Vietnam’s seafood exports hit hard by coronavirus outbreak
Seafood exporters in Vietnam are seeing their orders and export value plunge due to the coronavirus pandemic.
Local exporters surveyed by the Vietnam Association of Seafood Exporters and Producers (VASEP) said their orders have been reduced by between 30 to 50 percent. The COVID-19 outbreak has forced customers in other affected countries to cancel or postpone orders from Vietnamese packers, and local producers have also had trouble filling orders due to shortage of material inside Vietnam, VASEP found. Most of the companies surveyed by VASEP – with the notable exception of pangasius producers – said they lacked material for processing, and have been prioritizing orders from retailers, the trade group said.
“Due to impacts from the COVID-19, the production and trading activities of seafood companies have been seriously affected, especially in the first two weeks of March,” VASEP said in a statement 24 March.
Vietnam’s key seafood export markets have shut down one by one as the coronavirus has spread globally. First, China’s market disappeared as it fought the virus through January.
Starting in late February and early March, Europe stopped receiving cargoes, and by mid-March, customers in North America, the rest of Asia, the Middle East, and South America also increasingly decided to cancel or postpone orders. Stockpiles rose as companies could not export as planned.
Between 35 and 50 percent of shrimp orders from the U.S. and E.U. have been canceled or postponed because customers have failed to sell the products in their respective countries despite having to reduce up to 30 percent of prices. As a result, the cold storage systems belonging to both exporters and customers are now at capacity, VASEP said.
Le Van Quang, the chairman and CEO of Minh Phu, Vietnam’s leading shrimp processor and exporter, confirmed to SeafoodSource on 24 March that the company’s stockpiles are rising as it has struggled to maintain its exports to key markets.
Companies processing marine seafood are suffering the same existential threats as the country’s shrimp exporters. Binh Dinh, a province in central Vietnam, failed to export about 600 metric tons (MT) of tuna products to E.U. due to the coronavirus impacts. Apart from disruptions in exports, according to VASEP, these companies are short about half of their material need for processing, the trade organization said.
“Signing of new export contracts now is very difficult, especially with buyers from the U.S., E.U., and Japan,” VASEP said. A large number of small- and medium-sized exporters do not yet have any new orders for the second and third quarters of this year, it said.
VASEP said the pangasius sector has been hit the hardest, with exports falling significantly in the first two months of 2020. Vietnam exported pangasius worth USD 210.3 million (EUR 197 million) through February, 32.1 percent lower year-on-year. Trade with China has suffered the most, with a 52 percent drop to USD 28.4 million (EUR 26.3 million). Exports to the E.U. fell 40 percent year-on-year to USD 26 million (EUR 24 million) in the first two months of 2020, and shipments to the U.S. went down 27 percent to USD 38.6 million (EUR 35.7 million) over the same time period.
Making matters worse for Vietnamese traders, pangasius prices have plummeted as demand has evaporated. Farm-gate prices in the Mekong Delta Province of Dong Thap declined sharply to around VND 18,000 (USD 0.76, EUR 0.70) per kilogram in the week ending 26 March, much lower than more than VND 30,000 (USD 1.3, EUR 1.2) per kilogram in the same period last year, data from VASEP showed.
Surprisingly, shrimp exports from January through February surged 2.6 percent to reach USD 383 million (EUR 358 million), due mainly to an increase to Japan. Shrimp exports to Japan rose 16 percent in the period, making up for declines in other key markets, VASEP said. Exports to China and the E.U. contracted 37 percent and 15 percent, respectively, in export value in the two months.
In total, Vietnam took in USD 988.8 million (EUR 915 million) from exports of seafood products in the first two months of this year, a decline of 10.7 percent compared to the same period in 2019. Key buyers of Vietnamese seafood included Japan with USD 184.7 million (EUR 171 million) in purchases, up 2.5 percent year-on-year; the U.S. at USD 179.5 million (EUR 166 million), edging up 0.9 percent from a year earlier; and the E.U. at USD 143.7 million (EUR 133 million), down 10.9 percent from January-February last year, customs data showed.
Despite the tumbling export totals, VASEP said the seafood sector should be prepared for a recovery in global demand for seafood once the pandemic is contained, which it said could some as soon as July for shrimp. It urged farmers who are hesitant to begin stocking due to market uncertainty not to panic.
VASEP said it has submitted the findings of the survey and its latest trade data to the Ministry of Agriculture and Rural Development, and it is likely that it will form the basis of a financial support package currently being crafted by the government. On 4 March, Vietnam’s central government directed the State Bank of Vietnam and relevant agencies to provide a credit package of VND 250 trillion (USD 10.7 billion, EUR 9.7 billion) and another fee and tax exemption and reduction scheme worth VND 30 trillion (USD 1.3 billion, EUR 1.12 billion) to support businesses affected by the epidemic.
VASEP said most of seafood companies in Vietnam are facing tremendous financial strains due to lower sales value, high interest rates, rising shipping, storage costs, and other fees. In a proposal submitted to the Agriculture Ministry on 24 March, VASEP asked the government to cut corporate income taxes on seafood companies by half, remove road fees for seafood companies, and lower electricity prices for seafood processing plants and cold storage units. It also requested that banks be encouraged to provide preferential loans with low-interest rates, extend debt payment periods, and reduce banking fees.
Photo courtesy of VASEP