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Published on March 7, 2008

"The government must urgently enact concrete measures to save the shrimp industry, or else the industry might disappear as it will always face the same problem of oversupply and falling prices every year," Anurat Khokasai, chief marketing and operating officer of Prantalay, a subsidiary of Union Frozen Products, said yesterday.

Following an annual cycle, shrimp prices have fallen again this year, causing farmers to cut back on shrimp raising. Fears of inadequate supply have driven producers to call for the government to allow imports of shrimp.

The industry's plan proposed to the premier includes promoting cluster development by establishing contract farming between all shrimp farmers and producers to guarantee farmers a minimum price, and setting aside a budget for soft loans to buy freezers to ensure sufficient supply during the harvest season.

Solving the perennial problem of falling shrimp prices is one of the challenging tasks for the new government, Anurat said. Shrimp prices always face trouble during the harvest season.

Previous governments could only help relieve the problem through a price-pledging programme that usually took a big bite of the government budget. Last year the loss to the state was about Bt300 million.

Shrimp prices normally soften in the middle of the year, as US importers slow down their purchases in order to force down prices.

Anurat said contract farming would not only do an efficient job in easing the pain from falling prices, it would also help the government save money in the long run. The government should be a middleman to help set up the project so that farmers feel more confident about joining.

The price for medium-sized shrimp has already plummeted from Bt145 a kilogram to Bt120-Bt125, and will drop below Bt100 soon due to oversupply and lower demand from overseas markets, particularly the US and the European Union.

To make contract farming work, the government must set a floor price of Bt120-Bt125 for medium-sized shrimp, as production costs run at Bt110-Bt115.

Although farmers might be reluctant to participate in contract farming at first, as their margins will be lower than during the peak season, they will find that it would mean they never lose their investment, despite lower demand for shrimp each year, Anurat said.

According to the Agriculture Ministry, more than 200,000 families are in the shrimp industry. The Kingdom is the world's largest shrimp producer and supplier among the 30 producing countries worldwide. Thai shrimp exports reached US$2.15 billion (Bt67.8 billion) last year.

If the proposed shrimp plan is successful, the government will ensure sustainable development for the industry, Anurat added.

Petchanet Pratruangkrai

The Nation