According to one Vietnamese news report, the area dedicated to pangasius farming in the Mekong Delta has shrunk by about 20% compared to this time last year.
Farmers are currently receiving VND 13,000 to 16,000 ($0.62 to $0.77) per kilogram for their fish (round weight, harvested), while it is costing VND 23,000 to 25,000 ($1.10 to $1.20) per kilogram to rear them. They are therefore losing about VND 10,000 ($0.48) per kilogram for every kilogram of fish they sell. This situation is unsustainable and it is expected that about half the farmers will give up after harvesting their next lot of fish.
To stay in business they need VND 25,000 ($1.20) a kilogram. That price would have to work its way through the chain and with a fillet yield of 30%, plus the cost of processing and freezing, resulting in a selling price for export of $3.80 to $4.00 a kilogram. Some in the industry say that this would make pangasius more or less unmarketable, as it would lose out to other, cheaper whitefish species. But without an increase, the further reduction in supplies will lead to more processors cutting back on production, or even shutting down completely.
Right now farmers are selling their fish at a loss in order to pay off the loans they took out to pay for feed and juvenile fish. Bank interest rates are sky high, ranging from 15% to a massive 30%, and companies are being given no leeway on paying them back. Meanwhile. a steep increase in the price of feed, particularly that produced by foreign-owned feed mills, has farmers jittery. One Vietnamese press report says that feed prices have increased by 40% already this year, and as feed accounts for 60-70% of farming costs this is a very heavy burden for farmers to bear.
Regardless of what happens to price and its impact on sales in the future, there are already problems with exports to northern Europe where consumers are reining in their spending because of the economic crisis caused by the plight of the euro. As a result, importers in the Netherlands and Germany are reported to be sitting on huge piles of pangasius they cannot sell. The United States is still the biggest market for pangasius from Vietnam, but there are doubts that opportunities for increasing sales there are as great as was once thought. Exports to Russia have been hit by yet another dispute about quality, and overall the number of markets to which pangasius is exported is shrinking
-- it was down to 117 from 125 during the first quarter of this year.
