What Will Be Next Pangasius for Vietnam?

Just ten years ago, the name Pangasius was unknown to seafood consumers in the West. Millions of pounds have been exported from Vietnam since then, yet relatively few people are familiar with the name even now. Despite the unfamiliarity of the name, Pangasius has become one of the most loved and best selling seafood species in the US. Because of its great value, the popularity of Pangasius has soared. It was recently announced that Pangasius made it to the list of Top Ten Seafood Species consumed in the US for 2009. And industry experts predict it could be in the top 5 by 2015, a promising future!

 

But there is a shadow over the bright future for Vietnam’s Pangasius - some very serious challenges and threats emerging in the US. There are two main issues at stake: extremely high tariffs imposed by the US Department of Commerce and a misleading anti-Vietnam Pangasius campaign from the Catfish Farmers of America (CFA) organization.

In mid-September the US Department of Commerce (DOC) announced a decision to impose stiffer import duties for several companies importing Pangasius into the US from Vietnam. The higher tariff rates will not be made official until March 2011, but VASEP and the Vietnam government are taking action now. VASEP, various government agencies and leading exporters have been working together to change the DOC decision through diplomatic and legal actions. Meanwhile, the US organization known as National Fisheries Institute (NFI) and several major Pangasius importers have also been protesting the decision with US lawmakers. If the US DOC revises its decision in March, the industry will likely be able to maintain its positive momentum.

 

But, what if the decision is held? What will become of Vietnam’s Pangasius industry in the US?

 

According to independent industry experts, it is most likely that the DOC will maintain its decision. The end result will be a decrease in companies able to import into the US from Vietnam. The party worst hit in the whole picture is the consumer. The consumption price of US seafood will rise dramatically as a reflection of the higher duties. It is likely that many exporters will halt shipments to the US entirely. This could have a spiral effect on the US economy, as processors, shippers, port workers and many others will lose work. These higher duties will, in effect, damage the US.

What about the rest of the world? The United States represents only 10 percent of total Pangasius exports. Exporters from Vietnam will simply divert their sales and marketing efforts to other countries. In essence, the industry will continue for Vietnam.

The sharp rise of feedstock prices have virtually wiped out the little profit margin that the Pangasius farmers have. This has led to the closing of many independent farms, hence causing serious shortage of materials for the growing demands from the world markets. These challenges have brought clouds into the once bright future of Vietnam’s Pangasius.

 

With other challenges, it is a totally different matter. Jim Hoang Ngoc Diep, a strategic management expert from Vietnam, pointed out: “From the sustainable development angle, our Pangasius industry must quickly address many fundamental issues, from feedstock pricing to profitable farming practices, from product quality consistency to our own products’ brand names to overseas markets. Perhaps the most important objective for local players is to establish brand names. This would lead to better profit margin for everyone from producers to processors to farmers.” His comment does have a lot of merit. While Vietnamese Pangasius has reached the top 10 list in the US, we found only one producer selling its own brand directly sold to US end-buyers: QVD. From Dong Thap, QVD is one of the few companies in Vietnam that has its own complete farming system which includes independent, partner and company-owned farms, all working together to sustain production output and meet specific market demands.

 

When asked about the current challenges and what the local industry should do first, Chris December, QVD’s CEO, said: “I agree with Jim’s thoughts. First and foremost, I see that the whole industry needs to form a single, unified voice. Doing so would show the global market the value of our Pangasius. This could address the CFA’s smear campaign and, perhaps more importantly, introduce the true healthy picture of our local industry to overseas consumers. This voice could also be the bridge to close communication gaps between local industry and overseas supporters, especially in the US market, where there are many supporters including the US NFI, key importers and buyers. VASEP has been trying hard, and doing an excellent job, but there are too many long-term and short-term agendas to address all at once. As the leading importer of Pangasius into the US market, QVD is happy to share our experiences, our business platform and reputation with other local producers in an effort to build a sustainable industry in Vietnam.”

 

It is clear VASEP is putting strong efforts toward confronting the US DOC issue for short term issues. But for the longer term there is not a clear picture of what the local industry will do. Will there be a program for brand name development in the US and other lucrative markets, as Jim Hoang suggested? Will there be a coordinated voice to help build a positive image of our local industry to overseas consumers and gain overseas supporters as QVD recommended? Will there be a series of sustainable development programs to help reshape the local industry? Whatever the future holds, we know that our local industry should seriously, and quickly, form programs to support longer term concerns. Otherwise the local industry will continue to struggle with short term challenges and crises as hundreds, or even thousands, of independent Pangasius farmers are forced to close the businesses they started.