Shrimp: A review of the news in 2002   Published on March 11, 2003

Overview and outlook

The economic crisis in Japan led to lower demand for shrimp there. Main supplying countries had to reduce prices and look for other markets to sell their products in. The US market was strong in 2000 but declined sharply in 2001 and 2002, especially after the dramatic events of 11 September. Demand for shrimp in Europe had improved until 2000, in parallel with the overall economic situation, but since then the weakening of the euro has undercut any substantial growth there. On 29 January 2002, the EC halted imports of shrimp from China due to the strong presence of antibiotics.

Diseases experienced in Ecuador and Central America in 1999 led to lower production of cultured shrimp for the next two years. Total world shrimp production is expected to sharply increase between 2002 and 2004 by about 8 percent year on year, or 60,000-100,000 tons (base on finish products weight). Major shrimp producers are China, Vietnam, India, Brazil and Mexico, according to the Black Tiger Shrimp Farms, Producers and Exporters Association.

In 2002, Thai shrimp production fell about 40 percent from 2001 to approximately 160,000 tons due to disease at the beginning of the year, unfavorable weather, high salt concentrations in water, slow shrimp growth rates, low yield per area, switches to other shrimp species such as fresh water shrimp or white shrimp and concerns over antibiotic residues. Other major shrimp exporting countries, namely Brazil, China, Vietnam and India increased output in 2002, causing the Thai share in world markets, especially in the US, to shrink.

Movements in Thai shrimp production in 2003/2004 will depend on several factors:

- Shrimp prices at the end of 2002 will lead to decisions on shrimp crops in 2003.

- Production technology, due to slow shrimp growth rate and low yield per area in 2001. In addition to concerns over antibiotic residues, shrimp farmers prefer to use low technology such as increasing shrimp feed and increasing water circulation in shrimp ponds during the middle and end of the crop period, which leads to the spread of disease.

In 2003, the shrimp market situation will give more power to the buyers' side with toughness on standards, trade barriers and non-tariff trade barriers. Shrimp retail prices will decrease, and hopefully it may also stimulate more demand from consumer which could eventually help to stabilize prices.

Thai shrimp prices may face an increase in production costs (caused by tightening food safety standards and inspections) which could exceed market prices. In addition, the ongoing El Nino phenomenon will help boost shrimp production in the Gulf of Mexico and South America. This will lead to more intense competition in the US and Japanese markets and depress global prices.



2002: Year of the Thai shrimp crisis

In September 2001, the EU found chloramphenicol residues in Chinese, Vietnamese and Indonesian shrimp. Both the EU and US became concerned about antibiotic residues in shrimp products and began strict inspections for chemicals in all shrimp imported from Asian countries.

Thailand is the world's largest producer of farm-raised shrimp, accounting for 33 percent of global shrimp aquaculture, and was the largest shrimp exporter in 2001. However, as a result of increased inspections shrimp product exports started to decline in 2001 and kept falling in 2002.

Impacts on Thai shrimp exports to major markets

From January to November 2002, Thailand exported 95,874 tons of frozen shrimp worth 32,012 million baht, down 28 percent from 133,438 tons and down 37 percent from 32,012 million baht from the same period in 2001. Exports to the top five importers of Thai shrimp - the US, Japan, Canada, Singapore and Korea - fell sharply in terms of value, especially exports to the EU, which fell 80 percent from 2001.

The main factors which caused a tough year for Thai shrimp exports were intense global competition and non-tariff barriers. Farms in Ecuador, Brazil, Mexico and China all increased their production. Shrimp production in China (the largest producer in the world) is forecast to reach 300,000 tons this year, although only 20 percent of total production is exported. Chinese shrimp are mostly Latin American White shrimp, Panaeus Vannamei. China's cost of production is the cheapest in the world at 88 baht per kilogram, compared with 140-150 baht per kilogram for Thai Black Tiger shrimp.

Between January and November 2002, Thailand exported 24,593 tons of frozen shrimp to Japan, worth 8,844 million baht, up 8 percent in terms of quantity but down 18 percent in terms of value from 2001. The changes were due to a slow Japanese economy, and consumers switched focus onto smaller shrimp sizes or products with a lower price.

