials per year (to produce 1.7-2.0 mill tons of processed seafood).

Meanwhile the country only produced 3 mill tons of raw materials for export and 1.5

mill tons for direct domestic consumption (www.laodong.com). Concerning resource

efficiency, the VASEP estimates also indicated that about 3.3-4.0 mill tons of fish are

by-products of processing. VASEP's advice is to maintain the processing plants, as they

are needed to import raw materials for processing or re-processing and re-export. It is

said that in the 1st Quarter of 2009, many processing plants are operating less than 50%

of their capacity due to a shortage of raw materials.

¢ Fuel subsidies: have been pushed resulting in more pressure on the fisheries resources

due to the recovery of small-sized vessels to re-fish at sea. Due to high fuel prices,

most of the offshore-vessels have remained dormant, but subsidies facilitate them to

re-fish. Due to low availability of the fish, most small-sized vessels have also stayed in

port, but in order to get the subsidies, they need to prove that they are operating.

¢ Resource and revenue tax: lead to a reduction of the production cost and reduced

responsibility of fishers on resource protection.

The following table provides a summary of the impact assessments above, in terms of

both positive and negative aspects:

29


Table 8: Brief impacts assessment of the key fisheries subsidies and management policies on

resources in Vietnam

30


The table above suggests policies implications for fisheries management and how it

should minimize the negative impacts of fisheries subsidies. Fisheries management should

be reformed from an open access to a rights based fisheries management regime to control

the access to fishing. Also, a mechanism to ensure that off-shore fishing vessels (who

received subsidies) do not return to the near-shore to compete with small-scale fisheries is

needed (e.g. revoke of the credits for the un-responsible vessels). Improvement in the sci-

entific basis of fisheries management through better forecasting and assessment of offshore

fishing grounds is required. In relation to the issue of the excessive number of processing

plants, instead of an import tax reduction for raw materials, the government can close the

non-food safety processing plants or promote aquaculture rather than wild fisheries.

Although the Master Plan in a way already does this i.e. looks at aquaculture to meet the

export growth targets while maintaining zero growth in capture, the problem is implemen-

tation i.e. both capture fisheries and aquaculture production continue to increase.

Type of subsidies Impacts on resources

Credits for off-

shore fishing

Increases fishing efforts for off-shore and near-shore

Some off-shore vessels go back to the coastal areas to fish due to

the difficulty to find fish off-shore and because of the high cost

Fuel subsidies (both

near shore and

offshore)

Recovery of decommissioned vessels to continue fishing, otherwise

they will disappear from the sector

More small-vessels operate in the coastal area, more harm to the

resources

Small-vessels get more than large vessels, more small vessels

increased since they expected to get more in the future

Tax & revenue Losing responsibility of fishers on resource protection (no payment

on resources tax)

Infrastructure

development

(fishing port and

storm shelters)

Regardless of the management system, no effect on decisions on

capacity and effort, but marginal effects on entrance into and exit

from the industry (Porter, 2004).

Impacts more on food safety & hygiene rather than resources

Science &

technology

Improved selected fishing, better for the resource sustainability

through the application of advanced technology and science based

fisheries management

MPA network Improve resources recovery & generation through habitat

conservation

Fishing pressure may be transferred to areas

not in the MPA Network (i.e. no parallel objectives to reduce

fishing effort together with establishing protected areas)

Open access No control of vessels entry, contributes to overfishing

Export promotion Too many processing plants, pressure to over harvest to meet goals,

contributes to overfishing if no import of raw materials

Improve

management

Support better fisheries management

Table 9: Brief impacts assessment of the key fisheries subsidies and management measures

on trade in Vietnam

31


Type of subsidies Impacts on trade Remarks

Open access Poor control of catch which

might lead to export supply

Export promotion Increase in export and import

of raw material for re-

exportation

Credits for off-

shore fishing

Contributes to an increase in

fish catches and therefore to

more exports

Fuel subsidies Reduction of the production

costs, therefore impacts on

trade distortion

Provide incentives for fishers to

continue fishing under increased

fuel price

Resources &

revenue Tax

Reduction of the production

costs, therefore impacts on

trade distortion

Provide incentives for fishers to

secure their livelihoods

Infrastructure

development

Support domestic marketing

and food safety & hygiene at

fishing ports

Science &

technology

More advanced technology

applied to fishing and

processing leads to more

exports and imports of raw

material for re-exportation

Indirectly impacts on trade

MPA Stringent controls of fishing

reef fish and endangered

species lead to less catch and

therefore less export

temporally. However, in the

long run, exports might

increase due to resource

recovery.

Indirectly impacts on trade

Improve

management

It is expected that there might

be more exports in terms of

value and quantity.

The case of anti-dumping has not occurred in wild-fishing but only occurs with

Vietnamese farmed pangasius and shrimp, reflecting the fact that the subsidies for wild

products have not yet violated trade regulations. However, recently, Vietnamese sword fish

and tuna were refused by Portugal and Spain as imports to those countries are subject to

trade barriers. These countries also criticized that Vietnam is not a full-member of WCPFC

and that those fish are not appropriately traced. In addition, new EU regulations are soon

coming into force regarding catch documentation schemes for traceability of all wild cap-

ture fish entering the EU. This EU legislation is going to have a big impact on Vietnam's

tuna exports (and other capture fishery species).

Most of those subsidies caused the Government's concern about offshore fisheries

development and aimed at securing the livelihood of the fishing community (who are

impacted by fuel price increases and storms) but the negative impacts of the subsidies on

resources and trade have not been properly considered. In addition, some problems in the

implementation process need to be solved e.g. return credits/loan by fishers were very low

and the ambiguity in fisheries subsidies and poverty subsidies led to the fact that small ves-

sels received more subsidies than large-scale vessels. Therefore, fuel subsidies conflicted

with the policy of reduction of fishing efforts. Further quantitative studies on the impacts of

the subsidies on fisheries resources and trade need to be conducted based on initial findings

from this study.

Today, Vietnam has no subsidies on exports, no reward policy for exports (i.e. more

export = more financial reward provided to exporting companies) as was the case before

2006 and there is no tax difference on domestics and export products. Vietnam also does

not prioritize the use of domestics rather then imported products. The taxes of seafood

imports are consistent with all export products.

2.3. General conclusions on fisheries subsidies

¢ The open access regime is the key factor leading to overcapacity and overfishing in

Vietnam and can be considered as a lack of management

¢ Vietnamese subsidies ($316,633) have been much smaller compared to other foreign

subsidies (e.g. Japan 3,931,013, 000 $US; China-862,450,000 $US and Malaysia

536,318,000 $US since 2006.) Sumaila and Pauly 2006 (eds.)

¢ However, most of the Vietnamese subsidies involved, although limited, have had many

negative consequences that were not addressed or managed

¢ Therefore, wiser subsidies should be considered. This will also have relevance for the

WTO negotiations on fisheries subsidies.

¢ Subsidy programs should identify the key areas for support in ways that small govern-

ment support could create the big positive changes for improving resource protection

not support every aspect

¢ Due to limited data or inaccessible data, the assessment of the levels at which subsi-

dies partly contributed to over fishing in coastal areas is qualitative only, not quantita-

tive

2.4. Recommendations on subsidies reform:

It is suggested to reduce direct fisheries subsidies which lead to overfishing and over-

capacity. Key subsidies should be given to support better management of fisheries e.g.

strengthened workforce capacity, regulation enforcement, monitoring surveillance and con-

trol, information provision, EBM-enabling programs and sciences.

To solve the issue of current overfishing, the subsidies to switch from fishing into other

livelihood should be a priority. Also, due to the fisheries need for more investment to

32


ensure sustainability it is recommended that an improved investment environment for the

private sector actors involved in sustainable fisheries is considered and promoted.

Here are a number of specific recommendations:

In relation to tax policy: Reform tax policy based on catch and the level of destruction

as an instrument to enhance the responsibility of the fishers and ensure fair exploitation of

a key natural resource.

In relation to offshore fishing vessels: It is not recommended to provide preferential

credits for offshore fishing vessels for upgrading small vessels to fish offshore but other

types of indirect supports should be considered. Concerning vessels providing services at

sea, upgrade fishing port facilities to support food safety and catch documentation require-

ments

In relation to logistics/ infrastructure: Continue supporting logistic projects such as

upgrading fishing ports, landing sites to compliance with quality standards of the govern-

ment and importers; support for at-sea services and fish auction market to enhance food

safety and improve benefits for fishers (incentives for fishers to engage in food safety

improvement)

In relation to the policy of fishery extension: improve fisheries extension policies,

especially supporting the use of environmentally friendly techniques and methods

In relation to fishing operations: reduce direct subsidies but provide indirect support for

offshore fishing, those operate friendly fishing practices. These subsidies should be in com-

pliance with WTO rules for developing countries

In relation to fisheries structural change: strengthen subsidies that provide incentives

for change towards less harmful fishing gear and/or that support the establishment of and

transition to alternative livelihoods

Policies of trade promotion: support compliance with international and regional man-

agement rules (UNCLOS, RFMOs); also Vietnam committing formally to obtain full status

in WCPFC and standards (ISO) to improve market access and marketing of Vietnamese

products; support the development of trade-markets for key seafood products at business

and national level

It is also identified that government support should be given to reform the "open

access" regime to a co-management and rights-based management regime that promotes

competitiveness of the Vietnamese seafood through quality improvement, certification and

good governance (fisheries management by legalization, not subjective or ad hoc)

Recommended and prioritized fisheries subsidies are summarized below:

¢ Reform of fisheries information management, including licenses system to ensure

input control; strengthening the monitoring, control and surveillance of fisheries activ-

ities;

33


¢ Promotion of community-based fisheries co-management as a means to reduce fishing

efforts, improve responsible fisheries while reducing intervention and expenses of the

government;

¢ Support the ecosystem based fisheries management including the establishment of

Marine Protected Areas;

¢ Provide scientific research to support efficient exploitation and technological modern-

ization, to create a solid basis for regulation, and to promote environmentally friendly

technologies (e.g. by-catch reducing gear);

¢ Extend membership of Vietnam to international and regional fisheries management

organizations and adjust national policies to their rules;

34


3 KEY FINDINGS ON WILD FISH SUPPLY CHAIN IN VIETNAM

3.1. Overview of the seafood supply chain in Vietnam

35


Figure 4. Supply chain of capture fisheries in Vietnam (Source: Group discussion with stake-

holders under field survey in Binh Thuan and Ben Tre province, Vietnam)

In Vietnam, the fisheries supply chain is dominated by small-scale actors, particularly

the production and intermediary phases.

The decision of "who to sell the fish to" is taken either by the vessel owners, by the

cooperatives' manager boards, or by middlemen (nau vua in Vietnamese). The middlemen

act as a bridge between the fishers and other trading parties. They often provide fishers

with capital or own their vessels which they lease to crews.

At the intermediary stage, prices are more stable than in the production phase but no

value is added. Traceability questions are important at this stage, as they affect internation-

al competitiveness and this is a key aspect determining the sustainability of the whole sup-

ply chain and the fisheries sector.

