Pangasius price will soon increase because raw material shortage may last until the end of the second quarter of 2022.
Under the impact of Covid-19 and supply chain disruption in 2021, many pangasius farming households are unable to execute this year’s crop plan. The ponds are mostly stocked at maintenance levels with limited feeding, and very few rearing facilities stock more.
Pangasius production, import and export are also affected in many other ways such as drought and saltwater intrusion in the Mekong Delta, not to mention food prices, international shipping costs, and fuel prices have increased to record levels in recent years.
Vietnam Association of Seafood Exporters and Producers (VASEP) has recorded a shortage of pangasius supply at the beginning of 2022. The lack of supply while the demand increases are what causes the price of raw pangasius to be pushed up.
The price of raw pangasius at the moment has increased by 25% compared to the end of 2021, and reached a record of VND 32,000/kg, even higher in some places.
Contrary to concerns, the pangasius industry is showing signs of strong revival after three dismal years. According to the General Department of Customs (Ministry of Finance), by the end of the first quarter of 2022, pangasius exports are estimated at USD 646 million, up 88% over the same period in 2021, accounting for approximately 27% of the total seafood export value.
The value of pangasius exports to some of the top markets grew by triple digits. The USA market is a prime example: The total export value of pangasius in the first two months of 2022 reached USD 94.6 million, up 120% over the same period last year.
The USA is the number one pangasius export market of Vietnamese enterprises. As consumption demand increased, many enterprises have taken full advantage of the opportunity of not being subject to anti-dumping tax to promote sales in this market.
Apart from the USA, pangasius exports to China – Hong Kong have increased 240% in the first two months of the year to USD 86 million. Even Europe, the market that witnessed two consecutive years of decline, has also shown signs of improvement in this regard.
The above factors have led VASEP to the conclusion that pangasius exports in the second quarter of 2022 may increase by more than 50% compared to the same period in 2021. Seeing these promising developments, many pangasius exporters expressed optimism about their business results in 2022.
Vinh Hoan Corporation sets a target of consolidated net revenue of VND 13,000 billion and profit after tax of VND 1,500 billion, expecting an increase of 43.5% and 35.6% respectively compared to 2021. Vinh Hoan Company confirms that all factories have returned to normal operations as before the Covid-19 epidemic.
International Development and Investment Corporation (IDI) sets a target of net revenue of VND 8,300 billion, aiming for an increase of 45% compared to 2021, and VND 900 billion in profit after tax which would be 6.3 times higher than the same period last year.
In order to solve the matter of supply, pangasius enterprises have built many scenarios, such as IDI having signed enough pangasius export orders until the end of the second quarter of 2022. The unit also prepares stockpiles of up to VND 1,400 billion of cheap pangasius (VND 17,000 – 18,000/kg) for this recovery of markets worldwide. And aside from processing, IDI intends to focus its resources on production, diversify products from pangasius, refusing to invest outside the industry.
IDI has built a third processing plant this year with a capacity of 500 tons/day. This establishment stems from the reality that the remaining two factories, with a total capacity of 450 tons/day, are operating at full capacity but still unable to meet consumption demands.
The pangasius industry is in high spirit because of the growth forecast from now until the end of 2022, but VASEP notes that farmers need to have a reasonable stocking plan, ensuring a balance between supply and demand to avoid repeating the scenario in 2018. (At that time, people everywhere rushed to raise pangasius, causing the price of pangasius to plunge from more than VND 30,000/kg to VND 19,000/kg after just one year.)
Author: Bao Thang
Translated by Samuel Pham