A slump in farm-gate prices reported in China’s key tilapia producing regions this year appears to have caused a shortage of quality fish for filet processors and exporters. Major tilapia processing companies claim they’re not able to get sufficient quantities of suitable fish largely because farmers are no longer feeding their fish due to pessimism over low prices. Several key processors in southern China questioned for this article said they’re expecting a rebound in raw material prices which could curtail factory output and tighten supply.
Demand for processed tilapia is steady for Xiangtai Fisheries Co., key processor in Hainan, but the firm’s biggest problem is a shortage of suitable fish which forced the firm to cut back on its output of 10,000 kilos per day in September. “It’s unprecedented, sometimes only 20 percent of the batches of fish we buy in are suitable for filets,” said a senior executive at the firm. A persistent problem is the excessive residues of antibiotics found in much of the fish bought from local ponds, claims the executive. “This causes us lots of problems as we can’t export it as the residues will be detected but the farmer still wants to be paid.”
Meanwhile Yang Huaying, vice president of key processor Hainan Sky Blue Sea Food Co, claims the firm’s shipments are largely on a par with last year but the firm is being forced to pay more for quality fish, which is resulting in an overall decline in earnings so far this year.
The tilapia sector was on course for its “worst year ever” in 2015, predicted China Aquatic Products Promotion & Marketing Association (CAPPMA) earlier this year, when prices fell to CNY 4 (USD 0.62, EUR 0.58)/500g in Guangdong province in April, slipping to a low of CNY 2.9 (USD 0.45, EUR 0.42)/500g in June. Prices for large sized fish had recovered to CNY 4.2 (USD 0.66, EUR 0.62)/500g in September. Yet there will be further increases in fish prices through the autumn, predicts Fen Zhi Guo, general manager at key local aquaculture breeding and processing firm Zhanjiang Evergreen Aquatic Product Science and Technology Co.
Evergreen has been able to grow its tilapia sales in 2015 thanks to “stable customers” as well as increased shipments of frozen filets to Africa. But earnings are down: “The problem is prices paid by our new customers are lower, so there no profits,” says Fen. The firm processes an average five to ten thousand kilograms per day with shipments of 40 containers (each of them 19 metric tons) per month.
Similar sentiments were expressed by Hainan Qinfu Aquatic Products Co., a key processor in the Hainan region which grew its exports by 40 percent in 2014 but is predicting 20 percent year-on-year growth in export sales for 2015. Southeast Asia has also become a threat, with importers in Southeast Asia buying Chinese frozen filets to add value and re-export them. Increased volumes of tilapia being cultivated in Vietnam is a risk, as Vietnam enjoys easier long-term access to the U.S. market through its membership of the Trans Pacific Partnership (TPP) free trade pact.
Meanwhile the huge Tongwei Co. conglomerate – it sells feed, fry and processes tilapia – has also felt some pain with the head of Tongwei Co.’s operations in Hainan, Yi Gang Hui, revealing that his firm’s shipments are “slightly worse” so far in 2015 compared to last year. This has led to a “slight scaling back” of the firm’s processing capacity of 50,000 kg.
“Processors are trying to open domestic markets but this takes time, we’re seeing slow progress” noted China’s export standards watchdog, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ). The situation for China’s tilapia processors is “not optimistic,” it noted in a September briefing to exporters.
