Faced with growing competition from rivals, seafood enterprises need to focus on improving the success rate of shrimp and pangasius farming, and on adding value to their products through processing and branding in order to maintain their market share in the international market.
According to the Association of Seafood Exporters and Producers (VASEP), 2022 is expected to be a record year for the seafood industry, with export turnover reaching an all-time high of $11 billion. However, experts warn that the industry will face challenges in early 2023, including tight credit, high inventories, inflation, and declining purchasing power, as well as increased global competition.
Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Food Joint Stock Company (Fimex), analyzed that in 2023, shrimp enterprises will face great competitive pressure from rival Ecuador.
Specifically, 5 years ago, Ecuador ranked 5th in the world in shrimp farming, now it has risen to the leading position. This feat, together with the advantage of being close to the shrimp feed material area, the successful national seed strategy has helped to keep the price of Ecuadorian farmed shrimp the lowest, about $1/kg cheaper than Indian and Vietnamese shrimp. Thereby, Ecuadorian shrimp is leading in the EU and China, beating Vietnamese shrimp for the same product segment.
Particularly for the US market, Ecuador also has the advantage of low transportation costs, which helps to gradually increase its market share in this market, despite the average processing level.
Facing competitive pressure, Mr. Luc said that shrimp enterprises need to improve the success rate of shrimp farming through quality control of shrimp seed; Localities need to invest in irrigation in key shrimp farming areas, encouraging ASC-certified farms to attract customers from Western Europe.
Furthermore, seafood enterprises must focus on improving the value of their products by investing in branding and packaging, as well as implementing modern technologies to increase efficiency and reduce costs. This will help them to compete with rivals and maintain their market share.
In addition, businesses must be aware of the different needs and preferences of customers in different markets. For example, in the US market, businesses should focus on supplying high-end products to high-end distribution systems, while in Japan, Korea, and Australia, businesses should focus on supplying products that are affordable and have low shipping costs. In Western Europe, businesses should focus on promoting the consumption of ASC-certified shrimp to penetrate the high-end shrimp market.
“Everything has two sides and is always changing. Ecuador is trying to improve the processing level, if we are slow, the challenge for shrimp will be bigger in the coming years," said Mr. Luc.
As the President of Fimex noted, the pangasius industry is facing difficulties as the world pollock fishing quota is set to increase in comparison to the previous year. Countries such as India, Indonesia, Bangladesh, and China that farm pangasius are continuing to develop this affordable product to meet the domestic demand and are also planning to export, thereby competing with the Vietnamese market.
“The external and internal difficulties are compounded by the fact that the pangasius parents have not recovered well; the incubation success rate is still too low, at less than 20%, and the survival rate is not high, at around 50%. As a result, the growth of the fish is slower than before and prices tend to increase,” said Ho Quoc Luc.
The Fimex President stated that the pangasius industry needs to invest in selective broodstock, increase the rate of high-processed products, and control the production of farmed fish in accordance with the world whitefish supply and demand situation.
In light of the rising global inflation, Mr. Ho Quoc Luc also provided recommendations for seafood businesses in general. He emphasized that businesses should only purchase raw materials to fulfill existing orders, in order to avoid increasing inventories. In the event of an inventory surplus, enterprises should release it at a discounted price to avoid capital and warehouse congestion.
Furthermore, businesses should focus their resources on main production, avoid heavy investment and cut spending, review consumption norms, and optimize processing processes.
In addition to these solutions, Mr. Luc also emphasized the importance of mechanization, digital transformation, and foundation building for sustainable development. By establishing a solid foundation, businesses will find it more convenient to implement sustainable business criteria, align with global trends, and increase consumer appeal for their products, thereby increasing their long-term competitiveness.
(Enterprise & Business)
Read more: Seafood Industry Report
Seafood Industry Report - December 2022