VN could face tra fish oversupply

Monday, Jan 07, 2019 08:37

Viet Nam’s tra fish farmers could face oversupply problems this year due to rampant production. — Photo

The tra fish 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).

Many farmers have rushed to breed tra fish 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 tra 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, Viet Nam 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 tra fish in the US market are likely to decrease. Viet Nam 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 tra fish export volume to the US market to increase sharply this year.

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

With the popularity of processed products in the US and EU markets, Viet Nam 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 tra producers like Vinh Hoan to expand production.

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

Viet Nam’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 Viet Nam Association of Seafood Exporters and Producers. — VNS

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