Pangasius industry tasted bitter fruit because of overheat

Recently, pangasius farming area recorded a mass increase, causing a rapid increase in production. Along with that, the main export markets of pangasius such as China and the US are increasing barriers. All are pushing the industry into a difficult situation.

Pangasius price has hit the bottom within the last two years. Photo: N. Thanh.

The more you sell the more you lose

According to the latest information from the Department of Agricultural Product Processing and Market Development (Ministry of Agriculture and Rural Development): In August, the wholesale price of raw pangasius in the Mekong Delta tended to inch up slightly by VND 500 / kg compared to the previous month, but still very low compared to the production cost of farmers. Prices range from VND 21,500-22,000 / kg for pangasius type I (VND 800-900g / fish), while farm-bought price is VND 20,500-21,000 / kg. Catches of businesses are stable, while demand is not high.

Despite inching up, but conspicuously with the current selling price, pangasius farmers are still in the situation of selling prices below the cost, the more they sell, the more they lose. Duong Nghia Quoc - Chairman of Vietnam Pangasius Association said at the current selling price, farmers lost at least 3,000 VND / kg.

Pangasius is one of the two key export seafood products and has achieved great success in 2018. So why from the beginning of the year until now, the price of pangasius has been in a state of turmoil and even hit bottom? Many see the key as difficulties coming from China and the US. "The cause of the price reduction is due to a sharp decline in exports, especially exports to two major markets, the US and China," the Department of Agricultural Product Processing and Market Development said.

Quoc said that recently, the devaluation of the Chinese yuan to boost exports and reduce imports has reduced the amount of goods entering this market. Besides, the plan to "localise" Chinese pangasius is also being encouraged and invested by the Government of this country. Therefore, even from now until the end of the year, Vietnam's pangasius exports to China - Hong Kong (China) are forecast to grow but will not reach the expected numbers.

"With the US market, although still ranked second in the largest export markets of Vietnam pangasius, exports of pangasius to the US market will continue to decline in the coming months due to technical and trade barriers. The cause of the decline is mainly due to the reduction of US import demand due to the high volume of goods. In addition, the US is also seeking other sources of imports from Canada, India, Chile, Indonesia ," Quoc said.

The Vietnam Association of Seafood Exporters and Producers (VASEP) has also recently forecasted that in the last two quarters of 2019, pangasius exports to the US market are likely to continue to decline. Trade and technical barriers continue to hinder Vietnamese businesses in this market.

Do not focus on output

Around the story of falling pangasius prices, Vo Hung Dung, Vice President of Vietnam Pangasius Association said with the Chinese market, it is largely due to changes in trading methods. Specifically, in the past, China allowed small imports, so Vietnamese pangasius has been exported a lot through this market. However, this year, China tightened imports, requiring goods to be exported through official quotas and standards not lower than those of European countries, causing difficulties for pangasius export. "It takes some time for businesses to adjust, then the market will stabilise," Dung assessed.

Regarding the underlying cause, Dung noted that new supply is the main factor that made pangasius prices fall. Specifically, in 2018, pangasius production has increased by more than 20 percent compared to 2017 and this output continues to increase in the first quarter of 2019.

Sharing the same view, Duong Nghia Quoc said the overheating development in the area has pushed the pangasius farming and processing industry into an unstable and difficult situation to control. In 2017 and 2018, pangasius export was favorable, raw material price increased, farmers massively expanded the area. Therefore, when the market fluctuates, consumption decreases and fish price reduction is unavoidable.

Talking to reporters of the Customs Newspaper, Tran Dinh Luan, Director General of the General Department of Fisheries (Ministry of Agriculture and Rural Development) said the price of fish to the bottom is mainly in cases of spontaneous pond digging, sold to traders, price constraints. In 2018, oangasius price increased, inefficient rice farming area was converted by people to dig catfish ponds. The same area as the pangasius farming area therefore increased.

Some experts say the biggest bottleneck of pangasius farming, processing and export is the lack of linkage between farmers and businesses, between businesses and the region. Pangasius industry still operates in the style of "freedom" so it is impossible to control the output, resulting in excess when there is a fluctuation.

Duong Nghia Quoc said that the competition in the pangasius market is increasingly fierce when China and India all invest in high technology to actively raise pangasius. At the same time, China's import standards for pangasius so far have not been much different from those of the US or EU. Therefore, to develop stably and maintain the market, there is no other way, businesses must innovate technology, good corporate governance, and do not focus on output but improve quality.

Tran Dinh Luan also stated that in recent years, the General Department of Fisheries has made clear and regular recommendations to localities on farming pangasius as planned, not massively developing. In addition, the key is still to promote farming closely linked to international standards, traceability, to ensure clear origin.