« May 2010 Table of Contents
Top Species: Basa/swai
Regulatory uncertainty keeps pangasius market in check
by Joanne Friedrick
May 01, 2010
Still considered a relative newcomer to the U.S. market, both basa ( Pangasius bocourti ) and swai ( P. hypophthalmus ) continue to penetrate retail and foodservice channels as a lower-cost alternative to traditional white fish.
Once considered a head-to-head rival with U.S. catfish, importers and marketers of basa and swai are positioning the fish on its own, hoping to create a niche among purchasers of cod, tilapia and pollock. In 2009, the wholesale price for pangasius ranged from $1 to $1.45 per pound, and retailers have featured it as a $3.99 per pound special.
For the past 2.5 years, Mazzetta Co., a direct importer of frozen seafood based in Highland Park, Ill., has worked with pangasius from Vietnam, says Tom Mazzetta, CEO.
"It took a while developing pangasius," he says, as the company worked with its supplier on broodstock, feed and processing details.
With a newer species, says Mazzetta, "I think it's important to educate the customers." While he acknowledges that the species initially competed with domestic catfish, "it's now on its own."
"It's a great fish and can take different applications," he says, noting his company offers a pre-cooked portion and a battered portion for both retail and foodservice.
At his Cal-Asian restaurant Dragonfly in Truckee, Calif., chef and owner Billy McCullough says basa has been a wonder fish.
"[Basa] fits perfectly into the style of food. It is extremely mild, so it pairs well with flavorful sauces,"
McCullough has experimented over the years with different preparations, but settled on a plantain- and panko-crusted basa with bamboo rice, Chinese long beans, mango-papaya salsa and banana curry as "a calling card for Dragonfly."
Basa found a permanent spot on the menu after customers complained when he tried to remove it.
Additionally, says McCullough, "I have no trouble getting a consistent product at a great price."
Newer to the pangasius market, Clear Springs Foods in Buhl, Idaho, has been working with QVD, an importer in Bellevue, Wash., to source swai from Vietnam. The company teamed with QVD because of its reputation for quality control, inspection processes and monitoring, says Don Riffle, Clear Springs' executive VP-sales, marketing and global supply chain development.
Clear Springs added swai to its product line as part of its expansion of value-added products. "We had trout and mahimahi, and we were looking for another species with growth potential and a price point that fit. Swai met those criteria," Riffle says.
The price has been stable for the past eight months, Riffle says, and that wasn't likely to change in the near future. The fish is affordable for Clear Spring's target market for the product, which are institutional foodservice, healthcare and corporate-feeding programs.
"It's very adaptable," says Chris Howard, Clear Springs' director of marketing. The company markets Country Cornmeal, Panko Crusted and Citrus Sesame Swai recipes. "But there are many other opportunities and other ideas we are reviewing," he says. "I think we can come out with more."
Of course, says Howard, getting acceptance for the product will dictate how extensive a line Clear Springs offers. "The first thing is to get it into their mouths," he says. "It's a process of getting one client and then, via word of mouth between operators, getting more."
Riffle likens the path swai is taking to that of tilapia, which is now ubiquitous on menus. "Tilapia was a three- to five-year education," he says. "But we hope the learning curve is shorter with swai."
Swai, however, faces some barriers that have kept it from really taking off. Matthew Fass, president of Maritime Products International in Newport News, Va., says an ongoing anti-dumping order and plans in the U.S. Farm Bill to move pangasius oversight from the Food and Drug Administration to the U.S. Department of Agriculture has caused some concern about basa and swai's long-term potential in the U.S. market.
What is happening now doesn't impact the immediate market, says Fass, because publication of draft regulations continues to be delayed. "So regardless of the direction, there would be a significant time period before the USDA would take over," says Fass.
Making the switch to USDA oversight would make it difficult to import product because of a radically different system than FDA's, he says.
With USDA oversight, there would need to be equivalency agreements in place, he says, "and it would be years before country-to-country negotiations could be worked out."
There would also be the need for on-site USDA inspectors in overseas fish processing plants, similar to what meat plants in the United States and exporting countries have in place.
Although action has been slow and often delayed, Fass says the issue can't go away "unless a new law is written." A law already on the books calls for a deadline of USDA oversight to take place
last December, he says,
but that obviously isn't possible because the draft regulations haven't even been released yet.
He says lack of funding for the project has been proposed as one way to permanently delay the change, but that could result in a decision to ban imports of the fish altogether. Such an action, says Fass, could start a trade war with Vietnam and China, which are leading pangasius exporters.
In 2009, U.S. imports of frozen pangasius fillets from Vietnam reached 84.2
million pounds, while imports from Thailand hit 12.3 million and imports from China topped 5.5 million pounds.
Beyond the oversight issue, Fass says importers continue to deal with anti-dumping tariffs enacted by the U.S. Department of Commerce to keep pangasius from being sold at below-market prices. While 10 companies have achieved 0 percent duties, Fass says they have done so by shipping at price levels that are artificial, and they could lose their zero-duty status if the price gets too low.
On the upside, says Fass, "production is good and steady," and prices are aligned with other fish in the market that have all experienced some weakness because of lower demand.
Icelandic USA works with MPI to source P. hypophthalmus for its striped pangasius product line, which it launched about a year ago, says Jim Papadakis, Icelandic's director of marketing. Under FDA regulations, the fish can be
called swai, sutchi, tra or striped pangasius.
While the product is currently a very small part of Icelandic's overall business, "We are seeing sales grow as our customer base becomes more familiar with this newer species," he says.
Icelandic offers seven SKUs in cornmeal-breaded, panko-crusted or beer-battered versions. "There's been a good response," says Papadakis. He says customers view striped pangasius as a less-expensive option
to cod or haddock. "It's about $1.50 to $1.30 per-pound cheaper."
"The new food-safety bill is a concern and has many importers watching carefully as to its effects," adds Chuck Spencer, national accounts manager for the Newport News, Va.-based Icelandic, "but without details from the USDA regarding implementation, we are moving forward into expanding the use of this species. There
are currently no other supply concerns."
Fass agrees that companies already on the basa/swai bandwagon aren't changing their plans while the regulations are sorted out, but some large quick-serve and foodservice operations are probably delaying their involvement until the issue
Meanwhile, he says, producers in Vietnam are diversifying, adding tilapia to their farms as a safeguard against an unclear future - but they're not abandon-
"Vietnam is showing itself to be an aquaculture powerhouse," says Fass.
Contributing Editor Joanne Friedrick lives in Portland, Maine