April 3, 2014


Rise of Vietnamese pangasius prices hit EU demand


Due to supply shortages and stronger US demand, raw material prices of Vietnamese pangasius have jumped, which has seen usually-strong EU demand fall off in the short-term, said industry players.


Two Dutch importers said prices out of Vietnam have risen in a short space of time from around VND22,000-23,000 (US$1.04-1.09) per kilogramme to as high as VND26,000 (US$1.23) per kilogramme currently – confirming tentative predictions made at the start of the year.


"Prices of raw materials are seriously increasing, due to a lack of availability of raw fish. Factories are looking around for material, besides the fish from their own farms, and the market price of the raw material at the 'free market' is going up now," said Frans Zeeman, purchasing director at the Dutch importer Seafood Connection.


Rens Elderkamp, sourcing manager at Anova Seafood, attributed the increase in price mainly to higher demand in the US, and to Russia re-opening its border to Vietnamese imports.


That impact on demand is apparently being felt, as prices reach a peak in Europe, said Zeeman. However, he said, it is positive to see farmers and factories getting better prices after a two-year low period.


According to Elderkamp, the increase is a durable trend, because "prices have simply been too low". He expects prices to stabilise at a somewhat lower level than the current one, depending on the demand.


Harvested all year round with no peaks or troughs in supply, pangasius is an entirely demand-driven product, with only small increases in demand before Christmas and Easter. "If the US keeps on buying as much as they are and Russia keeps strong, and if the EU keeps stable as it has been of late, prices will stabilise."


Zeeman, meanwhile, does not think demand will be weakened permanently. It can have some influence on the short term, but not for the longer term. Pangasius remains the cheap whitefish product, demand will not go down suddenly.


It may take several months before new prices are accepted in the market, while customers get used to new levels, he suggested. It has been a sudden and rapid price increase, so depending on raw material availability in the coming weeks, retailers may be able to increase selling prices step by step, he said.


He also said that several long term contracts were signed and fixed for a certain period already. It's a combination of both factors for the packers now – supplying pending contracts and new demands, plus the availability of raw fish.


According to Vietnam's Association of Seafood Exporters and Producers (VASEP), the area of pangasius farms has fallen in many provinces and cities after three consecutive years of losses. The supply shortage could continue until June, said VASEP, when farmers harvest the tra fish they are breeding at present.


Another change affecting the market, said Elderkamp, has been the emergence of much larger farmers, which means better planning of harvests and supply, as opposed to smaller farmers who might decide to harvest their pond when they need the cash.


That said, it might too early to talk of a wide-ranging change in Vietnam's pangasius farms, an industry that has been plagued by financial difficulties over the past few years.


In Europe, the fish also continues to suffer from a poor image, said Elderkamp. Although companies and organisations like Anova, the Vietnamese exporters association and the Aquaculture Stewardship Council are working to fight this, it is not going to happen overnight.

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