1. AquaMarkets 2003, 2-6 June, Manila, Philippines
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2. Vertical Cooperation and Marketing Efficiency in
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Vertical Cooperation and Marketing Efficiency in
the aquaculture products marketing chain:
a national perspective from Vietnam
by:
Raymon van Anrooy
Aquaculture Economist, FAO, Rome
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3. OUTLINE OF THE PRESENTATION
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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
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4. 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) consumers
12 provinces
October 2001 – May 2003
Reports on Marketing, Credit, Consumption and Vertical Cooperation
Database in SPSS
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5. Marketing Efficiency and Vertical Cooperation
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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
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6. Vertical Cooperation objectives
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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
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7. Cooperation is important in view of world-wide trends
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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)
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8. Some advantages of vertical cooperation!
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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
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9. Current cooperation! Market information exchange
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Current cooperation! Market information exchange
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10. Current cooperation! Handling and grading of products
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Current cooperation! Handling and grading of products
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11. Current cooperation! Exchange of technical instructions/advice
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Current cooperation! Exchange of technical instructions/advice
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12. Is there a need for more cooperation? (1)
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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
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13. Is there a need for more cooperation? (2)
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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
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14. Main benefits of long term vertical cooperation!
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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)
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15. Vital issues for vertical cooperation!
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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
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16. Main obstacles in the development of vertical cooperation!
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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)
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17. AquaMarkets 2003, 2-6 June, Manila, Philippines
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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!
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18. AquaMarkets 2003, 2-6 June, Manila, Philippines
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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
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19. Thank you for your attention!
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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) Fax: (84)
Website:
Raymon van Anrooy
Food and Agriculture Organization of the United Nations (FAO)
Viale delle Terme di Caracalla
Rome – Italy
Phone: (39)
Website: OR
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21. AquaMarkets 2003, 2-6 June, Manila, Philippines
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22. AquaMarkets 2003, 2-6 June, Manila, Philippines
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