Seafood exports find direction in difficulties

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Seafood enterprises participate in international seafood fairs to find partners and increase orders. Photo: T.H

Export orders reduced by 20-50%

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), seafood is one of the industries facing many difficulties in exporting, causing a sharp drop in turnover. In the first quarter of 2023, export turnover was only USD 1.85 billion, down more than 27% compared to the first quarter of 2022. The results of seafood export in the first quarter of the year showed that the two main export products of Vietnam's seafood, shrimp and pangasius, decreased deeply. By the end of the first quarter of 2023, shrimp exports brought in USD 577 million, down 40%, pangasius reached USD 447 million, 32% lower than the same period, and tuna decreased by 31% to USD 179 million.

According to Ms Nguyen Thi Thu Sac, President of VASEP, in the first months of 2023, inflation caused the demand for seafood to decrease in most of the main markets and adversely affected domestic production, causing the export orders of Vietnam to decrease by 20-50%, inventory increased. As a result, the market is difficult, and domestic production of raw materials has slowed down. "The cost of producing raw materials has increased along with the price of packaging, materials, energy, and labour... while Vietnamese seafood is under pressure to compete in supply and price with Ecuador and India. India, Thailand and Indonesia in major markets," said Ms Thu Sac.

In particular, Vietnam's shrimp exporters are facing difficulties in competitive advantage when countries such as India, Indonesia, and Ecuador have too ideal raw shrimp prices. For example, according to Mr Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Food Joint Stock Company (FMC), in the main harvest season, the price of raw shrimp size 40 heads/kg in Ecuador is only VND 100,000 /kg, while in Vietnam is VND150,000 /kg. Not only that, the cost of shrimp farming in Vietnam is currently quite high, so the price of Vietnamese shrimp is high, leading to reduced competitiveness.

According to VASEP's assessment, the trend of exporting some seafood products in the first half of 2023 is still very difficult. In particular, shrimp exports will recover slowly because of fierce competition with India, Ecuador and Indonesia. On the other hand, Pangasius exports will be better in the context of inflation and economic decline in many markets and have more great opportunities after China fully reopens after Covid-19. Therefore, to help the seafood industry grow, there is nothing better than raising the value of seafood products.

Asian market expectations

In the context that seafood exports are falling deeply due to the decrease in orders of enterprises from many major markets, seafood enterprises are still in the mood to find new directions for development. According to Mr Tran Van Linh, Chairman of Thuan Phuoc Seafood Company, seafood businesses need solutions to adapt to the situation. It is necessary to keep import customers accept to reduce production costs and profits. The export situation will change in the next quarter when the demand from Asian markets such as China, Korea, and ASEAN increases.

Notably, in the Chinese market,the reopening of China is a catalyst for the seafood industry in 2023. In the first 3 months of the year, the United States and China were still our country's largest seafood import markets, with a value of USD 237 million and 230 million USD, respectively. Both of these markets have a drop of 9-50%. However, with the Chinese market, the export value only decreased in January, while February and March increased by 25-30% over the same period. According to Truong Dinh Hoe, General Secretary of VASEP, to increase exports to China in the future, it is necessary to have special measures forthe Chinese market more effectively than the present time, setting up a direct selling agency forVietnamese people. First, however, it is necessary to consider which location is suitable.

Mr Ho Quoc Luc said it is very difficult to penetrate the Chinese market for shrimp, especially vannamei shrimp. Therefore, only pangasius and black tiger shrimp can be penetrated. Therefore, according to Mr Ho Quoc Luc, the immediate strategy for the shrimp industry is to focus on the market favouring shrimp products with high value-added content, which Ecuador and India have not been able to penetrate like Japan and West Europe.

To meet the above requirements, FMC leaders propose to increase ASC standard farming facilities to meet major markets. Currently, the area that meets the ASC standard is too low, less than 1% of the farming area, while Ecuador is 20%, and their shrimp dominate the E.U.market, where this standard requirement is very popular. "Due to the current situation of Vietnam's shrimp farming industry, it is fragmented, small, spontaneous, and difficult to meet requirements. The solution is to encourage investors to accumulate land to form as large a farm as possible. The bigger it is, the more favourable it is to invest in science and technology to reduce costs and increase competitiveness, " Mr Luc proposed.

Commenting on the market in the future, a representative of VASEP said that China wouldbecome the largest import market, but the competitive pressure is great because exporters and traders from other countries also focus on the market. Exports to the E.U., U.S., Japan and South Korean markets are difficult to break through because of inflation, which causes consumers to tighten their spending and the average import price to decrease compared to the previous year. From the reality of market fluctuations, seafood enterprises have reasonable adjustments of export products. For example, inChina, in addition to frozen products, businesses should take advantage of their close geographical location to increase shrimp and fresh/live seafood exports to the restaurant, hotel, and tourism segments. With other major markets such as the U.S.and E.U., businesses are more interested in importing goods for Asian supermarkets, which means that traditional Asian product lines are still attracting customers.

It is forecasted that Vietnam's seafood exports can only recover gradually from the third quarter of 2023. The seafood industry's biggest focus today is domestic production and processing, which must be ready for supply as soon as the market recovers. Before the current situation, businesses will focus on implementing measures, such asbeing proactive, finding a balance of raw materials and finance to keep traditional customers and be ready to supply when the market recovers again,and adjusting export market structure and product structure. At the same time, seek to import raw materials for export production and export processing to markets to take advantage of processing capacity, increase export turnover and maintain stable jobs for employees; make more use of the tariff preferences of FTAs to maintain a competitive position in the world market; actively participate in international seafood fairs, participate in B2B trade programs to find partners, increase orders.