AquaMarkets 2003, 2-6 June, Manila, Philippines 20/11/2018 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Vertical Cooperation and Marketing Efficiency in 20/11/2018 Vertical Cooperation and Marketing Efficiency in the aquaculture products marketing chain: a national perspective from Vietnam by: Raymon van Anrooy Aquaculture Economist, FAO, Rome 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

OUTLINE OF THE PRESENTATION 20/11/2018 OUTLINE OF THE PRESENTATION “Fisheries Marketing and Credit in Vietnam” Project Marketing Efficiency and Vertical Cooperation Why can Vertical Cooperation be important? Current Vertical Cooperation practices in the sector Is there a need for more Vertical Cooperation? Who should lead the establishment of Vertical Chain Cooperation initiatives? Conclusions 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Fisheries Marketing and Credit in Vietnam” Project (MTF/VIE/025/MSC) MOFI, DANIDA and FAO 1400 sectoral stakeholders (fisherfolk, aquaculturists, wholesalers/middlepersons, processors, retailers, large consumers) + 600 consumers 12 provinces October 2001 – May 2003 Reports on Marketing, Credit, Consumption and Vertical Cooperation Database in SPSS 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Marketing Efficiency and Vertical Cooperation 20/11/2018 Marketing Efficiency and Vertical Cooperation Marketing efficiency Efficient allocation of resources  Consumer Satisfaction Affected by market control, externalities and information Information exchange does not work properly in traditional channels! Vertical Cooperation in the chain offers opportunities for increasing marketing efficiency. The main objective of Vertical Chain Cooperation is: To obtain a larger profit for all participants in this cooperation 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Vertical Cooperation objectives 20/11/2018 Vertical Cooperation objectives Other objectives may be: Increasing market share Improve product image among consumers Improve product quality Decrease effects of market failures Vertical Cooperation ≠ Vertical Integration Transfer of full-ownership and -control does not take place 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Cooperation is important in view of world-wide trends 20/11/2018 Cooperation is important in view of world-wide trends Increasing consumer demands (food safety, environmental friendly production, traceability) Rapid technological developments (IQF, genetically modified species, ICT) Increasing capital needs (machinery, equipment, land) Increasing product diversity (exotic species) Increasing international competition (WTO, ASEAN) High risks (diseases, detentions) High mutual dependency (product characteristics) 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Some advantages of vertical cooperation! 20/11/2018 Some advantages of vertical cooperation! Reduction of transaction costs (e.g. contracts) Joint development of new products, concepts and technologies (product-market combinations) Improvement of market information exchange Reduction of production and market related risks 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Current cooperation! Market information exchange 20/11/2018 Current cooperation! Market information exchange 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Current cooperation! Handling and grading of products 20/11/2018 Current cooperation! Handling and grading of products 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Current cooperation! Exchange of technical instructions/advice 20/11/2018 Current cooperation! Exchange of technical instructions/advice 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Is there a need for more cooperation? (1) 20/11/2018 Is there a need for more cooperation? (1) Main marketing problems of chain actors: Low and fluctuating prices Lack of information on markets and prices High competition Unstable supply of product Shortage of investment capital 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Is there a need for more cooperation? (2) 20/11/2018 Is there a need for more cooperation? (2) Areas in which improvement is being considered: Increase in market information exchange Improve stability of supply Accessing technical innovations Accessing investment capital 92 % of the 1300 stakeholders interviewed prefer long term relationships over market exchange contacts only 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Main benefits of long term vertical cooperation! 20/11/2018 Main benefits of long term vertical cooperation! Improvement of inter-dependency relationships Increased access to market information Reduction of costs related to transaction & negotiation Increased access to product quality information & requirements Possibility to better respond to consumer demands (packaging, product form & size, traceability) 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Vital issues for vertical cooperation! 20/11/2018 Vital issues for vertical cooperation! Fair and clear financial accounting (by partners) Good reputation and responsible behavior of partners Timely payment for services & products delivered Provision of mutual financial assistance when needed Having well defined problem solving arrangements Use of clear contracts and agreements 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Main obstacles in the development of vertical cooperation! 20/11/2018 Main obstacles in the development of vertical cooperation! Unclear identification of costs and benefits for each partner Delays in payment for services & products delivered Insufficient risks and information sharing Too much trust in friendship relation Underestimation of necessary changes in thinking to be made (Competitor → Partner) 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

AquaMarkets 2003, 2-6 June, Manila, Philippines 20/11/2018 Who should lead the establishment of vertical chain cooperation initiatives? No clear leader! MOFI, Wholesalers and VASEP most suggested It is clear that private -public partnerships are needed to establish successful cooperation! 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

AquaMarkets 2003, 2-6 June, Manila, Philippines 20/11/2018 Some Conclusions Vertical chain cooperation should be considered as TOOL to further increase marketing efficiency. The conditions for increasing vertical cooperation in the Vietnamese fisheries products marketing chain are available. Private –public partnerships seem key to success Potential benefits of vertical cooperation with respect to product traceability and development of Codes of Good Practice need to be investigated further 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

Thank you for your attention! 20/11/2018 Thank you for your attention! For more information, please contact: Fisheries Information Centre Ministry of Fisheries 10 Nguyen Cong Hoan str. Ba Dinh –Hanoi –Vietnam Phone: (84)-4-8343182 Fax: (84)-4-8326578 Email: ttam.bts@hn.vnn.vn Website: www.fistenet.gov.vn Raymon van Anrooy Food and Agriculture Organization of the United Nations (FAO) Viale delle Terme di Caracalla Rome – Italy Phone: (39)-0657053031 Email: Raymon.VanAnrooy@fao.org Website: www.fao.org OR 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

AquaMarkets 2003, 2-6 June, Manila, Philippines 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines

AquaMarkets 2003, 2-6 June, Manila, Philippines 20/11/2018 AquaMarkets 2003, 2-6 June, Manila, Philippines