With many orders and good market signals, shrimp processing and exporting enterprises are looking forward to restoring production to take advantage of the peak months of the year to accelerate exports of this product.

Processing shrimp for export at Sao Ta Food Joint Stock Company.
Photo: provided by the company

Reduce processing capacity

According to the analysis of Ms. Kim Thu, shrimp market expert of VASEP, with the complicated development of the Covid-19 pandemic, from July 2021 to present, the situation of shrimp production, processing, export and consumption in the country faced many difficulties, shrimp processing factories had to reduce their operations, shrimp purchases were delayed, dragging shrimp prices down.

According to a report by the Directorate of Fisheries, although brackish water shrimp production in the first eight months of 2021 increased by 1% over the same period in 2020, the price of commercial shrimp is now down from VND10,000 to 20,000/kg compared to last year, with some areas reduced to more than VND20,000/kg.

The price of shrimp in Ca Mau is currently decreasing continuously, even down to 30% compared to the time before the pandemic. The sharp drop in shrimp prices had a negative impact on the stock of shrimp farming in Ca Mau, farmers were afraid of losses and did not continue to raise new ones. Currently, only about 30-40% of the new crop is stocked.

Shrimp prices in Bac Lieu also decreased by 40-50%, causing shrimp farmers to suffer. Shrimp prices in Soc Trang decreased from VND10,000-20,000/kg because processing facilities did not have high demand for raw materials, now they have to reduce their operations to 30-50% of capacity, operating the "3 on the spot" model.

As reflected by shrimp processing enterprises in Ca Mau, Soc Trang and Bac Lieu - the three leading localities in shrimp output and production of the country, the Covid-19 pandemic is complicated and the provinces all follow social distancing in accordance with Directive 16, it is not only difficult to circulate goods, buy and sell seed, harvest shrimp, but also causes a shortage of workers, so factories have also had to reduce processing capacity by 60-70%.

The above difficulties have strongly affected the production and delivery progress of enterprises. As of the end of August 2021, up to 40-50% of orders were delivered late and about 10-15% of orders were canceled.

Worry about production

Difficulties from production and processing have affected shrimp export turnover of enterprises. In the first half of August 2021, Vietnam's shrimp exports only reached US$119.2 million, down 35% compared to the same period last year. It is expected that shrimp export value in August this year will decrease by 35-40% over the same period last year.

Currently, the demand for shrimp imports from key markets has many positive signals. The US and EU markets have eased social distancing measures, reopened and the vaccine is being widely administered. Demand for shrimp imports from these markets, especially large-sized shrimp, is very high from now until November to serve Christmas.

According to export businesses, many orders are signed, but there is concern the production is not enough to meet the orders. As of July 2021, the number of orders of enterprises increased by 10-20% compared to 2020 because import markets in the world have all recovered.

Another concern comes from farmers reducing stocks, leading to the risk of serious shortage of raw shrimp in the last months of this year.

Experts recommend that farmers continue stocking with low density to harvest large-sized shrimp, meeting the high demand of the market.

According to Mr. Le Van Quang, General Director of Minh Phu Seafood Corporation, the market demand for large shrimp is very good with high export prices. To increase capacity in light of the current shortage of workers, the factory has to increase production of large shrimp. It is recommended that farmers stock low density of 100-120 fish/m2 compared to the previous high density of 250-300 fish/m2. Currently, the size 10-45 pcs/kg is being contracted a lot.

The type of 40 fish/kg is being ordered a lot by the US market.

Mr. Quang advised farmers to rest assured that when the social distancing situation stabilizes, businesses will push up the purchase price. Minh Phu also produces shrimp seed, so it will work with shrimp seed companies to have a policy to support price reduction and improve the quality of shrimp seed for successful farming.

According to the recommendations of enterprises, in the future, when vaccination achieves certain coverage, relevant agencies should have appropriate strategies and reasonable policies for each locality to both prevent and control the pandemic for production development to gain the "dual goals".

Localities need to strengthen propaganda measures and continue to maintain brackish shrimp farming to avoid a shortage of raw shrimp for processing and export in the last months of 2021 and early 2022. It is recommended that the banking sector, financial institutions, etc. join in supporting the processing plant by lowering lending interest rat to purchase raw shrimp for farmers, creating favorable conditions for the reproduction and raw materials for shrimp exports.