Domestic consumers have little if no influence on pricing. Demand is high and there

are no seafood consumer associations in Vietnam. In contrast to this, if the product is sold

to an importer it will be the importer setting the price. The importers' influence is bigger for

non-processed products, as they cannot be stored during times of high supply levels.

In general, middlemen are "at the heart of the system" with dynamics and economical

effectiveness. If they operate properly and responsively with regard to food safety and fair-

ness of trade, the markets are stable and vessel owners and fishers can operate firmly. If

the system of middlemen does not work properly, the trading system collapses and prices

may get too high or too low in comparison with the products' actual values.

The main actors along a typical fisheries supply chain are:

Fishers: only fishing oriented, little concern about resource protection and food safety

due to the open access situation and incentives to fish as much as possible; even if they have

some concern, they have almost no power to influence the whole supply chain and even if

they conduct responsible fishing this may put them at a disadvantage due to the open access

situation.

Most of the Vietnamese fishers are not members of any civil societies or professional

organizations e.g. VINAFISH or VCA. Nobody fights for the definition or protection of their

rights. They depend on the middlemen in terms of operational costs. Few people provide

guidance to them on what to fish, how to fish more responsibly and how to move towards

better systems. Their voices are too low in the marketing aspect; bargaining power has been

driven by middlemen and other actors.

However, fishers can change their behavior and practices toward more responsibility

for trade, resources and food safety if there is more pressure from buyers, the government

or civil societies of which they are members e.g. VINAFIS or VCA

Middlemen: mainly concerned with their own benefit, profit-oriented. They are also

concerned about the social aspects of helping fishers gain access to easy loan but this is also

in their own interest (benefit). The middlemen are one of the key drivers that can have an

influence on the change of the practices of fishers and help processing plants develop and

operate a better traceability system if incentives were provided e.g. premium prices and a

more stable price for traceability products.

Processing plants: the most powerful actor in the wild fish supply chain but generally

do not want to develop their own supply chains for their companies because it is either too

expensive or difficult (given the nature of small-scale fisheries); very difficult to gather fish

on a quantity-demand basis due to seasonality and uncertainty of raw material caught.

Processing plants do not want to buy directly from fishers because they have to work with

thousands of fishers to buy enough fish, and it would be very time-consuming and expen-

sive in terms of human resources and travel to buy directly.

The processing plants in Vietnam are mainly looking at brand, food quality and food

safety certification e.g. HACCP, SQF, ISO but very few are looking at eco-labeling e.g.

MSC.

Domestic distributors (trader, retailer, restaurant etc.): In Vietnam, consumer

associations are very weak. Hence, these people are only concerned about the price differ-

ential, food safety and hygiene, and cannot be a potential actor who can drive positive

change in the system. It is unlikely that domestic consumers will take action to change the

system for the better.

Domestic consumers: presently this segment buys seafood mainly based on visual

observation and price with no brand association. In most of the cases, seafood sold at the

36


local market is of lower quality compared to that sold for export, hence prices usually are

lower. A gradual increase in the demand for brand and trademarks is noted, but consumers

have low concern or awareness about traceability and eco-labeling/certification issues.

International buyers (retailers, wholesalers, importers): there is an increased

demand for food safety, brand, traceability, trademark and certification among these buy-

ers and this can potentially influence significantly the supply chain through Vietnam pro-

cessing plants.

International consumers: Likewise there is an increased demand for brand, traceabil-

ity, trademark and certification/sustainability among these buyers and they can influence

significantly the supply chain through their purchasing choices/preference. This dynamic is

already being seen in some Asian countries where retailers and/or importers, in response to

consumer "seafood choice" campaigns, look to source more responsible products. While

this dynamic has been slower to take shape in Vietnam, some initiatives are already under-

way such as preferential sourcing by European wholesalers from Ben Tre (MSC clams) and

with the Ibromar B.V interest in sourcing Circle-hook caught tunas.

There are several cases of international partnerships, such as Business to Business

(B2B) initiatives to support the enhancement of the supply chain e.g. Hai Nam seafood pro-

cessing plant in Binh Thuan (supply octopus to Japan) and IncomFish exporting companies

in Ho Chi Minh City (supplying Ben Tre clam to the EU). The international buyers positive-

ly influence the supply-chain through such private-sector initiatives (interview with DARD

Binh Thuan and Ben Tre). Under this mechanism, buyers ask for continuous improvement

of the quality and supply chain. Similarly, the supply chain of tuna in central provinces, can

also be gradually improved through the influence of Ibromar B.V application of circle hooks

and Observer Programs in tuna fishing to reduce by-catch under a project with MARD,

WWF and NOAA. This is a good example of how to improve sustainability of the sector

through private sector involvement.

There are further examples to help make the supply chain work more responsibly. The

model of Services Cooperatives at sea is to buy fresh fish to reduce the cost of fuel and

enhance the efficiency of the fishing activities. It also enhances the food safety and there-

fore is more favorable from a trade aspect. Due to the success of the Service at Sea model,

several processing plants started to organize At-Sea-Vessels fleets to buy fresh fish and

supply it directly to the processing plants (e.g. in Phu Quy, Binh Thuan province) without

the involvement of middlemen.

But exactly how Services Cooperatives affect resource protection is questionable. It

may lead for example to more pressure on fish due to the increased time fishing vessels

operate at sea and the increased level of catch.

There are no examples of resource sustainability enhancement through supply chain

improvement except the case of circle hook in tuna fishing adopted by Ibromar and WWF

and to some extent the new interest of European wholesalers in the Ben Tre MSC product.

The promotion of selective gear by the government and the private sector is currently lim-

ited. Presently, the majority of seafood processing plants supply wild seafood which is

37


caught by any kind of gears without consideration about how they are caught. Rather there

is only concern about the size of the product (which determines the price).

Since 1999 there has been a project of the Vietnamese government on traceability of

bivalve mollusks which successfully improved food safety by enhancing quality control

along the supply chain, from fishing grounds, middlemen, traders and processing plants to

export to the EU and other markets.

Public-Private Partnerships (PPP) in Vietnam fisheries are at a limited scale currently,

and no procedures/guidance on implementing PPPs exist especially in terms of infrastruc-

ture requirements. Capital contributions remain unclear and likewise an unclear benefit-

sharing between the government and private enterprises are noted as the key barriers for

the promotion of PPP to the development of the economy including the fisheries sector

(Vietnam Net 2008).

3.2. Discussion on problems/challenges in seafood supply chains

In the study, problems and challenges in achieving sustainable supply chains have been

identified. The most important of these will be presented in the following:

There is a lack of supply chain management: processing plants or exporting companies

depend on the middlemen (to gather raw materials) and they could not develop their own

supply chain where they can control the quality of post-harvests. Meanwhile a single mid-

dleman might supply materials to more than one processing plant and there have been very

few effective traceability systems set up for capture fisheries.

Further, cooperation between actors in the supply chain (to improve the food safety and

traceability) is weak due to the lack of institutions or mechanisms available to coordinate

the system. The processing plants could potentially be the key agency coordinating the sys-

tem but they have limited capacity currently for this. There is also little pressure from for-

eign retailers to influence the domestic supply chain. The cost of conducting traceability

programs under small-scale fisheries (millions of fishers but very small quantity of catch

per vessels) is also a limiting factor.

Processing plants usually do not accept small-fish size for their processing (except fish

sauce) due to the fact that the demand for such fish is not high in the foreign markets; in

domestic markets there is no need to have industrial processing of such fish. This has impli-

cations on how end-domestic consumers and domestic retailers influence the fisheries

resources and sustainability of the sector.

Therefore, if the goal is to reduce the quantity of small size fish in the catch, domestic

consumers, fishmeal plants, middlemen, retailers and the fishers themselves must all be

influenced, not the processing plants (see Table 10).

By-catch of sea turtle and shark is an issue, but fishmeal plants almost never purchase

sea turtle and shark as materials for their production; they only buy the low value fish with

lower quality (which could not otherwise be used for human consumption). In Vietnam,

while some dolphins are harvested (although limited) due to low population levels) fishers

38


never catch whales due to traditional beliefs (i.e. whales represent godly qualities). As

indicated, several fishers have turned to fish sea turtles as target species although they

know it is illegal (see Table 11).

There have been few "win-win" situations observed in the supply chain of seafood in

Vietnam. However, potentially one is the contract system between processing plants and

middlemen (leading to more pressure on fishers to produce more responsibly with regard to

trade and food safety); the other is B2B between foreign importing companies and domes-

tic exporting companies to supply better seafood (e.g. Hai Thuan seafood processing com-

pany in Binh Thuan and Japanese importers on cuttlefish and octopus).

Table 10: Resource impacts on the supply chain: actors related to small-size fish or low value

or "trash-fish" reduction in Vietnam

39


Actors Behavior/practices Impacts on small size fish

resources

Domestic consumers Using small size fish for

their diet

Lead to demand for small

size fish

Fish meal plant Using small size fish for

their production

Lead to demand for small

size fish

Middlemen Purchase all fish size to

supply the demand

Open the incentive for

fishers to catch small size

fish

Fishers Catch all fish size as long

as they have profit even if

the Law does not allow to

catch small fish size

Lead to IUU fishing and

resource reduction

Table 11. Resource impacts related to the supply chain: Actors related to by-catch in Vietnam

Actors Behavior Impacts on by-catch

Some foreign consumers

(e.g. China)

Prefer to use sea turtle and

shark (fins) as food or

souvenir

Constant demand for sea

turtle and shark products

Domestic consumers Prefer to use sea turtle and

shark as food or souvenir

Constant demand for sea


Processing plants Some process sea turtle

and shark (e.g. shark fins)

Middlemen Due to high profit, they

supply and distribute sea


Increases the incentive for

fishers to catch more

Fishers Rarely return sea turtle and

shark back to sea since

they can sell it

-No selective fishing

adopted as it is expensive

Leads to IUU fishing and

resource reduction,

ecosystem impacts

Table 12. Fisheries-related habitat destruction in Vietnam

40


Actors Behavior Impacts on habitat

destruction

Foreign and domestic

consumers including the

retailers and restaurants

Demand for all fish, limited

concern about the origin of

fish including reef-fish or if

fish caught by IUU fishing

except the fact that concern

is rising among consumers

and some restaurants in

Europe and North American

Indirectly

Middlemen No concern about where the

fish come from, no concern

about whether habitat is

destroyed or damaged, only

profit oriented

Indirectly

Fishers Concern about the profit

only; if there is a profit,

they will conduct IUU etc.

There are sophisticated

measures developed by

fishers to “hide” from

patrollers

Directly, fishers are willing

to violate the Fisheries Law

(e.g. forbidding trawling in

shallow areas), to fish in

MPA and IUU fishing;

profit-driven

The actors are not aware of collaborative mechanisms, nor do they trust collaboration

particularly. Collaboration can reduce the transaction cost but is also associated with risk.

Capture fisheries are risky and hence not many people want to invest in the sector.

