Pangasius: floor price and raw material issues

Feeding at a Pangasius Farm, Mekong Delta

Feeding at a Pangasius Farm, Mekong Delta (Source: Qualasa Expertise)

At the end of Q.1/2011, pangasius exporters are still grappling with difficulties. On the one hand, soaring input costs, declining quality of parent pangasius and short supplies pushed pangasius price up to VNS28,500 – 29,000 per kilogram. On the other hand, pangasius farming operators are struggling with untruthfull stories in many export markets and floor price realization in Q.1/2011. These issues were discussed at the “Conference on Pangasius Enterprises 2011 and Q.1/2011 export revision” held by VASEP on April 25th 2011 in Ho Chi Minh City.

Pangasius price reaches its real value

“The pangasius export volume in Q.1/2011 raised only 5.2 percent compared with the same period of 2010, however, export value was up 21.6 percent. There was not much change in average export price in first three months of 2011 (based on shipment value), the price was fixed approximately at US$2.55 per kilogram. These features show that Vietnam pangasius will face many challenges in the coming time,” To Thi Tuong Lan – VASEP’s Deputy General Secretary said.

Currently, pangasius importers accepts higher price offered by Vietnam enterprises. Rise in selling price persuades foreign importers that VASEP is trying to realize pangasius floor price engagement. After offering low export price for a longtime, pangasius price is now reaching to its real value. Some importers even predict that export price will go up by 10 percent in the summer harvest season.

After realizing floor price, Vietnam pangasius exporters agree to fix a reasonable floor price in order to assure profit of both farmers and exporters and focus on the most profitable export markets. In addition, the players in Vietnam pangasius industry must continue to improve high quality of export seafood products and respect the rules if they do not want to get out of the game.

Raw material – input cost issue

“Lack of raw pangasius was due to problems in fingerling production. In fact, low quality of parent fish, lack of management of government agencies, limited access to loans also led to persistent crisis in raw material supply,” Duong Ngoc Minh – President of VASEP Freshwater Fish Commission. “To resolve partly this problem, Hung Vuong Corp invested VND4 billion in developing parent pangasius flock and help farmers create farming areas in the direction of sustainable development. However, it is necessary that government agencies get involved in solving the difficulties,” Mr. Minh added.

“Vietnamese enterprises fell into troubles because export price was much lower than surging output cost due to the soar of all input costs – especially raw material price, declining quality of juvenile fish and scarcity of raw material for processing. The difficulties were doubled when bank loan rate rise from 14 percent to 20 percent,” Nguyen Van Ky – Agifish’s General Director reported.

Besides domestic difficulties, Vietnam pangasius exporters are now struggling with barriers from many import countries to inhibitVietnam pangasius export to these markets, representatives from South Vina, Cadovimex 2 and Anvifish shared while reporting obstacles in export to Brazil, risks on anti-dumping tax in the U.S. and pangasius denigration in Germany.

Addressing at the conference, the Deputy Minister of Agriculture and Rural Development Luong Le Phuong agreed that the coherent coordination between government agencies and pangasius producers and traders was not strengthened yet; this caused the ongoing turbulence in Vietnam pangasius industry. The raising bank loan rate and shortcoming in financial system were the common challenges of Vietnam industries; therefore, the State will provide necessary and effective assistance to facilitate trading operations of enterprises and farmers.

“For the U.S. market, it is important to create a Vietnam Representative Committee for this market in order to re-structure export operations to the U.S., control selling floor price, export products standards in compliance with common principles adopted by exporters and the State,” Mr. Phuong added.

Source: Pangasius Vietnam

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