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Published on December 18, 2007

The Thai Shrimp Association, the Thai Marine Shrimp Farmers' Association, the Surat Thani Shrimp Farmers' Club and other producer organisations yesterday held a joint press conference to explain the collaboration plan.

The associations, which control thousands of shrimp farmers, felt the need to implement the measure after facing a dramatic price slump this year. The average farm gate price for 50 shrimp, equal to 1 kilogram, has been Bt95 over the past few months. Earlier this year, the price was at least Bt140. In addition, previous price slumps have occurred during the harvest season and only for about two months, while this year's has lasted for at least eight months.

Under the plan, shrimp farmers will focus on reducing production while considering shrimp congestion on their farms. They will reduce the number of crops by taking longer to feed new crops and stop expanding new farms.

The plan is aimed at reducing the country's shrimp production from its projected total volume of 530,000 tonnes this year to 500,000 tonnes next year. Shrimp production grew 6 per cent this year.

Thai Shrimp Association president Somsak Paneetatyasai said the strategy would encourage farmers to concentrate more on quality production. The lower supply would help shore up shrimp prices next year.

The association expects total shrimp exports to reach 350,000 tonnes next year, worth about Bt80 billion. Both figures remain unchanged from this year. Last year, total export volume was 340,000 tonnes worth Bt84 billion.

"It is a difficult year for the shrimp-farming industry," he said. "We've faced not only non-trade barriers, but also anti-dumping duties and cuts in the Generalised System of Preferences, all of which have prompted both the price drop and big losses for farmers."

The price drop problem arose from two major factors: the fluctuating exchange rate and market liberalisation, which brought tough price competition. Moreover, total shrimp production increased 10 per cent to 2.1 million tonnes this year.

"The price has dropped despite a rise in global demand. Thailand has been blamed by its export rivals for quoting low export prices, because importers use this price as a reference to purchase from them," he said, adding that although Thailand was the world's biggest shrimp exporter, it had no bargaining power.

Somsak hopes lower shrimp supplies will tempt the market to purchase more and consider higher import prices.

However, Thai shrimp farmers must also shoulder higher costs because of increased consumption of biofuels. The growing of crops to manufacture biofuels has directly affected the production of raw material for feed meals, particularly maize. It is expected that the cost of feed meal will rise 20 per cent next year.

Surat Thani Shrimp Farmers' Club president Ekapoj Yodpinit said major farm crops, including maize, soybean meal and wheat flour, were being used to produce alternative energy. Consequently, prices for these crops have increased 53 per cent.

"Thailand should rush to solve the [shrimp] oversupply problem or farmers will stand on the verge of a price drop from next March to June. They will face a more serious problem because of rising production, which will bring them a loss with each kilogram of shrimp," he said.

Thai Marine Shrimp Farmers' Association president Surapol Pratuangtum said if the export price for shrimp continued to drop, Thailand's shrimp-farm base would be hard-hit.

Production costs are expected to increase 10-15 per cent next year, and the current shrimp price of Bt95 per kilogram is already causing a loss of about Bt30 per kilogram.

While the action of shrimp farmers to reduce production is one plan to pull up the price, shrimp processors should also be controlled so that they quote reasonable export prices instead of using price-cutting practices, he said.

Achara Pongvutitham

 The Nation