The value of Thai prepared or preserved shrimp and prawns exported to major importers also decreased in terms of value. Exports fell 1 percent to 96,451 tons and dropped 13 percent to 34,250 million baht from 2001.

Problems included the detection of chloramphenicol in Thai shrimp by the EU, the discovery of lead in shrimp heads, the incidence of disease in some farming areas and dumping accusations by American farmers.

However, this sector is likely to record 2.58 percent growth in 2003.

Table: Total Thai exports of frozen, prepared or preserved shrimp and prawn, Jan-Nov 2002

Country	Jan-Nov 2001		Jan-Nov 2002		Difference (%)
	Quantity	Volume	Quantity	Volume	Quantity	Volume
Frozen shrimp
Total	133438	51019.05	95874	32012.70	-28	-37
US	62042	25362	39725	14549	-36	-43
Japan	22874	10840	24593	8844.8	8	-18
Canada	5214	2073	4585	1708.8	-12	-18
Australia	3474	1354	3124	984.60	-10	-27
EU	6552	2273.49	1622.00	483.30	-75	-79
Prepared or preserved shrimp
Total	97178	39436	96451	34250	-1	-13
US	51143	21338.38	56808	20522	11	-4
Japan	20780	9197.64	19329	7604	-7	-17
Canada	5775	2231.76	6064	2003.55	5	-10
Australia	3301.00	928.68	2659.00	674.10	-19	-27
EU	5611	1847.43	2360	644.93	-58	-65

Source: Thai Customs Department



Impacts on demand, prices

Due to lower demand for Thai shrimp products from major importers, especially the US and Japan, shrimp supplies were abundant in the market. Thai shrimp farmers faced a tough time in 2002 as shrimp prices fell significantly compared with the same periods in 2001, while the price of shrimp feed rose significantly, pushing up production costs.

Although the industry faced an antibiotic scare, shrimp prices were higher in the fourth quarter of 2002 than in 2001. In October 2001, shrimp prices hit a bottom level of 221 baht per kilogram due to the September 11 terrorist attacks. Shrimp is a luxury product and the crisis discouraged people from dining out, causing a decline in Thai shrimp exports. The US is the biggest market for Thai shrimp products, accounting for around 50 percent of Thai shrimp exports. The terrorist attacks affected Thai shrimp prices more than antibiotic concerns in EU countries. The EU took around 1 percent of Thai shrimp exports in 2001.

However, shrimp prices moved up at the end of 2002 due to low production of shrimp culture.

Tabel: Average shrimp prices (40 counts per kilogram) at Mahachai market in 2001 and 2002

Year	Jan	Feb	March	April	May	June	July	Aug	Sep	Oct	Nov	Dec
2001	318	330	313	303	313	290	266	270	253	221	238	267
2002	308	263	289	278	284	243	239	266	276	273	288	278
Difference (%)	-3.2	-20	-7.7	-8	-9.3	-16	-10	-1.4	9	23	21	4.1

Source: Foodmarketexchange.com
Remark: Unit = baht per kilogram; Exchange rate on March 6, 2003 was baht = 42.5 US$.



A chronological account of the EU's tightened inspections of Thai shrimp and the resulting improvements in Thai shrimp farming and processing industries

January 2002

The European Union tightened testing for chemical residues in all shrimp imported from Indonesia, China and Vietnam in September 2001, banning any shipments containing the antibiotic. In the US, the Food and Drug Administration (FDA) carried out similar inspections. Meanwhile, many Thai shrimp factories chose to source their raw materials from trustworthy farms rather than buying from central markets, where it is more difficult to establish the origin. The Thai government agreed to tighten imports of chloramphenicol so that for every shipment of the drug, the importer needed to declare its purpose, and any misuse of the drug was subject to severe punishment

February 2002

The Department of Fisheries announced that they had formed a special committee to carry out inspections and prevent the use chloramphenicol and other banned substances in shrimp producing provinces. The committee included officials from the Ministry of Public Health, the Livestock Development Department and the Department of Fisheries. Representatives from the Department of Fisheries inspected shrimp prior to them being selected for sale to markets to ensure they were free from contamination.

