Pangasius Rising

I attended a gathering of entrepreneurs, bureaucrats, academicians, farmers, and fisherfolk and other professionals at the Gems Hotel and Convention Center in Antipolo City,  Philippines last March 30, 2012 where the 12^th  Pangasius National Conference was being held.

 I was invited to be one of the speakers ( I spoke on the equity financing program of SB Corp.)  to this group of diverse backgrounds but common interest. And this shared interest is in the development of the Pangasius, a fish that is fast emerging as a new industry in the Philippines agri-business landscape.

I was surprised at the response of people (I estimate to be 200 individuals at least) attending the conference. There was a genuine interest and enthusiasm at an industry that has had a roller coaster journey as a fledgling industry.

The Pangasius Hypopthalmus, or popularly known in Philippine aquaculture circles as Pangga, a term of endearment in the Ilongo dialect, or to be precise, the localized name of a fish species of the cat fish family that is sold in grocery stores and supermarkets as cream dory, is slowly but surely, on the rise as its new star in the local aquaculture scene.

It all started in 1981, when the country’s Bureau of Fisheries and Aquatic Resources (BFAR) introduced this catfish to the Philippines.  Since then, attempts to grow it as a full-fledge aqua-culture industry has failed until recently when the various players in the value chain has come together to address the challenges it faces as an industry.

Glen Baticados, an entrepreneur and a Pangasius advocate who runs Bay Cove International Inc., shared his experience and his vision on how the Pangasius can become a successful aquaculture industry in the country in the said conference.

Ups and Downs

According to Baticados, Pangasius production and processing in the Philippines is characterized by a boom and bust cycle. Early attempts to establish it as a major aquaculture commodity produced locally failed.

This may be attributed, according to him, to a failure to integrate the various aspects of the industry and the different players in the value chain into one cohesive whole. There were gaps in the value chain and nobody took care to look at the big picture and address these gaps, he explained.

But it persisted. Some of its pioneers just would not give up.

Since its relaunch in 2007 as a food fish from Vietnam, its popularity has increased and so did its importation.

Merle Cruz, Department of Trade and Industry Under Secretary for Regional Operations, said that the country imports a monthly average of 600 metric tons of pangasius fillet valued at $ 1.6 million. This amount could have been earned by our local producers of Pangasius, if the industry was already well established.

The Current Situation

While importation is still growing and the demand for the pangasisus fillet increasing, the industry is still unstable given to the gaps in the value chain.

For example, Baticados pointed out several major problems of the industry that hinder its growth. First, he said there is a lack of institutional buyers. Being a new commodity in the market, it is not yet as acceptable as other fish species such as bangus and tilapia. Filipino households have not yet accepted it as a regular fare, but the product is slowly getting there.

Second, production inputs are unstable and some producers complain of high production costs. Baticados said that P 50 per kilo should be the baseline production cost for Pangasius for the industry to be competitive. Higher costs would make the locally produced pangasius more expensive than those imported. And this would kill the local industry.

Baticados is optimistic this production cost can be stabilized given that bigger producers that have resources to produce their own feeds are able to maintain the P 50 per kilo base line cost.

“Pangasisus can be fed alternative feeds such as surplus fruits and vegetables, snails (kuhol found in rice fields have been tried successfully), and duckweeds, small free floating plants found in ponds and rice paddies with high crude protein content). While this is so, however, the sustainability of sources for these alternative raw materials for feeds cannot be sustained at commercial levels.”

The challenge he said is to develop these stable supply of alternative raw materials for feeds. 

In some areas of the country this is not a concern, but for the others, the sources of alternative feed supply are a problem. So in these areas, production is dependent on commercial feeds which can be an expensive input to production resulting to higher costs of Pangasius.

“Another concern is the supply of affordable fingerlings. There are many producers but very few commercial hatcheries,” emphasized Baticados. Pangasius is a fish endemic to a certain area of the Mekong river where it exclusively breeds. Anywhere else in the world, the pangasius is incapable of natural breeding. So for the many growers, they buy their fingerlings from hatcheries that induce artificial breeding to produce the fingerlings for production.

Right now, there are not enough hatcheries to supply the demand for fingerlings so there is an irregular supply of live fishes.

Baticados sums up the problems of this emerging industry as, “weak linkages among the actors in the industry value chain.  The actors in the value chain operate independently of one another, and nobody is looking at, and taking care of, the big picture of the industry.

The Solution

The industry needs integration and managing the value chain.  To Baticados, this is what needs to be done to make the industry sustainable.

Right now, according to him there is no one in particular that manages the value chain.  For instance, the various players in the supply chain not only are independent of one another but compete among themselves.

Baticados explains that the industry can follow the example of the poultry industry where there are integrators that manage the value chain and integrate the different players to produce the final product.

And this is what Baticados has adopted as a strategy to grow his business and at the same time help in the development of the Pangasius industry. His firm, Baycove International Inc. is now in the process of establishing formal and informal linkages with the various value chain players in the industry and strategic alliances with the other major players that will facilitate the delivery of inputs and outputs in each linkage in the value chain.

For example, as Baycove tries to be the integrator, it is developing the local supply chain and doing research on at least three hatcheries it has and will establish in Luzon area---HO Hatchery in Victoria, Laguna, Meralco Foundation Inc., hatchery in Jala-jala, Rizal and the Baycove hatchery in Resureccion, Silang Cavite; signing marketing agreements with growers; forging strategic partnerships with processors and feedmillers.

“Our strategy is to bring everybody in one house,” said Baticados.

“So far we are doing good in that strategy, he added.

Already, Baticados is working on partnerships with other players such as: Meralco Foundation Inc., in hatchery operations; Fish Ventures International in Bulacan as processor; Vitarich in the supply of production inputs and feeds and growers in Bustos, Bulacan, Calamba, Laguna, and Binan, Laguna.

In addition, it has entered into a joint venture with Soro-soro Ibaba Development Cooperative (SIDC), an established agri-business coop dealing in feedmilling, hogs and poultry production, organic fertilizers production to develop and operate a 21-hectare commercial grow out farm of Pangasius in Batangas.

Optimistic about the future of the industry, Baticados says that their growers’ program practically provides a stable supply of inputs. “There is an assured supply of fingerlings, a feed support program, and a buyback program.

Baycove is trying to model its system to the existing broiler contract growing industry. However, he is not lost on the need to validate his assumptions. “To come up with a doable model, we must first standardize the production assumptions,” he pointed out.

“The integration of the value chain is a work in progress,” he further explained. “Let us collaborate first,” he calls on his colleagues in the industry. “Let the industry grow first, then there will be profit for everybody,” he emphasized.

“In the value chain, everybody should earn; even if only one segment of the value chain should wind up losing, then that would kill the industry,” he concluded.