According to the Ministry of Planning and Investment (MPI), fisheries is one of the sectors

with the lowest FDI in Vietnam in comparison with other sectors, due to the high risk. In

2007, among 20 billion USD of FDI in Vietnam, only 5% of those investments were made

in the agriculture-fisheries sector (of which mainly on services of agriculture and aquacul-

ture). There were no FDI projects on capture fisheries (FICEN, 2005).

The government has the policy (QD 80-TTg 2005) of food-stuff consumption promo-

tion, including seafood through contract systems (to improve the trade responsibility, the

quantity and quality commitment) and better cooperation (rather than create difficulties)

between four actors: farmers/fishers, scientists, business enterprises and the government.

However, the policy implementation is very poor and does not contribute to reforming the

situation. Presently, stakeholders continue to deal with cash and ad hoc deals rather than

contracts with more responsibilities attached to each deal. It is reported that due to the lack

of mechanisms (responsibility of each actor if the contracted is not respected and violated)

and incentives (e.g. access to the lower interest rate credit) this has led to poor implemen-

tation of the policy and therefore to no improvement of the quality and prices of the prod-

uct.

The high risk of the fisheries sector and uncertainty of resources has influenced the

supply of raw materials for processing. Hence, it is not easy to ensure the success of con-

tract systems between companies and the fishers. Actors must depend on the middlemen to

gather raw materials based on the dynamics of the system. In addition, the processing com-

panies have no plan to develop their own supply chain system due to very high expenses

under small-scale fisheries.

In this small-scale context, the role of civil organizations (e.g. VINAFIS, VASEP and

VCA) are gradually playing more important roles in terms of influencing the supply chain

to better support their members including fishers (e.g. market information, policies, rules

and regulations, protection of their members' benefits). However, such entities are still rel-

atively weak and have little power, thus they cannot function as properly and effectively as

possible. One positive example, however, raised by VASEP is the vertical linkages for

Pangasius that has been recognized and supported by the government. This initiative can

also be applied for wild fish but requires major adjustment due to the more sophisticated

system involved.

There are also other problems that have been identified:

¢ No mechanism exists for competitiveness improvement of products created by process-

ing plants that have the strongest capacity in the supply chain;

¢ Very few actors have initiated the improvement of supply chains through the contract

with the middlemen who commit themselves to supplying materials for a processing

plant only (i.e. without selling to other processing plants) with trusted quality, ensured

quantity and traceability;

¢ Producers usually have limited or no concern about market requirements on seafood

quality/specifications and they do not feel they will lose benefits without these;

¢ Impacts of practices of stakeholders along the supply chain including fishers on the

environment and resources are not a particular concern.

¢ In Vietnam, while some dolphins are harvested (although limited) due to low popula-

tion levels) fishers never catch whales due to traditional beliefs (i.e. whales represent

godly qualities).

¢ Food safety and quality are not properly/sufficiently considered by most of the stake-

holders

¢ Poor awareness of certification, eco-labeling or branding are observed in most fish-

eries.

¢ Fishers have minimal impact on prices as storage facilities are rudimentary and fish rot

easily, i.e. they have to sell their goods quickly. They thus carry the highest risk of

financial losses and are the vulnerable link in the supply chain - especially because

they are often financially dependant on middlemen who invested in their fishing gear

and operational costs;

¢ Cooperation throughout the supply chain is generally poor causing uncertainty in plan-

ning;

41


¢ Environmental awareness is low among all actors along the national supply-chain -

profits and prices always come first;

¢ Influencing the supply-chain towards more sustainability is difficult as the manage-

ment scheme is not available and poor efforts to ensure traceability are made. Also the

diverse, small-scale nature of the fisheries sector makes certification and traceability

difficult to implement;

¢ The market preference also influences the sustainability of the fisheries e.g. the fact

that consumers prefer eating small-size of anchovy leads to small mesh size fishing on

this species.

¢ Food safety regulations are often ignored and cheap chemicals are used for preserva-

tion purposes; the complaisance of some importers lead to un-comprehensive food

safety standards that provide a few gaps for low quality products to be exported.

¢ Poor facilities for seafood storage in fishing vessels and landing sites are one of the

critical issues leading to the reduction of the quality and to contamination.

¢ At the intermediary stage, traders often lack capability to control quality and ensure

traceability meanwhile the stage take longest time for food transportation. Food qual-

ity thus suffers.

3.3. Recommendations for the improvement of the supply chain

Promotion and adoption of traceability systems for all actors along the supply chain

should be conducted with more focus on fishers and middlemen. The seafood traceability

program should be national-wide and under the umbrella of national guidelines for trace-

ability. Species fisheries e.g. Ben Tre clam, Binh Thuan scallop or Phu Quoc anchovy fish-

eries should be considered.

At the production stage - the critical stage to improve the effectiveness of the whole sup-

ply-chain - some selected actions should be taken as follows:

¢ Promotion of sustainable fishing practices, including through targeted government sub-

sidization ("good" subsidies);

¢ Improvement of the fisheries infrastructure to meet the food safety and traceability

requirements;

¢ Alternative livelihood programs that are realistic and based on appropriate feasibility

studies, with a focus on the improvement of education (including through targeted gov-

ernment subsidization);

¢ Establishment of a disaster relief fund for fishers.

At the processing level:

¢ Processing plants should initiate the economic contracts to fishers to ensure sustainabil-

ity of the sector (vertical linkage).

42


¢ Promotion of B2B with the foreign buyers as one of the tools for improving sustainabil-

ity of the supply chain.

¢ Raise the initiative of the PPP in terms of improvement or upgrading of the facilities at

fishing ports to meet the food safety requirements at ports which presently are very

poor.

¢ Development of at-sea service cooperatives purchasing seafood from fishers and mar-

keting ice, fresh-water and food-stuffs for fishers at sea, to reduce the costs for both

parties and improve the quality of seafood.

At the distribution and consumption (buyers, importers, retailers) level:

For the domestic market

¢ Strengthen the capacity of Consumer Associations in terms of food safety and quality

to protect the rights of the seafood consumers;

¢ Raise consumer awareness of food safety and quality, especially at the national level,

through relevant organizations, as well as through the mass media;

¢ Establish and disseminate clear guidelines for seafood labeling and traceability com-

prehensively and nation-wide.

For the importing markets

¢ Buyers, importers and retailers should provide more pressure and incentives (e.g. mar-

ket for eco-labeling products) to reform the Vietnamese seafood supply chain whether

through the B2B or through incentives of premium prices for continuous improvement

of the supply (quality, quantity, traceability).

43


4. KEY FINDINGS ON CERTIFICATION IN VIETNAM

4.1. Certification approaches in Vietnam

Given the above situation and the global trend towards the use of eco-labels as a tool

to manage fisheries, some efforts have also been undertaken in Vietnam to promote certi-

fication as a tool - complementary but not alternatively to governmental fisheries regula-

tion - to improve fisheries sustainability. The MSC certification is currently the prevailing

eco-label and requires that the following three principles be met:

i) The fishery must be conducted in a manner that does not lead to over-fishing or deple-

tion of the exploited populations and, for those populations that are depleted, the fish-

ery must be conducted in a manner that demonstrably leads to their recovery;

ii) Fishing operations should allow for the maintenance of the structure, productivity,

function and diversity of the ecosystem (including habitat and associated dependent

and ecologically related species) on which the fishery depends;

iii) The fishery is subject to an effective management system that respects local, national

and international laws and standards and incorporates institutional and operational

frameworks that require the use of the resource to be responsible and sustainable.

There are two fisheries that have been previously identified as potential candidates for

certification: Ben Tre Clam and the traditional Phu Quoc anchovy fishery (Thuy, 2009).

WWF Vietnam has been supporting the assessment phases of the former as well as stake-

holder meetings to identify further fisheries for potential MSC certification (see list in

annex). The following main problems were encountered in terms of eco-certification in

Vietnam:

¢ Most fishing communities were not aware of MSC certification, and did not show much

interest since it is not a required element for selling at national/international markets

(exception: fishermen in the oceanic tuna, lobster, Soc Trang clam, Bac Lieu shrimp

fisheries and Ca Mau tiger shrimp brood stock);

¢ Data deficiency was a problem in most fisheries;

¢ The prevailing picture was characterized by:

- downward trends in the population abundance,

- poor level or no knowledge of the population dynamics,

- high interaction of fishing gear with the ecosystem,

- poor sophistication of the management system,

- nearly no enforcement of fishery regulations,

44


- no organization at fishers' level, hence no community participation in the fishery

management,

- socioeconomic level of the fishing community poor or average,

- fishermen have only control over the harvesting step in the market chain,

- all fisheries supply the national market while half of them are also linked to the

international market (swimming crabs, anchovy, scallop, mackerel and tuna,

oceanic tuna, lobster, clam and shrimp fisheries).

From the list of 20 identified fisheries, WWF and its partners/advisors selected two

fisheries for potential entrance into the MSC certification: Scallop fisheries in Binh Thuan

and Soc Trang Clam fisheries.

There are some other factors that influence certification:

¢ Interest from processing factories: There is a processing company in Vietnam that holds

the MSC Chain of Custody certificate named INCOMFISH based in Ho Chi Minh City.

INCOMFISH is currently only dealing with Alaskan Pollock, Pacific salmon and

Pacific halibut, but is interested in products from Vietnamese fisheries once available;

¢ Interest from other industries: IBROMAR BV, a seafood company from the

Netherlands importing tuna from Vietnam and selling it in the EU has shown their

interest in sustainable fisheries through their contribution to the WWF program on by-

catch reduction in tuna fisheries. They support the government in MSC pre-assessment

for yellow fin and big-eye tuna long line fishery.

¢ Local availability of certification bodies: Currently, TCQSI, a MSC certification body,

has a representative office in Vietnam. Capacity of staff in this office is still below the

requirement's that would allow them to carry out MSC assessment. However, this

promises the reduction in the MSC certification cost.

¢ Awareness amongst consumers: WWF has conducted several sustainable seafood cam-

paigns in key markets to promote sustainable fisheries products. Based on a traffic light

approach (consumer choice between red, yellow, green), Vietnamese fisheries will

also be categorized into different colors. The MSC products, as well as aquaculture

products that meet the BMP, ShAD, PAD and TAD standards, will be part of the green

category and therefore clearly distinguishable.

Other eco-labels and approaches: Other than MSC, "Naturland wild fish" is still being

developed and more focused on inland fisheries. In Vietnam, the shrimp fishery in Ca Mau

mangrove has received the "Naturland" label (for aquaculture), leading to a 20% increase

in prices. The "Friends of the Sea" label has been acquired by some Vietnamese fisheries,

such as Squid and Cuttlefish. However, MSC certification have 3rd party certification

processes that are fully transparent, with true stakeholder engagement, that meet the FAO

guidelines and that challenges itself with continuous improvement programs. Hence, it is

seen as credible and robust enough to be fully accepted by the buyers, processors and NGOs

across the industry.

International and regional Initiatives: The FAO Committee on Fisheries (COFI) has

officially adopted a set of voluntary guidelines for the eco-labeling of fish products in 2005

45


. In the region, ASEAN/ SEAFDEC conducted a Regional Study on Eco-labeling among the

ASEAN/SEAFDEC member countries in 2006, on the role of the Asian governments with

regards to eco-labeling, on the practicability of labeling schemes and on the readiness of

fisheries sub-sectors to acquire certification in 2007. This was planned to apply to some

pilot studies . The APFIC workshop (Asia Pacific Fisheries Commission, 2007) found that

the small scale fisheries have particular potential for being sustainable and socially-equi-

table, especially if based on co-management arrangements.