March 2002

EU officials found some shipments of shrimp products from certain Asian countries to be contaminated with another banned antibiotic, nitrofuran. This led to the EU's decision to impose 100 percent checks on all shrimp imports from Vietnam, Thailand and Myanmar for nitrofuran and to ban the products nitrofuran was found in new shipments.

A team of high-ranking officials from Thailand flew to Brussels to discuss with EU authorities comprehensive measures to prevent any future problems. At the end of the month, the EU expressed satisfaction over Thailand's prompt action in solving the problem of chemical residues and the Thai government's decision to prohibit imports of 17 chemicals banned for use in feeding chicken and shrimp.

April 2002

The Department of Fisheries and Livestock Development Department worked together to provide more thorough inspections of every shipment of shrimp products, and cooperated with private sectors such as slaughterhouses and processors to tighten their raw material inspections.

Moreover, government officials from related agencies visited shrimp farms in several provinces to educate farmers about the 17 banned chemicals.

May 2002

Thai exporters stopped exported shrimp to the EU in March to avoid problems with tough residue inspections. But exports to the EU were expected to resume in June when the peak season arrived.

The Department of Fisheries pushed the Code of Conduct (CoC) practices in order to ensure the safety of shrimp products from farm to fork. The method required minimal use of chemicals and treatments and relied more on natural treatments. Approximately 1,000 farms were expected to be certified in 2002, and all 15,000 farms in the next five years.

June 2002

The Department of Fisheries decided to permit imports of White shrimp for commercial breeding and farming in Thailand. The EU tightened rules on chemical residues in Thai shrimp products and raised import tariffs on Thai frozen shrimp as high as 12 percent, while competitors like Vietnam, Indonesia and India paid a rate of 4.2 percent. German authorities found traces of nitrofuran in some shrimp products from Thailand and began checking food imports from Thailand after the EU suggested it at the end of March. Products from Brazil were also inspected more strictly.

July 2002

The Department of Fisheries established a new regulation requiring farmers to fill in a 'shrimp catching form,' which includes details of the catching date, total shrimp weight and the name of the farmer with his/her identification card number. This document helped the department keep track of the catching process. Two market shrimp auction markets in Thailand, at Mahachai and at Pak Panang, also used the document.

August 2002

The EU Commissioner for Agriculture, Rural Development and Fisheries visited Thailand and held a discussion with government regarding the chicken and shrimp trade problems between the EU and Thailand. Thailand assured the EU that it had implemented several measures to make sure that Thai products were free of antibiotic residues. The Department of Fisheries purchased 1 piece of equipment to test for antibiotic residues according to EU standards.




September 2002

Shrimp farming activities in Thailand fell by approximately 30 percent in 2002. The drop was due to oversupply in 2001, which caused many farmers to withdraw from the business, as well as the depressed market prices.
The EU expected to continue 100 percent inspections of Thai shrimp and chicken imports until the end of the year to monitor Thailand's progress in controling the use of banned drugs.

October 2002

The government announced that Thailand would impose the same zero tolerance standard on agricultural imports from the EU as it has been imposing on Thai shrimp and poultry products. Meanwhile, the Fisheries Department worked with France to outline a code of conduct to ensure an environmental-friendly method of cultivating shrimp at every step of production. A quality certification system was established to help farmers and exporters overcome the strict inspections by the EU.

The Ministry of Agriculture and Cooperatives planned to establish a Black Tiger Shrimp breeding research agency to help the industry with its parent stock problem.

November 2002

Thailand's Department of Medical Sciences began to develop aquaculture drugs from local herbs to replace the antibiotics used in the past.

EU officials announced that the EU had found no dangerous contamination of Thai shrimp products since September 21.

December 2002

Deputy Agriculture Minister Newin Chidchob announced plans to meet with an EU committee in the middle of January 2003 to explain the Thai government's corrective actions to resolve the problem of antibiotics. On January 24, 2003, the EU committee decided to drop Thailand from its list of problem countries and revert to random testing of only 10 percent of imported Thai shrimp products.

Source: FoodMarketExchange.com