Shrimp exports struggle to adapt

All types of costs skyrocketed

After over the first three months of 2021, the consequences of the Covid-19 pandemic have become more evident because the breaking of the global economic chain has had a strong impact on the production chain of Vietnam’s seafood industry.

According to Mr. Ho Quoc Luc, Chairman of the Board of Sao Ta Foods Joint Stock Company (Fimex-VN), the originally skyrocketed international shipping costs had led to the rise in prices of many imported raw materials and packaging materials used for processing.

To be specific, the freight of one container increases from US$ 1,700 to US$ 7,500, and at times the freight to Europe goes up to US$ 10,000. As calculations are made, businesses lose an additional US$ 6,000 for each container, while the highest profit is only about US$ 3,000 - 4,000, not to mention other input costs have also increased sharply by 20 - 40%.

Mr. Luc analyzed that since the risk of the Covid-19 epidemic remains, many countries have not yet accepted the vaccine passports. On the other hand, if the shrimp exporting enterprises put in all the costs, the selling price will be too high, result in the clients refusing to purchase. 

In the comparison made by Mr. Vo Van Phuc, General Director of Vietnam Clean Seafood Corporation, last year was favorable, but it was more difficult this year, especially when shrimp materials is insufficient because it was only the beginning of the crop, while the selling price is not higher than last year.

Up until now, the Covid-19 pandemic has greatly impacted the prices of materials, resulting in a huge increase in inputs.

Consequently, the increase in shipping charges to Europe has "eaten" all the profits of businesses, even make them suffered losses. In fact, in the first quarter of 2021, there were several shrimp exporting enterprises that suffered losses for signed orders.

Listen to the market, waiting to recover 

Currently, the weather in the Mekong Delta has changed seasons and has rained early, so the shrimp farming area is favorable and the shrimp develops well. Enterprises investing in shrimp farms and many shrimp farming households have predicted that this year's shrimp crop will be better thanks to a good and stable farming process.

Meanwhile, countries with large shrimp farming areas and supplies are still heavily affected by the Covid-19 epidemic. It is estimated that the shrimp production volume of some countries such as India or Thailand will not be much. Moreover, the labor shortage is due to limited displacement because of transports, isolation time ... As a result, farmers are not assured, since maybe the shrimp volume will not increase.

However, in accordance with enterprises in the shrimp export industry, it is not possible to calculate how shrimp prices are sold at present because how the world supply and demand is still under observation, especially the progress of Covid-19.

In particular, the key issue is out of the reach of businesses, therefore awaits the intervention of the Ministry of Industry and Trade and the Ministry of Transport with shipping lines about the freight. It’s because of the obstacle of container cost prices, enterprises must balance them before signing contracts to ensure jobs for workers, but if the price is too low, they cannot sell.

According to the cycle of shrimp consumption, the market usually gets better at the end of the year. At the beginning of the third quarter, in Northern Hemisphere countries, tourists go out a lot in summer, making consumption increase… However, it is hard to increase the already high price of shrimp, while shrimp farming costs this year increased due to the increase of most input costs. When the season is high from June to September, the price will likely drop and will increase again at the end of the season.