4.2. Case studies:

Ben Tre Clam Fishery: Ben Tre clam fishery is one of the traditional and artisanal fish-

eries in the coastal area in the south of Vietnam. The capture method of this fishery is hand

gathering, usually following re-laying of spat ("seed") in previous years.

The pre-assessment was first conducted in January 2005. The full assessment took

place in last August 2008 and the first impressions were positive. The final results will be

available and open for public comments in a very short time. A method for assessing small

scale and data deficient fisheries was also tested during the full assessment (MSC GASS-

DD project). Fishermen in Ben Tre are well aware of environment protection issues and the

assessment process also improved the management system of communities.

Main lessons learned include: (i) the interest and commitment of the fishery manage-

ment body is key for achieving certification, cooperatives play a crucial role, (ii) support

from the government and other stakeholders is essential and agreement on objectives

amongst stakeholders is indispensable; (iii) solid communication and information for the

fishing community is important, including information about marketing questions; (iv) given

the high cost of assessment and re-assessment, an arrangement has to be found, such as

between WWF and DOFI. The contribution from the industry (processors and exporters)

should be the main replacement for WWF in other future MSC fisheries.

Binh Thuan Bivalve (Scallop) Fishery: Local authorities have tried to address the prob-

lem of overexploitation and rapid depletion of scallop via different management measures.

While leading to certain successes, this has not been enough to effectively stop the unsus-

tainable and illegal fishing activities and could not harmonize protection and harvesting

objectives. It is expected that community based management measures will be developed

with the MSC certification procedure to raise awareness and improve sustainable resource

use.

Some considerations concerning the two fisheries: Ben Tre took 3 years from the pre

assessment to the full assessment, while at the pre assessment time, it already had some ini-

tial cooperatives and a good traceability system. For Binh Thuan scallop and other fisheries,

these are not initiated yet; therefore, the improvement of the fisheries, especially the man-

agement system, to meet the MSC standards would take more time and much more effort.

46


4. http://www.fao.org/fishery/topic/12283/en

5. Researches have not been implemented

4.3. Challenges and opportunities for certification in Vietnam

In the technical study, the following challenges/barriers have been identified for certi-

fication:

1. At case study level:

¢ Management is the main challenge to most fisheries in Vietnam since resources for

implementation of legislation are insufficient;

¢ While traceability is relatively simple to ensure in the case of clam, it gets more diffi-

cult if more actors are involved such as middlemen in other fisheries;

¢ Awareness of fishing communities is relatively low, higher amongst processors and

exporters;

2. General issues identified in literature:

¢ Not always clear in how far working and living conditions of fishermen are improved

through certification;

¢ Danger that confusion arises with many different non-harmonized certification

schemes;

¢ Possibility of high quality products being exported and lower quality being "dumped"

locally;

¢ Eco-labeling could be used as a new form of barrier to trade;

¢ Data deficiency and the cost for assessment is often impeding certification;

¢ Tropical multi-species fisheries where many different gear types are used create high

problems of bycatch and are more difficult to certify;

Market access:

1. At case study level:

¢ No link between small-scale fishermen and the market as all their links go through

middlemen and processing companies;

¢ Very low awareness of and interest in sustainability issues among Vietnamese con-

sumers;

¢ Motivation for certification is low if an international market is already established for

which certification is not required.

2. General issues identified in literature:

¢ Many different, country-specific rules and regulations for entering regional markets;

¢ Large difference in power between fishers and recipients/consumers as fishers cannot

set the price, but consumers can demand certificates, papers, etc. and influence pric-

ing;

47


¢ Due to a lack of information on species and volumes landed, it is difficult to predict

which fisheries could have export potential (with or without certification);

The following benefits for the fisheries and opportunities to promote certification have

been identified in the case study area:

Global Trend

¢ Experience in the case study area shows that certification/branding is beneficial for

fishers, with an increase in incomes;

¢ More emphasis should be put on the comparative advantage of small-scale fishers

(SSF) - MSC is currently developing risk based assessment tools to facilitate the

assessment of SSF with limited data availability.

Requirements by the Export Market

¢ Standards that are required by the export markets usually get implemented very quick-

ly and efficiently, such was the case with the Certification of Origin (CO) demanded

by the EU in 1997;

¢ With an increased interest in certified, sustainable products, the market share for small

scale fisheries could increase, thus raising income for the certified fisheries.

Hidden Benefits

¢ Fishermen in Ben Tre do not only receive a higher income (presently 10-15% higher

price), but also learn about resource and environmental protection;

¢ Binh Thuan DARD start to request that scallop be helped to access MSC and that

capacity be built on this

¢ Community management techniques gain better recognition and technical and finan-

cial support can be more easily organized;

¢ Certification increases the community's sense of ownership, which often translates into

responsible resource management;

¢ Understanding the market and supply chains helps in better managing the fisheries

resource and controlling production and trading.

Certification and Resource Efficiency, Post-harvest and Social Elements

While the reports focused mainly on environmental certification, the appropriate scope

of certification may be debated. It may be considered to include social and economic crite-

ria. Only one label, Naturland, includes other than environmental criteria, covering social

(employment standards, fishermen livelihoods health service) and economic issues (access

to financial services).

Cost and Benefit Sharing

Ecolabel certification is perceived as expensive considering the external costs (certi-

fiers) and the internal costs (changes in practices, changes in equipment, paper work, etc).

48


The general lack of finance is said to prohibit fisheries in developing countries from secur-

ing certification. Small-scale producers in developing countries are less likely to be able to

'front-up' the money required for certification due to difficulties in accessing credits and

lower overall earnings/profits. Raising funds from the government and from stakeholders in

developing countries is therefore likely to be more difficult than in developed countries,

where eco-certification is in many cases taken in charge by public institutions (national,

regional, local). However, if any small-scale fishery in Vietnam shows serious interest in

MSC certification, there are opportunities to find financial support from organizations like

the Sustainable Fisheries Foundation and the Packard Foundation.

In the reports, fishermen are described as the players taking the most risks and being

the less rewarded, whilst players down the distribution chain (middle men, exporters, end

sellers) are said to generate higher profits at selling Vietnamese seafood.

4.4. Incentives for certification

Besides the pro-active work carried out by NGOs (WWF in the case of Vietnam), the

number one incentive for fishermen to enter a certification program is the potential gain

they may collect from branding the product carrying a positive -and certified- value. In

developing countries, small scale fisheries are run by fishermen with low education. The

lack of education and the poverty are incentives to not comply with the fisheries regulation

and constraints when they exist. And also, by entering MSC assessment this provides a way

to assess the obstacles for sustainability - perhaps more an incentive for the government but

an important one. Fisheries in developing countries can potentially access support funds

from interested global Foundations and/or NGOs for an assessment of management con-

straints by a third party and get the issues on the table. Thus, even if pre-assessment did not

recommend full assessment, the process itself is of some benefit, identifying gaps and

issues that otherwise were not being as directly and independently assessed.

Lack of Knowledge, Awareness and Expertise

The complexity of certification procedures and the limited related capacity of fishery

managers and officials in local, national and regional management bodies are considered to

substantially impede the use of certification. The lack of awareness of fish resource vulner-

ability is another severe impediment to applying eco-certification. This is a matter of con-

cern to both fishermen and local regulating agencies. Improving the awareness of all fish-

eries players is a key factor for success. Middlemen, while usually unaware or little aware

of eco-labeling do at least recognize that it may present to them a commercial opportunity

and potential benefit to sell to markets where there is a demand for certified products.

Talking to fishermen involved in the MSC Ben Tre clam fishery, they said that they

would understand quite well resources and environmental protection issues. They do not

know all about MSC requirements in details but they talked about protection of the envi-

ronment, resources and how to keep resources for the future generations. In this specific

case, the eco-certification program has improved the awareness of fishermen. One of the

key lessons learned from Ben Tre is that the role of the local authority is the provision of

requested information and facilitation of cooperatives and other stakeholders working

together to improve all weaknesses to meet the criteria of the MSC.

49


Data Deficient Fisheries

Assessing fishery environmental performances against measurable standards (man-

agement and outcome indicators) requires a large amount of data. In the absence of such

data, certification is difficult. To date, only MSC offers a risk-based procedure to offset the

deficiency of fisheries data. Improving production and access of fisheries data is one way.

Besides the FAO, several private bodies and organizations attempt to fill this gap. WWF is

at the moment working at building a data bank ranking marine stocks according to their sta-

tus.

Impact of Certification on Management Process and Structure

Entering a certification process has contributed to set up the right management body

and inspired the creation of similar bodies in other fisheries. Ben Tre DOFI has formed the

first cooperative. When this cooperative has been on track, it was easier to form other coop-

eratives in the community. In the case of Ben Tre clam, DOFI has several roles: i) direct-

ing the organization of the cooperatives, ii) technical support for them in getting the scien-

tific information including inviting research institutes to carry on some researches, iii) link-

ing keys in the chain of custody together to apply for the certification.

4.5. Recommendation for certification road map

APFIC 2007 has agreed that the government and regional organizations as well as the

private sector could support the entries of fisheries into certification schemes as fisheries

are currently less of a driving force for certification than those bodies, possibly due to the

lack of immediate or appearance benefits accrued to them. In the long term, the cost should

be transferred toward consumers and benefits to producers. In the current Vietnamese fish-

eries context, we cannot expect much from the fishermen with regard to applications for

certification even though they may well understand the benefit it brings. Government and

other interested organizations need to support this process as a management tool.

It is possible that the demand for certified products from outside Vietnam may act as a

sufficient driver to enable the exporters and processors to put pressure on the government,

especially at the Provincial level to take action to improve the data collection system and

to feed the data into a more rational approach to stock assessment. Low impact harvesting

systems may also need to be encouraged, although some of the most damaging gear such

as beam trawls is not widely used.

Several companies down the supply chain (Vietnam exporter, USA retailer, Europe

importer) have expressed an interest in Vietnamese certified fisheries products. This hap-

pened through the communication of certification organizations like MSC and Naturland.

The continuing effort of WWF and VASEP up to date did also provide more information for

the processors and exporters community. However, the best communication channel on this

issue should be taken by the Government and VASEP through their trade promotion strat-

egy/activities. Moreover, sustainable products can also be promoted through the companies

who are either having export markets or partnerships/communications with whole-sellers or

retailers in the market which require sustainable certifications.

50


It may be possible to build export demand through the processor/exporters that have

sales staff to promote new products either directly to existing customers or through promo-

tion at (e.g.) trade fairs. At least there are exporters having some proven expertise in sup-

plying eco-labeled products for export and they may be the best actors to take the lead on

this. Capacity outside these exporters is limited and some support would be needed to

ensure the success of any eco-labeling initiative.

