China tilapia exporters lose EU, gain Middle East

Published on
April 9, 2015

Prices for tilapia from China increased in 2014 even as volumes exported slipped – but cheaper catfish is pushing tilapia out of the EU market. And a stronger dollar means the United States is back in favor as a market for Hainan, one of China’s key tilapia producing regions.

Tilapia exporters in Hainan province, however, are concerned about a tightening of U.S. Food & Drug Administration (FDA) inspections for residues of sulphanilamide, hurting access for tilapia shipments. That’s according to a new report released by the key industry representative body in Hainan, a tropical island region near Vietnam which has dramatically grown its tilapia output in recent years.

Hainan exported 123,100 metric tons (MT) of aquatic products last year, down 2.67 percent in volume terms but, up 4.19 percent in value to USD 545 million (EUR 586 million), according to the Hainan Aquatic Products Processing and Marketing Association (HAPPMA). Tilapia exports fell 2.16 percent to 102,500 MT (83.2 percent of the province’s total seafood exports), but increased 6.69 percent in value terms to USD 378 million (EUR 406 million), according to its newly published report to members, which was shared with Seafoodsource.

Tilapia from Hainan fetched an average export price of USD 3,686 (EUR 3,963) per MT last year, an increase of 9.05 percent year on year with the price for tilapia fillets at USD 4,341.87 (EUR 4,667) per MT, up 5.72 percent. The average export price per MT of seafood in general was USD 4,432.28 (EUR 4,432), an increase of 7.05 percent, according to the HAPPMA report.

Higher farm-gate prices for tilapia were the main driver of the increase, while average wages increased by more than 10 percent in 2014, according to HAPPMA. Tilapia fillets accounted for 72.99 percent of total exports, an increase of 4.57 percentage points year on year.

Rising pond prices for tilapia have meanwhile turned off some overseas customers. Exports fell significantly in the second half of last year, totalling 65,000 MT, down 5.7 percent year on year. According to the HAPPMA report: “This was due to average prices for tilapia of CNY 5.7 (USD 0.91, EUR 0.85) per kilogram in the first half of the year to a current average of CNY 4.4 (USD 0.70, EUR 0.66) ... some foreign customers waited for the prices to drop and then postponed buying decisions again in expectation of further drops in the tilapia price.”

Exports to the EU markets show a continued decline and while the United States remains the largest export market the biggest growth is coming from the Middle East: Exports to Iran and Israel both doubled last year. Israel bought 7,700 MT last year, worth USD 29 million (EUR 26.97 million), up 111 percent in volume and 128 percent in value terms. But Iran appears to have paid more for its tilapia: It paid USD 32 million (EUR 29.7 million) for 6,500 MT, up 134 percent in value and 128 percent in value terms on the previous year.

Neither country however comes close to the United States, which paid USD 210 million (EUR 195.3 million) for 50,100 MT of Hainan tilapia last year – down 4.28 percent on 2013 in volume but up 1.21 percent in value terms. The EU purchases were lower-value at USD 28 million (EUR 26.04 million) for 9.7 million MT – down 30 percent in volume and down 27 percent in value.

While a weaker Euro has hurt sales to the EU for Hainan tilapia producers, competition from Vietnamese catfish (pangasius) is also key: It sells in the EU at EUR 2.99 (USD 3.22)/600g, compared to frozen tilapia sales at EUR 4.29 (USD 4.63)/600g, according to the HAPPMA report, which noted that EU consumers remain “very price conscious.” Wholesalers in Europe are regularly seeking to cut corners by increasing the ice content in the packs of tilapia shipped from Hainan, which “doesn’t correspond with our industry’s way of thinking,” noted the report.

While Europe is buying less, increasing appreciation of tilapia in the Middle East market has opened up opportunities. “For religious reasons, the Arabs do not eat shellfish or seafood without scales… the suitability of tilapia to the Middle Eastern diet has been gradually recognized in recent years,” noted the report.

One of the attractions of the Iran market is the use of Chinese currency (under a currency swap agreement between the Beijing and Tehran governments) for payments, thus guaranteeing forex stability for Hainan sellers. The collapse of the Russian rouble and fluctuations in the Mexican peso have both made Hainan tilapia exporters keen on established currencies like the dollar, notes the HAPPMA report. “…The Middle East market is mainly settled in U.S. dollars, and some merchants in Iran can also directly use the RMB (CNY) settlement, meaning relative stability.”

While the United remains in favor due to the stability of the dollar, a crackdown by U.S. authorities on sulphanilamide and other such chemicals and antibiotics will require the Hainan tilapia industry to take a stricter approach to residue testing in exports. “Otherwise access to the U.S. for our exports will be denied.”

Worryingly, HAPPMA points out that electricity shortages resulting from a surge in development in Hainan have in the past year hurt export processing enterprises ability to ensure timely, quality production and also led to increases in disease while fish sit in ponds due to black-outs at processing factories.

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