May 11, 2009

Thai Union Frozen Products (TUF), a leading producer and exporter of processed and frozen seafood products, has secured 10,000 tonnes of shrimp by signing contracts with 185 farmers nationwide, The Nation reports.

This is part of its business strategy to pave the way for wider export markets and more clients in a tough year.

TUF managing director of the shrimp business unit Rittirong Boonmechote said this gives a price guarantee for 10,000 tonnes of shrimp worth THB1.2 billion (US$34.8 million) to farmers, adding that the contract covers the period from May to December.

Rittirong said the company would like to help farmers by guaranteeing shrimp prices during the low season, while this strategy can assure the company that it will not have a supply shortage during the period. TUF will also have high-quality safe seafood both to export and to sell in the domestic market.

The company determines shrimp prices at averages for the whole year, which are acceptable to farmers.

The 10,000 tonnes of shrimp that TUF will adopt from 185 farmers account for 25 percent of the shrimp that the company will purchase this year.

Rittirong said that although the guarantee period is in the low season, in which shrimp will always be in oversupply and prices usually decline, TUF is confident that its cost of supplies this year will not increase from last year as the remaining 30,000 tonnes will be purchased at market prices.

He said farmers who joined in this contract would also benefit, as they could be assured of steady shrimp prices, adding that contract farming will also ease the government burden in issuing a price guarantee during the period of oversupply.

He also said TUF would hold a meeting with five other shrimp exporters - Vietnam, Indonesia, China, Brazil and Ecuador - soon in order to discuss cooperating on managing shrimp exports and determining prices in the world market. The six countries export 75 percent of the global shrimp output.

TUF expects its shrimp sales from Thai plants to grow by 15 percent from US$180 million last year to more than US$200 million this year.

Meanwhile, its operations in the US - Empress International, a manufacturer and wholesaler of seafood covering the eastern part of the country, and Tri-Union Seafoods, which covers the western part of the US - are expected to show sales growth of 10 percent and 15 percent, respectively. The two overseas companies generated combined sales of US$200 million last year.