More effort should be made to use certification and labeling to emphasize the compar-

ative advantages that the small scale fisheries may have (e.g. "organic" style). The seafood

campaign would help to pull consumer consideration on or at least raise awareness of

selecting fisheries products.

One of the main constraints that Vietnam fisheries face at entering eco-certification is

the low education of fishermen and the lack of expertise of the industry and support agen-

cies. Transfer of expertise can be considered as a tool to address these - e.g. through verti-

cal partnerships with partners along the value chain or through exchange of know-how with

experienced fishermen or experienced regulatory agencies. Ben Tre DARD and clam fish-

ermen can be the successful pilot model for others to follow. At the same time, active

processors who hold and will held MSC CoC soon will be the starting actors for spreading

the awareness of demanding sustainable fisheries sources from the market.

Vietnamese fishermen suffer from low ex-vessel prices and consequently low income.

To enhance value and the competitiveness of the fisheries products, it is necessary to

strengthen the control of hygiene and food safety. There is much room for improvement on

these issues in Vietnam. Offering safe products for sale is a pre-requisite condition for mar-

keting environment friendly seafood. Quality is by no doubt a solid means for improving ex-

vessel price.

To promote the certification schemes, each element in the value chain of fisheries

need to actively contribute to the process. In which:

Government: should support the development of the mechanism, policies and invest-

ment in building the eco-label system, the information system of the market,

¢ The Central Government should reform the subsidies policy toward the promotion of

certification e.g removal of taxes or fee for registration of sustainable vessels; more

investment in sustainable fishing fleets or fisheries; provision of lower credits to sus-

tainable fisheries, provision of low cost or free information which promote sustainable

practices or technologies in fisheries. The government should design the subsidies

mechanism in such a way that they cannot turn "bad" and start having a negative impact

on the fisheries resource after a few years or so.

¢ MARD should support local initiatives and improve fisheries management to make

sure fisheries law is enforced and hasten the implementation of Decision 123 on giv-

ing the user right to local communities. In this way it should be possible to get direct

backing for eco-labeling initiatives;

¢ The Provincial Peoples Committees back the initiative. Without their support, it is very

likely to fail. The provincial fisheries management bodies should support the commu-

51


nities in the improvement of the management system which is necessary for certifica-

tion

¢ DOFI are committed to enforcing MARD fisheries policy and to enforcing fisheries

law. It would be essential to ensure that legislation relating to catch limits, size limits,

close seasons and access are enforced to enable effective management of the fishery

and fish stocks. This would require strong political support from the Minister down to

the local community level;

Involvement of the private sector and organizations in supporting fisheries applying for

certifications should be encouraged. The strategy is that the efficiency and effectiveness of

industry-led initiatives will be improved through larger-scale MSC promotion by the indus-

try. It cannot be based on the support from NGOs like now and neither from the government

as the industry (processors, exporters etc.) has power and direct contact with fisheries. They

are keys in the supply chains and they should take a leading role. They can provide support

in the monitoring of the harvest, in traceability, in the development of the chain of value,

in communication and in linking fisheries to wider markets. They have a key role in paying

the cost for certification at the beginning.

Other organizations (research bodies, NGOs): support in conducting researches, sur-

veys to fill the data gaps of resources and environment, technology of preserving, raising

awareness for the fishing communities in the certifications/branding and sustainable fish-

eries.

Fishermen: forming the community based management model, monitoring the stock,

ensures the sustainability of the resource and environment during their harvest.

52


CHAPTER 5. LINKAGES BETWEEN SUBSIDIES, SUPPLY CHAIN AND CERTIFICATION

To analyze and discuss the linkages between fisheries subsidies, supply chain and cer-

tification, the following issues have been identified and discussed.

1. The Government can positively influence the structure of supply chains

through better mechanisms and legal framework, not merely subsidies.

From the resources protection perspective, overfishing and overcapacity are the criti-

cal problems of fisheries management in Vietnam. The fundamental cause of the problems

is open access. There are a range of potential subsidies in Vietnam: good, bad and ugly (see

chapter 2). Bad and ugly subsidies potentially contribute to overfishing and overcapacity.

To solve the problems, a rights based fisheries management regime should be adopted in

Vietnam through a fisheries co-management and ecosystem-based approach prevalent in

management.

From the trade perspective, poor traceability, lack of branding and certification and

concerns over poor food safety are critical problems in Vietnam. Middlemen have been

identified as the key actor for the positive restructuring of supply chains, although middle-

men themselves cannot directly change the supply chain. The re-structuring of the fisheries

supply chains should be started from buyers and processing plants since they are linked to

markets and carry with them more economic clout to change the way supply chains oper-

ate. The costs of improving food safety and traceability should be shared among all actors

including processing plants and buyers.

The role of the government is to support the enforcement of the related regulations and

fine those who have violated regulations. Also, while the government may directly inter-

vene with individuals or groups among the supply chain, the government can also have an

indirect influence through professional organizations that support members related to fish-

eries e.g. VASEP, VINAFIS, VCCI, VCA. The government should strengthen capacity and

empower those organizations to enable them to fulfil their potential. The government

should support positive initiatives such as the establishment of supply chain partnerships

(e.g. contract systems), the development of cooperatives etc. that contribute to better vali-

dation and more sustainable exploitation of the resources.

2. Improving traceability along the supply chain under existing national stan-

dards, as well as effectively utilizing policy measures of importing coun-

tries

Although the government has issued regulations on seafood safety, traceability as well

as standards, enforcement is very poor (especially at the fisher and middlemen level).

53


Hence, it can be stated that the degree of traceability along the supply chain in Vietnam is

very low. In view of requirements by importing countries, particularly the EU, the govern-

ment has conducted a national program of control of food safety and traceability for all

actors from producers to processing plants toward the bivalve mollusk since 1997.

However, the reasons why there are no other similar programs designed for other species

are still un-known.

Recently Spain and Portugal did not import tuna and sword fish from Vietnam due to

verification issues as Vietnam is not a member of the Western and Central Pacific Fisheries

Commission. Other countries might apply the same scheme to refuse Vietnam tuna to

access their market. As a member of WCPFC, Vietnam must follow the strict rules of the

WCPFC including traceability and harvesting quota. Presently, Vietnam is preparing docu-

ments to be submitted to the WCPFC in view of becoming a member, initially as a

Cooperating Non-member.

Therefore, the requirement of importing countries related to food safety, traceability

will have strongest impacts on the supply chain and sustainability of the fisheries sector.

Certification can support the compliance of fisheries with these standards.

3. Support (financially and non-financially) for the private sector is expected

from the public sector on the road to certification (management system,

data transparency, policy stability, public procurement).

In terms of certification, the private sector can expect "good subsidies" from the gov-

ernment e.g. management system, data transparency, policy stability, public procurement.

Financially, the government could also support a part of subsidies for pre-assessment and

full-assessment for the eco-labeling scheme e.g. MSC. Under the co-management

approach, the fishing right can be granted (as the government support) for some selected

fisheries e.g. Ben Tre clam or Binh Thuan scallop which were distributed in the coastal area

close to the mainland. The management system including scientific information as evidence

for pre-assessment and full-assessment (e.g. MSC) should also be expected.

In relation to some specific fisheries e.g. tuna fishing, the subsidies on circle hook

instead of "J" hook for tuna fishing to reduce turtle by-catch should also be adopted in case

the Vietnam tuna enters the MSC certification assessment. Also, revenue tax and prefer-

able credits for fisheries access to eco-labeling scheme e.g. MSC should be given.

4. Supply chain suitability for implementing certification approaches (e.g.

MSC) and the sharing of costs and benefits.

In case of Ben Tre clam, in the short term, the best supply chain for implementing cer-

tification approaches (e.g. MSC) is still fishers-middlemen-processing plants-buyers-end

consumers as the role of middlemen is still important and powerful in the re-distribution of

fisheries products. However, in the long-run (5-10 years in the future) the marketing roles

of fisheries co-operatives should be strengthened and replace the functions of middlemen

in marketing activities. The cost of certification should be shared between key actors

involved including fishers. The case of Naturland organic shrimp in Ca Mau, Vietnam

should be considered.

54


5. The challenges of reforming fisheries subsidies in Vietnam toward promot-

ing more sustainable fishing practices and management through eco-label-

ing e.g. MSC certification

Key challenges can be identified as below:

¢ Low awareness of central and local authorities on how eco-labeling e.g. MSC certifi-cation support more sustainable fishing practices and management; there are still wor-ries that labeling e.g. MSC certification can be considered new technical barriers totrade (TBT)

¢ Lack of understanding and mechanisms to make sure that eco-labeling (e.g. MSC cer-tification) will support sustainable fishing practices and management; what is the roleof the government in certification?

¢ Lack of mechanisms to ensure that costs and benefits are fairly distributed among theactors in the supply chain because this is the market based instrument, not governmentregulation and how the government is involved in certification promotion is stillunclear to many central and local authorities

¢ Management is the main challenge to most fisheries in Vietnam since resources for theimplementation of the legislation are insufficient

¢ Data deficiency and the cost for the assessment is often impeding certification

¢ High fishing pressure due to economic development but low interest in sustainabledevelopment

¢ Motivation for certification is low if an international market is already established forwhich certification is not required.

¢ No link between small-scale fishermen and the market, as all their links go throughmiddlemen and processing companies

Fisheries cannot afford to pursue certification without support from outside sourcesand/or other actors along the supply chain and without that a clear mechanism of cost andbenefit sharing is set-up. The cost will be too high and beyond the financial capacity of thesmall-scale producers for certification/eco-labeling. Therefore, initial support is neededfrom the government or buyers (e.g. costs of pre-assessment and full-assessment). The costof maintaining the certification and development as well as the cost for review should beburdened by the fishers.

The Government cannot work alone, and cannot press a strong intervention in the sec-

tor as this might risk violating the WTO rule on free trade and competitive laws. Therefore,

55


BOX 2. Cost and benefit sharing in organic shrimp farming in Ca Mau

In 2000 SIPPO initiated the project on organic shrimp in Ca Mau Vietnam with theGerman certifying company Naturland. The premium is given up to 20% after the shrimpaccessed certification. ¾ of the premium is shared among farmers, middlemen and theprocessing factory. ¼ remains in Eco-Fund. The Fund is used for paying the annualinspection, certification, marketing, training and others. in 2006, COOP Switzerlandimported US $3 mill of organic shrimp from Ca Mau

(source: Globalization and Fisheries: Proceedings of an OECD-FAO workshop 2007)

through strengthened capacity of professional associations e.g. VASEP, VINAFIS, VCA or

VCCI, the government can influence the supply chain re-structuring and certification pro-

motion.

Middlemen play an important role but have no capacity of changing the supply systemsince they depend on producers and processing plants and certain consumers. They can beinfluenced by a combination of processors, buyers and fishers.

Processing plants will pay a huge cost to trace the products and make sure that they aresafe if there is poor or no cooperation from primary producers.

Buyers have almost no links directly to producers and processors. Some of the majorrecommendations of this study are important to address this major gap, especially in viewof the overall influence buyers could potentially have on chain actors to promote sustain-ability and/or positively influence subsidies reform.

