Shrimp and Save in Tight Markets

Spend Matters welcomes a guest post from Nick Peksa, at Mintec Ltd.

2011 was an exciting year for prawns (or shrimp -- depending on where you are). Some species and origin produced price extremes caused by low supply due to unusual weather and disease, and shifts in demand.

Mid-2011 saw the beginning of the La Niña weather pattern, with increased flooding across Southeast Asia and unseasonably cold weather in parts of China. Dramatic floods across Thailand in October primarily affected the southern regions of the country but saw citizens of Bangkok wading through deep pools of water to go about their daily chores. This was the worst flooding in Thailand in more than 50 years, resulting in losses in many prawn farms and hugely affecting logistics. Over this period, farmed prawn production was 8% lower than in 2010, but at the same time values rose by 10%.

In addition, the World Bank has decided to upgrade Thailand's status, meaning it is now at risk of losing its privileges set under the developed countries' system of preferences. This change would result in Thailand's exporters facing a higher tariff, meaning European consumers would have to pay more and imports from Thailand may be restricted.

Elsewhere in Asia, Vietnam saw a disease outbreak in 2011 resulting in the loss of over 81,000 hectares of black tiger shrimp production. To combat this, Vietnamese farms introduced antibiotics into their system of aquaculture. High levels of the antibiotic enrofloxacin detected in prawns exported to Japan, however, have resulted in a decreased opinion of Vietnamese prawns worldwide.

In the European markets, increased levels of cod, a predator of prawns, have led to declining West Greenland stocks. Simultaneously, there have been reduced prawn imports into the EU. This was as a result of decreased demand due to the global financial crisis, but also due to limitations caused by the ATQ (Autonomous Tariff Quota) of 20,000 tonnes. The ATQ allows 0% tariff imports from Canada of coldwater prawns into the EU, and generally runs out by the middle of the year.

Furthermore, the prawns that are currently being imported are tending to be from less expensive sources and are often of smaller varieties. But there are increasingly strict import guidelines on best aquaculture practices, which some producers are finding ever more difficult to comply with.

Looking ahead to the rest of 2012, although consumption at the start of the year is reported to have been low, as is traditionally the case due to the colder weather, prices are still expected to remain firm with supplies low and demand increasing in Asia.

2012 may be producing another volatile commodity, this time of the 8-10 legged variety.

- Nick Peksa, Mintec Ltd.

First Voice

  1. Tool crib software:

    I am a great fan of sea food. And these prawns’ scarcity and news about the Vietnamese prawns made me keep away from them. The essence of any business is in its easy accessibility and price. Like I use this tool vending machine at my factory to keep a track of the tools and know if there is a shortage of the same without needs of manual inventory and all. This not only saves money but makes the work easy too. Let these prawn industry understand the term quality and availability to sustain in the market!

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