Thai Shrimpers Seek Better Prices;
Tilapia Farms Getting New Support

Thai Frozen Food Association works with government to bolster exporters’ bottom lines
without putting heavy burden on taxpayers. Put options could be used if prices fall too low.

Shrimp producers in Thailand plan to submit a working plan to the government supporting the new options program intended to stabilize prices of key commodities, including shrimp, starting in the next harvest season. The program would replace the traditional price pledging scheme that has caused huge financial burdens on the government and taxpayers for years.

“We realized the burdens and considered the mortgage program not only deepened corruption, but did little to improve product prices,” said Poj Aramwattananont, honorary adviser to the Thai Frozen Food Association (TFFA), at a meeting in Songkhla. Exporters, processors and shrimp farmers have accepted the options program for shrimp, expecting it will promote sustainable growth in an industry that earns approximately 80 billion Thai baht ($2.4 billion) in export income a year.

The government agreed to spend THB 1.4 billion ($41.2 million) to pledge 10,000 metric tons of vannamei white shrimp from farmers from July 15 to Sept. 30 to lessen pressure over falling prices as exports slump. The pledging volume later increased by 5,000 metric tons to meet farmers’ demands. The pledging prices varied based on the size of the shrimp, with 40 shrimp per kilogram to be pledged at THB 155 ($4.56), 50 shrimp for THB 135 ($3.97), and 60 shrimp for THB 125 ($3.68).

Under the new program, Poj said the government set reference prices, or insurance prices, by considering costs of production and transport, export prices, risk factors from exchange rates and fuel costs, and farmers’ profits. As with other crops, if the insurance prices fall below market prices, the government will use the put-option practice to absorb the difference. Panisuan Jamnarnwej, president of the TFFA, encouraged shrimp farmers to form as a group or in cooperatives, and supply product only to certified exporters or those that are members of the association to prevent any possible business risks, such as refusal to buy when prices change.

Carbon Footprint Label Conformity

Shrimp exporters and processors who run cold storage facilities have to inform the association about the farms where they want to buy shrimp. The practice should conform with the requirements for carbon footprint labels from the European Union, which considers the amount of carbon emitted during production.

The association and representatives of farmers from the southern provinces that control about 70% of the country’s shrimp production will present the plan to Deputy Prime Minister Korbsak Sabhavasu. Thailand’s shrimp production is projected to be 400,000 metric tons to 450,000 metric tons this year, of which 362,000 metric tons would be exported.

Meanwhile, Thailand’s Fishery Department plans to launch a three-year strategic plan to promote the tilapia – known locally as “planil” – as a new seafood export item. The plan, to be implemented from 2010 to 2012, aims at upgrading tilapia farms to international standards and increasing production to about 300,000 metric tons a year, of which 50,000 metric tons would be exported to Japan, Europe, the United States and the Middle East.

Tilapia has become a popular aquaculture product in recent years. Improving farming of the fish is part of the government’s “Strong Thailand” strategy of investing in various industries to enhance production facilities, said Jirawan Yamprayoon, deputy director-general of the department. It is expected to receive a budget of about THB 380 million ($11.1 million) to run the tilapia project.

Cooperation contracts, including contract farming for the TFFA to supply quality tilapia for export, are being opened to interested parties. The first agreement covers farmers in Chon Buri and members of the association. The export market for tilapia has been very competitive, due largely to low-priced products produced in China and Vietnam.

To avoid a price war with these two countries, Thai processors intend to focus on the premium market, shipping processed fish, fillets or tailored meat rather than raw frozen fish.