Thai shrimp sales suffer ‘worst slump in history’ : May 25, 2018
Louis Harkell : UndercurrentNews
Thai processors are currently suffering the worst slump in sales in the industry’s history, according to one of the country’s largest seafood suppliers.
Satasap Viriyanantawanit, general manager at Siam Canadian Group , which is headquartered in Thai capital Bangkok, told Undercurrent News it’s no overstatement to say the current slump is the worst he’s seen faced by the industry in its 40 years.
“I strongly suspect that most of the plants are suffering at least a 50% year-to-date sales drop compared with last year. It is the worst record in Thailand’s [shrimp industry] history,” he said.
The fall in global shrimp prices, which has rapidly swept through the industry and this week drove shrimp farmers in India out onto the streets in protest, is thought to be close to the bottom as major retail buying gets underway.
However, prices in India and Indonesia have fallen below those in Thailand, said Viriyanantawanit. Subsequently, US importers are opting to buy from those countries instead of Thailand, he said.
“The US retail market is active and buying regularly but most of the buyers just cannot afford current levels from Thailand. In all of Thailand prices are higher than India and Indonesia. Thai packers do not have anymore orders in hand,” he said.
In the first three months of this year, the US imported 11,305 metric tons of shrimp from Thailand, down from 15,099t compared with with corresponding period last year, according to the National Oceanic and Atmospheric Administration, a drop of 25%.
Sales to China have also declined significantly, he said.
He said a decline in raw material prices has left shrimp farmers in Thailand “screaming” about losses and urging processors to pay more, although a recent minimum price guarantee offered by exporters was rejected.
“But, realistically speaking, Thai packers are already struggling to sell at current levels,” he said. To increase their buying price would make them even less competitive, he said.
“Even at current levels where farmers are complaining Thailand are not yet competitive enough when compared to India and Indonesia. It’s not very healthy if the packers’ best case scenario to break-even and survive another month.”
The resulting tensions between farmers and packers had made relations difficult, he said, with farmers mistrustful; farmers think packers are exaggerating the bad state of the market. “They think they have got orders and they are waiting to buy ONLY [sic] when prices are hitting the bottom, which means further losses to farmers.”
An industry source in Thailand who wished to be quoted unnamed told Undercurrent processing costs in Thailand are “known to be higher”. This means they tend to concentrate on higher value markets and value added products.
However, Thai processors were “put in order” after the epidemic of early mortality syndrome in 2013, which halved the country’s national shrimp output, he said.
“Excess capacity in processing and feeds and low efficient producers went out of production,” he noted. He reckons countries like India, not Thailand, are faring worse from the current price slump, because they are “new to the game”.
“They thought production had no limits,” he said. “New leveraged investment is always at risk.”