Storms in the shrimp industry may last in 2024

Source: General Department of Customs, VASEP

Leaders of many businesses in the industry expressed concern about the consumption situation in the remaining months of the year. 

Sharing at the 2024 shareholders' meeting, Mr. Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Foods (Code: FMC), commented that the shrimp export situation of Sao Ta in particular and shrimp enterprises in general is at the top. Facing many challenges when demand is weak while supply is quite abundant, selling prices are generally difficult to increase.

Specifically, in Japan - Sao Ta's largest shrimp consumption market with a proportion of 45%, the yen devaluation and difficult economic situation caused people to partly shift from seafood to pork and chicken. 

Meanwhile in the US, a market that accounts for 30% of Sao Ta's export market share, shrimp businesses are facing lawsuits against tax subsidies. 

Accordingly, on March 26, the US Department of Commerce (DOC) announced preliminary anti-subsidy duties on Vietnamese, Indian and Ecuadorian shrimp. Accordingly, three of the four largest US farmed shrimp suppliers may be forced to deposit preliminary anti-subsidy tax (CVD) ranging from 2% -196%.

For shrimp from Vietnam, the deposit requirement will be 2.84% for Soc Trang Seafood Joint Stock Company (Stapimex), 196.41% for Thong Thuan Seafood Company Limited and 2.84% for all other Vietnamese suppliers. Stapimex is currently Vietnam's largest shrimp exporter.

“This issue is complex and unprecedented, so we are very focused on monitoring the situation. But overall this lawsuit certainly has an impact on us. In the immediate future, the company will focus on selling in the US market tax-free products such as breaded shrimp, fried shrimp or other items that have that but sell at good prices," Mr. Luc said. 

However, according to Mr. Vietnam, there is still some confidence when the DOC comes here through Vietnam's appeal, if this tax rate is reduced below 2%, the lawsuit can be canceled. If it's the opposite, the path for Vietnamese shrimp to enter this market will be even narrower.

Looking at this issue from a more positive perspective, Mr. Le Van Quang - General Director of Minh Phu Seafood Joint Stock Company - Top 2 Vietnamese shrimp exporting enterprises, said that the US imposition of anti-subsidy tax is a good opportunity for Vietnam: In previous years, Ecuador was not subject to tariffs while Vietnam and India were both subject to tariffs.

"Therefore, with the current US decision, competition will also be fairer," Mr. Quang shared with us. 

However, General Director of Minh Phu Fisheries also admitted that competitive pressure from India and Ecuador is still a big concern for the Vietnamese shrimp industry because the selling prices of these countries are low. 

VASEP said the US and China are the two leading shrimp import markets in the world. The US accounts for 26-30% of shrimp import value, China accounts for 16-22%. These two markets are having to "bear" most of the surplus shrimp from major producing countries, especially India and Ecuador.

These two shrimp farming powers rush to export, causing fierce competition not only between other competitors but also with domestic shrimp producers. Due to oversupply, both raw shrimp prices and global shrimp export prices will decrease sharply in 2023.

Faced with that situation, the US and China have continuously responded to protect the domestic shrimp industry and tighten imports. 

What are shrimp businesses doing to overcome the waves?

In the current difficult context, businesses are preparing many response measures. Sharing with VASEP, General Director of Minh Phu Fisheries said that in order to increase orders, the company has actively participated in fairs and exhibitions around the world to introduce products. Most recently, the International Seafood Fair in Boston in the US and the upcoming expected Japan and Korea... to reach consumers.

In addition, Minh Phu is promoting reducing shrimp farming costs to compete with Ecuador. 

“We are applying new shrimp farming technology that can compete well with Ecuador. However, this technology needs time to spread to all associated farming households. If Minh Phu alone raises food and people do not apply it to get low prices, it will not be successful," Mr. Quang shared with us on the sidelines of the event where Minh Phu cooperated with Bach Hoa Xanh to promote sales. domestic market at the end of March. 

As for Sao Ta, Mr. Luc said that since July 2023, Sao Ta Foods has put into operation the Vinfarm farm in Vinh Thuan, helping to expand the farming area by 203 hectares, bringing the total farming area to 525 hectares. with the ability to supply 16,000 tons of raw shrimp/year. When this farming area is fully operational, it will significantly improve the enterprise's ability to be self-sufficient in raw shrimp. 

Sao Ta representatives expect the Japanese market to recover as soon as possible. Besides, the company will also look for opportunities in the Chinese market.

“Currently we do not have any sales contracts to China but are forming the foundation. We consider this a top potential market and are confident we will penetrate it in the near future. However, we have not confirmed the timeline yet, it depends on accessibility and business opportunities," Mr. Luc shared with shareholders. 

Sharing with VASEP, Mr. Tran Be Sau, CEO of Viet-Uc Seafood Factory (Bac Lieu), also commented that the export market is facing many difficulties, and said that businesses will actively search for potential partners, expanding markets to increase export turnover. Along with that, there is investment in innovating technology and equipment and expanding production scale to improve quality, increase value and competitiveness for exported goods.

Source: vietnambiz.vn