December 18, 2013

Vietnam experiences shrimp shortage on high demand from China

Chinese buyers have been taking up supplies of raw shrimp directly from Vietnamese farmers, causing Vietnamese shrimp exporters and processors to experience difficulty in securing enough supplies of the shellfish.

Vietnam's shrimp export revenues increased 30% on-year over the first 10 months and the 2013 total is expected to reach some US$2.8 billion, up 27%, and far surpassing the target of US$2.2 billion.

But members of Vietnam Association of Seafood Exporters and Processors (VASEP) said the numbers would have been even higher if huge quantities of raw shrimp had not been sold directly to Chinese buyers in Vietnam.

The price of raw shrimp in the Mekong Delta has been 30-50% higher than normal rates brought about by the higher prices offered by the Chinese than domestic buyers.

Truong Van Phuoc, deputy director of a seafood processing company in Soc Trang Province, said Chinese dealers bought 200-300 tonnes of shrimp in the delta every day during the peak season in the third quarter.

China also surpassed South Korea to become Vietnam's fourth largest shrimp market through official export channels, importing US$462 million during the first 10 months, up 37% on-year. But the association said the export ratio to China of 3.6% processed shrimps to 96.3% raw frozen ones was a concern.

VASEP worries that the uncontrolled sale of raw shrimp to China is cutting into supplies needed for processors to make value-added exports to other markets. Vietnam's overall shrimp export this year was 31% processed and 69% raw.

Phuoc said local exporters are only managing to buy around 20-30% of what they need to meet export contracts. Thus they only dare to sign small contracts, one by one, he said.

A source from VASEP said many processors have failed to finalise contracts with customers they've had for years and years.

Tran Thien Hai, chairman of VASEP, said there was nothing wrong with Chinese dealers buying a lot of shrimp. But he worried the trend could cause a problem in the long term.