Shrimp exports face the challenge of "going against the current"

Shrimp exports have overcome difficulties, achieving a growth rate of nearly two billion USD in the first 7 months of 2024. However, to maintain the growth rate and achieve the annual export turnover target of 4 to 4.3 billion USD, businesses, farmers and management agencies certainly need reasonable and accurate strategies that can quickly adapt to changing market conditions, in order to create breakthroughs in the last 5 months of the year.

Processing shrimp for export at the factory of Minh Phu Seafood Corporation. (Photo: PHI SON)

By the end of July, cumulative shrimp exports reached nearly two billion USD, up 7% over the same period in 2023. Of which, white-leg shrimp reached 1.45 billion USD, up 4%; black tiger shrimp reached 246 million USD, down 10% over the same period in 2023. Lobster exports alone increased nearly threefold, reaching 145 million USD.

Difficulties "hold back" export momentum

The recovery momentum for Vietnam's shrimp exports has faced many difficulties since the beginning of 2024. Shrimp exports started strongly in January 2024 with a 71% increase compared to the same period in 2023, earning 242 million USD.

However, shrimp exports continued to face difficulties in the following months. Compared to the same period in 2023, February decreased by 11% to 173 million USD (due to coinciding with Lunar New Year); March reached nearly 272 million USD, up 3% and April reached 287 million USD, up 0.2%.

Although Vietnam's shrimp exports increased sharply in June and July, bringing the cumulative total for the first six months and seven months of the year to 1.6 billion USD and nearly 2 billion USD, respectively, the statistics do not fully reflect the overlapping difficulties.

This year, shrimp exports continue to face many disadvantages and challenges due to the impact of the Russia-Ukraine conflict, the global economic crisis, high inflation in major export markets, technical barriers to imported shrimp, price competition with India and Ecuador, increased shipping costs, complicated disease developments in farmed shrimp, high shrimp production costs and the risk of raw material shortages...

General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP) Truong Dinh Hoe said that although the shrimp industry is experiencing positive growth in the first months of 2024, this does not accurately reflect the reality of simultaneous difficulties in all major markets such as the United States, the European Union (EU), Japan, etc.

In the US market (Vietnam's largest shrimp export market in 2023, with a turnover of 682 million USD), on August 2, the US Department of Commerce issued a conclusion that it continues not to recognize Vietnam as a country with a market economy, which means that Vietnamese export enterprises to the US market continue to be discriminated against in US anti-dumping and anti-subsidy investigations.

The actual production costs of Vietnamese enterprises continue to be unrecognized, and the “replacement value” of a third country must be used to calculate the dumping margin. Thus, even in the key US market, Vietnamese shrimp is at a disadvantage.

According to Vietnam Customs, as of June 15, Vietnam's shrimp exports to the US reached more than 262 million USD, up 2% over the same period in 2023. After increasing in the first months of the year, shrimp exports to the US decreased in April and May due to high inflation, Americans tending to tighten spending; shipping costs increased dramatically and there was strong price competition with shrimp from Ecuador and India.

In the first 5 months of 2024, China, from the second position of the previous year, suddenly surpassed the United States to become Vietnam's largest shrimp consumption market.

It is forecasted that by the end of the year, China will be a place of strong price competition between Vietnamese shrimp and shrimp from Ecuador, India and Indonesia, where in the first six months of the year, when China imported 436 thousand tons of shrimp, shrimp from Ecuador alone reached 330 thousand tons, accounting for 75%.

In the logistics segment, export companies said that since May, shipping rates have increased dramatically by more than 40%, due to rising fuel prices, goods having to detour to avoid war and conflict areas, and also because many countries are collecting empty containers to reserve for export, causing rental prices to skyrocket.

The seafood industry, like many other agricultural products, requires refrigerated containers and transportation time is very important. The high cost of transportation will put Vietnamese shrimp exports at a disadvantage when competing on price in transoceanic markets.

In the country, shrimp diseases are complicated and have not been overcome, typically TPD. In many farming areas, farmers are not interested in breeding when the disease is increasing, prices are low, the possibility of a successful harvest is low, the possibility of losses is high, causing the risk of shortage of raw materials for export in the last months of the year.

Mr. Le Tien Luat, in Dat Do district, Ba Ria-Vung Tau province, said that his family has 17 shrimp ponds on an area of nearly 6 hectares. Recently, shrimp prices have dropped sharply, and the weather has been unfavorable, causing shrimp to grow slowly, increasing costs and causing large losses, making farmers lose money.

He has now decided to “suspend the pond” and stop farming, waiting until the price stabilizes before resuming production. According to shrimp farmers in Dat Do district, the current selling price of commercial shrimp is about 120,000 VND/kg, but the cost that farmers spend is also nearly 120,000 VND/kg. With this selling price, farmers must be very “lucky” to make a profit, if the price drops further, they will suffer heavy losses.

Harvesting shrimp farmed using high-tech model in Soc Trang province. (Photo: TRUNG HIEU)

Change strategy, accelerate at the end of the year

However, in the face of general difficulties, the Vietnamese shrimp industry still maintained its growth momentum. According to VASEP, in July, the export turnover of all key aquatic products improved; in particular, shrimp exports increased by 11%, the highest growth rate since the beginning of the year. Shrimp exports to China and the EU increased by 24% and 32% respectively, while exports to the United States increased by 9%, to Japan by 4%, and exports to South Korea by 21%.

In terms of markets, the United States and China will continue to be Vietnam's two leading shrimp export markets in 2024, accounting for about 40% to 45% of the industry's total export turnover.

VASEP leaders forecast that the shrimp export market will improve in the coming time, when the demand for shrimp imports from China and the US increases again from the end of the third quarter to serve consumer demand during the holidays and Tet at the end of the year.

In markets such as Japan, Korea, Australia, UK, USA, EU, Vietnamese shrimp still maintains a competitive advantage over other sources from India and Ecuador due to its deep processing advantages and many value-added products.

Japanese consumers require products to be delicious, nutritious, beautiful, and meticulously processed, suitable for Vietnam's processing level and capacity, while other exporting countries cannot process them, or can process them very little.

In order for Vietnamese shrimp to be more competitive and overcome the predicted difficulties, the shrimp industry needs to make more efforts. Vietnamese shrimp has successfully entered demanding markets, partly thanks to rice-based shrimp, ecological shrimp, and organic shrimp products, so in the development strategy, ecological shrimp still plays an important role.

Reducing diseases, focusing on investing in farming areas, proactively sourcing raw materials, and expanding new customers are important solutions to help the shrimp industry strengthen its internal strength and be ready to compete in large markets.

General Director of Minh Phu Seafood Corporation Le Van Quang said that shrimp processing and exporting enterprises must invest in more advanced technology to create more deeply processed, high-value products to conquer the international market.

Chairman of the Board of Directors of Sao Ta Food Joint Stock Company Ho Quoc Luc also shared that thanks to investment in modern technology and promoting the strength of deep processing, despite facing strong competitive pressure from cheap shrimp from Ecuador, India and Indonesia, Vietnamese shrimp can still stand firm, even occupying the largest market share in the international market.

Regarding "foreign affairs", businesses also need support from authorities to reduce trade barriers such as anti-dumping and anti-subsidy taxes in the US market; quota regulations in Korea... which are directly affecting the growth potential of the shrimp export industry.

Although the Vietnamese shrimp industry is facing many challenges and difficulties, with efforts and determination, along with reasonable and accurate strategies, shrimp exporting enterprises can still take advantage of the last months of the year - the "golden season" of the seafood industry to swim against the current, reaching the finish line with a sprint.

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