Pangasius exports to EU market set to reach over US$200 million in 2022

According to details given by the Vietnam Association of Seafood Exporters and Producers (VASEP), pangasius exports to the EU market will be close to US$122 million, up 91% over the same period from last year and exceeding the pangasius turnover recorded in this market in 2021 of US$106 million.

Most notably, all markets in the EU strongly increased imports of Vietnamese pangasius, with the lowest growth rate standing at 25% and the highest being nearly six times higher than the same period last year.

The top five markets in the bloc include the Netherlands, Germany, Spain, Belgium, and Italy with respective import increases of 72%, 107%, 75%, 92%, and 90%.

This year demand among these markets has exploded after two years of halted domestic production has not been able to meet demand.

In particular, the global geopolitical context relating to the Russia-Ukraine conflict leading to a series of sanctions being placed on Russia's economy and trade has had an impact.

This is in addition to a lack of raw white fish amid record inflation in the EU which is viewed as a great opportunity for Vietnamese pangasius products.

Furthermore, the EU-Vietnam Free Trade Agreement (EVFTA) preferential tariff will promote more advantages for Vietnamese pangasius exports to the EU in the year ahead.

The bloc used to be the country’s largest pangasius import market with peak sales of US$511 million in 2010, accounting for 36% of the nation’s pangasius exports.

Vietnamese pangasius also accounted for 22% of the overall market share of white fish imported to the EU at that time. Indeed, pangasius was actually considered a competitor to some of the common white fish species found in Europe.

On August 1, 2020, the signing of the EVFTA signaled a great expectation for seafood exports, including pangasius exports to the highly potential market.

In line with the terms of the trade deal, pangasius products will enjoy a tax reduction according to a three-year roadmap. This will specifically focus on smoked pangasius, with the tax reduction roadmap being seven years from the date of entry into force of the agreement.

However, the advantage of tariffs will also did not promote an increase in pangasius exports to the EU in the second period of 2020 and 2021 because of the COVID-19 pandemic.

Social distancing and blockade caused the food service segment, which is the largest consumption channel of pangasius in Europe, to be closed.

The broken supply chain caused by delays in logistics, a general lack of shipping containers and the four to 10-fold increase in sea freight compared to pre- pandemic represented a disadvantage for the pangasius industry as prices failed to compensate for the high cost.

Therefore, the results achieved over the past seven months can be viewed as a good sign for the pangasius industry following a long period of continuous decline in exports to the EU from 2010 onwards.

Although it this industry that the best use of the EVFTA, according to Le Hang, communications director of the VASEP, seafood exports to the EU market are facing plenty of challenges.

This is largely due to each market in the EU having its own controls, leading to misunderstandings about CO2 levels and rules of origin placed on exporters. This is therefore a major obstacle for seafood exports to the EU.

Moreover, inflation has caused EU consumers to tighten their spending, focusing on moderately priced items. The lowest EUR/USD exchange rate after 20 years has led to consumers limiting spending, thereby causing importers to re-negotiate with importers in order to delay orders.

Moving forward, there are other challenges such as the increasingly higher certification requirements imposed by the EU market, as well as environmental and labour requirements, both of which are serious problems for Vietnamese seafood exports to the EU market.

With market opportunities and advantages from the EVFTA, pangasius exports to the EU in the second half of the year are forecast to continue to grow at a high rate. This will therefore bring in over US$200 million in foreign currency, an increase of 90% compared to that figures recorded in 2021.

In order to take full advantage of the advantages brought about by the EVFTA, the VASEP hopes to gain more support from the Import-Export Department and the Ministry of Industry and Trade. This will help in the process of guiding businesses to make the most of tariff incentives, as well as competently applying rules of origin to reduce obstacles when exporting seafood to this market.