October 10, 2013

 

Vietnamese shrimp exporters in dire need for raw materials

 

 

In hope that prices would rise in the future, Vietnamese shrimp farmers are refusing to sell shrimp even as shrimp exporters are facing challenges in fulfilling export contracts due to a serious lack of raw materials for processing.

 

Recently, Chinese businessmen have entered the domestic raw material market, thus bringing up shrimp prices by two-fold. Meanwhile, farmers recently have refused to sell shrimp, because they believe the prices would increase further.

 

In mid-September, the farmers in the coastal districts of Tra Vinh province, including Duyen Hai, Cau Ngang, Tra Cu and Chau Thanh began shrimp harvesting, expecting a bountiful crop. However, the local seafood processing companies remain thirsty for materials. The merchants from other localities have come to purchase shrimp in large quantities. The "war" between the local companies and the merchants has made the shrimp prices increase day by day.

 

The representative of the Cuu Long Seafood Processing and Export Company said though the company sets a relatively high price, which is half as high against the last year's price, it still unable to purchase shrimp.

 

The more the shrimp prices increase, the less shrimp products are available on the market. The upward trend in shrimp price has prompted farmers to hoard shrimp for selling later, when prices go up.

 

It was the lack of shrimp, not the lack of orders, which has hindered the shrimp export. The company reportedly fulfilled only 53% of the yearly export plan after the first eight months of the year.

 

In Ca Mau province, the black tiger shrimp price has soared to VND240,000 (US$11.40) per kilogramme, while it was VND170,000 (US$8) per kilogramme last year and VND200,000 (US$9.50) per kilogramme two months ago.

 

The shrimp hatchery area in the locality had reached 267,000 hectares by the end of September 2013. Local farmers have harvested 100,000 tonnes, or 78% of the yearly plan. As the shrimp price increases continuously, farmers decide to take risks by hoarding shrimp and waiting for the prices to increase.

 

This has pushed Vietnamese seafood processing companies into deadlock. They need to deliver products by the end of the year to fulfil the export contracts, but still do not have materials for the production.

 

In Ca Mau province, the locality with the highest shrimp farming area and biggest output, 31 one out of the 32 seafood processing companies have been reportedly running at 30-40% of capacity.

 

Minh Phu Seafood Company has warned farmers against hoarding raw materials. The farmers' move will not only put big difficulties for enterprises, but for themselves as well. Le Van Quang, General Director of Minh Phu Group, said farmers would suffer heavily if epidemics break out, or the shrimp price goes down. According to Quang, most of the seafood processors are about to fulfil the export contracts prior to October 15, 2013. After that, the demand for shrimp would decrease, which will force the prices down.