Global financial meltdown will affect Bangladeshi shrimp industry
Bangladeshi shrimp industry foresees the toughest time this year on a continuous fall both in the price and demand in the troubled developed economies, main consumers of the item, according to industry people.
Bangladesh Frozen Foods Exporters Association (BFFEA) president, Kazi Belayet Hossain said buyers in the US and EU are pressing Bangladeshi exporters to reduce the price of the item in the wake of a deepening financial crisis.
Hossain added that some buyers even have showed their reluctance to receive the goods from their respective countries' customs authorities without a reduction in prices.
The central bank in its latest semi-annual monetary policy also predicted a weak export demand for shrimps in the coming months on the continued financial crisis.
According to the industry, the price of shrimp has dropped by US$1 per pound, or about 155 Bangladeshi Taka (BDT) per kilogramme, in late 2008 compared to the 2007 price.
Hossain also said in fiscal year 2007-08, the price of 16 to 30 grade shrimp, which accounts for around 65 percent of the total frozen shrimp export, ranged between US$5.20 and US$5.50, but now it has come down to as low as US$4, marking a 30 to 32 percent decline.
In FY 2007-08, the country exported frozen foods worth US$534 million. The government set a target of US$574 million for this fiscal year, but exporters made it at US$600 million.
Shrimp, which is considered as a luxurious product, alone accounts for over 80 percent of frozen food products.
The EU, USA and Japan are the three key markets for Bangladesh's frozen shrimp, with the EU and the US accounting for 48 percent and 40 percent respectively of the total exports. All the three destinations are now suffering acutely from financial crisis.
The export price of frozen shrimp started falling on the fuel oil price hike in June 2007. And after the onset of recession in the USA and EU, the price has taken a nosedive.
To face the situation, the association has already requested the government to create an emergency fund for the shrimp exporters to protect them from liquidity crisis.
The association feared that the exporters would fall in a liquidity crisis of BDT500 to BDT600 crore because of the adverse impacts of the global financial turmoil.
Hossain added that the formation of 40 percent interest -free block account facility for a period of four to five years will help to sustain the situation.