Seafood enterprises are making efforts to expand the market. Photo: T.H

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam's seafood exports in the first half of 2022 achieved a record high growth rate of 40% despite global inflation and geopolitical instability. However, since July 2022, along with the difficulty of raw materials, the shadow of inflation seems to have begun to obscure the picture of Vietnam's seafood exports. Inflation and the appreciation of the dollar are weighing on the ability to consume seafood in markets, especially big markets such as the US, EU, China, UK.

In the first half of August 2022, the impact of high input material prices combined with exchange rate fluctuations on the world market made seafood export difficult. Many businesses said that their partners announced they would suspend signing new orders.

The impact of exchange rate fluctuations of the Euro and Japanese Yen is making seafood exporters worried. Inflation is causing people in Europe and China to reduce consumption. Many importers said they would not accept orders from the end of October.

Seafood processing is even more disadvantageous when the source of aquatic raw materials in the country is showing signs of decline in the last months of the year. Many factories will face two pressures at the same time. That is to reduce the export price but to increase the purchase price of raw materials due to the lack of supply.

According to Ms. Le Hang, Deputy Director of VASEP.PRO Center, in the US market, the inflation rate up to June 2022 up to 9.1% is a record level from 1981, until July was slightly low but it is at a high of 8.5%.

After soaring 85% in April, Vietnam's seafood exports to the US showed signs of slowing down from May and turned to negative growth from June with a decrease of 8% over the same period. In July, seafood exports to the US fell further, at a decrease of 30.5%.

In which, exports of black tiger shrimp dropped the most by 69%, and whiteleg shrimp decreased by nearly 55%. Pangasius exports to the US in July also decreased by 4%. Crab is also in the top five seafood species that are exported to this market, but it decreased by 22% in July. However, in July there are many seafood products to the US with high growth such as tuna, which increased by 34%. In addition, herring exports to the US increased nearly 8.5 times over the same period, herring is the export product with the seventh highest turnover in seafood products to this market.

Inflation in the euro area reached a record high in July 2022, with 8.9% as the war between Russia and Ukraine caused energy and food prices to soar. The inflation is blocking the recovery of market demand after the Covid pandemic.

Vietnam's seafood exports to the EU grew by 31% in the second quarter, but in July, the growth rate dropped to 18%. In addition to the problem of inflation, the depreciation of the Euro against the USD will also affect Vietnam's seafood exports to this market. By the end of July 2022, total seafood exports to the EU reached US$818 million, up 37% over the same period.

Like the EU countries, the UK market is reeling in a spiral of inflation with a forty-year record high, with a rate of 10.1% as of July. Joining the campaign of economic sanctions against Russia, the UK also suffered from food price inflation. Vietnam's seafood exports to the UK in the second quarter of this year decreased by 12%, in July continued to decrease by 18%.

Another important factor is that the Covid-19 pandemic has basically been controlled in many parts of the world, so importers are not in a hurry to sign contracts like in late 2021 and early 2022. Therefore, Seafood exports will be difficult in the last five months of 2022.

Besides difficulties, seafood enterprises have many opportunities for good-priced seafood products. According to VASEP leaders, the lack of supply of seafood in Europe is creating a "golden opportunity" for Vietnamese pangasius products to increase market share in these two markets. Previously, the average price of pangasius exported to Europe was only US$2.7/kg, in the first six months of this year, the export price to this region reached US$3.45/kg on average. The price of pangasius exported to the United States increased even more strongly, reaching US$4.5/kg, the highest ever, while in the past, pangasius exported to the US usually only reached US$2.9-3.1/kg.

Ms Nguyen Ngo Vi Tam, General Director of Vinh Hoan Joint Stock Company, said that high inflation in major countries promotes the consumption of essential items, especially low-cost products. Vietnam's pangasius exports have always kept a good price, so exports in recent years have been quite favorable.

Along with difficulties in raw materials, exchange rates, and inflation, Vietnam's seafood exports in the second half of the year cannot maintain high growth as in the first half of the year. However, businesses are optimistic about the seafood export figure of over US$10 billion for 2022.