Shrimp exporters have reasons to be cheerful

THAILAND - This is likely to be a bonanza year for the shrimp industry, which is expected to achieve a 20-percent increase in exports over 2005 because of a number of factors, including favorable tariffs in European Union markets, KResearch said.

Shrimp exports should rise to US$2.4 billion this year from $2 billion in 2005, according to estimates by KResearch, the research arm of Kasikornbank. Growth in the industry’s export earnings will be fueled by a recent decision by the EU to put Thai shrimp products back on its list of imports granted lower duties under its Generalized System of Preferences (GSP).

The EU restored GSP privileges to Thai shrimp products following assessments that show Thai shrimp farms meet its food hygiene standards. This should significantly raise shipments to EU markets to $190 million this year, the think tank said. Competitors India and Bangladesh, meanwhile, have failed to meet such EU standards.

Shrimp exports to Japan should also rise significantly with the Thailand-Japan free trade agreement (FTA) going into effect this year, KResearch said. Thailand is Japan’s fifth-largest supplier of shrimp products, after Vietnam, Indonesia, India and China.

Competition among shrimp exporters to Japan is expected to become intense this year since many top suppliers, which have been charged high anti-dumping fines by the US, may also aim for increased shipments to Japan.

However, Thai exporters should have an edge over their rivals in the Japanese market because the Japan FTA offers zero to five-percent tariffs on Thai shrimp products, KResearch said.

This is also an appropriate time for Thai exporters to be more aggressive, the think tank said. It noted that, while farms in many competing countries are plagued by epidemics and concerns about chemical residues in their products, Thai exporters are about to complete reconstruction of shrimp hatcheries that were damaged by the 2004 tsunami.

When the tsunami swamped the country’s southwestern coastal provinces on December 24, 2004, it halved the output of shrimp hatcheries. The think tank said shrimp hatcheries would be commercially viable again by June this year. As a result, production in the first half of the year will be 50-percent lower than pre-tsunami levels. Expect shrimp prices to be rather high during this period, it added. Shipments should begin to increase rapidly in the second half of the year.

For all of 2006, KResearch expects shipments of shrimp products to rise 7.7 percent to 450,000 tonnes from last year’s 418,000 tonnes. Due to foreign buyers’ changing preferences, 60 percent of export shipments last year were processed shrimp.

Thailand continues to be the top exporter of shrimp products to the US, according to KResearch, but exporters have to put up so-called continuous bonds, or C-bonds, as collateral for shipments to American buyers. The requirement limits exporters’ ability to keep enough cash on hand for production.

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Source: ThaiDay

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