Thai shrimp production to slump below 200,000 tons : July 22, 2014
Thai shrimp output for the current year is on the verge of dropping below 200,000 metric tons, sources in the industry IntraFish talked to believe.
Elisabeth Fischer : July 22, 2014
A mix of early harvests, hesitation by farmers to seed ponds on the back of the heavy Early Mortality Syndrome (EMS) crisis of recent years, and attractive prices for small shrimp are the main causes for the development.
“We are hearing that due to heavy rains in many parts of Thailand and attractive prices [to farmers] on small sizes, farmers may harvest earlier than originally planned, even though shrimp has not yet reached their original target sizes,” Jim Gulkin, CEO at Siam Canadian said. “This may bring down Thailand production in tonnage volume.”
Siam Canadian’s estimations are “somewhere in the range of” 250,000 metric tons for the full year, however, others in the industry feel the total could be lower.
Daniel Gruenberg, CEO of Thai organic shrimp farm Acquestra, told IntraFish he believes total production will fall below 200,000 metric tons.
In the east, where his farm is located, about 90 percent of the ponds are empty, he said.
Heiko Lenk, CEO at Bangkok-headquartered Lenk Frozen Foods Asia, is even more pessimistic. He believes production won’t exceed 180,000 to 200,000 metric tons for the full year, from record-low of 250,000 metric tons last year.
“That’s my personal, subjective opinion,” he said.
EMS is still the main reason for the high number of vacant ponds, both Gruenberg and Lenk believe.
“But they are certainly getting it under control,” Lenk told IntraFish. Farmers are working on better water management and lower stocking densities, which is showing good results.
The situation has improved, but many leave the majority of their ponds fallow, and “don’t invest to seed more than 30 to 40 percent of their ponds,” he said.
Fear EMS could hit again is too big, which is why many farmers concentrate on proper quality control on less ponds, rather than just ramping up production again. Lenk, however, is more optimistic for 2015, saying production will successively grow again.
Shrimp prices are generally still very high in Thailand and will remain so, Gulkin said.
He is seeing them possibly moving up over the next three weeks “in some cases” due to demand from packers to fulfill their pending orders.
“We understand that some of the major packers currently have pending orders through the end of August or early September,” he told IntraFish in a note on Friday. “We expect prices to remain firm for at least another 2-3 weeks and/or possibly move up further. Supply on smaller sizes is extremely tight, and larger sizes are not yet available in the market.
He is quoting prices of $4.50 (€3.30) for vannamei white shrimp raw Hlso EZ Peel IQF 10×2 lbs, 31-40, delivered to the east coast of the United States; and $4.40 (€3.20) for 41-50.
Vannamei white shrimp CPTO 5×2 lbs 51-60 fetch $5.55 (€4.10) on the east coast of the United States, while 71-90 fetch $5.30 (€3.90).
Lenk on the other hand is seeing Asian shrimp prices in general rising again by the end of the month when “big US buyers” will have to make their purchasing decisions, after a drop in June.
Exports shift to new regions
When asked how the recent events around the slavery allegations in the Thai shrimp supply chain, and the United States’ Tier-3 downgrade in this year’s Trafficking In Persons (TIP) Report, could affect the sector, Lenk said, there will definitely be an impact.
Losing out on the European Union (EU) Generalised System of Preferences (GSP) tariff privilege, which came into force with January this year, will have the biggest impact, he believes.
With the adoption of a new GSP in October 2012 the EU cut the countries which get preferential tariffs from 176 to 89.
Tariffs for frozen shrimp increased from 4.2 percent to 7.12 percent, while tariffs on raw shrimp will go up from 4.2 percent to 12 percent in 2015, when Thailand is expected to fully exit the EU GSP scheme as a graduate country with upper incomes.
Under graduation, the tariff on processed shrimp, excluding cooked, shell-on, went up from 7 percent to 20 percent at the beginning of this year.
“Thailand will have to look for new markets,” Lenk said, pointing to the Middle East, and other Asian countries, in particular for China’s growing domestic consumption.
“We will see a shift in the distribution of raw material sources, most definitely,” he said.
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