January 16, 2012

Thailand's 2012 shrimp industry expected to do well

Despite lingering grave concerns on viral outbreaks, rising international trade barriers in light of the delicate US and EU economies, and more natural disasters, the outlook for Thailand's shrimp industry in 2012 looks positive, the Bangkok Post reports.

"We foresee another year of good growth in 2012, as global demand for shrimp remains strong and the price is affordable," said Somsak Paneetatyasai, president of the Thai Shrimp Association. "But this is the case only if no calamities break out like last year and farmers have decent farming management plans."

According to the industry's body, the world's shrimp production was estimated at 2.335 million tonnes last year, a slight drop from 2.35 million tonnes in 2010, with Thailand's farmed shrimp production making up 600,000 tonnes, down 6% from 640,000 in 2010.

The country's exports for 11 months ending in November were 361,460 tonnes, a 7.87% contraction from the same period last year, but by value they rose 9.78% to THB101.13 billion (US$3.2 billion), outstripping THB100.94 billion (US$3.2 billion) for the whole of 2010. The production decline was mainly attributed to heavy floods in late 2010 and early 2011 in the southern region and heavy rains and cool weather in the central and eastern regions in the second half of the year.

According to Somak, the country's shrimp trade is expected to grow by at least 10% in terms of both production and export value, boosted by strong global demand despite the troubled economies of the US and the euro zone. However, he warned the industry remains concerned about rising non-tariff barriers in importing countries in light of the weak global economy. Of particular concern are the anti-dumping (AD) penalties by the US and the generalised system of preferences (GSP) cut by the EU.

Washington currently imposes a 0.73% import tariff on Thai shrimp, a significant drop from 6% in 2004, when the world's largest economy first launched anti-dumping duty on Thai products to protect its local industry. According to Somsak, US authorities are now reviewing the AD duty on shrimp imports and Thai exporters are hoping for the best.

They expect the rate to be cut below 0.50% (de minimis), a level considered nil or duty-free in effect. But the US Department of Commerce looks set to treat the rates below 0.50% normally. The decision may affect the US market, which makes up 46% of Thai shrimp exports.

According to Somsak, the EU is also in the process of reviewing its GSP rules, planning to lower the number of countries that enjoy its privileges, with Thailand possibly one of them. Thai fresh shrimp currently faces a 4.2% GSP tax rate, with the rate for processed shrimp levied at 7%. The tariff could possibly rise to as much as 20% for processed shrimp and 12% for fresh shrimp if the Thai authorities fail to convince the EU counterpart to retain GSP for the Thai shrimp, he said. The EU made up 16% of Thai shrimp shipments last year.

More importantly, Somsak said one of the industry's key concern is the spread of the infectious myonecrosis virus (IMNV) now found in Indonesia and Brazil.

"It's fortunate Thailand is free from IMNV now, but we are closely working with the Fishery Department and related authorities to monitor shrimp imports to prevent a breakout," he said.