Costs rise, orders fall
Mr. Ong Hang Van, Deputy General Director of Truong Giang Seafood Company, said: Currently, the company has 3 processing factories, however, in the first half of 2023, key pangasius export markets all decreased sharply, especially the US and China markets; causing the pangasius enterprises' inventory to be very large, and there are still many fish in the pond.
Difficult export also affects the cash flow of enterprises. Along with that, the high inventory level leads to high costs for preserving goods of enterprises. The electricity cost for operating cold storage alone is about 4 billion VND per month on average.
"This is the first time in the past 10 years that our business has fallen into a cash shortage, because we cannot export goods so the bank cannot disburse loans, even though we have assets to mortgage," Mr. Van shared.
Pointing out the industry’s biggest weakness, Mr. Van said that feed depends too much on imported raw materials. To produce 1kg of raw pangasius fish, it currently requires more than 1.7kg of feed, causing the production cost to reach 1.2 USD/kg. Meanwhile, the cost of fish that compete directly with pangasius fish, such as Alaska pollock, is only 1 USD/kg. Therefore, the current problem is that there must be support in every way to bring down the price of aquatic feed.
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| Pangasius exports are flourishing again |
Sharing the same view, Mr. Huynh Duc Trung, Director of Vinh Hoan Joint Stock Company, said that the average number of export orders has decreased by about 30% in all markets, and the selling price has also dropped dramatically. Orders and selling prices have both decreased, while the costs of raising, processing and exporting have all increased. The price of feed alone accounts for about 70% of the cost of producing pangasius, but has increased compared to the same period; costs of quality control, logistics, inventory storage and credit costs, etc., have all increased, creating great pressure on seafood processing and exporting units.
According to Mr. Trung, the Government has launched a VND15,000 billion credit package to support businesses in the seafood and forestry industries, but businesses still have difficulty accessing this credit package. “In fact, businesses are currently in a state of oxygen deficiency, while the oxygen is there and they do not know how to get it to breathe. Therefore, businesses in the pangasius industry are having to tighten costs to the maximum, trying to bear the burden, and maintain production to retain workers,” said Mr. Trung.
According to the Vietnam Association of Seafood Exporters and Producers (VASEP), in the first seven months of 2023, Vietnam's pangasius output increased slightly by 2.3% year-on-year to 922,000 tons. However, pangasius export turnover decreased by 37% year-on-year to reach 1 billion USD.
Of which, pangasius exports recorded a decrease in value in all five of Vietnam's largest markets. Specifically, the Chinese market decreased by 32% in turnover, to 325 million USD; the US decreased by 59%, to 159 million USD; the EU decreased by 22%, reaching 101 million USD; Brazil also decreased by 16%, reaching 47 million USD and the UK market decreased by 16%, reaching 40 million USD.
Year-end market expectations
Although the market in the first months of the year was not very bright, according to Vasep, the bright spot in the picture for 2023 is that pangasius exports to some small markets are growing well. This is considered a hope for pangasius businesses when they are facing difficulties in traditional large markets. Typically, exports to the German market increased by 25% compared to the same period last year; New Zealand increased by 17%; Sweden increased by 25% or exports to Finland increased by 18 times compared to the same period last year.
According to Mr. Ong Hang Van - Deputy General Director of Truong Giang Seafood Company, pangasius exports are showing positive signs. Accordingly, in June and July, the amount of pangasius exported by the enterprise is on the rise again. This is a signal proving that the market will recover in the remaining months of this year and 2024.
Similarly, Mr. Huynh Duc Trung, Director of Vinh Hoan Joint Stock Company, also shared that the company's major export markets have recorded positive growth again. Specifically, exports to the EU market in July increased by 22% compared to July 2022, to China increased by 13% and to the remaining markets increased by 20%.
Figures from the Ministry of Agriculture and Rural Development show that in the first eight months of 2023, pangasius exports reached nearly $1.2 billion, down 34% year-on-year. However, the rate of decline is slowing down, indicating that the market is recovering.
Mr. Truong Dinh Hoe, General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), acknowledged that tra fish exports have not yet seen positive growth compared to the same period last year, but are showing signs of good recovery.
In Vietnam's largest pangasius export market, China, the decline is gradually decreasing, from minus 65% in January compared to the same period last year, minus 30% in May and down to minus 7% in July 2023. This opens up the expectation that pangasius exports to the market of more than 1.4 billion people will recover in the last months of the year.
For the US market, inventories are currently depleted. They are forced to increase imports in the coming time. Along with that, at the end of August 2023, the inspection team of the US Food Safety and Inspection Service - FSIS (US Department of Agriculture) came to Vietnam to assess the food safety control system for exported catfish. Through inspection and assessment, Vietnam's pangasius production system is still guaranteed. Accordingly, the farming facilities/areas of enterprises ensure good criteria and conditions according to the Food Safety Control Program for fish and Siluriformes fish products exported to the US market. Along with that, 100% of farming facilities/areas have been granted pond identification codes. This is a favorable condition for enterprises to continue exporting pangasius to this market.
In the last months of the year, the decline will gradually narrow compared to the same period last year as the market enters the season of placing orders for year-end consumption and major festivals. “If the market progresses favorably, people and businesses have enough capital to maintain production and processing, pangasius exports this year could reach nearly 1.8 billion USD,” Mr. Truong Dinh Hoe predicted.
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