Vietnam could face catfish oversupply

The catfish export sector was probably the most improved industry this year, but rampant production could lead to excess supplies and price drops, according to Viet Dragon Securities Company (VDSC).

Tra fish

Many farmers have rushed to breed catfish after prices increased steadily from the beginning of 2017 due to fingerling and raw materials shortages.

The situation may lead to oversupply of raw materials when farms step into the harvest season. The selling price of raw fish for factories could be reduced, the company said.

Farms could suffer great losses and stop breeding  for the next season, meaning they would lack raw materials for the next crop, VDSC warned.

However, according to the firm, if the US-China trade war continues, Vietnam could increase its market share in the US, replacing Chinese tilapia that currently accounts for 40 per cent of all fish imports to the US.

Barriers to Vietnamese catfish in the US market are likely to decrease. Vietnam has passed the US Department of Agriculture (USDA) field tests – the most important step in the assessment process established by the USADA’s Food Safety and Inspection Service (FSIS).

In addition, the preliminary anti-dumping tax on basa fish during the 14th administrative review period (POR 14) is significantly lower than that of POR 13. As a result, VDSC expects the  catfish export volume to the US market to increase sharply this year.

The EU-Vietnam Free Trade Agreement (EVFTA) may be approved early this year. If EVFTA is approved, the import tariff for frozen catfish fillets will be reduced from the current rate of 5.5 per cent to zero within three years. The rate for processed catfish fillets will be reduced from 7 per cent to zero within seven years. VDSC said demand for  catfish in the EU is expected to rise.

With the popularity of processed products in the US and EU markets, Vietnam has the potential to increase its profits from high-value products. The gross margin for the products is 22-25 per cent, higher than the margin of 12-16 per cent for frozen fillets.

The world population will exceed 8.5 billion people by 2030. As the natural fish supply worldwide is dwindling, the market share of farmed fish is expected to increase from 47 per cent in 2016 to 54 per cent in 2030. According to VDSC, this change presents a chance for catfish producers like Vinh Hoan to expand production.

Vietnam’s Mekong Delta region has favourable ecological conditions for large-scale  catfish farming. The natural conditions combined with advanced farming technology will produce white-meat catfish products, a favourite choice of consumers. Other major catfish producers such as India, Bangladesh, Thailand and Indonesia produce low-value yellow-meat catfish.

Vietnam’s export value of the fish was estimated at US$2.3 billion for 2018, higher than the $1.8 billion recorded in 2017, according to the Vietnam Association of Seafood Exporters and Producers.

Source: VietnamNews