The value chain of white leg shrimp exported to the U.S market in Khanh Hoa province, Vietnam

Abstract

The research aimed to explore the value chain of frozen white leg shrimp exported to the U.S market from Khanh Hoa province, Vietnam. Three objectives were set up, that is, (1) to identify the activities conducted by different actors in the value chain and the corresponding costs and earnings of those activities, (2) to evaluate the distributions of revenue, cost and profit along the chain, and (3) to determine factors preventing shrimp farmers from dealing directly with processing firms. Research findings showed that before exported to the U.S market, white leg shrimp has to undergo farming, procurement, and processing. Shrimp farming basically comprises of such steps as pond cleaning, seed release, and caring. When shrimp attain harvestable size, middlemen come to perform the procurement which includes harvesting, preserving, and transporting. At the processing plants, shrimp are transformed into final products, packed, labeled preserved and stored waiting to be exported. During shrimp farming, farmers incur several costs like seed, feed, labor, and other miscellaneous expenses. At the procurement stage, addition to purchasing shrimp from farmers, middlemen have to add some other costs like transport, labor, ice, and other inputs to transfer shrimp to the next stage. At the processing stage, direct material, direct labor, overhead, and other costs are added in accordance with the accounting format. Farmers, middlemen and processors experience positive profit in the 2008-2010 period. Based on costs and earnings data, some calculations were made which revealed the distributions of revenue (export price), cost and profit of 1 kg frozen shrimp exported to the U.S market. Costs and profits distributions were in sync with expectations. The surveys revealed 3 reasons why farmers depend on middlemen to sell their harvest, that is, lack of facilities, delayed payment policy and risk aversion.