Thai labor measures presenting shrimp sector with difficulties : Nov 7, 2017
Neil Ramsden : Undercurrentnews
Having given primary processing centers – or “peeling sheds” – the boot in recent years, Thai shrimp processors are facing difficulties in meeting their labor needs, Siam Canadian CEO Jim Gulkin told Undercurrent News.
The Thai industry came under the microscope in 2015 and 2016 when an Associated Press report into slave and child labor in the shrimp processing sector gained widespread recognition. In response the country moved to largely close down the unregulated peeling sheds – the main employers of unethical labor – from whom packers would buy their raw material.
“With peeling sheds largely gone and most factories doing all pre-processing in-house, the demand for labor in the factories themselves has risen,” Gulkin – whose company buys shrimp all over Asia and beyond – told Undercurrent.
“At the same time, new government regulations regarding foreign labor and labor agencies have tightened up, resulting in a severe shortage of foreign labor.”
Many packers relied on workers from Myanmar, but following revelations that large numbers of these migrant workers had effectively been traded into the country, by agents who would take their passports and demand fees, there was a rush to “clean up” the labor supply chain.
As a result of the labor shortages, Thai processors have been less inclined to accept orders for products that are more labor intensive in 2017, such as smaller-sized shrimp, shrimp rings, and some other value-added products, said Gulkin.
This may not apply to Thai Union Group, which – seemingly with great foresight – took the step of bringing all of its peeling shed employees in-house. Catering for 1,200 additional workers was “a big move”, sustainability and procurement director Anthony Lazazzara said recently.
“Overall, the industry remains difficult for Thailand and competition from other origins continues to challenge its market share,” he said. Vietnam especially has made efforts to increase its value-adding, with an eye on taking advantage of Thailand’s troubles with early mortality syndrome and lower raw material production.
“Fortunately, Thailand has been strong on larger sizes this year, and farmers have been growing larger and larger shrimp,” said the CEO.
This has come amid a global shift towards smaller sizes, Undercurrent reported at the recent Global Outlook Aquaculture Leadership (GOAL) conference in Dublin, Ireland.
In 2017 around two thirds of global farmed shrimp production is expected to be 40 count per kilogram or smaller; by comparison, just half of global farmed shrimp produced was of this size in 2010.
“The fundamental strengths of the industry remain, and most believe production will increase over the coming years and allow Thailand to claw back some market share,” Gulkin said, of Thailand.
He believes the efficiencies of Thailand and its processing industry will likely continue to give it “certain advantages”.
Thai production has seen less of an increase than anticipated in 2017, he said, estimating the year-end volume at between 305,000 metric tons and 315,000t.
Survey results presented at GOAL showed Thai producers anticipate a 2017 output of 320,000t. They predicted a climb to 340,000t in 2018; then 350,000t in 2019. This year, the Thai industry anticipates production of 320,000t.
Gulkin also recently told Undercurrent the global shrimp sector was holding its breath while it awaited a decision from the European Union on whether it will take measures against perceived health risks of Indian shrimp imports.
“If there is an outright ban, or other severe restrictions placed that could drastically curtail India shipments to the EU, there will be a domino effect on the industry,” he said.