July 23, 2012

 

Bangladesh's shrimp exporters anxious over European economic recession

 

 

As the demand from the world market, especially European countries, has fallen because of economic recession, Bangladesh's shrimp exporters are struggling hard to survive with huge stock worth BDT1.0 billion (US$12 million).

 

The drastic fall in demand for big size shrimp and consequent fall in price by around 50% have badly affected them, exporters said.

 

They demanded immediate launching of vannamei shrimp cultivation, block allocation and increase cash subsidy to 15% from the existing 10% to overcome the crisis faced by them.

 

"We cannot sell our big size products as demand for this item has drastically fallen in our main markets," Khan Habibur Rahman, executive director of Lockpur Group told the FE.

 

Prices of the local value added products have also fallen to 50% due to the recession which hit hard the sector, he said. The demand for black tiger is on the verge of decline in the US and Japan while in the EU, the largest market of Bangladeshi shrimps, is also declining, he added.

 

Echoing similar concern, Kazi Belayet Hossain said buyers now place orders for the low rated and small size vannamei.

 

"And we cannot supply the item as the government imposed restriction on it," explained Kazi, former president of Bangladesh Frozen Fish Exporters Association (BFFEA).

 

The price of one pound black tiger shrimp came down to US$3.80 which was sold US$6.0 last year. On the other hand, vannamei price ranged between only US$3-4.5 per pound, he said.

 

More than 80% of the total shrimp exports go to the EU and US markets which are facing economic slowdown depressing the demand for value added frozen food like black tigers and sweet water prawns, he added.

 

One pound of black tiger containing 16-20 pieces has lost the demand in those markets and the buyers are very much interested in low cost vannamei shrimp due to financial crisis, Hossain said. Besides, exporters are yet to enter the Russian market due to government apathy in taking necessary steps to open the market for the local exporters, a BFFEA official said.

 

Only four or five exporters have access to this market while 27 are ready to take advantage of the market, he added.

 

"There are about 750 containers of shrimp remain unsold in the country's 50 shrimp processing factories worth BDT1.0 billion (US$12 million)," Chairman of Bangladesh Aquaculture Alliance Maksudur Rahman said.

 

Due to this huge stock, exporters are incurring losses with high interest of bank loan and other expenses, Rahman added. If government does not come with a special package to help the sector, exporters will fail to repay the bank instalment and the factories will turn sick, he said.

 

"Bank interest rate should be reduced to 7.0% from the existing 15%," he said demanding a special stimulus package of BDT4.25 billion (US$52 million), moratorium on the 30% of the exporters' term loan till 2014.

 

The sector has been suffering from credit crunch since the onset of the global financial crisis in 2008. To overcome the problems of the country's third largest foreign currency earning sector, he demanded 15% cash incentive.

 

The sector fetched US$598.42 million in outgoing financial year (2011-12) showing a negative growth of 4.26%.