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Crash, crash, crash go shrimp prices as exports to Japanese market stall.

Crash, Crash, Crash Go Shrimp Prices As Exports to Japanese Market Stall

Hopefully, it will all be over by the time you read this. For Thai shrimp farmers, who saw their prices plummet by nearly a third last year in face of weak demand in Japan, another year like it could be a killer.

It was partly changing consumption patterns, partly bad luck that sent the industry reeling last year, according to David L. Cohen, technical and marketing service manager for Aquastar Foods Ltd., which has a big shrimp farming-processing operation in southern Thailand.

The changing consumption patterns, he told the International Seafood Conference, came after Japan deregulated meat imports in April and supermarkets started promoting meat at "previously unheard of low prices." The bad luck was a dockyard strike in Tokyo that prevented a lot of shrimp from clearing customs until after the festive season when consumption is highest.

|Word Got Around'

Import prices started dropping rapidly as word got around of slow consumption and heavy stocks. In June, they even briefly fell below the prices (also falling rapidly) paid farmers, meaning that packers were taking a bath even without factoring in production, packaging and shipping costs. "At this point, most packers ceased or severely curtailed production," Cohen said.

Import prices for both Japan and the United States bottomed out in July, even as prices to farmers continued to fall -- the latter were apparently beginning to stabilize in August. But slowly, Cohen said, the industry overcame its shock -- production resumed, and the farmers, processors and importers all began counting up the cost of summer panic. "Green card" packers could increase their sales in the United States; others had to turn to Europe if nobody in Japan was buying.

There was a silver lining to the dark cloud: exports of Thai black tiger shrimp to the USA reached an estimated 36,000 tons last year, compared to 25,400 in 1990. American imports from Ecuador, by contrast, were off a bit last year from 38,300 to 34,600 tons, and those from Indonesia increased only slightly from 8,600 to 10,200. China, which held the number one position in 1990 with 54,400 tons, slipped to 36,000. Japanese imports of Thai shrimp, at 20,300 tons by the end of June, were running behind those for the same period in 1990 (20,600 tons).

Both Thailand and Indonesia specialize in black tiger shrimp, while China sells China whites (penaeus chinesis) and Ecuador markets white shrimp (penaeus vannamei). Japan normally prefers dark-shelled black tiger shrimp from Thailand because they turn deep red when cooked. Central Thailand produces shrimp of the right color, but environmental problems have curtailed production. Yields are better for shrimp grown in southern Thailand, but they have lighter shells -- which become even lighter at higher growth densities. Japan still pays a premium of 20 to 50 cents a kilogram for Thai vs. Indonesian shrimp, but the gap is steadily narrowing.

Those Japanese prices used to run 50 cents to $1 over prices paid by USA customers, and it was unclear at the time of the Conference whether that premium would return. Its loss led Thai packers to look to Europe, especially for sales of high-grade head-on shrimp. France and the United Kingdom appear to be good bets for further sales of cooked and peeled shrimp, Cohen said, since Thai exports in that category, although still modest, had increased substantially in 1990. But the long-term viability of the market depends on the farmer and his profit -- no farmers, no shrimp.

Cooperative Advantages

Cohen plugged the cooperative approach to shrimp farming that Aquastar practices in southern Thailand, where massive water intake and a central infrastructure insure both efficiency and hygiene (pond water is exchanged at a rate of up to 40% a day, for example). By contrast, he said, "wild cat ponds" -- whether operated by farmers or speculators -- tend to be slipshod operations, with shrimp raised in excessive densities and with poor quality control (such as a 10% pond water exchange rate).

One major change to look for this year is more efficient peeling operations by processors. One major company has reportedly bought 30 high-volume peeling machines, and others are expected to follow suit if they haven't done so already. Until now, peeling has nearly all been done by hand -- that has meant higher yields per shrimp, but severely restricted overall output. A new generation of steam and humidity cookers is also coming on line, suggesting a major assault this year on the USA cooked shrimp market.

Shrimp Aquaculture Output

(In Metric Tons; 1989 Estimates, 2000 Projections)
Country 1989 2000
China 175,000 350,000
Thailand 100,000 125,000
Indonesia 85,000 150,000
Ecuador 60,000 85,000
Philippines 46,000 90,000
Vietnam 28,000 45,000
India 23,000 42,000
Taiwan 24,000 40,000
Panama 4,000 6,000
Honduras 3,200 5,000
Colombia 2,800 15,000
Malaysia 2,500 6,000
Mexico 2,500 25,000
Others 28,000 41,000
Total 584,000 1,025,000

Sources: Various Embassies, Industry, INFOFISH (F.A.O.), World Bank, Shrimp World Inc.

PHOTO : The rapid growth in shrimp farming over the past five years has had both a spectacular and destabilizing influence on prices, says Aquastar's David Cohen.
COPYRIGHT 1992 E.W. Williams Publications, Inc.
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Publication:Quick Frozen Foods International
Article Type:Industry Overview
Date:Jan 1, 1992
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