Europe faces pangasius shortage

The Dutch and Scottish politicians who are launching vitriolic attacks on Vietnam’s pangasius industry — likely without any firsthand knowledge of the industry — may get their wish to reduce imports of the inexpensive, Vietnamese-raised fish, but through no efforts of their own. Europe is already facing a shortage of pangasius, and the situation is only going to get worse.

Vietnamese processors are receiving such low prices for IQF pangasius fillets from European buyers — USD 2.80 to USD 3 per kilogram CIF for best quality fish (100 percent white with a 5 percent glaze) — that they’re stockpiling the fish in cold storage in Vietnam. Companies such as Bianfishco are reportedly holding upward of 10,000 metric tons of product each, while waiting to see what happens to a U.S. measure, part of the 2008 Farm Bill, that would transfer the responsibility of inspecting pangasius from the Food and Drug Administration to the Department of Agriculture, which would effectively slow imports considerably.

If the decision on the measure, which is expected in January, favors the Vietnamese, then the stockpiled supplies will be released to the U.S. market. IQF pangasius fillets are currently fetching USD 3.70 per kilogram CIF U.S. ports, which is at least USD 0.70 per kilogram higher than two years ago and about 30 percent above what European importers are paying.

If the decision goes against the Vietnamese, then processors will be forced to seek alternative markets.

There is already far higher demand for pangasius in Europe than there is fish available. The buyer for Globus, a major discount retailer in Germany, has publicly stated that he could sell twice as much pangasius than he has been able to buy but cannot get a hold of it. (Observers have estimated that Vietnam could easily sell about 2 million metric tons (round weight) of pangasius worldwide, double the amount that farmers are currently producing.)

The shortage in Europe is likely to last until May when the new harvest becomes available. This means that European retailers, some of whom can sell four to five containers each per week, will miss both the vital Christmas/New Year and Easter periods. (Each container has 20 metric tons of fillets on board.)

However, it is far from certain that the shortage will ease in May. The Vietnamese Ministry of Agriculture and Rural Development (MARD), which includes fisheries, is so concerned about the low prices being paid for pangasius in Europe, and the hardship it’s causing to Vietnamese farmers, that it is stepping in to restrict the volume of pangasius produced in 2011 to 1 million metric tons, the same as it was in 2009.

To achieve this, the ministry will limit the number of farming licences and set a minimum farm-gate price of VND 18,000 (USD 0.92) per kilogram, as this price has dropped to as low as VND 13,000 (USD 0.67) per kilogram. The ministry also wants to improve the product quality and thus hopes to raise the export price of pangasius to well over USD 3 per kilogram.

There have been several attempts by the Vietnamese Association of Seafood Exporters and Producers (VASEP) to impose a minimum selling price for pangasius in Europe and other regions of the world, but none have been successful. Now it seems that the government has lost patience and will itself try to impose controls on both the farmers and the processors who buy in pangasius from independent farmers.

How they intend to do this hasn’t yet been revealed. And it must be pointed out that the prognosis isn’t good, as previous attempts to impose minimum prices for pangasius have all failed. But, if the MARD is successful this time, then European importers will continue to face shortages. So the European politicians may get their wish, but European consumers will be deprived of a source of good, cheap whitefish.

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