Will the pangasius discount cycle end in 2021?

After recent decreasing prices, it is forecast that the pangasius price reduction cycle will end in 2021. The farming area tends to be narrowed, resulting in a decrease in output and pushing up pangasius prices again.

Pangasius export is forecast to have prosperity in 2021. Photo: N.Thanh

Exports decreased by 23%

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the cumulative export of pangasius from the beginning of the year to the end of November reached US$1.34 billion, down 24% compared to the same period in 2019. Estimated fish exports in the whole year inspection will reach about US$1.54 billion, down 23% compared to 2019.

According to the General Department of Fisheries (Ministry of Agriculture and Rural Development), cumulative area for pangasius farming by November was 5,485 hectares, equal to 73.8% of the same period in 2019; harvested area reached 2,813 ha, 52% compared to the same period in 2019; farming output reached more than 900 thousand tonnes, equaling 83.7% from the same period in 2019.

In 2020, mentioning the impact of the Covid-19 pandemic on pangasius export will be shortcomings if not mentioning the difficulties coming at the end of the year from the Chinese market. In mid-November, the city of Shanghai (China) required all imported high-risk frozen foods stored, processed and sold in this city to be in transit warehouses for Covid-19 testing and packaging fumigation of deliveries will be done online.

Truong Dinh Hoe, General Secretary of VASEP, assessed that, at the end of the year, the demand for Chinese seafood and Shanghai in particular is very high because importers increase importing goods to prepare for Lunar New Year. In this context, the above requirement for the Covid-19 test will affect delivery progress of the company and many orders have slowed down. Pangasius is the most affected item because this is a commodity that has enjoyed a significant recovery in the Chinese market.

End of discount cycle?

Assessing the pangasius market, especially in 2021, experts of Bank for Investment and Development of Vietnam Securities Joint Stock Company (BSC) said the demand could increase again. According to BSC analysis, service channels (restaurants, hotels) still account for a large proportion in seafood distribution will continue to recover to pre-pandemic levels. Therefore, it is expected that when the Covid-19 pandemic ends, the demand for consumption will grow again. In addition, the positive influence from the Vietnam - EU Free Trade Agreement (EVFTA) in the long term will create a large tax difference between Vietnamese pangasius and rival countries. Vietnamese pangasius products such as whole pangasius, fresh frozen pangasius fillet after three years will mostly decrease to 0%, lower than the tax rate of competitors like Indonesia (4.5% - 9%) and China (0% - 9%).

VNDirect Securities Joint Stock Company also expects export pangasius to recover strongly since 2021. This comes from the positive EU market with the advantage of EVFTA. In addition, VNDirect also expects the pangasius export sub-sector to recover in 2021 when the Covid-19 pandemic can be controlled with vaccines.

Duong Nghia Quoc, Chairman of the Pangasius Association, said the pangasius price reduction cycle will end in 2021. The reason is the farming area tends to shrink, leading to a decrease in output, pushing up pangasius prices again. To develop the pangasius industry, it is necessary to have production planning and improve quality according to international standards, avoiding overproduction and oversupply like last time.

Around the story of pangasius development, Minister of Agriculture and Rural Development Nguyen Xuan Cuong has repeatedly assessed pangasius is a very advantageous commodity but currently facing challenges. To continue to develop pangasius, in the production stage, science and technology must continue to apply to the best production stage, contributing to cost reduction, while focusing on deep processing. The pangasius industry currently has more than 50 products, of which products comply with the law of the circular economy. Making collagen from pangasius skin is Vietnam first. For other commodities, it is necessary to push further to ensure the highest value.

“The most important issue right now is the reorganisation of the market. We only pay attention to each export market, this market is limited, but continuously increasing, it is not possible, while there are fish products of other countries. The direction of the Vietnamese pangasius industry is not to boost exports to increase in quantity; At the same time, great attention should be paid to the domestic market of 100 million people. In the past two years, the whole industry has done and especially this year the consumption trend in the north is quite good, restructuring the market,” said the head of the agriculture sector.