July 5, 2005

Shrimp farmers in Thailand in need of assistance

Shrimp hatchery farmers hit by the tsunami in Thailand are still struggling to rebuild amid insufficient state aid, falling shrimp prices and other negative factors.

Six months after the tsunami disaster in the southern provinces, the plight of devastated hatchery farmers has not eased, even as a slump in shrimp prices has hit the industry.

In addition to the tsunami destruction, the price of shrimp has been in continuous decline because of the US anti-dumping penalties and the decision by the European Union to delay until early next year the announcement of which countries will receive import tax privileges.

Reduced tariff rates under the EU's Generalised System of Preferences (GSP) were supposed to take effect last week, and last for three years. Instead, the EU has delayed their introduction until the beginning of 2006.

The US Department of Commerce also announced a 5.95 percent anti-dumping tariff on Thai shrimp last December. On March 15, it also adopted a new bond rule, requiring higher bonds, amounting to full collateral for the possible punitive dumping tariff.

The rule applies across the board to imports of all agriculture or aquaculture products liable to anti-dumping duties. To comply with the rule, an importer of Thai shrimp must post a bond to the value of the previous financial year's imports multiplied by 5.95 percent, the rate of the anti-dumping duty.

The bonds are valid for a year, but cannot be redeemed until after three years, creating a situation where companies need to have two or three bonds running concurrently, which few can afford. Hatchery farmers moreover do not own the land on which they operate so find it difficult to access loans.

So far, the authorities have approved financial aid of about 10 percent for the losses by farmers, but the amount is hardly enough for most to rebuild their businesses. The entire Thai shrimp export industry used to generate revenues of 75 to 80 million baht each year.

The Fisheries Department has estimated tsunami damage to the shrimp industry at about 14.8 billion baht, excluding opportunity losses.