Pangasius buyers and the battlefield of quality and price


Prices for pangasius are set to continue rising over 2011 as production from Vietnam drops on strong demand, while the buying industry must also combat negative media attention and unscrupulous operators.

With many farmers stopping production because of low prices over 2010 and problems getting credit from banks to buy fingerlings, pangasius production is set to drop dramatically over 2011. Buyers are predicting further price rises in the lead up to the Brussels seafood show and beyond.

The Vietnam Association of Seafood Exporters and Processors (VASEP) stated in January that the export of pangasius over 2011 will reach about 360,000 metric tons, down 40 percent compared to 640,000 metric tons for 2010.

An executive with a Spain-based importer reported that pangasius is already being replaced in the market for products with a certain price point.

While some buyers consider the rise in prices for pangasius to be a good thing for farmers in Vietnam and the industry as a whole, there is much uncertainty in the markets.

“It is difficult to say what the prices will do going forward,” said Klaas-Jan Mazereeuw, QA manager with Dutch importer Seafood Connection. “I think maybe they will increase in the run up to the Brussels show and then stabilize. They are certainly not likely to drop.”

Prices of finished product have been increasing over the last two months. “We have some contracts, as we try and take a long term view. But we are waiting to see what the market will do. Also, contracts are only worth so much in this market.”

VASEP has ordered a floor price of $3 (€2.2) for 100 percent net weight, freight on board (FOB) pangasius, which is also adding to the increased prices, said Mazereeuw.

“The price is increasing because some 50 percent of the pangasius farmers have quit over 2009 and 2010, causing serious shortage of raw material,” he said. “Also, costs for feed and salaries are rising in Vietnam.”

Fernando Lago, export manager with Spanish seafood company Iberconsa, said he fears some operators will try to keep prices low using dubious means.

“I just hope that some non-scrupulous operators would not again try to keep prices low by cheating in glazing, quality or extra additives,”. “This would just ruin the last bit of good reputation for the Vietnamese producers.”

The trend of importers using sodium tripolyphosphate to boost the weight of pangasius and keep the price down is already happening in the U.S. market, said Jeff Goldberg of Chicago-based frozen supplier Mazzetta Company. “We feel that the overuse of sodium tripolyphosphate will continue to hinder the entry of pangasius into the mainstream,”.

Prices should increase

Adriaan de Leeuw, CEO of Antwerp, Belgium-based importer Solea International, agrees with his Dutch counterpart Mazereeuw that prices are likely to continue to increase over 2011, which he said is a good thing.

This is a healthy development for the farmers, the packers and the buyers, he said. “It is very good that the prices have and will continue to increase.”

This is a point emphasized by Lago. Although Iberconsa operates its own fleet, it is also an importer of pangasius into the Spanish market.

“I strongly defend fish should be sold for what is worth, and for whatever reason, this product has been underpriced for too long now,”.

Seafood Connecdtion’s Mazereeuw said it is not as simple as saying pangasius is undervalued. “If the market will not pay more, then pangasius is not undervalued. It is a market, with supply and demand.”

Whether pangasius is or has been undervalued or not, some companies in Europe are still offering pangasius stock at low prices, which is contributing to the market imbalance, said de Leeuw.

“Although prices are going up in origin, a lot of wholesalers and distributors are still selling the stock at low prices, while we, Solea International, have to pay 30 percent more than six months before to get the same product,” he said.

“At the moment, we are selling the standard pangasius fillets with 80 percent net weight around $3 (€2.2) to $3.10 (€2.3) per kilo delivered, duty paid (DDP) in Europe,” . “I am sure the price will increase another 15 percent to 20 percent up until summer, because there is just not enough supply and other international markets are ready to pay the price for it. So at the moment, there is no reason that the prices will go down at all.”

Over the last few years, nobody has earned enough money on importing pangasius, said de Leeuw. “All related parties in Vietnam are working very, very hard but at the end almost nobody is able to earn anything.”

This is one of the reasons why the prices have gone up now for the last three to four months, he said.

“A lot of farmers did not have enough money to put new juveniles in the ponds and nobody was willing to finance them,” said de Leeuw. “It was much more attractive to grow palm trees or other food products on their land, rather than working hard and at the end having nothing to show for it.”

It’s not only the farmers who have struggled with margins on pangasius, but also the importers, de Leeuw said.

“Neither the farmer; nor the factory; nor we as importer; or our customers — the wholesalers and distributors in Europe — have made good margins on pangasius.”

In addition, the low prices for pangasius have also created a “very bad impact” on the price level of other seafood products.

Negative press

The increasing prices are only part of the problem, said Mazereeuw.

“There are lots of other issues at the moment, with the negative press about pangasius in the media,” said Mazereeuw.

Although World Wildlife Fund (WWF) has removed pangasius from its red list, the impact of the initial red listing is still being felt. This has been added to by news of an upcoming documentary featuring WWF’s Catherine Zucco, which is to be shown on German TV on March 9.

“The seafood business, and especially pangasius, is in need of some good ideas in the area of public relations and positive press,” said Mazereeuw. “The pangasius industry has enough good things going on to turn this negative image around. We need to spread this side of the story, as well.”

Lago said the wild fish business has benefited from the negative press on pangasius.

“Obviously our business was affected by pangasius in the beginning but, to be frank, the fact that many producers and importers have spoilt and prostituted its quality, has provided a good chance for us to defend our wild fish products versus pangasius.”

Source: Pangasius Vietnam



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