June 17, 2014

 

Slavery scandal in Thailand shrimp sector could cause increase of demand and prices elsewhere

 

 

Reports of alleged slavery in the supply chain of Thailand's shrimp sector could cause demand and prices from other points of origin to increase, according to Undercurrent News.

 

Already affected by the outbreak of early mortality syndrome (EMS) and the loss of preferential tariffs for sales of shrimps to the EU this year, the sector is reeling from the latest coverage of its problems with slavery.

 

The article from the UK's Guardian newspaper heavily covers the involvement of Charoen Pokphand Foods and also cited Tesco, Carrefour, Costco and Tesco.

 

This month, Carrefour stated it is suspending all purchases from CP Foods, "as a precautionary measure".

 

In a press release, CP Foods stated it is clarifying the situation with Carrefour, adding that its export value to the France-based retailer was only US$4 million in 2013, accounting for 0.03% of its total revenue of US$12 billion last year.

 

"If the negative coverage drives end users to switch supply, it could force up prices at other origins. It would be the worst possible scenario, if this did happen," said one UK-based shrimp sector source, who had switched away from buying large volumes from Thailand.

 

Meanwhile, prices for shrimp at most origins have been falling.

 

With the impact of EMS on production, which dropped to 250,000 tonnes in 2013 from 500,000 tonnes the year before, prices in Thailand are still higher than in other countries, such as Ecuador, Indonesia, India and Vietnam.

 

"As of now, the only reluctance of any major importer, retailer or other end user to buy Thai product is Thailand's current high prices," said an unnamed source.

 

Thailand is also facing the loss of its preferential tariff for sale to the EU, under the GSP scheme.

 

The country has already lost a lower tariff value of 7% on processed shrimp under the gradation from GSP rates at the start of 2014 and will lose its 4.2% tariff on raw shrimp at the start of 2015. The tariff on processed shrimp, which excludes cooked, shell-on types, increased to 20% at the start of 2014 while raw types are 12% at the start of 2015.