|Pangasius processing line for export at the factory of South Vina at Tra Noc Industrial Zone in Can Tho city. Photo: VNA |
Vinh Hoan Corporation, Vietnam’s leading basa processing and exporting company, has just issued its June business report. Its total revenues of the month increased by 15 per cent over the same period, reaching VND713 billion ($31.1 million). The main contributor to the increase are basa products with a growth of 16 per cent on-year, reaching VND478 billion (20.8 million) in revenue.
Export to the US market improved significantly due to the reopening of restaurants and food services, but was partly offset by a decrease in Europe and China due to the risks of a reemergence of the pandemic. On June 28, Vinh Hoan received a review from the US’ Department of Commerce on Vietnamese basa shipments imported into the US market from August 2018 to July 2019.
With the official result, Vinh Hoan, together with Nam Viet Corporation, is not subject to arrears of tax on the volume of goods exported to the United States during the review period. Moreover, the absence of tax is an opportunity for them to promote their basa exports to the US with the existing customer base.
In the first months of the year, some other seafood companies also recorded a high growth of basa exports. Specifically, Saigon Aquatic Products Trading JSC revealed that the company’s export of basa and catfish in the first five months increased 10 per cent on-year. In addition, Can Tho Import Export Seafood JSC also recorded in the same period an increase of basa exports to the US by 1.5 times compared to the end of 2020.
According to data from the Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam’s basa exports in the first half of 2021 hit $788 million, up 18 per cent over the same period last year.
Specifically, basa exports to the US have been increasing by over 170 per cent. Other markets such as Mexico, Brazil, the UK, and Thailand achieved growth from 100-450 per cent. Each of these markets accounts for about 2.5-4 per cent of Vietnam’s basa export value, while the US makes up 21 per cent of this. Meanwhile, exports to China decreased by up to 7 per cent despite its highest proportion with 26 per cent in Vietnam’s basa.
To Tuong Lan, deputy secretary general of VASEP, stated that the stability of the US market, along with the recovery of other markets, helped the industry recover.
“The pandemic control in key markets has been quite optimistic so far. The reopening of these markets has led to the restoration of the main distribution channels for basa products. Exporting companies had the opportunity to expand their retail channels as people buy fish for home cooking, in parallel with traditional distribution channels and wholesale,” Lan said.
However, a representative of Fresh Studio, an agriculture consultancy firm covering Asia and Europe, claimed that the growth is not significant as it is an on-year comparison with 2020 during which the pandemic had a strong influence on the industry.
“The increase we observe is simply the illustration of the market recovery compared to last year. However, both in terms of volume and value, the export of basa remains very low compared to a normal year. Most markets have recovered in terms of volume this year, especially China and the US, however the value per unit remains extremely low,” the representative elaborated.
Basa exporters have been facing rising raw material prices and logistics costs, causing profits to erode.
Lan pointed out that the price of raw materials increased 4-5 times from the middle of last year. Essential products – especially gloves and protective equipment – all increased by up to 25 per cent, while aquatic feed increased by up to 20 per cent.
Export prices did not increase due to the impact of the pandemic, which rendered the profits of suppliers even less than anticipated. But they are forced to operate to keep customers, waiting for the market to fully recover.
While recovery remains unpredictable, Lan of VASEP stated that basa exports will mainly depend on the US and China, while the negative growth rate of 30 per cent in the first quarter makes the EU unable to rise up in the second quarter.
Meanwhile, it is hard to calculate with the Chinese market due to its unpredictable import and export policies. Lan hoped that in the fourth quarter, exports will be able to recover to meet the increased demand for year-end holidays in the global market.
On the other hand, the representative of Fresh Studio stated, “We will continue to see better performances than last year. Maybe the unit price will rise from October, when demand from China peaks. But I would not speak of growth. Last year, the export volume declined compared to 2019. This year, we expect it to be the same as last year.”