Differentiating Thai shrimp offerings
to weather tough international markets
By Jon Fernquest |
The Bangkok Post business section Friday edition reported on efforts to improve the competitiveness of the Thai shrimp industry in the face of the dwindling US export market.
The strong baht reduced earnings in the shrimp industry last year and the weak US economy is expected to make a dent in the total quantity of shrimp exported from Thailand this year:
The United States accounted for 61% of the 300,000 tonnes of shrimp Thailand exported in 2006, but the share could fall to 48-49% this year...Stagnant sales this year would limit Thai shrimp output to 440,000 tonnes, about the same volume as in 2007 and far below the 530,000 tonnes produced two years ago...
Export revenue...would also fall if the baht continues to appreciate against the US dollar.
Shrimp exports earned the country an estimated 80 billion baht last year, down 5% from the year before, due partly to the 7% appreciation of the baht over the year."
Shrimp exports to Japan and the European Union are taking up some of the slack:
"Shipments to Japan rose 7% to 54,710 tonnes in the first 11 months of 2007. "The JTEPA (Japan-Thailand Economic Partnership Agreement) helped accelerate sales to Japan," Mr Niwat said.Under the free trade pact that took effect on Nov 1 last year, Japan eliminated the 5% import tariff on Thai shrimp.
Meanwhile, exports to the European Union showed robust growth, rising 54% in volume to 28,287 tonnes and 48% in value to 7.05 billion baht in the first 11 months of 2007. The performance was helped by the restoration of lower tariffs under the Generalised System of Preferences (GSP) for developing economies. The EU had eliminated GSP tariff breaks for shrimp in 1997."
Domestic consumption of shrimp within Thailand has also been increasing:
"According to the Thai Frozen Foods Association, about 10% of Thailand's shrimp production is consumed locally and the volume has been increasing every year. The market is estimated at 60,000 tonnes this year, up from 54,000 tonnes last year and 40,000 in 2006."
Larger breeds of shrimp have been targeted to differentiate the Thai product and avoid direct competition with low cost Chinese and Vietnamese shrimp:
Vietnam depends on this key commodity to earn large export revenue and has accelerated shrimp exports, with volume of 150,000 tonnes last year.The competition among big-size shrimp or 20 heads equivalent to a kilogramme remain light but has high demand from upper market such as the US and Japan. "We've been conducting research and development into making quality black tiger prawn broodstock with resistance against disease but it is a time-consuming process," he [Niwat Sutemechaikul, deputy director-general of the Fisheries Department] said.
Value-added products have also been planned to differentiate Thai product offerings from those of low-cost producers such as Ecuador and Brazil:
"Producers are also encouraged to export more value-added products and to offer shrimp in popular dishes: "The target for this year is to see the proportion between the exports of prepared shrimp and frozen shrimp at 65:35, from about 50:50 last year."
Direct shipping by agricultural cooperatives of shrimp farmers to other countries that avoid various middlemen is another option being looked at:
Negotiations are also under way with countries in Asia to create co-operatives to directly ship chilled commodities. Currently, shrimp co-operatives in Mae Klong have a deal to export about 2,000 tonnes of raw shrimp to South Korea a year.The pattern is a win-win proposition as buyers could get fresh, quality products while farmers could bypass brokers and obtain more income..."
(Source: Bangkok Post, business section, 25-01-08, temp-link)
Vocabulary:
weather (bad times) - survive bad times
differentiate a product - to make a product different from competing products to create a market and customers for it
dwindling - become less in number, become weaker
make a dent in - reduce by a large amount
taking up the slack - providing something that is no longer being provided by others
JTEPA (Japan-Thailand Economic Partnership Agreement) - the Thai-Japan free trade agreement that began this year under the interim government
import tariff - tax paid on imports into a country
robust growth - strong growth
restoration - causing something to exist again, after it has disappeared
Generalised System of Preferences (GSP) - rules that allow some developing countries to get special tariff reductions or eliminations, "a system of exemption from the Most Favored Nation principle, MFN, that obligates WTO member countries to treat the imports of all other WTO member countries no worse than they treat the imports of their "most favored" trading partner" (See Wikipedia)
black tiger prawn - the breed of prawn commonly raised for food exports in several Asian countries including the Phillpines, Thailand, and Vietnam (See Wikipedia)
broodstock - the stock of fish used to produce further generations of fish rather than sold as a product
time-consuming process - takes a long time
value-added products - products that change or transform the product in some way and add value to it, for example packaging the shrimp, creating a pre-prepared frozen meal with the shrimp, or breeding the shrimp a little bit larger
agricultural cooperatives - when farmers in an area work together on the processing, packaging, distribution and marketing of their produce (See Wikipedia on agricultural cooperative)
middlemen - buyers and sellers of a product between the factory and the customer
win-win - a situation where everyone gains from some action, in which there are no losers
bypass avoid, go around
