Thai shrimp sector turns corner, but fresh challenges await : September 15, 2016
Ross Davies : Undercurrentnews
BANGKOK, Thailand — “Good, but not as great as possible.”
That was Choopong Luesukprasert’s personal summation of the Thai shrimp industry’s performance in 2016.
Luesukprasert, managing director of exporter Marine Gold Products, was speaking to Undercurrent News from the confines of his family-run company’s factory in Samut Sakhon, on the outskirts of Bangkok.
While Thailand may be staging a recovery from the disease outbreak of 2013, which wiped out productivity and saw the country’s shrimp farming sector accrue losses of over $5 million, Luesukprasert said the industry now had to contend with a new challenge: Chinese competition.
“Farming has recovered very well, but there are now circumstances we cannot control,” he said.
“The Chinese are buying some of our raw materials. They have sucked up some of supply normally used for our exports. China used to import from Ecuador and India, but now they are short and coming here. Prices are firm.”
While raw material prices bottomed at the start of May this year, they have been rising steadily since. Consequently, Thai packers are also vying with rivals in Vietnam for raw materials, as Satasap Viriyanantawani, general manager for supplier Siam Canadian Group, told Undercurrent in June.
“Several packers are buying more aggressively, attempting to fulfill pending orders,” he said.
Supply in Thailand, which is forecast to hit between 270,000 metric tons and 300,000t in 2016, is good, “but it is just not enough”, he said.
Due to a lack of shrimp raw material in China and Vietnam, some brokers are currently buying directly from shrimp farmers throughout Thailand, claimed Viriyanantawani.
“These brokers are even more aggressive than Thai packers,” he said.
Like all of its peers, Marine Gold – Thailand’s third biggest shrimp exporter – saw its bottom line take a hit at the hands of the outbreak of early mortality syndrome (EMS) in 2013.
Three years on, things are, however, looking up again for the group.
Earlier this year, it launched a ready-to-eat brand, “Yummy Tale”, featuring products such as shrimp pad Thai and shrimp green curry with jasmine rice. At this stage, the range is principally for the domestic market, but Marine Gold aims to export further afield in the future.
“It’s going very well,” said Luesukprasert. “We are using the domestic market as a test, but we are looking at other markets. We already have two containers of shrimp tom-yum soup going to Japan.”
The group also has the US in its sights. As Luesukprasert previously told Undercurrent at this year’s Thaifex food trade show, held in Bangkok in May, it has set an export target of 45 million pounds for 2016.
Similarly, the managing director said he hoped Marine Gold could expand its output by 20-25% — ahead of the forecast increase in production.
There are also plans to expand its processing facility — said Luesukprasert, while taking Undercurrent on a tour of the shop floor — but this will be contingent on the impact of raw materials prices on the company.
“The plant is big enough for us to double production,” he said. “But it all depends on raw material prices and supply availabilities.”
Doubtless, the current pricing situation weighs heavily on the mind of packers, but surely there’s greater cause for optimism than there was in 2013.
This was touched upon by Robins McIntosh, senior vice president at Charoen Pokphand Group, who, in an address at last month’s TARS conference in Phuket, said farmers had every reason to believe they can get back to “the production levels we had in the old days”.
Farmers, as McIntosh argued, are considerably more proactive – and realistic – in their approach to confronting disease, but cannot afford to become overzealous in striving to re-attain production levels of yesteryear.
Soraphat Panakorn, technical sales and support manager at Novozymes Biologicals – and a fellow TARS speaker – issued a similar shot across the bows of farmers, urging them to “not be greedy”.
This was a sentiment shared by Poj Aramwattananont, president of the Thai Frozen Foods Association (TFFA).
Having reached 220,000t in 2015, Aramwattananont said the yield for this year was expected to be 300,000t, while next year “is going to be even better”.
However, he said Thailand’s department of fisheries had a responsibility to set an official target, lest shrimp farmers try to up production to unviable levels.
“The entire industry needs to sit down and set up a national target,” said Aramwattananont.
“What direction do we want to go in with our shrimp farms? To try and farm more and more is not the answer. Trying for 500,000t is not the answer. This can lead to disasters.”
“It’s better to try and set a realistic proper target. It can be compartmentalized, too. How many tons do we want for domestic use? How many do we want to export? And to what market? Let’s not forget, shrimp is a big commodity,” he said.
In the past, Thailand’s shrimp farmers and packers operated in decidedly independent domains with little scope for open communication levels, said Viriyanantawani.
Yet, while “the two don’t always collaborate very well, in some ways, it is getting better”.
Luesukprasert agreed. “It’s about building trust,” he explained. “There was once a time when you’d visit a farm and they wouldn’t be very happy to see you.”
“But we’ve been working with our farmers for over a decade now, and instead of pre-negotiating, they just ship everything over to us and then negotiate prices through gentleman’s agreements.”
Undercurrent visited one such farm, located a two-hour drive away from Bangkok.
The owner explained that yield for 2016 on the ten-acre site was already above the target set out at the beginning of the year.
“This year, I’ve had two crops, which have produced a total of 50t,” he said. “The target was 30t. The main size has been for 35- 50 pieces per kilo. The target in southern Thailand is much bigger than it is in the middle of the country.”
The farmer, who had been involved in shrimp aquaculture for over 20 years, said that one of the most noticeable shifts he had observed in recent years across the industry was a greater openness to embracing new technologies.
This was something alluded to by McIntosh in his TARS speech, in which he advocated new culture systems technologies as a way of ramping up productivity sustainably.
“Increased production efficiencies will be accomplished through the application of new culture systems technologies that provide for more control on the environment, use less water, and produce shrimp with less energy input/shrimp output,” he said.
Farmers also need to become “as conversant in the science of microbial ecology as they are in algae bloom management”. The same goes for biosecurity.
The farm owner nodded his head at this. “Shrimp are very sensitive,” he said. “You need to rely on new technology.”
“For instance, we are also using more nurseries. And all ponds need polyethylene lining to prevent dirt. Because if there’s dirt, the shrimp won’t eat, and if they don’t eat, they won’t grow.”
The farm’s ponds also made use of a flushing mechanisms – also championed by McIntosh – as a means of removing shrimp sludge, old feeds and molts as quickly as possible.
“Concepts like this and nurseries are becoming the norm,” said the farmer.
“You can’t ever say there’s no disease. But, these days, I know how to manage it.”