In summary, fisheries subsides, supply chain and certification are inter-linked besidesthe specific characteristics of each. The brief chart below summarizes the inter-links amongthese three components.

Links between subsidies (effect) and supply chain

56


Effect on supply Can increase supply: most of the above mentioned

subsidies including export oriented policy

Can decrease supply: resource tax and revenue tax

subsidies

There have been very few subsidies aimed at reducing the supply of seafood inVietnam due to the export-oriented policy by the central government as a tool of "fastdevelopment". In addition to this goal, the Vietnamese government is planning to import $2billion US of raw materials of seafood for re-processing (VASEP, 2009). Vietnam plans tobe an "industrial country" in 2020 based on an export oriented model. Hence, it is estimat-ed that the seafood export promotion policy will be dominating until 2020. However, thepolicy of shifting from a quantity based to a value based fisheries sector has been official-ly stated in the Master Plan of Fisheries.

Links between subsidies and certification

Effect on the fisheries

management

Subsidies promoted sustainable fisheries management:

pilot co-management, MPA, legislation, information,

registration and inspection, research and fish auction,

promotion of certification and EBM/bycatch programs

Effect on fishing pressure Increase pressure in the fishing stocks: most of bad and

ugly subsidies identified

Reduce pressure in the fishing stocks: MPA, input

(fishing effort) control, gear technology

Effect on certification There are several support policies of encouragement of

food safety certification e.g. HACCP, SQF etc., however,

no clear subsidies for eco-certification have been

observed.

The overlapping among those implied policy options for three issues, hence the link-

ages among those described in Table 13.

Table 13: Linkages between fisheries subsidies, the supply chain and certification in Vietnam

57


Links between the supply chain and certification

Effect on more responsible

supply chain

Sustainable certification might be a more positive

influence rather than food safety certification; however,

most of the processing plants are presently concerned

more about the food safety certification as all markets

require this, while only few rising markers require eco-

certification

Direct links between producers and processing plants will

be a more ideal supply chain pattern in the context of

small-scale and rights-based measures

Characteristics Objectives Common objectives

Fisheries

subsidies

Government

support for the

fisheries sector

Must be aligned with

related WTO

negotiations, not

lead to overfishing

and overcapacity

Should target better

fisheries management

including improvement of

the supply chain and

promote certification

Subsidies should not lead to

but address issues of

overexploitation and over-

capacity

Fisheries

supply chain

Inter-relationship

between trade

and benefits

among actors of

the chain

Must meet the food

safety, traceability,

social and

environmental

requirements

Enhance cooperation

between actors and the

government, reduce the

government cost of

inspection, more effective

in terms of resources,

environment and the trade

responsibility, create

motivation/incentives for

certification

Certification-

market

driven

instrument

Originally

promoted by

consuming

countries

through buyers

Address food safety,

traceability and

social and

environmental

requirements

Require that actors along

the supply chain work

together, reduce the

government cost of

inspection, address issues of

traceability and overfishing

6. CONCLUSIONS AND RECOMMENDATIONS

6.1. Conclusion

a. Most of the previous and ongoing fisheries subsidies of Vietnam on management were

appropriated and aligned with WTO negotiations on fisheries subsidies (Draft Chair

texts).

b. The previous and ongoing fisheries subsidies policies on fuel and vessels renewal,

upgrading, infrastructure etc. have been focused on solving short-term issues and dif-

ficulties; they are not likely to remain in the long-term. They have also focused more

on production or quantity promotion rather than quality or competitiveness of the

seafood.

c. The supply chain of seafood in Vietnam has not been effectively designed and operat-

ed and has not contributed to the sustainability of the sector. Problems include

resources protection, limitations in traceability, food safety issues and lack of brand-

ing/eco-certification. Also, the coordination of the seafood supply chain as a whole is

not effective and the roles of different actors along the supply chain related to the

resources responsibility are not clear.

d. The middlemen system has played a key role in the seafood supply chain in Vietnam;

it can be seen that only a small adjustment in the middlemen system may provide a

large impact to make the sector more effective and sustainable. A small intervention

(e.g. market incentives) might lead to big impacts for the whole system in terms of

resources protection, food safety, traceability and marketing relations.

e. The success of MSC assessment for Ben Tre clam reveals the possibility of small-scale

fisheries accessing the MSC and facilitating market-based fisheries management in

Vietnam. The lessons learned from Ben Tre Clam eco-labeling are recognized and

need more attention of the government and actors among the supply chain to support

the initiative overall in Vietnam.

f. In relation to fisheries management, the open access regime is the key problem lead-

ing to overfishing and over-capacity and this can be understood as a lack of manage-

ment and a need for reformative change. Co-management regimes should be adopted

in Vietnam at a national scale after the piloting in nine provinces under FSPSII/DANI-

DA.

g. There is not yet agreement in the WTO on fisheries subsidies rules, but negotiations

are on the way to prohibit subsidies leading to overcapacity and overfishing (Hong-

Kong mandate). The Chair of the negotiations made an ambitious proposal and in 2007

most of the Vietnamese subsidies were already in line with this proposed text.

58


6.2. Recommendations

a. It is suggested that any kind of Vietnamese government subsidies in support of the fish-

eries sector should take into account WTO negotiations on fisheries subsidies. Any

kind of Vietnamese government support which is likely to lead to overfishing and over-

capacity should not be acceptable. It is also recommended that Vietnam engages more

actively in the WTO negotiations. In addition, sustainability criteria should be applied

to Vietnamese subsidies. The sustainability criteria developed by UNEP-WWF com-

prise three elements, namely a biological (science-based assessments of fish stocks),

industrial (fleet capacity) and management (regulatory elements such as assessment,

control and enforcement) component. These criteria are set out in the publication enti-

tled "Sustainability Criteria for Fisheries Subsidies - Options for the WTO and Beyond

(2007)".

b. A further detailed and comprehensive study on fisheries subsidies needs to be conduct-

ed to advise the Government and MARD about "good" subsidies schemes e.g. subsi-

dies for MSC certification in some selected fisheries.

c. Subsidies-based sustainability should be adopted by changing from fisheries produc-

tion-based (catch more) models into value-added based models. Examples include

support for storage and maintenance of hygiene systems on boat/vessels to improve

food quantity; provision of tax preference for responsible vessels and/or support for

their direct involvement in sustainability programs (e.g. by-catch reduction, EBM)

d. Instead of subsidies for one phase along the seafood supply chain (e.g. production),

fisheries subsidies should be provided for the whole supply chain system, addressing

the key issues that make the supply chain ineffective (e.g. capacity of the recording on

traceability). Also, fisheries subsidies should be different from welfare subsidies to

avoid misunderstandings and confusions in the context of the WTO.

e. Reform the investment environment to attract more foreign investment (FDI) in fish-

eries services e.g. more environmental friendly technologies, at sea marketing servic-

es, upgrading of storage system at sea to improve food quality.

f. In relation to supply chain, empower and strengthen the capacity of civil societies e.g.

VINAFIS and the Vietnam Cooperatives Alliance (VCA) to support fishers (e.g. mar-

ket information, policies, rules and regulations, protection of their members' benefits)

which enable fishers to have more power to bargain and deal with the other stakehold-

ers; also improvement of the responsibility in terms of marketing, trade and resources

protection. VINAFIS and VASEP should have better relations in linking producers to

processing and exports.

g. A pilot of some selected fisheries identified by WWF/VASEP for pre-assessment of

MSC should be conducted in collaboration with the central and the provincial govern-

ment. It is suggested that the scallop in Binh Thuan should be another potential candi-

date for MSC. In the future, strengthened competitiveness for some key Vietnamese

seafood products (shrimp, tuna, scallop, and clam) through certification should be pri-

oritized.

59


h. The capacity of DECAFIREP related to certification and eco-labeling should be

strengthened. Thus, DECAFIREP can also develop national guidelines or

protocols/mechanisms in order to make sure that the benefits of certification are shared

fairly among stakeholders. Provided that stakeholders accept the mechanism, then eco-

labeling or certification schemes should be promoted for some selected fisheries. The

capacity of fishers and middlemen related to certification and eco-labeling should also

be strengthened.

i. In relation to fisheries management and linkages between fisheries subsidies, supply

chain and certification, the open access regime needs to be reformed through co-man-

agement in two ways: horizontally (among fishers) or vertically (fishers-middle men-

processing plants and other key stakeholders e.g. bank, fuel and gears suppliers). A

legal framework on fishing rights granted to local fisheries associations will support

better governance of the sector, address problems of middlemen and enhance the

effectiveness of the seafood supply chain in Vietnam, support certification and brand-

ing. The subsidies should also focus on the MPA network development and/or harvest

refugia areas, and livelihood of the fishers shifted from destructive and small vessels

to other livelihood around the MPA.

60


REFERENCES

APFIC, 2007. Certification schemes for capture fisheries and aquaculture. APFIC

regional consultative workshop, Ho Chi Minh City 18-20 September 2007. RAP publication

2007/26.

Center for Fisheries Scientific-Technologies and Economic Information, 2002, report

on support in Vietnam fisheries (funded by FAO).

Dao Manh Son, 2005. Result of surveys and assessment of fisheries resources and suit-

able fishing technology to achieve sustainable development of offshore fisheries in

Vietnam. Proceeding of "National workshop on Protection of environment and fisheries

resources", Haiphong January 2005.

Department of Capture Fisheries and Resources Protection, 2008, preliminary report

on implementing Decision 289/QD-TTg.

Edward, Peter; Le Anh Tuan and Geoff Allan, 2004. A survey of marine trash fish and

fish meal as aquaculture feed ingredients in Viet Nam. Australian Center for International

Agriculture Research.

Lem, A.; Tietze, U.; Ruckes, E.; Anrooy, R. van. Fish marketing and credit in Viet

Nam. FAO Fisheries Technical Paper. No. 468. Rome, FAO. 2004. 174p.

www.fao.org/docrep/007/y5707e/y5707e02.htm

Ministry of Fisheries, 2006. Master Plan of Fisheries Development in Vietnam in 2010

and toward 2020. Hanoi, Vietnam.

Ministry of Foreign Affairs and Ministry of Fisheries, 2005, handbook on Agreement

to fix the boundary and fisheries co-operation agreement on the Gulf of Tonkin between

Vietnam and China.

Ministry of Agricultural and Rural Development, 2007-2008, annual report of agricul-

ture and rural development sector.

Ministry of Agricultural and Rural Development, 2007, master plan on exploitation,

protection fisheries resources to 2015, oriented to 2020.

Ministry of Fisheries, 1997-2006, annual report of Fisheries sector.

Nguyen Viet Nghia, 2008, overview fisheries resources in Vietnam (Research Institute

of Marine Products).

Sigg, Melanie 2007. Consumer assurance: market based quality schemes, certifica-

61


tions, organic labels, ecolabelling, retailer specification. FAO fisheries proceeding no. 9

"Global trade conference on Aquaculture", China May 2007.

http://www.fao.org/docrep/010/a1454e/a1454e00.HTM

Sumaila and Pauly, 2006 (eds.) Catching More Bait: a bottom-up re-estimation of glob-

al fisheries subsidies

Tri D. L et al, 2009. Review of fisheries subsidies in Vietnam. Technical Report #1.

