December 22, 2008
Thailand's Sea Value may not reach its THB1.8-billion target
An eFeedLink Exclusive
Two years ago, the Sea Value Group surprised the tuna industry by announcing a joint venture with Bumble Bee Foods, the biggest seafood producer in the North America. Since then, they have become one of the biggest frozen food exporters in Thailand.
Sea Value produces 1,200 tonnes of tuna products a day from its two factories. Lately, however, there are fears that the Group may not achieve its THB18,000 million total export target because of the strengthening baht and diminishing tuna supply.
"We are expecting a decrease of around 10 percent (THB1,800 million) in our target this year," said Poj Aramwattananont, president of Sea Value Co., Ltd. "The stronger baht is affecting the industry and with the continuing economic crisis, local exporters are at a disadvantage. Our competitiveness is affected."
Besides these, he continued, the tuna export industry is also being affected by the apparently decreasing stock of tuna available. "Global warming and ocean quakes mean the ocean currents are changing all the time," he explains. "Fishermen cannot catch fish as they were doing before. Less tuna catch results in less supply, and less supply means tuna becomes more expensive. For example, the Skipjack tuna have become more expensive, doubling its price from US$900 per tonne to US$1,600 per tonne."
"Indeed, we might see our total export sales slashed by around 10 percent and we're not expecting the situation to improve next year," he said, adding the problem is affecting the entire industry. "We have entered long-term contracts with Japanese and Taiwanese fishing fleets but there's still not tuna supply."
To offset the impending loses, Sea Value have launched new initiatives in the home market, which is Thailand. The total target includes sales in Thailand.
"We have launched new products such as the 'Super C-Chief' sardines and Mackerel, which have big potentials for growth," Poj said. "We have also joined with Vietnam to build a new cannery (with Sea Value holding 60-percent share). We expect these initiatives to pull up total sales in the next year."
Sea Value's main markets are the US, Africa, Japan, and Australia.
Meanwhile, the Rubicon Group, which distributes shrimp and seafood products to the US, still expects to reach its total sales goal of US$300 million. The purchasing power of the Americans has declined but the demand for Rubicon products has remained steady, according to its CEO. Rubicon is the mother company of Sea Value Thailand.
Sales growth is actually quite slim, but Rubicon sees total sales going up in the future because they're planning to move to the high value ready-to-eat sector in the US market.
Back in Thailand, they are set to take advantage of the Japan-Thailand Economic Partnership (JTEPA), which stipulates the imposition of lower taxes for seafood products. According to the JTEPA, Thai shrimp products gets a zero-percent import duty to Japan, while taxes for tuna, squid and frozen squid will be cancelled in the next five years. The goal is to expand the exports of seafood product to Japan from the current 20 percent of the total market to 30-35 percent.
Plans to corner the potentially lucrative markets of Russia and Eastern Europe are also afoot.
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