Vietnamese pangasius processors gearing up for USDA inspection

Published on
March 29, 2017

At long last, U.S. catfish farmers could be on the verge of achieving their objective of preventing Vietnamese pangasius from, as they see it, undermining their market.

From 1 September, all catfish – and pangasius is now officially recognized by the U.S. authorities as being a catfish species, whether produced domestically or imported – will be subject to the scrutiny of the U.S. Department of Agriculture (USDA).

Up until then the U.S. Food and Drug Administration (FDA) has been responsible for ensuring that imported pangasius met all the necessary criteria on food safety. The change in responsibility means that USDA inspectors will visit, and check on, all stages of the production chain in Vietnam, from egg to final packaged product.

Vietnam produces about 90 percent of the pangasius sold in the United States. The increased inspections could be regarded as a sensible way to proceed, except for the inconvenient fact that Vietnamese pangasius has been successfully sold in the U.S.A. for 10 to 15 years and that there has never been a single case of pangasius causing harm to U.S. consumers.

In addition, the Vietnamese pangasius industry is probably the most tightly regulated fish industry in the world. The farms are certified by independent and reputable organisations such as ASC, BAP and GlobalG.A.P., while its processing plants incorporate HACCP and meet IFS and BRC conditions. Nearly all have been approved for exporting pangasius to the E.U., which has very strict importing criteria.

However, all this counts for nought in the southern U.S. states of Mississippi, Louisiana and Alabama, where channel catfish (Ictalurus punctatus) is farmed and where Vietnamese pangasius (Pangasius hypophthalmus) is regarded as a cheap interloper undercutting prices and ruining their market.

Unfortunately, instead of promoting channel catfish as a “superior” species and therefore worth paying extra for, the Catfish Farmers of America (CFA) have waged a long and bitter war denigrating the Vietnamese species by any means open to them.

This included publishing that pangasius, grown in the Mekong River, were living in water contaminated with Agent Orange and feeding on human body parts – presumably as a result of the ill-fated war waged by the U.S.A. in the south of Vietnam. Pangasius are, however, now farmed in specially constructed ponds and fed on commercially produced pellets.

The CFA even helped to persuade the U.S. Congress to pass a law restricting the use of the word “catfish” to American varieties. However, when the new law failed to dent sales of the import formerly known as catfish and now called “swai” in the United States, American farmers decided to launch an anti-dumping suit, despite their claim that the imported fish were not even comparable to home-grown ones.

Their petition contended that companies in Vietnam, where the average income per person is about one-fiftieth of America’s, are subsidizing rich Americans’ taste for catfish. According to an FAO report detailing the above, the CFA alleged that “the Vietnamese government meddles in its economy so much that it is impossible to make a true assessment of the local producers’ costs.”

Through their Congressional representatives, the Southern catfish farmers asked the U.S. Department of Commerce to calculate how much it would cost to raise hypothetical catfish in India, fillet and freeze them in imaginary factories, and ship them in phantom boats to America. That study resulting in a finding that Vietnamese producers are unfairly subsidized and should pay a tariff of up to 190 percent.

The anti-dumping duties are still present, although the amount to be paid varies from producer to producer. For example, leading pangasius producer and exporter Vinh Hoan has been placed on a zero rate. The duty is actually collected from the importer who then charges the exporter accordingly. There is also a “deposit” in case dumping is “proven,” which can amount to USD 1 million (EUR 942,000) and has to be paid upfront to the state.

Faced with all these obstacles, it would be understandable if Vietnam decided to abandon the U.S. market. In fact, China is already close to overtaking the u.S. as Vietnam’s largest export market for pangasius. However, Vietnam is working extremely hard to meet USDA requirements.

“The U.S. market is very profitable for the Vietnamese processors,” an industry source said. “They like to send fish to the U.S. because they generate better prices there.”

Ironically these “better prices” can be achieved because of the high prices at which home-raised channel catfish are sold.

Vietnamese catfish, or swai, is still sold at cheaper prices than channel catfish, but much higher than it can be sold in the E.U., the source said.

This must beg the question as to whether Vietnamese exporters should not withdraw from the European market, particularly given the recent report on Spanish television, replete with “alternative facts,” which has severely damaged supermarket sales in Europe.

In fact, the Vietnamese Ministry of Agriculture and Rural Development is already advising pangasius exporters to see Asia as an answer to difficulties they are facing in markets like the U.S.A. and the E.U.

However, if Vietnamese producers can meet USDA requirements, a huge market in the U.S. awaits them. Pangasius is now more popular than channel catfish and, if renamed “catfish,” the industry inside I spoke to said it has the potential to “explode in sales.”

“The U.S. catfish industry is by far not able to serve the market potential of this species. They cannot even tap it,” the source said. “This is actually why they fight tooth-and-nail with every trick in the book to keep the Vietnamese industry out.”

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