DNVN - Continuously growing shrimp farming and export output of leading producing countries has led to oversupply, pushing shrimp prices to record lows. With high input costs and high prices, Vietnamese shrimp find it difficult to compete with India and Ecuador in this segment.
The "big guys" continue to increase production
According to the Vietnam Association of Seafood Exporters and Producers (VASEP), shrimp farming and export output of leading producing countries has continuously grown rapidly in recent years, leading to oversupply and pushing shrimp prices in markets to record lows.
In 2023, shrimp exports from some countries recorded a decrease, but some "big players" in the industry continued to grow farming output and exports. Shrimp exports from the top 6 countries in the world increased steadily from 2021 to 2023.
Total farmed shrimp production in 2023 is estimated at about 5.6 million tons. Production is forecast to increase by about 4.8% in 2024. Shrimp production in the two major countries, Ecuador and India, will still generally have surplus to meet global demand in 2024.
The top five shrimp producers are Ecuador, China, India, Vietnam and Indonesia, respectively. These countries account for about 74% of global production in 2023 (estimated at 4.1 million tonnes). Other important producers in Asia include Thailand, Malaysia, the Philippines, Myanmar and others, contributing about 840,000 tonnes. In Latin America, other producers led by Brazil, Mexico and Venezuela will add about 500,000 tonnes to world production in 2023.
According to VASEP, global oversupply will create immediate consequences for Vietnamese shrimp.
The US and China are the world's two leading shrimp import markets. The US accounts for 26-30% of shrimp imports, while China accounts for 16-22%. These two markets are shouldering most of the surplus shrimp as major producing countries, especially India and Ecuador, rush to export, causing fierce competition not only between shrimp exporting countries but also with domestic shrimp producers and traders. Due to oversupply, both raw shrimp prices and global shrimp export prices will fall sharply in 2023.
Faced with that situation, both markets continuously took actions to protect the domestic shrimp industry and tighten imports.
For example, the US has moved to investigate anti-subsidy duties (CVD) from major shrimp suppliers India, Ecuador and Vietnam and has announced preliminary CVD duties on shrimp from the three countries.
China - Ecuador's largest shrimp consumer market - also warned and increased food safety control on shrimp imported from Ecuador.
Ecuador and India have no intention of “restraint” shrimp production in the future. Although these two countries also plan to increase value-added shrimp, in the short term their strength is still raw shrimp such as shell-on shrimp and shrimp meat.
With the current production situation such as high input costs and high prices, Vietnamese shrimp will certainly not be able to compete with India and Ecuador in this segment.
US shrimp import data in February 2024 showed that the price of Vietnamese shell-on whiteleg shrimp was 1-2 USD/kg higher than that of Indian and Indonesian shrimp, and that of black tiger shrimp was 3-5 USD/kg higher. Meanwhile, the price of breaded shrimp imported from Vietnam was higher than that of Indian and Indonesian products, but lower than that of Thai breaded shrimp.
Value added
According to expert Kim Thu (VASEP), how should Vietnam's shrimp export products be reshaped to limit the risk of trade defense measures such as anti-dumping tax, anti-subsidy tax, non-tariff barriers and competitive pressure with other countries?
In addition to always having to ensure compliance with market regulations on food safety, labor, environment... should Vietnamese shrimp businesses think about further increasing the quality and added value of imported shrimp products, instead of chasing quantity and output like India and Ecuador?
Currently, the proportion of processed and preserved shrimp exported to the US, Japan, and the EU is increasing and is superior to raw shrimp. This shows that Vietnamese shrimp is promoting its strengths and is on the right track.
Like Thailand, Vietnam should continue to promote the export of deeply processed shrimp to gain better value, accepting a more "modest" export volume, but reducing the risk of being subject to trade defense measures.
Investing more in the model of raising and exporting black tiger shrimp and rice-shrimp can also be a good direction in the current context. However, every segment will have competition. Therefore, black tiger shrimp or rice-shrimp also need to invest in quality to demonstrate the superiority and strength of Vietnamese shrimp: large size, beautiful shrimp color, delicious and firm shrimp meat...
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