Seafood Exports to Rise 10% in 2021?

Vietnam’s seafood exports are likely to grow by 10% to US$9.4 billion in 2021, driven by free trade agreements (FTAs) that the country has joined.

Overcoming challenges to maintain exports in 2020

In 2020, the Covid-19 pandemic rocked the world, especially in key export markets of Vietnam such as the EU, the U.S., China, South Korea and Japan. Their demand for Vietnamese seafood contracted.

Mr. Truong Dinh Hoe, General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said, Vietnam's seafood exports in the first quarter and second quarter of this year shrank 10% and 7% from the same period of 2019, respectively, due to Covid-19 pandemic adversity. The shipments dropped most in March and May (down 48% and 16%, respectively, from the same period in 2019). However, since July, exports have started to recover and increase in the last three months (with 10% to 13% growth). This showed that seafood companies in Vietnam are adapting and outperforming challenges and seizing opportunities in the context of the Covid-19 pandemic.

In 2020, seafood exports were boosted by the steady growth of shrimp and positive signs of seafood products from August 2020. Accordingly, the seafood export value reached US$7.8 billion as of November, similar to the value in 2019.

VASEP’s data also showed that, among Top six seafood markets, only shipments to the United States and China increased over 2019. Specifically, the stateside shipments were estimated at US$1.66 billion, up 13%, while the exports to China rose nearly 5% to US$1.48 billion. Other markets shrank due to the impact of Covid-19 pandemic.

As for the EU market, despite the decline, a boom appeared after the adoption of the EU - Vietnam Free Trade Agreement (EVFTA) in August 2020. The shipments to the EU revived strongly from September, expanding by 19-30%. In the first 11 months of 2020, seafood exports to the EU dipped 3.8% year on year to US$900 million. In 2020, the EU market (excluding the UK) was estimated to spend US$991 million on seafood imports from Vietnam, down 2.5% over 2019.

"The EVFTA has boosted Vietnam's seafood exports to the EU market. In the first seven months of 2020, Vietnam's seafood shipments to the EU sank 26% on Covid-19 pandemic impacts. However, from August 2020, exports tended to rise significantly over the same period of 2019. In addition to the adaptation to market demand changes, the tax cut is a catalyst to the export surge, said Mr. Hoe.

Intertwined opportunities and challenges in 2021

With respect to seafood opportunities of the fisheries sector in 2021, VASEP said, in 2020, the world experienced the worst economic recession since World War II, with the global gross domestic product (GDP) estimated to slide 3.8%. According to international experts, the world economy is likely to recover about 3.1% in 2021. However, if the adversity of the Covid-19 pandemic on the world economy remains, GDP growth may face a bleak outlook in 2022-2023.

The fisheries sector still has opportunities from new-generation FTAs such as the Regional Comprehensive Economic Partnership (RCEP), the EU - Vietnam Free Trade Agreement (EVFTA), and most recently the UK - Vietnam FTA (UKVFTA). These FTAs are producing a good impact on Vietnam's seafood exports and helping enhance seafood competitiveness in the coming time.

Given the likelihood of opportunities that Vietnam can grasp, Vietnam’s seafood export is forecast to increase by 10% to over US$9.4 billion in 2021. Specifically, shrimp will increase most, 15%, to US$4.4 billion; pangasius will expand 5% to reach about US$1.6 billion; and seafood exports will expand by 6% to US$3.4 billion.

Mr. Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Food Joint Stock Company, affirmed that shrimp export is likely to achieve a good outcome in 2020 because good farming and processing practices ensure quality.

As for the pangasius industry, analysts from BIDV Securities Joint Stock Company (BSC) said that demand could grow again. According to BSC, service channels (e.g. restaurants and hotels) will recover to the level before the pandemic crisis. Moreover, positive influences from the EVFTA will create a large tax difference between Vietnamese pangasius and rival countries.

In addition to advantages, the fisheries sector will face barriers, Hoe said. For example, anti-dumping tax on shrimp and pangasius in the U.S. market showed no signs of ending in the next five years. Additionally, the IUU Yellow Card, which has not been removed, also affects seafood exports. At present, although the Government, authorities, enterprises and the fishing community are making great efforts to overcome them, it is difficult to solve it overnight. Furthermore, the Chinese market is forecast to import more seafood.

Therefore, the seafood business community will have to try its best to enhance seafood quality, control the origin and sustainable production process, ensure labor and environmental standards and social security to achieve the goals set in 2021.

By Huong Ly, Vietnam Business Forum