Despite a robust recovery in 2024, the seafood industry continues to grapple with raw material shortages, growing competition, and the risk of rising shipping costs.
STRONG GROWTH IN 2024
Vietnam’s seafood export industry is experiencing significant growth in 2024, with export turnover approaching the USD 10 billion. After hitting a peak of USD 1 billion in October, seafood exports for November reached USD 924 million, marking a 17% year-on-year increase. By the end of November, the total export turnover for the year had reached nearly USD 9.2 billion, reflecting an 11.5% increase compared to 2023. This industry also sets a rather modest target of 10,5 billion USD for 2025.
Shrimp continues to be the leading product, with an impressive growth rate of 22% in November and is expected to reach USD 4 billion by the end of the year. Other products, such as pangasius and tuna, have also seen positive growth. VASEP forecasts that pangasius exports—Vietnam’s second-largest seafood export—could reach USD 2 billion this year. Tuna is also expected to break a record, reaching USD 1 billion in exports.
SHRIMP RAW MATERIAL SHORTAGES
The shrimp industry is currently facing raw material shortages and rising prices. Since mid-August, the price of farmed shrimp in the Mekong Delta has increased significantly. Notably, the price of shrimp at 50 pieces per kilogram at farms saw the biggest increase in October, rising by 6%. Both processing plants and traders have shifted their focus to smaller shrimp sizes due to the scarcity and high prices of larger shrimp.
Prices have increased significantly, especially for the 50 pieces/kg size, which rose by approximately 30% from week 35, reaching VND 155,000 (about 6.1 USD)/kg in mid-November. This marks the first time the price of this shrimp size has reached 6USD/kg since late 2021.
According to VASEP, part of the reason for the price surge is the reduced supply due to fewer shrimp being farmed and disease outbreaks affecting shrimp populations. Shrimp farming yields have decreased due to extreme weather conditions and rising input costs. The reduction in global shrimp production has contributed to an increase in demand for Vietnamese shrimp.
The price of raw shrimp material surged dramatically in October and continued to rise in November. The supply of raw shrimp material this year has dropped significantly, and the season is shorter than last year. Inventory levels at processing plants have also decreased due to the combination of high export demand and low raw material supply. To maintain purchasing activities and meet export orders, large processing plants have had to raise their buying prices.
The raw material procurement activity for tiger shrimp at processing plants dropped significantly in October due to limited supply.
In a statement shared on VASEP, Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Food Joint Stock Company, noted that the quality of shrimp broodstock is no longer at its highest level, and the shrimp farming environment, particularly the water quality, has worsened. Within a month of stocking, shrimp ponds are already experiencing widespread disease, including EHP and the next stage of white feces disease.
“In this situation, the shortage of raw shrimp material will continue until the end of the first quarter of next year. During this period, processing enterprises face significant challenges as they must buy raw shrimp at high prices, while the price of finished shrimp must compete fiercely with cheaper shrimp from other countries, leading to a reduction in production and business efficiency,” Luc observed.
INCREASING COMPETITION FOR PANGASIUS
As for pangasius, competition from other whitefish products such as tilapia, snakehead, and Alaska pollock is growing increasingly intense. Data from the International Trade Centre (ITC) shows that frozen cod fillets (HS code 030471) have been the most consumed product in the world for over a decade, accounting for about 13% of the market share for white-fleshed fish. Cod is favored by consumers due to its high brand value, good quality, and rich nutritional content, making it a premium option in many countries’ cuisines.
Following cod, frozen Alaska pollock fillets and frozen tilapia fillets are increasingly popular alternatives. Tilapia, in particular, is an affordable option with a mild flavor, low fat content, and stable prices compared to other fish species, and is commonly used to make basic products like fish balls and fillets.
TUNA RAW MATERIAL SHORTAGES
As for tuna, processing and exporting companies are facing difficulties due to a shortage of genuine raw materials. This is mainly because many fishing vessels in the three key tuna fishing provinces are unable to operate due to regulations on the minimum allowable size for caught tuna (500mm).
Under this regulation, if processing companies purchase smaller tuna than the minimum size, they cannot receive certification for the raw materials to be used for export. As a result, businesses are no longer purchasing smaller tuna, leading to slower sales and lower prices for tuna.
SHIPPING COSTS MAY RISE AGAIN
Another challenge that could weigh heavily on exporters in general, and the seafood industry in particular, is the potential increase in shipping costs once Donald Trump officially takes office.
Trump’s victory is predicted to strongly impact global shipping costs, as he has previously proposed tariffs ranging from 10% to 20% on most imports, with a minimum tariff of 60% on all imports from China.
This phenomenon has occurred before, in 2018, when Trump introduced a series of tariffs on imports, especially from China.
Hope our information is useful for your purchasing decision. We look forward to discussing further with you!
By AT Seafood Team
Source: Vietfishmagazine
