The pandemic "blew away" most of the profits of pangasius businesses

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Processing pangasius for export. Photo: T.H

No more profits

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), pangasius is one of the most affected seafood products of Vietnam during the pandemic with exports down more than 31% in the first half of 2020. Reducing new orders, high inventories and low export prices have made profits of businesses plummet.

For key products mainly for export, due to delays, the profit of Cuu Long An Giang Seafood Import-Export Joint Stock Company in the second quarter fell sharply. Net profit was only more than VND4 billion, down 93% over the same period last year. In the first six months, the company achieved a net profit of over VND5 billion, while this figure was nearly VND113 billion over the same period.

The rapid decline in the export market caused businesses to face many difficulties, a large amount of pangasius products were in stock and could not be exported; many businesses lost orders, interrupted production; businesses are exhausted, leading to risk of overdue debts and great economic damage; and especially the impact on the sustainable development of Vietnam’s pangasius industry.

Similarly, due to the influence from exports, the business results of Vinh Hoan Corporation (VHC) plummeted, halving the profit in the second quarter to VND218 billion (US$9.2 million) compared to the previous year. The six-month profit also halved to nearly VND368 billion, fulfilling only 35% of its annual target.

VHC is researching investment strategies to increase profits through its value chains. In addition to traditional pangasius export activities, the company aims to increase 20% in fish fat and fish meal sales this year, and 60% in collagen and gelatin product sales thanks to the new factory opening.

Besides losing most of their profits, many businesses could not export their products, leading to losses. Mekong Fisheries Joint Stock Company (AAM) suffered a loss of over VND595 million in the second quarter due to a halving of exports compared to the same period last year. The six-month profit was only VND71 million, much lower than the target of VND8 billion in profit this year.

Redirecting domestic consumption

Facing the fact that pangasius exports fell sharply, many pangasius processing and exporting enterprises tried to maintain production in the direction of promoting domestic consumption.

According to the Nam Viet Group, the Group's total pangasius farming area is 1,100 hectares, supplying 200,000 tons of fish per year to the market. In the second quarter, the group's revenue from the export market was only about VND399 billion, less than half of the same period in 2019. Therefore, the group's profit in the second quarter decreased 79% year-on-year to VND32 billion, the lowest level since the beginning of 2017.

However, thanks to focusing on the domestic market, the company achieved a net domestic revenue of VND485 billion, an increase of 113% over the same period in 2019 and domestic sales have surpassed exports for the first time.

Currently, Nam Viet Group has linked with five distributors of pangasius products in the Northern market. The group supplies these units from 15-30 containers, each container is 25 tons every month.

At the recent meeting with Nam Viet Group, Deputy Minister of Agriculture and Rural Development Phung Duc Tien acknowledged the recommendations of the group in promoting information for the domestic market to access high quality pangasius products. At the same time, the connection of product supply to the Northern market recently recorded many positive signs.

With a market of 100 million people, the Ministry of Agriculture and Rural Development said if the domestic market could consume 10% - 20% of the pangasius production, it would reduce the pressure on currently difficult exports.

Therefore, for pangasius products to widely reach domestic consumers, pangasius trading businesses need to promote the application of high technology in the production process to reduce costs, improve product value and build a chain for this key product of the Mekong Delta, including An Giang in the future.

To achieve the growth target of pangasius in particular and the seafood sector in general, businesses need to strongly promote a number of key tasks and solutions, such as: controlling aquaculture conditions and quality of inputs; and encouraging farmers and processing enterprises to join the chain to produce according to market signals, and avoid oversupply of raw fish or lack of raw materials for export.