VZCZCXRO7355
OO RUEHAST RUEHDT RUEHLN RUEHMA RUEHPB RUEHPOD RUEHTM
DE RUEHHM #1075/01 3511134
ZNR UUUUU ZZH
O P 161134Z DEC 08
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5224
INFO RUEHHI/AMEMBASSY HANOI PRIORITY 3481
RUEHHM/AMCONSUL HO CHI MINH CITY PRIORITY 5454
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCPDOC/USDOC WASHDC PRIORITY 0092

UNCLAS SECTION 01 OF 03 HO CHI MINH CITY 001075 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS, USAID/ANE, EEB/TPP/BTA/ANA, OES/STC 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
HHS/OSSI/DSI PASS TO OGHA (MABDOO) AND FDA (MLUMPKIN/RCAMPBELL) 
CDC FOR COGH AND CCEHIP/NCEH 
 
E.O. 12958: N/A 
TAGS: ECON EAGR SENV TBIO EFIN ETRD VM
SUBJECT: HOPES AND FEARS OF MEKONG DELTA REST WITH ITS DEVELOPING 
SEAFOOD INDUSTRY 
 
HO CHI MIN 00001075  001.2 OF 003 
 
 
¶1. (SBU) Summary:  In anticipation of possible changes to the 
way the United States regulates imported Vietnamese tra and basa 
("catfish"), Senior Investigator David Nelson from the House of 
Representatives' Committee on Energy and Commerce visited 
seafood producers in the Mekong Delta on December 9 and 10, 
¶2008.  Without exception, the producers stressed that the 
stringent hygiene requirements of their overseas customers have 
forced the modernization and improvement of aquaculture, 
processing, monitoring, and testing capacity in Vietnam, often 
employing products and technologies imported from the United 
States.  Increasingly, Vietnamese producers are buying U.S. 
technology to ensure export safety and U.S. feed inputs like soy 
meal to improve the quality of aquaculture products.  Despite 
these gains, safety gaps persist:  GVN regulations lack bite, 
and uncertified inputs may still enter the production chain. 
The Delta's seafood producers continue to seek engagement with 
food regulators to increase both productivity and safety.  Post 
continues to engage GVN regulators and private and public sector 
producers on fish safety issues and facilitate USG training and 
capacity building efforts.  End summary. 
 
Threat of Losing Markets Prompted Safety Improvements 
--------------------------------------------- -------- 
¶2. (SBU) Vietnam had more import detentions than any other 
seafood exporter to the United States in 2001.  When this wave 
of contaminated seafood exports closed markets to Vietnamese 
seafood products earlier in the decade, the GVN mandated testing 
for all shipments bound to key markets (including the United 
States), leading seafood producers to invest heavily in seafood 
safety to maintain overseas market share.  Consequently, 
Vietnam's seafood safety record improved significantly.  Last 
year, the GVN scaled back its mandatory testing regime for 
U.S.-bound shipments, shifting to producers the responsibility 
for many routine quality and safety tests.  Following their 
earlier meetings with regulatory officials in Hanoi (septel), 
Chief Investigator Nelson and Investigative Counsel Krista 
Rosenthal examined Vietnamese aquaculture practices, processing 
facilities, as well as monitoring and testing capacity of a 
range of seafood producers, noting continuing progress and 
remaining challenges. 
 
Private Sector Expanding Safety Testing Capacity 
--------------------------------------------- --- 
¶3. (SBU) In an office adorned with certificates from U.S. and 
European food safety auditors, as well as Kosher and Hallal 
certifying organizations, the founder and president of Can Tho 
city based Hiep Than Seafood company proudly noted that none of 
the firm's $40 million dollars' of seafood exports has been 
refused entry in the company's two year history.  He attributed 
this to continuous food safety training for employees, modern 
processing facilities, and a rigorous inspection regime. Company 
engineers test every shipment for microorganisms and outsource 
testing for banned antibiotics to the global safety auditing 
firm Intertek. 
 
¶4. (SBU) While outsourcing testing to international firms is an 
option in Can Tho, the Mekong Delta's largest city, the 
joint-venture Kim Anh company in outlying Soc Trang province had 
to build its own testing facility. Hit hard by anti-dumping 
duties on exports to the United States in 2003, the firm moved 
to high-end seafood products like sushi, tempura and breaded 
catfish.  To simplify quality control, the company adopted the 
most rigorous safety requirements of its numerous import markets 
and built a laboratory comparable to that of Vietnam's national 
quality assurance lab.  "Only one or two containers every 
several years of the two thousand shipped abroad yearly" are 
refused entry for contamination, the company chairman told 
Staffdel. 
 
¶5. (SBU) The General Director of the publicly held Min Phu 
Seafood Corporation told Staffdel that the company stopped using 
chemical additives in its shrimp ponds four years ago, and now 
depends on U.S. biotechnology products to maintain sanitary 
conditions.  Located in the capital of Vietnam's southernmost 
province (and site of a regional GVN seafood inspection and 
testing center) the company pays the regional laboratory over 
600 million VND ($35,000) per month to test its shrimp exports, 
including those headed for Walmart and Costco in the United 
States.  After touring their state-of-the-art shrimp processing 
facility, a delegation member noted that the plant "was better 
 
HO CHI MIN 00001075  002.2 OF 003 
 
 
than most he'd seen in the United States." 
 
