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20 Jan 2006

Agriculture

Shrimp and Products, 2006: Bright Exports...Supportive Factors Abound for 3 Key Markets

คะแนนเฉลี่ย

Shrimp and products are, again, expected to emerge as a promising export this year, thanks to numerous favorable factors to their production and export. In 2006, Thailand is expected to produce 300,000 tons, an increase of 7.1 percent over the previous year. Both the government and private sector have encouraged shrimp farmers to increase their shrimp production. Exports of shrimp this year are set to expand in continuation from the final quarter of last year, when production started to pick up following the Tsunami disaster having heavily damaged fry hatcheries. On the global front, shrimp production is expected to be on the ebb, given that major shrimp producing countries have been confronted with diseases and chemical residues in shrimp products, sagging shrimp prices, exacerbated by the US anti-dumping tariffs imposed on these products, which have dealt a severe blow to shrimp exporters. This is particularly true for India that may scrap its shrimp shipments to the US market in 2006. These production-related problems have been evident since last year. China, Indonesia, Brazil and Ecuador -- Thailand's archrivals in the US and EU markets, are among the affected countries. Still, Thai shrimp producers should monitor other key competitors, including Vietnam, India, Malaysia, the Philippines and Mexico. Notably, Vietnam's shrimp production in 2006 is expected to rise to 132,250 tons. Of this, 120,000 tons will be black tiger prawns, and 12,250 tons will be white shrimp. In 2005, Vietnamese shrimp production reached 115,000 tons, rising by 15.0 percent, over-year. This increase came mainly from rising production of white shrimp from farming areas in the Vietnamese central region. Meanwhile, its black tiger prawn production was almost flat, stable from production of the year before.

In 2006, Thailand has targeted raising its shrimp exports to 450,000 tons, potentially worth USD2.4 billion. The country's shrimp exports last year are expected to have reached 418,000 tons, worth a total of USD2 billion, representing year-on-year increases of 7.7 percent in volume and 20.0 percent in value. Emphasis will be placed on improvements in product quality, particularly, certification of safety standards, which is regarded as a Thai shrimp industry strength. Thailand also aims to boost its export ratio of frozen shrimp to processed shrimp over the current 65.0 percent frozen, and 35.0 percent processed. In so doing, value will be added to Thai shrimp exports, while better serving demand of foreign customers who have recently turned to consuming more processed shrimp. Lately, overseas consumers have shown a preference for buying shrimp products from retail outlets to cook themselves.

Among key favorable factors for Thai shrimp exports is the remarkable growth of Thai shrimp exports to the European Union (EU) market. Since the EU reinstated its Generalized System of Preferences (GSP) privileges to Thai shrimp products, Thailand's competitiveness has steadily increased. For the US market, Thailand remains the largest shrimp exporter, despite the continuous bond requirement that has put a greater burden on Thai shrimp exporters' shoulders, and reduced their liquidity. Still, tough competition seems to lie ahead for Thai shrimp and products in key export markets, i.e., the US, EU and Japan. Local shrimp exporters should thus not sit idle, but make efforts to adjust themselves and steadily develop their products to better compete with their rivals.

Related industries that are set to benefit from brighter prospects for shrimp product exports include shrimp feed, fry hatcheries, cold storage companies and producers/marketers of small-displacement diesel engines that are used by shrimp farmers. Shrimp prices are expected to rise in light of upbeat exports. Around 70 percent of all shrimp products are earmarked for export.

However, some risk factors are foreseeable for shrimp exports in 2006. Both public and private sectors concerned will have to, once again, adjust themselves to overcome any possible obstacles. These are, for instance:
  1. Exports to the US need the Continuous Bond which affects working capital of exporters / cold storage companies and sent the consequent effect to the domestic shrimp prices to slump at the end of 2005. At present the Thai government is negotiating with the US and may petition WTO for double taxation by the US. This may urge the US to revise its Continuous Bond policy.
  2. Exports to the EU face serious competitions as Thailand's archrivals also face A/D tariff collection in theirs shrimp exports to the US, so most of them have also shifted to EU.
  3. For export expansion to the Japanese market, Thai shrimp farmers have to adjust the shrimp farming system as Japanese like to consume large prawns, which Thailand has to compete with India where most of its shrimp farming still remains under the Extensive System. This includes tougher competition in Japan's market when other shrimp exporting countries have shifted to Japan to offset falling export to the USA.
  4. To expand the exports of shrimp products to new markets, particularly Canada, Australia and Switzerland ? whose imports are tending toward increase ? Thai exporters have to compete with Vietnam, which has adapted itself rapidly to uncertainties in exports to the US market. Vietnam's shrimp exporters have begun to penetrate new markets where they have achieved quite worthy success. In the first half of 2005, Vietnam's exports of shrimp products to Switzerland have increased 52.0 percent, while exports to Australia increased 60.0 percent in 2004, and 37.0 percent in 2005. To the Canadian market, Vietnam's shrimp exports increased 16.0 percent in the first half of 2005, after it had increased as high as 241.0 percent in the same period of the preceding year.

Apart from the challenges of shrimp exports to major markets, and expansion to new export markets, exporters will have to be careful about the problem of chemical residues in its products, as importing countries may use this issue as a trade barrier. At present, some shrimp-raising countries have focused their interest on organically raising shrimp, which highlights biological safety, particularly freedom from drugs or other pharmaceuticals. This is considered a new alternative to offer shrimp importing countries that Thailand must watch.

Agriculture

Shrimp