Vietnam Country Project ""Reforming trade and fisheries policies, re-shaping supply chains

and enhancing consumer demand for sustainable fisheries management"

Thuy N. D 2009. Eco-Certification Initiatives in Vietnam. Technical Report #3.

Vietnam Country Project ""Reforming trade and fisheries policies, re-shaping supply chains

and enhancing consumer demand for sustainable fisheries management"

UNEP, 2001, Fisheries Subsidies and Overfishing: Towards a Structured Discussion.

UNEP, 2004, Analyzing the Resource Impact of Fisheries Subsidies: A Matrix

Approach

UNEP-WWF, 2007, Sustainability Criteria for Fisheries Subsidies - Options for the

WTO and Beyond

Van P. T. H, 2009. Review of the fisheries supply chain in Viet Nam. Technical Report

#2. Vietnam Country Project ""Reforming trade and fisheries policies, re-shaping supply

chains and enhancing consumer demand for sustainable fisheries management"

VASEP 2008. Statistic of seafood export of Vietnam period 1998-2007

WTO, 2007, Draft Consolidated Chair Texts of the AD and SCM Agreements, Doha

development agenda, Chairperson's Texts 2007.

WWF Vietnam, 2008. Sustainable Livelihoods in Marine Protected Areas (LMPA)

report (DANIDA/MARD/WWF)

62


ANNEXES

ANNEX 1. List of participants in consultation workshops in binh thuan (24

nov 2008) and ben tre provinces (16 dec 2008)

63


BINH THUAN PROVINCE

NAME INSTITUTIONS

1. Mr. Le Van Tuan Vice director, DARD Binh Thuan (chair

of the workshop)

2. Mr. Nguyen Viet Tai Centre of trade promotion, Binh Thuan

Dept of Commerce and Industry

3. Mr. Do Van Nam Director, Phan Thiet fishing port

4. Mr. Nguyen Van Thuan Director, Hai Thuan processing Plant

5. Mr. Nguyen Hoang Nam Director, Hai Nam processing Plant

6. Mr. Hoang Van Thanh Large scale middlemen, Phan Thiet

fishing port

7. Mr. Le The Duyet Economic Department, Phan Thiet city

8. Mr. Nguyen Van Ba Head, Collective and Private Department,

Binh Thuan DARD and Chair of Binh

Thuan Fisheries Cooperative Association

9. Mr. Le Duc Minh Civil servant, Fisheries Extension Centre

10. Ms. Ngo Thi Hue Dept of Finance, Binh Thuan province

11. Mr. Luong Thanh Son Head, Professional and Integrated Office,

DARD Binh Thuan

12. Mr. Le Thanh Binh Vice director, Pecafirep, DARD Binh

Thuan

64


13 Mr. Ngo Duc Hung Director, Infrastructure Project Board

14 Mr. Hoang Van Dinh Fisher, Duc Long, Phan Thiet

15 Mr. Nguyen Viet Son Fisher, Duc Long, Phan Thiet

16 Mr. Huynh Quang Huy Head, technical Department, DARD Binh

Thuan

17 Mr. Ho Van Ton Chair, Thuy Tu fishing village, Duc Thang,

Phan Thiet

18 Mr. Thanh Fisher, Thuy Tu fishing village, Duc Thang,

Phan Thiet

19 Mr. Nguyen Dot Fisher, Duc Long, Phan Thiet

20 Ms. Nguyen Thi Hang Middlemen, Phan Thiet Market

BEN TRE PROVINCE

NAME INSTITUTIONS

21 Ms. Tran Thi Thu Nga Vice director of DARD Ben Tre (chair of the

workshop)

22 Mr. Doan Van Danh Vice diretor of DARD Ben Tre

23 Mr. Nguyen Minh Canh Head, technical Economic Department, DARD

Ben Tre

24 Mr. Nguyen Van Buoi Vice head, Marine and Coastal Aquaculture

Department, DARD Ben Tre

25 Mr. Nguyen Phuc Hiep Policy Department, DARD Ben Tre

26 Mr. Nguyen Van Cong Head, Technical Department, Pecafirep Ben

Tre

27 Mr. Tran Ngoc Nhuan Vice head, Provincial directorate of food safety

inspection, DARD Ben Tre

28 Ms. Tuyen Centre of fisheries extension, DARD Ben Tre

29 Ms. Chau Van Nho Civil servant, Technical Department, Pecafirep

Ben Tre

30 Mr. Linh Fishers, member of Doan Ket clam cooperative

31 Mr. Nguyen Quoc Dzung Chair, Rang Dong clam fisheries cooperatives,

Binh Dai, Ben Tre

32 Mr. Kieu Van Vy Vice Chair, Rang Dong clam fisheries

cooperatives, Binh Dai, Ben Tre

33 Ms. Tam Fishers, member of Doan Ket clam cooperative

34 Mr. Sang Project officer, FSPS II/DANIDA Ben Tre

35 Mr. Canh Project coordinator, FSPS II/DANIDA Ben Tre 36 Mr. Cao Van Viet Director, Pecafirep Ben Tre

37 Mr. Vo Van Duc Be Tri fishing port, Ben Tre

38 Mr. Phan Nhat Thanh Vice director, Pecafirep Ben Tre

39 Mr. Tran Van Thinh Chair, Dong Tam clam fisheries cooperatives,

Binh Dai, Ben Tre

40 Mr. Nguyen Van Tung Aquatex Seafood Processing Plant

ANNEX 2. List of participants workshop on fisheries subsidies and supply

chain and certification (24-25 feb 2009)

65


Institution Name/position

International & Regional

organizations

1. Southeast Asian Fisheries

Development Center (SEAFDEC)-

Vietnam Representative

Dr. Chu Tien Vinh

2. World Fish Centre (in Vietnam) Prof. Ha Xuan Thong-WorldFish

Center Country Liaison Officer -

Vietnam

3. GTZ SME office (in Vietnam) Mr. Hoang Dinh Tu (public and

private partnership)

4. DANIDA/FSPS II/SCAFI Dr. Anders Poulsen

5. DANIDA/FSPS II/STOFA Mr. Mike Akester

6. DANIDA/FSPS II/POSMA Dr. Paul Nichols

Government agency

7. Vietnam Institute of Fisheries

Economics and Planning

(VIFEP)/Ministry of Agriculture and

Rural Development (MARD)

Dr. Le Tieu La-project team

Mr. Nguyen Quy Duong-project

team

Mr. Pham Thuy Linh-project team

Ms. Nguyen Thi Phuong Dzung

Mr. Hoang Van Cuong

8. Department of Fisheries Resources

Protection and Exploitation/MARD

Mr. Le Tran Nguyen Hung

Mr. Pham Ngoc Tuan/project team

9. Centre of Informatics and Statistics

/MARD

Mr. Duong Long Tri-vice director-

project team (involved in FAO study

in fisheries subsidies)

10. Institute of Strategy and Policy

Studies /MARD

Ms. Pham Thi Hong Van-projetc

team

Mr. Phung Giang Hai

11. Department of Agriculture, Forestry,

Fisheries and Salt/MARD (2)

Mr. Dinh Ngoc Anh-civil servant

Ms. Mai Duc Chinh-civil servant

12. Journal of Fisheries Trade/VASEP Mr. Thai Thanh Duong-Vice Editor

in chieft

13. Sea and Island Department-Ministry

of Environment and Natural

Resources

Dr. Vu Si Tuan-Director

14. Department of Science and

Technology and

Environment/MARD

Ms. Nguyen Giang Thu-Vice director

15. Department of Finance/MARD Ms. Nguyen Thu Nguyet-civil

servant

Ms. Le Kim Dzung-civil servant

ANNEX 3. List of participants for the validation workshop on "Reforming

trade and fisheries policies, re-shaping supply chains and enhanc-

ing consumer demand for sustainable fisheries management:

Country project Vietnam" (3 July 2009 Ha Noi, Vietnam)

66


16 International Cooperation

Department/MARD

Dr. To Ngoc Chau-Vice Director

17 Ministry of Finance Ms. Dinh Thi Nuong -senior civil

servant

18 Agenda 21 Office-Ministry of

Investment and Planning

Ms. Nguyen Thi Dieu Trinh-senior

civil servant

19 Ministry of Commerce and Industry

Department of Trans-boundary

Trade policy (WTO Department)

Ms. Nguyen Quynh Nga-Head of

WTO department

NGO, professional organizations

and civil society

20 WWF Vietnam (INGO) Dr. Flavio Corsin-Project team

Dr. Keith Symington

Mrs. Nguyen Dieu Thuy-Project

team

Mr. Tuong Phi Lai-project team

21 Vietnam Seafood Producers and

Exporters Association /MARD

Prof. Nguyen Huu Dzung-General

Secretary

Mr. Nguyen Hoai Nam

22 Binh Dinh Tuna Fisheries

Association (large scale)

Mr. Nguyen Huu Hao-Chairman

23 Ben Tre Clam Fisheries Association

(small-scale)

Mrs. Tran Thi Thu Nga-project team

Provincial representatives

24 Binh Thuan DARD Mr. Luong Thanh Son-project team

25 Ben Tre DARD Mrs. Tran Thi Thu Nga-project team

Others

26 Vietnam News (Press) Ms. To Nhu

Name Position/Institutions

GOVERNMENT AGENCY/MARD

Dr. Hoang Dinh yen

Mr. Le Tran Nguyen Hung

Mr. Pham Ngoc Tuan/project team

Vice director, NADAREP

Head of fisheries management office

Vice Head of fisheries management office

Prof. Le Tieu La

Dr. Nguyen Thanh Tung

Pham Thi Thuy Linh

Nguyen Quy Duong

Vu Thi Hong Ngan

Nguyen Phuong Dung

Director of VIFEP

Vice director, VIFEP branch in HCMC

Researcher, VIFEP

Researcher, VIFEP

Researcher, VIFEP

Researcher, VIFEP

67


Le Thu Huong

Nguyen Tien Hung

Tran Huy Cuong

Tran Thi Dzung

Tran Van Tam

Researcher, VIFEP

Researcher, VIFEP

Researcher, VIFEP

Director, Centre for Fisheries Consultancy

and Planning under VIFEP-MARD

Centre for Fisheries Consultancy and

Planning under VIFEP-MARD

Mr. Duong Long Tri Centre of Informatics and Statistics /MARD

Phan Thuy Hang Department of Trade and Processing of

Agriculture, Forestry, Fisheries and

Salt/MARD

Ms. Pham Thi Hong Van-projetc team

Institute of Strategy and Policy Studies

/MARD

Dr. Ngo Anh Tuan Director, Department of Finance/MARD

Doan Manh Cuong

Do Thu Phuong

Tran Thi Lan

Civil servant, International Cooperation

Department/MARD


Department/MARD


Department/MARD

OTHER GOVERNMENT AGENCY

Dr. Vu Si Tuan Ministry of Environment and Natural

Resources-MONRE

Director/ Ms Nguyen Thi Dieu Trinh Agenda 21 Office-Ministry of Investment and

Planning

CIVIL SOCIETIES

Mr. Thai Thanh Duong

Deputy director, Journal of Fisheries Trade-

Vietnam Association of Seafood Exporting

and Processing (VASEP)

