Thailand's encumbrance with an undersupply of shrimp began in 2012 and continued well into 2013. As we are now approaching midyear 2014, problems seem to have never faded away, despite attempts by relevant parties. Shrimp exports thus nosedived (-)22 percent YoY during 5M14, totaling only USD691 million. Contractions persist to every major market, e.g., the US, Japan, EU and ASEAN. It is also obvious that our share of processed shrimp and shelled seafood sent to the US has been waning constantly, implying that Thailand has lost considerable market share in a major market owing primarily to raw material shortages.
Now that we are entering 2H14 – the export season, an additional affliction is facing the Thai shrimp industry, being a concern on labor issue. The US human trafficking watchlist has relegated Thailand to Tier 3 (the lowest rank), crushing the industry's hope for a comeback in the near future. On account of this, we at KResearch forecast that Thai shrimp exports will plunge around (-)20 percent this year, making it the third consecutive year of contraction. Thai shrimp exports will continue to be challenged by an undersupply.
Looking at the labor issue, it is crucial that the government sector and shrimp exporters clarify the situation and try to divest us of a negative image toward Thai products now taken by trade partners. This could help us climb to a better Tier classification next year, although this alone won't turn the shrimp industry around. Actually, it is expected that our shipments of fishery products and canned/processed seafood, especially shrimp, will probably be caught in more aggressive competition, compared to products from rival countries that are ranked more favorably in the US human trafficking watchlist, e.g., Indonesia, Vietnam, India and Ecuador. It will probably take until 2015 for our depleted supply to rebound and an upgrade on our human rights ranking by the US could be expected, perhaps mid-2015.
Involved parties must cooperate to optimize our industrial sector, including fisheries, by introducing quality assurance measures over the whole supply-chain, placing more emphasis on the development of premium products marketed as Thai brands. In the meantime, Thai processors should consider investment opportunities abroad to increase stability in our production capacity. This might help us retain competitiveness and evade unpleasant upshots in non-tax measures by global trade partners in the future.
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