Shrimp exports fall 15% below target, far worse than expected

 Overseas consignments for the six-month period ended June 30, 2016 stood at US$1.4 billion, up US$200 million from US$1.2 billion for the corresponding period in 2015 and a full US$250 million short of the US$1.65 billion target.

In a nutshell, shrimp exports dropped 29% for the six-month period January 1-June 30, 2015 and the current year target was overly optimistic, set to regain all of that loss plus 4%, said VASEP.

However, that didn’t happen and exports for calendar year 2016 are now on track to see a full US$500 million shortfall from the original budget—if they don’t turn around in the second half of the year, said VASEP.

Truong Dinh Hoe, secretary general of VASEP, said the overall drop is primarily the result of weaker than anticipated demand in the US and other major markets.

He said saltwater intrusion brought about by the worst drought in nearly a century in the Mekong Delta has further reduced shrimp supplies and negatively impacted exports as valuable fish farming hectarage has been destroyed.

The depreciation of the euro following Brexit, weaker economic conditions in China and devaluation of the yen, among other things, he said, also played a role in the weaker than expected figures.

He said the supply situation in the global market has eased the price of shrimp. The average unit price of frozen shrimp fell to US$8.28 per kg for the six-months against US$10.38 for the same period in 2015.

The latest data casts significant doubt about whether the 2016 annual target of US$3.3 billion for shrimp exports is achievable so it was lowered 10%, or by US$300 million, to US$3 billion.

Even the lower annual target of US$3 billion may be overly bullish as it still represents a 12% jump, or US$3.21 million rise, over the year 2015 total shrimp exports of US$2.68 billion.

This means that the second half of 2016 would need to outperform the first half by US$200 million, a figure that is highly unlikely to materialize and maybe the annual target should have been adjusted downwards by a full US$500 million.

On a positive note, he said, sales to the major US market regained much of the ground it lost ground in 2015 during the first two quarters of 2016, and is hopeful that the upward swing will continue throughout the remainder of the year.

The major markets that experienced positive growth included China-Hong Kong 41.8%, the US 13.8% and the EU 6.5%.

The US is the biggest importer of shrimp around the globe. During the first half of this year, the market spent US$2 billion on shrimp imports. Indonesia was the largest supplier of shrimp for the US, trailed by India, Thailand and Vietnam.

He said Vietnam and the US in July 2016 resolved key litigation stemming from antidumping duties that set the stage for enhanced future exports.

Assistant US Trade Representative Barbara Weisel, who headed the US delegation in the settlement talks, applauded the deal as an important stepping stone for the future of Vietnam-US trade.

“We welcome the resolution of this long-standing issue,” she said in a statement “This agreement demonstrates the commitment of the United States and Vietnam to address outstanding issues as we work to take our relationship to the next level.”

To be prepared to tap opportunities presented by the settlement, shrimpers should take extra precautions to strictly comply with regulations on food safety and technical standards of foreign markets, said Secretary General Hoe.