Positive outlook for Vietnam's shrimp exports in the second half of 2023

Recovery in the market for shrimp

The "Online forum to connect the production, processing and export of brackish water shrimp in Vietnam" was held on the afternoon of July 21. According to Mr. Le Thanh Hoa, Deputy Director of the Department of Quality, Processing and Market Development under the Ministry of Agriculture and Rural Development, Vietnam has over 370 facilities specializing in combined shrimp processing that are eligible for shrimp export with a total capacity of over 1.7 million tons of raw materials per year.

Shrimp processing facilities are concentrated mainly in the South Central provinces of Khanh Hoa, Phu Yen, Ninh Thuan; the Mekong Delta provinces of Long An, Tien Giang, Ben Tre, Tra Vinh, Soc Trang, Ca Mau, Kien Giang and Southeastern province of Ba Ria - Vung Tau.

All shrimp processing facilities for export comply with the strict regulations established by the import market on disease safety and food safety. Shrimp products have been processed in a variety of designs and forms to meet the needs of the consumer market, including products with high added value such as breaded shrimp, Nobashi shrimp, Sushi, Tempura ,etc. As a result, Vietnamese shrimps can satisfy the most demanding markets around the world, including Japan.

In addition, Vietnamese businesses have utilized various shrimp by-products to produce high-end value-added products such as chitin, chitosan, glucosamine, astaxanthin and so on. Consequently, shrimp continues to be highly competitive, and one of the strategic export products of Vietnam.

Vietnam's shrimp exports established a record of 4.3 billion USD in 2022. However, it fell sharply by nearly 32% in the first six months of 2023 over the same period in 2022. Vietnam's shrimp exports to the five main markets of the USA, the EU, Japan, China - Hong Kong and South Korea simultaneously decreased by double digits. Accordingly, exports to the EU fell by 48.9%, the US were down by 38.1%, South Korea was down by 28%, Japan was down 29%, and China and Hong Kong were down 15.7% over the same period in 2022.

However, the shrimp market has shown signs of recovery within the last few months. Experts forecast that inflation factors and inventories will reduce towards the end of year, whereas demand will increase in anticipation of year-end festivals. Consequently, these factors will boost the export of Vietnamese shrimp.

Promoting the sustainable development of the shrimp industry

Regarding the potential for shrimp industry development, Vietnam has excellent potentials in terms of area, favorable climate and abundant water supply for the development of brackish water shrimp production, which can produce high quality shrimp products of various sizes.

On the other hand, Vietnam's brackish water shrimp industry has applied scientific and technological advances in terms of seed production, commercial farming, and preservation and processing with varying degrees of complexity. Furthermore, shrimp processing businesses currently employ skilled human resources in shrimp farming and value-added product processing.

The market for Vietnamese shrimp is benefiting greatly from an increase in demand. Moreover, the free trade agreements signed between Vietnam and major economies around the world are an opportunity to expand export markets. Vietnam's considerable land fund for brackish shrimp farming in several coastal areas allows for the planning of concentrated farming areas. Additionally, the advantages in science and technology, human resources and other natural conditions help Vietnam develop the shrimp industry in a modern and sustainable manner.

Conversely, Vietnam's shrimp industry faces numerous challenges and limitations. Namely, the limited production infrastructure and the small-scale farming households cause disruptions in the supply of water as well as water drainage. These limitations hinders agricultural production and poses the risk of pollution and disease. In addition, the shrimp production costs are high compared to competing countries in the same market segment.

On the other hand, climate change and the rising sea level are causing the loss of coastal shrimp farming areas. Furthermore, climate change, heatwaves, storms and floods cause sudden changes in the temperature, rainfall, and salinity, which subsequently impair the growth of farmed shrimp and cause disease outbreaks.

According to Mr. Le Thanh Hoa, the Ministry of Agriculture and Rural Development must promote the application of high technology in shrimp farming as well as other stages in the shrimp production chain in order to sustainably develop the shrimp industry. Additionally, the Ministry needs to organize production with a focus on association and certified production (VietGAP, GlobalGAP, ASC, etc.) to improve quality, reduce costs and increase the competitiveness of Vietnamese shrimp products in the global market. 

Scientific and technological advances must be applied to improve productivity, product quality and production efficiency in an effort to meet market demand. High technology must be utilized in shrimp farming as well as other stages in the shrimp production chain to reduce direct labor and limit the spread of diseases.

The Ministry of Agriculture and Rural Development has alse been recommended to timely update information regarding market regulations; remove trade barriers to promote exports; seize opportunities to promote exports to markets that benefit from signed free trade agreements.

The Ministry of Industry and Trade has been recommended to negotiate new trade agreements and diversify product markets; support businesses in utilizing the free trade agreements; prioritize trade promotion activities to expand markets; connect with trade partners to promote shrimp exports

The Vietnamese Trade Offices in foreign countries need to study the needs and regulations of each individual market so that Vietnamese ministries and agencies can guide the development of the shrimp market; strengthen business and trade connections between Vietnam and trade partners to promote exports.