The Brazilian Ministry of Agriculture and Livestock (MAPA) has announced the temporary suspension of tilapia imports from Vietnam. This decision was conveyed by Carlos Fávaro, the head of MAPA, during his address at the Rural Show Coopavel in Cascavel, Paraná.
But... what happened?
Through decision resolution 270, MAPA applied the measure alleging the need to review current sanitary protocols motivated by potential risks related to the TiLV virusi. The ministerial decision also expressed concerns from MAPA about the possible use of polyphosphate to increase the weight of the fish fillets artificially. The suspension will be lifted once this review of the sanitary protocol is concluded.
In response to this measure, the National Authority of Vietnam for Agro-Forest-Fishery Quality, Processing, and Market Development (NAFIQPM) has taken the first steps by requesting that all tilapia producers and exporters whose products are destined for Brazil halt their export operations at the request of the Brazilian authority.
Given its importance and potential due to its market size for Vietnamese exports, NAFIQPM has urged its exporters to voluntarily update, evaluate, and adequately implement regulations related to fish farming and processing for exports to the Brazilian market.
Background
Not coincidentally, Brazilian fish associations and producers expressed concern regarding the arrival of foreign competition in the domestic market, with the suspicion of potential market flooding. During 2023, the governments of both countries established trade negotiations in which Vietnam sought to include its tilapia exports to Brazil. Progress in this process led to increased unease from the Brazilian domestic industry, which, according to information provided at the time by the National Agriculture Society (SNA), opposed the process.
In other words, given the prospects for domestic market growth and tilapia production in the country, the entry of Vietnamese competition was seen as a threat and deemed harmful. During the negotiations, the possibility of implementing a customs regime for tilapia imports from Vietnam was considered. Still, it was deemed inconvenient by the Brazilian Agricultural Research Corporationii (in conjunction with the Brazilian Association of Fish Farmingiii, because it could involve an import tax reduction.
In October 2023, MAPA dismissed the negotiations for this product, partly due to the intense pressure exerted by the domestic industry and its associations. Brazilians are unfortunately not used to any competition, good or bad.
Sanitary issues or efficient competition?
An overview of highlights of the tilapia’s situation:
In 2022, tilapia production in Brazil reached 408,350,403 kilogramsiv, representing 64% of the total fish production.
98% of national companies and producers are small businessv.
Brazil is among the top 12 global fish producers - captured in internal waters - surpassing Vietnamvi.
During a public hearing - in December 2023 - within the Agricultural and Agrarian Reform Commission, the sector was considered "weak" at the time, comparing production costs and rigors imposed on Brazilian producers and their Vietnamese counterparts, as the latter could enter with competitive prices. Subsequently, the Commission’s representatives called for "some form of protectionism" for the sector.
In 2023, approximately 25 tons of tilapia were imported from Vietnam, valued at $118,000 USD.
What to expect?
If there is concern about possible sanitary and phytosanitary impacts that could pose health problems for the general population on any imported product, because of the TiLV, the government, through its institutions, is obliged to conduct necessary reviews of the protocols in this matter applied in the exporting country.
However, there is a possibility that this measure is aimed at preventing the tilapia domestic market from allowing the law of supply and demand to regulate its prices and make tilapia more accessible to the population. But why? Several stakeholders have been contending about the possibility of dumping from these imports.
For example, based on data presented by SNA from various sources, the value of the product imported from Vietnam - around USD 4/kg - is below the market average (domestic), which could – as they allege - lead to imbalances. In addition, tariff manipulation has been claimed by the Brazilian domestic producers.
Bearing that in mind, it is necessary to encourage the development of a strong and competitive tilapia local industry, not only domestically but also globally, given Brazil’s potential. But rather than requesting "protectionism" for a sector, it is necessary to ask for the right governmental policies for the required market adjustments so that there is no fear of competition. Sidera prepared in 2018 for the Brazilian Agency of Export Promotion and Investment, Apex Brasil, a thorough report with the segment’s bottlenecks and recommended strategies for the short and medium terms.
As we pointed out at the beginning of this article, Vietnamese exporters will probably adapt their processes to Brazilian standards. Meanwhile, the Brazilian tilapia domestic industry gains only a little time to adjust to the new market conditions – and compete with imports – or push the government to raise the import tariff rates. Another possibility is that, once the ban is lifted, there will be attempts from the domestic industry to initiate an anti-dumping investigation against the imports of tilapia from Vietnam, which will confront the Brazilian producers with the Vietnamese importers for at least one year, most likely five, potentially never-ending extensions of equal periods.
As we observe non-tariff trade barriers in various sectors across Brazil, global producers must adopt a proactive approach and prepare necessary strategies to anticipate potential scenarios. Tilapias, or the so-called “St. Pierre” dishes, the most popular type of fish protein in Brazil, are experiencing a surge in demand, contributing significantly to the population’s nutrition, health, and overall well-being. Instead of enjoying these benefits, our reaction is always to close up and not do our homework. Get ready then for a potential increase in the prices for this favorite dish. Back to chicken!