Overseas Shrimp demand starting to slump

Today the Bangkok Post reports that shrimpers have suggested the industry cut production by between 10% and 20% next year to match expected slow demand from major buyers overseas.

Somsak Paneetatyasai, the president of the Thai Shrimp Association, said the poor economy would force importers to keep lower stocks. The result could be lower prices for Thai shrimp, especially if the local industry still sticks with its target to produce 500,000 tonnes of shrimp next year. Next year's production should be slashed by 20% at maximum and export volume should not exceed 350,000 tonnes, or 50,000 tonnes lower than this year's estimate, he said.

The cuts are to prevent further falls in shrimp prices, which have dropped steadily this year. The price is 115 baht per kilogramme (50 shrimp), down 15% from the same period last year. "If the market improves, farmers will be able to build up supplies quickly as the harvesting period of shrimp is only four months," he said.

Mr Somsak's suggestion is in line with a similar proposal made by the Thai Frozen Foods Association, a group of major seafood exporters.

Association president Poj Aramwattananont said after meeting with shrimpers and farmers early this week that orders from major markets - the United States, Europe and Japan - had shown slow growth in the first eight months this year. The value of Thailand's shrimp exports from January to August this year grew only by 3.11% from the same period a year ago, to US$1,4 billion.

The US, Japan, and Europe respectively represented 52%, 18% and 9.5% of the total shrimp exports of 349,4000 tonnes from Thailand in 2007. "The global financial crisis has not ended but we have already felt the pinch as new orders for delivery next year have tended to decline," Mr Poj said.

Some buyers have bargained hard for lower prices and longer payment periods, he added. He called for closer co-operation among exporters and farmers in managing supply to handle unsure markets. However, he said he was confident that Americans and consumers in other big markets would not cut spending on food, shrimp included.