August 24, 2012

Vietnam's 2012 shrimp exports unlikely to reach target

After falling for two successive months due to rising competition from other countries and increasing costs, Vietnam's shrimp exports seem unlikely to reach the target of US$2.5 billion this year.

The Vietnam Association of Seafood Exporters and Producers (VASEP) reported that July shipments were down 6.8% on-year after a 4% fall the previous month.

VASEP now predicts third-quarter exports to be no more than US$690 million, or 4% lower than in the same period last year. It will take exports in the first three quarters to US$1.7 billion.

VASEP blamed the sluggish exports on pressure caused by competition from other countries and higher input costs together with modest demand in importing countries.

Global shrimp prices are falling but demand in major markets like the US, Japan, and the EU is not expected to recover soon due to the tough economic conditions.

Deputy Chairman of VASEP Tran Nan Linh told the Vietnam Economic Times that Vietnam is losing its competitiveness despite selling shrimps at very low prices, sometimes as low as the cost of raw shrimps.

After the same time major foreign feed companies which dominate the domestic market, have been hiking prices, he said.

VASEP said the situation will improve if the Government, in third quarter and subsequently, provided support by putting interest rates and increasing lending to the industry.

Only a third of seafood producers have been able to keep production unchanged, it said, while the others faced a cash crunch and cannot resume exports without financial support.

Vietnamese shrimp is exported to 62 markets around the world. Japan is the biggest, followed by the US, the EU, and the UK. Exports to most of these markets have been declining. In the US, Vietnam shrimp exporters have to compete with those from Thailand, Indonesia, Ecuador, and mainland China.