Pangasius export quality drops, retail seafood buyers to blame

Published on
March 30, 2015

The constant drive for lower and lower prices, particularly from supermarket buyers, is being blamed for the noticeable decline in the quality of pangasius products exported to Europe from Vietnam. Coupled with the hike in anti-dumping taxes in the United States, this has led to a marked decline in pangasius sales to the two major overseas markets.

The drop in sales is so great that it is badly affecting the volume of fish being farmed in Vietnam.

“We are facing severe problems with pangasius,” said an industry insider. “The latest figures show that the major German market declined by 12 percent again in 2014 [it had already declined in 2013 by about 50 percent].

“The last stroke was the euro/U.S. dollar conversion rate where the value of the euro has fallen to its lowest level for more than a decade. You buy the fish in U.S. dollars but you sell it in euros or pounds sterling.”

Until November 2014 a euro was worth about VND 28,500 per kg [the Vietnamese currency in which the farmers sell the fish] but now it has dropped down to VND 24,000 even VND 23,000, which is hardly covering the costs of production.

One of the European importers calculated that his profit had dropped down to EUR 10,000 (USD 10,511) for contracts to supply 120 metric tons (MT) of IQF skinless, boneless pangasius fillets to supermarkets. “That is not something you can survive on in the long run. The buyers do not give you higher prices; the sellers cannot cut [prices] anymore – so here we are between a rock and a hard place.”

Pangasius exports to the United States have been harmed because of the anti-dumping taxes exporters are forced to deposit in advance.

To add to exporters’ problems, the Russian market is reported to have practically dried up due to the economic situation in that country.

“So the farmers refrain from breeding pangasius,” said the industry observer. “We will probably end up with only 600,000 to at most 800,000 MT [harvested fish] this year – half of what was farmed five years ago. They [the farmers] are increasingly turning to tilapia now.”

As reported in SeafoodSource last week, Vietnamese tilapia can be sold at a higher price than pangasius – about USD 4.10 (EUR 3.77) per kg for fish with 10 percent glaze and no chemicals [polyphosphates, etc] C&F Europe.

Meanwhile, IQF skinless, boneless pangasius fillets from Vietnam are selling for USD 3.10 to 3.50 (EUR 2.86 to 3.23) which is a little higher than it was because the fish competes in the same cheap sector of the whitefish market as Alaska pollock and this is now more expensive at about USD 4.00 (EUR 3.77) per kg.  

Unfortunately pangasius exporters have always competed with each other on price. There have been numerous attempts by authorities such as the Vietnamese Association of Seafood Exporters and Producers to increase the export price and to get the exporters to agree not to sell below a certain level, but the exporters always break ranks in order to secure orders.

Then the only way to meet the prices stipulated by overseas buyers is for the processors to bind in extra water by tumbling the fillets in chemical solutions prior to freezing and to add excess glaze afterwards.

This has now reached such a critical state that at the North Atlantic Seafood Conference early this month, a consultant advising the Nestle-owned French company Davigel, which delivers meals to 10,000 restaurants daily, said the company was now considering whether it should continue to sell pangasius as sales had suffered. This was even though the company claimed to be buying only high quality fish.

There is a saying in the U.K. about killing the goose which lays golden eggs. This appears to be precisely what pangasius processors are doing in Vietnam at the behest of importers.

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