The impact of COVID-19 on key import markets created many challenges for the Vietnamese pangasius industry in 2020, subduing farming activities and accelerating the downward price trend. However, a partial recovery of the Chinese market and a much tighter supply situation paints a somewhat brighter picture for 2021

Production

In Viet Nam, the world’s largest producer and exporter of farmed pangasius, the effects of the global pandemic on international seafood markets has put a damper on industry development and shifted the focus to damage limitation. Farm-gate prices dropped steeply as market demand dried up abroad.
In June 2020 farmers were reportedly losing around VND 3 500 (USD 0.15) to VND 5 000 (USD 0.22) per kg. These unprofitable price levels, combined with widespread uncertainly, mounting debt levels and trade slowdowns, saw producers sharply reduce stocking, slow feeding and generally adopt a defensive approach. The result was an estimated 26.2 percent decrease in total farming area and a 48 percent drop in harvested area in the Mekong Delta. This in turn is expected to lead to a drop of around 15 percent in total output year on year to around 1.2 million tonnes.

According to data presented at the Global Outlook for Aquaculture Leadership event, supply contraction in Viet Nam and elsewhere is expected to lead to a decrease of some 7 percent in global pangasius production for 2020. The emerging Chinese industry continues to lag behind their more experienced Vietnamese counterparts in terms of broodstock production and farming practices, but they have the advantage of having direct access to an enormous and growing domestic market.
Meanwhile, Indian and Bangladeshi production is expanding steadily, but suppliers are significantly less focused on export markets relative to the Vietnamese industry.

Trade and markets

Demand in Viet Nam’s top export markets for pangasius, the United States of America and China, For Viet Nam, the cumulative impact of the pandemic has been considerable, with the total value of pangasius revenues reaching only USD 1.04 billion in the first 9 months of 2020, 28.6 percent lower than the same period in the previous year. According to the Vietnam Association of Seafood Exporters and Producers (VASEP), exports to China (including Hong Kong SAR), the United States of America, the ASEAN block and the European Union fell 22.7 percent, 16.8 percent, 30.3 percent and 33.8 percent respectively. In response, Viet Nam’s Ministry of Agriculture and Rural Development (MARD) has called for increased emphasis on the Vietnamese domestic market, which it estimates could absorb some 10-20 percent of production.

China overtook the United States of America as Viet Nam’s most important market for pangasius in 2019, and its shutdown in early 2020 in response to the COVID-19 crisis was a significant blow.
Demand from the foodservice sector effectively evaporated while weaker demand from China’s own export markets meant a surplus of whitefish available to domestic consumers. In May and early June, the decision of Chinese authorities to close a number of ports due to concerns over possible transmission via seafood products drove supplier revenues down even further. However, China was also one of the first large markets to return to some semblance of normality and this recovery from the third quarter onwards saw Vietnamese export revenues return almost to 2019 levels by the end of 2020.

Prices

For the majority of the summer, farm-gate prices for pangasius in the Mekong Delta were hovering around VND 18 000 (USD 0.78) per kg, below the average breakeven level. Later in the year, however, they recovered to barely profitable levels as supply tightened and the Chinese market reopened. Meanwhile, US import prices were back up to around USD 2.20 per kg by the start of Q4, after falling to USD 2.00 per kg earlier in the year.

Outlook

Following the supply contraction last year, stakeholders expect to see an increase in total pangasius production of around 10 percent in 2021. At the same time, demand from the Chinese market is approaching pre-pandemic levels and this is expected to help lift prices and relieve some financial pressure on supplier businesses. However, the spike in global COVID-19 cases in the New Year underlines the continuing threat of the pandemic and the risk of a halting or reversal on this recovery is significant. Additional border checks in China are an example of pandemic-related obstacles that are likely to endure for some time. Vietnamese authorities have emphasized the need to focus on cost reduction, controlled output increases and product diversification to increase the resilience of the industry and to protect businesses.