Bright prospects seem to lie ahead for exports of shrimp products in 2006 thanks to scores of supportive factors for their production and exports. On the global front, shrimp and prawn production is expected to decline, blamed on widespread epidemics plaguing large shrimp producing countries and unfavorable weather. In 2006, Thailand is expected to record some 381,700 tons in shrimp and prawn production, against 360,000 tons in 2005, rising by 6.0 percent, year-on-year. Output of cultured shrimp and prawns (white shrimp and black tiger prawns) during January and May 2006 reached 145,431.05 tons, an increase of 28.2 percent, year-on-year. Shrimp and prawn production rose considerably during the second quarter of this year, though in the first quarter, shrimp farmers had been confronted with unfavorable weather, particularly, torrential rainfall and floods in the South -- the main area for shrimp production -- and also widespread disease.
Exports of shrimp and products during the first half of 2006 picked up over the same period of last year thanks to surges in shrimp imports from the European Union (EU) and the US. Over the first five months of this year, exports of shrimp and products totaled 103,201 tons in volume and THB26.465 billion in value, compared to the 82,099 tons and THB20.721 billion of the prior year, rising by 25.7 and 27.7 percent, respectively. Earlier, exports of shrimp and products during the latter half of this year were expected to be sluggish in light of declining purchasing orders in the second quarter. However, the orders are likely to pick up in the third quarter as Thai shrimp products should receive a windfall from unfavorable weather and natural disasters affecting Indonesia and Vietnam, Thailand's arch rivals. As far as estimates go, exports in 2006 are expected to reach 280,000 tons in volume, almost unchanged from last year with THB75 billion in value, rising by 5.0 percent over-year. Of this volume, 57.0 percent will be in the forms of chilled, frozen and fresh shrimp and prawns, while 43.0 percent will be processed shrimp. Exports of shrimp and products to major markets, e.g., the US, EU and Japan are also on the rise. This is particularly true for exports to the EU where GSP (Generalized System of Preference) benefits for Thai shrimp and products have been reinstated. In addition, the closed cultivation system adopted by most Thai shrimp farmers, resulting in more hygienic production control, is expected to be a boon to exports of Thai shrimp and products to the EU market that has implemented stricter inspection measures. Meanwhile, the US is likely to remain Thailand's largest shrimp market, where Thai exports have been on the rise thanks to the fact that the US anti-dumping tariffs imposed on Thai exports of shrimp and products are comparatively lower than those levied on such products from Thailand's rival countries. Importantly, Thai shrimp products respond well to US consumer preferences. However, it remains to be seen what the new rate on US anti-dumping tariffs will be, and how the World Trade Organization will rule on the continuous bond (C-bond) requirement at the end of this year.
Moreover, state and private sectors concerned with shrimp farming have to cooperate to rid the obstacles of export shrimp products, particularly exports to the US market. At present, the negotiation on C-bond requirement is being filed with the WTO, assistance must be rendered to exporters who must submit the information to the US Department of Commerce to review the anti-dumping tariffs. If the result comes out that Thai exporters still gain an upper hand over competitors, it will be a big support to the expansion of Thai shrimp export markets in 2007.
It is forecast that the climate in 2007 will return to normalcy. The amount of shrimp farming will increase as the impact from La Nina will vanish in 2006 and the tendency that prawns entering the market will be larger will boost the average shrimp price. This will help shrimp farmers to not suffer losses incurred from harvesting shrimp before full maturity, and slumping prices as seen this year. According to the Shrimp Strategic Plan (2006-2008), it is forecast also that shrimp farming areas will be increased by 10%. Production efficiency, or the average output per rai, is also targeted to increase, i.e., 950 kilograms per rai for white shrimp, and 700 kilograms per rai for black tiger prawns, from their present average output of 800 kilograms and 565 kilograms, respectively. In addition, the proportion of shrimp farming land under cultivation will be adjusted, particularly for white shrimp, which are popular with consumers in both the US and EU markets. Formerly, white shrimp farming accounted for 45 percent of all shrimp farming, and tiger prawn farming took the other 55 percent, but the new ratio shows an increase to 70 percent for white shrimp, and 30 percent for black tiger prawns. Black tiger prawns are popular with Japanese consumers, but they must be large, so black tiger prawn cultivation has been adjusted to achieve sizes that meet market demand.
Exports of Thai shrimp in 2007 are expected to be healthy. Despite the problem of tough competition as in 2006, it is still forecast that Thai shrimp exporters will be able to maintain their market shares and penetrate more markets, too. The market that is forecast to allow Thai exporters to extend their market substantially is the EU, where Thailand holds the upper hand over competitors in shrimp farming technology, which rids it from worries about chemical residue detection. Shrimp exporters have set a target of expanding exports to the EU market in 2007 to 50,000 tons, which would be 1.5 times higher than in 2006. For exports to the US market in 2007, Thai shrimp exporters will still be faced with the problem of higher export costs due to Wal-Mart Department Store tightening its quality inspection standards on goods. Interesting points include:
- The announcement of the new AD duties that are expected to come out at the end of 2006 after the AD revision. If the new rates remain the same for all countries, it would mean that Thailand would still hold an upper hand in competition within the US market. However, Thai exporters will probably lose their advantage, if the AD tariffs of competitors are lower.
-The decision of the World Trade Organization about placing C-bonds on shrimp exports to the US, a practice against which countries that export shrimp to the USA have filed charges to the WTO, if the WTO adjudicates that the C-bonds are an unfair practice, this will benefit shrimp exports to the US market, because the cost of shrimp of Thailand will moderate.
On Japanese market front, Thai exports are increasing because Thai shrimp exporters have adjusted production to better meet Japanese market demand. There have been adjustments in the size of black tiger prawns, because the Japanese market prefers jumbo-size tiger prawns, and improvements in shrimp cultivation have reduced production costs. As a result, the export price of Thai shrimp is now more competitive. It seems that Thailand will enlarge its market share over such competitors as Vietnam and India. In addition, increased exports of processed shrimp to Japan will be aided by the popularity of buying products to prepare at home.
Apart from the expansion on Thai shrimp exports to the main markets such as Europe, the USA and Japan, exporters plan to enter potential new markets by focusing on road shows to high-purchasing power countries, particularly Spain, Russia, Egypt, and the Netherlands, Italy, England, Belgium and France by instilling confidence toward Thai entrepreneurs through compliance with such systems as traceability.
In order to have stability in Thai shrimp exports and place Thailand first in the world market, related entities such as growers, cold storage facilities and exporters have to cooperate in developing shrimp stocks - a key factor to competitiveness. Everyone should collaborate to maintain stable shrimp pricing. An appropriate price would be about THB150-155 per kilogram (50 shrimp/kg.). The maximum price for this size category should not be over THB165/kg., and the minimum price should not be lower than THB140/kg. If the certainty can created, it will induce shrimp growers to raise more and exporters will sell more because Thai exporters this will help break into other markets and they can deliver more to leading distributors in foreign countries giving Thailand greater competitiveness.
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