Going Natural: Raising Shrimp without Chemicals 
--------------------------------------------- -- 
¶6. (SBU) The 100 percent U.S.-invested Hiep Thanh company 
stopped using drugs or chemicals entirely in 2005, and instead 
lowered shrimp density to three per square meter of surface 
water (in contrast with densities of ten or more typical of 
commercial shrimp farms).  Made possible by cheap land (the 
company leases over 1900 acres from the Bac Lieu provincial 
government) this environmentally-friendly method produces 
healthier 'natural' shrimp, according to company officials. 
 
¶7. (SBU) All of the seafood processors visited by Staffdel 
Nelson contracted with small farmers to supplement 
company-raised seafood, providing feed, technology, and 
know-how. They are in various stages of developing 'pond to 
plate' product identification systems that will allow them to 
determine the date of harvest and origin of any processed 
product.  Kim An, for instance, can track each box back to a 
particular pond to determine feed contents on any given day. 
 
U.S.-Vietnam Seafood Trade a Two-Way Street 
------------------------------------------- 
¶8. (SBU) Every seafood exporter we spoke to said they used 
American inputs in their products, ranging from ground soybeans 
for fish feed to micro biotic technology to clean shrimp ponds. 
Several collaborate with U.S. researchers to develop custom 
shrimp varieties, while others use U.S. seafood quality auditors 
to conduct sanitation and certification checks. These inputs 
were a major factor in the doubling of U.S. agricultural exports 
to Vietnam in 2007, a trend that continues to grow in 2008. 
U.S. soybean exports to Vietnam, for example, are up nearly 300 
percent this year.  While a portion of the resulting seafood is 
shipped back to the United States, much of it is also shipped to 
Europe, the Middle East and other world markets. 
 
Aquaculture the biggest game in town 
------------------------------------ 
¶9. (SBU) Mekong Delta catfish (26 percent) and shrimp (40 
percent) are the largest components of Vietnam's aquatic 
exports, which grew over 12 percent to reach $3.76 billion (5.3 
percent of GDP) in 2007. Seafood processors are among the Mekong 
Delta's largest employers -- the four companies visited employ 
over 9,000 workers directly and many thousands more as contract 
farmers. As the Mekong Delta provinces lack land transportation 
infrastructure and are not rich in other natural resources, 
development of a modern seafood processing industry was crucial 
in reducing poverty in the region and maintaining current 
economic growth. 
 
¶10. (SBU) Investing in quality control measures to meet 
developed countries' safety standards is a hurdle faced by all 
developing country seafood exporters, and those that meet those 
standards most quickly will come out ahead in international 
trade.  In that sense, improvements in the Mekong Delta's 
seafood safety record have come none too soon as a number of 
large Chinese catfish and five shrimp processors are likely to 
enter the market in the near future. These Chinese products may 
comprise Vietnam's stiffest competition in the coming year. 
 
Gaps Persist in Safety Control 
------------------------------ 
¶11. (SBU) Although seafood processors have modernized 
aquaculture and processing and greatly improved monitoring and 
testing capacity, gaps clearly remain in the seafood safety 
control system.  The fish and shrimp provided by contract 
farmers remain outside the company's quality control regimes 
though they are tested on export.  Despite a government ban, one 
of the processors visited still 'cage-farmed' catfish, and 
although these fish made up only one and two percent of the 
firm's total production, it is possible that they could enter 
the export chain.  Meanwhile the GVN regulatory regime does not 
include administrative fines or criminal penalties for 
unsanitary or adulterated shipments.  Producers said that in 
such 'extreme cases' regulatory agencies could revoke a firm's 
export license, though none could recall such an occurrence. To 
the producers, the only deterrent was the major costs incurred 
by a returned shipment. 
 
 
HO CHI MIN 00001075  003.2 OF 003 
 
 
Improving Food Safety Going Forward 
----------------------------------- 
¶12. (SBU) Nevertheless all of our interlocutors were passionate 
about safety, eager to learn of any changes in U.S import 
requirements and working to assure the safety of their exports 
with the technology or testing most appropriate to their 
circumstances.  Staffdel noted the sharp contrast between Hanoi, 
where officials told them that processors are allowed to export 
if no contaminants are found during quarterly or biannual 
inspections, and with the companies themselves which say they 
not only meet the GVN regulations but exceed them in order to 
meet the testing requirements of their exports market 
regulators, their customers and standards/certifying 
organizations. 
 
Comment: 
-------- 
13 (SBU) Vietnam's seafood industry has been the driving force 
behind the development of the "deep south" provinces of the 
Mekong Delta, which otherwise rank among the poorest in the 
country.  The GVN pays close attention, since the industry is 
the largest employer in the region with an estimate two million 
jobs nationwide, and the Delta suffers each report of major 
market disruptions -- on trade issues (e.g., antidumping orders) 
or product safety issues (e.g., export detentions orders due to 
proscribed substances).  Enlightened self-interest encourages 
the seafood exporters' industrial organization to push 
provincial officials and national regulators to improve 
standards and testing services.  Finally, the aquaculture 
industry is a big part of the rapid increase in U.S. agriculture 
exports to Vietnam; set to top one billion dollars for the first 
time in 2008.  End comment. 
 
¶14. (U) This cable was coordinated with Embassy Hanoi. 
FAIRFAX