Tran Cao Muu General secretary, VINAFISH

Nguyen Viet Thong Vietnam Chamber of Commerce and Industry

(VCCI)

Nguyen Thi Ngoc Cam Vietnam Cooperatives Alliances

PRIVATE SECTOR

Nguyen Van Bang Fisheries Consultancy Co. Ltd

Dinh Thi Thanh Binh Supply chain Expert, University of Transport

and Communication

Tran Van Hien Seafood processing/export company in Binh

Thuan province

INTERNATIONAL

ORGANIZATIONS

Stefanos Fotiou

United Nations Environment Programme

ANNEX 4. List of fisheries profiled for MSC certification pre-analysis in

Vietnam

68


PROVINCES

Ms. Tran Thi Thu Nga Vice director, Ben Tre DARD (also vice

director of provincial fisheries association)

Mr. Luong Thanh Son Vice director, Binh Thuan DARD

Kieu Van Vi Vice chair, Rang Dong Clam cooperative, Ben

Tre province

Chau Van Hoa Fishers, Binh Thuan province

Nguyen Duy Linh Fishers, Ben Tre province

NGOs

Mr. Tuong Phi Lai

Ms. Nguyen Dieu Thuy

WWF Greater Mekong, Vietnam Program

WWF Greater Mekong, Vietnam Program

PRESS & MEDIA

Pham Hoang Lan Seafood Magazine/VINAFIS

Phan Van Khoa

Cao Ngoc Hieu

Vietnam Fisheries Magazine, FITES

Vietnam Fisheries Magazine, FITES

No. Fisheries Location

1 Offshore long line (target mackerel, snapper,

grouper, amberjack, hairtail, threadfin breams)

From Quang Binh to Nghe An

2 Offshore gillnet (for mackerel, tuna, sailorfish,

scads)

From Quang Bình to Nghe An

3 Trammel net(mesh size 65-75mm) targeting

demersal fish, cuttlefish, grouper, crabs, tiger

shrimp brooders

From Quang Ninh to Thanh

Hoa

4 Gillnet (mesh size 60-70cm) targeting demersal

fish and crabs

From Quang Ninh to Thanh

Hoa

5 Purse seine with light Sam Son, Tinh Gia (Thanh

Hoa)

6 Shrimp trawl fisheries From Long Chau to Ba Lat

estuary

7 Liftnet with Fish Attract Devices Binh Thuan

8 Scallop fisheries in Hoa Thang commune, Bac

Binh district

Binh Thuan

9 Stick held deep net with light for anchovy Binh Thua?n

10 Traditional otter trawl for cat tiger shrimp,

fishing ground in Southeast water and Gulf of

Thailand

Bac lieu

11 Swimming crab trap fisheries in Dat Do, Long

Dien, fishing ground at south of Vung Tau,

around ConDao

Ba Ria – Vung Tau

ANNEX 5. Concept of Good, Bad and Ugly fisheries subsidies (Sumaila and

Pauly 2006)

1. Good subsidies

'Good subsidies' are programs that lead to investments in natural capital assets to a

social optimum, which is defined here as the maximum allocation of natural resources to

society as a whole, i.e., by maximizing economic rent. Good subsidies enhance the growth

of fish stocks through conservation, and the monitoring of catch rates through control and

surveillance measures to achieve a biological optimal use.

Good subsidies are made up of the following two types:

i. Fisheries management programs and services: These are subsidy programs to ensure

that publicly-owned fisheries resources are appropriately managed and that regulations

are enforced (OECD, 2005a). Sub categories include: (a) monitoring, control and sur-

veillance programs, (b) stock assessment and resource surveys, (c) fishery habitat

enhancement programs, (d) implementation and maintenance of MPAs, and (e) stock

enhancement programs.

ii. Fishery research and development (R&D): These are subsidy programs geared

towards improving methods for fish catching and processing and other strategies that

enhance the fishery resource base through scientific and technological breakthroughs.

Sub categories include: (a) fishery frame surveys, (b) oceanographic studies, (c) fish-

ery socio-economic studies, (d) fishery planning and implementation, (e) setting fish-

ery information systems, (f) creating database and statistical bulletin supportive of fish-

ery management plans, and (f) setting up marine protected areas (MPA) and reserves.

Fisheries management programs and services have been questioned on the basis that

the services mostly benefit the private sector and not the public, i.e., the rightful owners of

marine resources (WWF, 2001). However, most countries have justified it as their sover-

eign right to manage and conserve their marine resources within their EEZs as espoused

under the United Nations Convention on the Law of the Sea (UNCLOS, 1980).

69


12 Abalone fisheries in Vung Tau, fishing ground

at south of Vung Tau, around ConDao

Ba Ria – Vung Tau

13 Trammel net for black tiger shrimp brood stock Ca Mau

14 Shrimp capture fishery in the mangrove Ca Mau

15 Yellowmeat clam capture fishery Kien Giang

16 Blood cockle capture fishery, fishing ground

from Ca Mau to Vung Tau

Kien Giang

17 Clam seed collecting Soc Trang

18 Cirhinus capture in Mekong river Mekong

19 Lobster for center Vietnam Central

20 Oceanic tuna fishery in the Center sea water of

Vietnam (big eye, yellowfin, and bluefin (if

exist))

Central (Khanh Hoa, Phu Yen,

Binh Ðinh)

2) Bad subsidies

'Bad subsidies' are defined as subsidy programs that lead to disinvestments in natural

capital assets once the fishing capacity develops to a point where resource exploitation

exceeds the Maximum Economic Yield (MEY). This is equal to the maximum rent obtain-

able from the fishery, computed as the largest positive difference of total cost and total rev-

enues. As such, MEY corresponds to an effort level lower than the maximum sustainable

yield (MSY). Excessive disinvestment can lead in some cases to outright destruction of the

natural resources (Bjorndal and Munro, 1998).

Fishery economics theory holds that, in an open access fisheries regime, in which fish-

ing cost is assumed to be proportional to fishing effort, effort will continue to increase even

though revenues per unit of effort are declining, and that ultimately revenues will decline

until they equal costs (Gordon, 1954). The point at which total revenue equals total cost is

commonly regarded as the bionomic equilibrium (BE), where both industry profits and

resource rents have been completely dissipated. With subsidies, the fishing effort can actu-

ally exceed E3 (Sumaila, 2002).

Bad subsidies include all forms of capital inputs and infrastructure investments from

public sources that reduce the cost or enhance revenue and include the following types:

i. Boat construction, renewal and modernization programs: These support programs

include lending programs below market rate and are geared toward fishing vessel con-

struction, renewal and modernization such as loan guarantees, restructuring and other

lending programs. This subsidy type also involves support programs to enhance fishing

technology from public funds for fishing enterprises, parastatals and firms;

ii. Fishing port construction and renovation programs: These support programs include

public funds toward the provision of fish landing site infrastructures, port improve-

ments for fishing fleets (APEC, 2000), harbor maintenance, jetty and landing facilities

and low or free moorage for fishing fleets;

iii. Marketing support, processing and storage infrastructure programs: These are support

programs towards market interventions such as export promotion, value addition and

price support. They also include infrastructure investment programs from public funds

toward processing and storage of fishery products and fish auction facilities;

iv. Fishery development projects and support services: These are support programs

towards fisheries enterprises development. It also includes support programs such as

the provision of institutional support and services, the provision of baits, and search and

rescue programs. The nature and sources for such support programs are diverse and

includes development grants and concession credit either from national sources or

through bilateral and multilateral assistance programs;

v. Tax exemptions: These are subsidy programs for investment in the fisheries sector that

have a direct impact on profits such as rebates and other government-funded insurance

support programs including: (a) income tax deferral for fishers; (b) crew insurance

(OECD, 2004); (c) duty free imports of fishing inputs; (d) vessel insurance programs,

and (e) other economic incentive programs;

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vi. Foreign access agreements: This program entails a combination of one of the follow-

ing: (a) explicit monetary transfer; (b) the transfer of fishing technology, and (c) the

provision of market access in another fishing country (OECD, 2005a). Out of these var-

ied combinations, three types of access agreements can be identified worldwide: (i)

reciprocal access; (ii) access for trade agreements, and (iii) access fees for third coun-

try agreements (Milazzo, 1998).

The aggregate impact of subsidies that enhance overcapacity and overfishing through

increased revenues or profits is to further stimulate effort and compound resource overex-

ploitation problems (Milazzo, 1998).

Certain types of subsidies therefore create incentives for overfishing under certain

management conditions (Munro and Sumaila, 2002).

3. Ugly subsidies

'Ugly subsidies' are defined as programs that have the potential to lead to either invest-

ment or disinvestment in the fishery resource. These subsidy programs can lead to positive

impacts such as resource enhancement programs or to negative impacts such as resource

overexploitation. Subsidies in this category include controversial ones such as fisher assis-

tance programs, vessel buyback programs and rural fisher community development pro-

grams:

i. Fisher assistance programs: These are payments to fishers to stop fishing temporarily

or to ensure income during bad times. These subsidies can also be given due to a lack

of alternative employment opportunities in regions where fishing is the main activity

(OECD, 2005b). This subsidy type could be revenue enhancing from government budg-

ets and increase community dependence on government funds; or may reduce fishing

pressure through retraining programs into other economic sectors. They include the fol-

lowing types: (a) income support programs; (b) unemployment insurance; (c) worker

adjustment programs, and (d) fisher retraining, and other direct payments to fishers;

ii. Vessel buybacks programs: These are fishing capacity reduction programs including

two types: (a) permit buybacks, and (b) license retirements. These subsidies reduce

fishing pressure and foster resource management goals, however their effectiveness

has been seriously questioned (Holland et al. 1999; Munro and Sumaila, 2002; Clark et

al. 2005);

iii. Rural fishers' community development programs: These consist of programs that are

geared towards rural fisher development with an overall objective of poverty allevia-

tion and food sufficiency. These programs include multiple stakeholder participation

within local communities involving cooperatives, with assistance from donor agencies

and NGOs for integrated livelihood development policy objectives. Despite such

development policy objectives, a number of fisheries development donor consultations

have concluded that projects concentrated on enhancing productive capacity in devel-

oping countries are contributing to overcapacity, and had a poor rate of management

success (SIFR, 1992).

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In summary, three categories of subsidies with eleven program types are identified

globally in this report:

A. 'Good subsidies'

¢ Fisheries management programs and services;

¢ Fishery research and development.

B. 'Bad subsidies'

¢ Tax exemption programs;

¢ Foreign access agreements;

¢ Boat construction renewal and modernization programs;

¢ Fishing port construction and renovation programs;

¢ Fishery development projects and support services;

¢ Marketing support, processing and storage infrastructure programs.

C. 'Ugly subsidies'

¢ Fisher assistance programs;

¢ Vessel buyback programs; and

¢ Rural fishers' community development programs.

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fisheries subsidies, supply chain and certification in … country projects... · 2018-06-07 ·...

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