FEED Business Worldwide - May, 2012
Vietnam's shrimp boom tails off
by F.E. OLIMPO
Along with Indonesia and India, Vietnam has been a major threat to Thailand's dominance of America's shrimp market - at least until recently. Although Thailand remains the number one shrimp supplier in the US, its market share has been shrinking since last year - while those of its competitors, particularly Vietnam, have been growing.
While Thai shrimp exports fell 6% last year, Vietnam's vannamei shipments in 2011 grew by a whopping 13%, earning the country US$2.4 billion in foreign exchange. Vietnamese shrimp during that year was shipped to 91 markets worldwide including Japan (where it dominates the market), the United States (where it is the third biggest supplier after Thailand and Indonesia), the EU, China (including Hong Kong) and South Korea.
Celebrating its huge success, the Vietnam Association of Seafood Exporters and Producers (VASEP) held a press conference in January where it outlined its plan to nearly double the value of its shrimp exports to US$3.5 billion to US$4 billion in 2015. Having won its anti-dumping duty case against the United States in the World Trade Organization (WTO), Vietnam has all the momentum behind it. The recent ruling, which declared as illegal the anti-dumping duty being imposed by the US on frozen Vietnamese shrimp, effectively makes Vietnam's vannamei exports more competitive in the American market.
For all these reasons, until January this year, Vietnamese shrimp looked set for an bigger leap. For that month alone, Vietnam's shrimp export to the US jumped by 30.6%, to 9.4 million pounds from 7.2 million pounds during the same period the year before. In comparison, US shrimp imports from Thailand that month slumped to 30 million pounds, down 14.3% from from 35 million pounds in January 2011.
Amid all this optimism, something happened along the way. The confidence Vietnamese shrimp farmers had in January has now been replaced by pessimism. Disease outbreaks, shifts in temperature and a tight credit crunch have suddenly made Vietnam's shrimp export targets farfetched and unreachable.
In March, shrimp in around 100 hectares of farms in Soc Trang province died of disease amid large temperature swings between day and night, reports Bowie Leung, country manager for Vietnam of the Thailand-based Siam Canadian Group, a seafood exporter. He also reported that shrimp in Tan Phu district in Ca Mau also suffered the same fate. According to Leung, disease and a cyclical shift from La Nina warm water to cooler ocean equatorial ocean currents have hit around 30% of farming areas in Phu Tan province, and also killed tonnes of shrimp in Nha Trang province.
"Shrimp farming at the beginning of this year was not good. Shrimp have died in several provinces recently and this threatens the US$2.5 billion (â‚¬1.9 billion) target for shrimp export turnover for Vietnam in 2012," Mr. Leung said, adding that in Tien Giang and Tra Vinh provinces, around 100 hectares of shrimp have also been lost. He added that In Binh Thuan province, around 90% of vannamei shrimp have died because of the infections myonecrosis virus (IMVN).
The disease outbreaks and change in ocean current temperatures couldn't have come at a worse time. Vietnam's economy has slowed dramatically during the last few months, resulting in bankruptcies and tight lines of credit across the country.
Nearly 12,000 companies have closed or suspended operations during the first quarter from a year earlier, according to official data released recently. Business optimism has fallen steeply, from 34% in the last quarter of 2011 to only 6% in the first three months of 2012, according to the latest survey by accounting and advisory firm Grant Thornton.
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