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9 Sep 2005

Agriculture

Shrimp Exports Encouraged: Boosting Export Value from Q4/2005 to 2006

คะแนนเฉลี่ย

The Thai shrimp industry has gotten good news lately. The European Union (EU) has cut import tariffs imposed on Thai shrimp to the special rates under Generalized System of Preferences (GSP) program. The tariff reductions will be retroactive to August 1, 2005, and will be in effect until December 31, 2005, as a gesture of assistance to tsunami-hit countries. This is regarded as a windfall for the Thai shrimp industry, given that import tariffs levied on Thai shrimp products will be equal to those of other rival countries, i.e., Malaysia, India and Indonesia. The new tariff rates for frozen shrimp and processed shrimp will be 4.2 percent and 7 percent, respectively. No import quota will be imposed on Thai shrimp products. The new GSP system will begin January 1, 2006.

Previously, Thai shrimp products were subject to the highest tariff rates ? i.e., 12.0-13.2 percent for chilled/frozen shrimp, and 20 percent for processed shrimp ? as a result of the EU scrapping of GSP privileges granted to Thailand. The reduction in import tariffs will make the prices of Thai shrimp products more competitive in the EU market. As far as estimates go, exports of Thai shrimp to the EU market stand to rise gradually, in particular, during the final quarter of this year, when Thai shrimp products will be lifted to 10th from 44th place. According to exporters of shrimp products, exports of Thai shrimp products in 2005 will likely reach USD2 billion (equivalent to approx. THB80 billion), a year-on-year rise of 19.6 percent. This increase can be attributed to the EU slashing import tariffs imposed on Thai shrimp products, which will boost exports of shrimp products considerably during the last quarter of this year. With this, the EU will become the third largest importer of Thai shrimp products, behind the US and Japan.

Even so, to reach the target of USD2 billion in shrimp exports this year will prove to be a challenging and uphill task. This means that Thailand has to export around USD223.7 million in shrimp products each month from August to December this year. Over the past seven months, Thai exports of shrimp products averaged only USD125.9 million each month. To reach the goal, exporters will have to expedite their exports to other markets, particularly the US, on top of the EU markets during the final quarter of this year. Measures to reduce obstacles in expanding the export market to the US includes lobbying the US government to review cancellation of its A/D tariffs on Thai shrimp products temporarily, because the situation has changed as a result of the tsunami damage. During September 10-20, the Thai Prime Minister and his team will travel to the US for trade negotiations. They will request that the US cancel A/D tariffs on Thai shrimp products temporarily as one of many issues in their discussions. Moreover, on September 12, 2005, the Department of Foreign Trade and the Thai Frozen Foods Association will travel to the US to provide information on the damaged shrimp industry in areas affected by the tsunamis. It will be additional information provided after US representatives came to collect initial information on damage at the end of August 2005. If the US cancels its A/D tariffs on Thai shrimp temporarily ? which will be announced in October 2005 ? it will help the exports of shrimp products to the US increase during the last quarter of 2005.

For 2006, it is forecast that the export of Thai shrimp products will still be stellar. The export value of Thai shrimp products in 2006 will likely be nearly USD2,400 million, which would represent an increase of 20.0 percent over the preceding year. This is also due to the continuing supportive factor of the EU announcement to return GSP privileges to Thai shrimp products. The GSP tariffs are equal to the import tariffs announced for temporary reductions. So the exports of Thai shrimp products to the EU market will likely be quite good and beneficial through to the beginning of next year.

It is expected that the export value of Thai shrimp products to the EU market will increase to a level close to that in 1997; in that year, the EU announced cancellation of GSP privileges on Thai shrimp products. It is expected that the export value of shrimp products to the EU market in 2006 will be equal to USD190.0 million. This factor, together with US reconsideration on A/D tariffs on Thailand to be announced in October 2005, if the US cancels its A/D tariffs on Thai shrimp exporters temporarily to help shrimp farms damaged by tsunamis, will be positive to the exports of Thai shrimp products to the US market.

Concerning the exports of shrimp products to the Japanese market, another positive factor is the FTA agreement between Thailand and Japan, which will become effective in January 2006. Under that agreement, Japan will reduce its import tariffs on Thai shrimp products from 5 percent to duty-free status, immediately, which will lift the export volume of shrimp products to Japan, as well.

Businesses that will be benefited by this bright trend in shrimp product exports are the shrimp-feed industry, shrimp-embryo breeders and cold storage businesses, as well as businesses related to small diesel engines that shrimp farmers use on their farms, not to mention the direct benefit to shrimp farmers, themselves. It is forecast that shrimp prices will improve with the better export climate, because around 70.0 percent of all shrimp products that Thailand produces are exported.

Agriculture

Shrimp