Hồ Quốc Lực, Chairman of Sao Ta Foods JSC, said that challenges of the shrimp sector would last until mid 2024.
During the International Workshop of Shrimp in the afternoon of Aug 23, Hồ Quốc Lực, Chairman of Sao Ta Foods JSC, anticipated that the shrimp sector would have to encounter challenges at least till 2024. The global shrimp output of 2023 may reach 6 million tons, up 5% as compared to 2022 amidst soft demand.
Vietnam’s shrimp sector has been facing serious disease outbreaks with a high mortality rate and the rising feed cost for a long time has resulted in a high unit price of shrimp. Additionally, farmers do not have incentive to stock post larvae as the price of shrimp material has been falling continually.
“I think just 50% of the shrimp have been stocked. It means the shrimp output will drop sharply, leading to a short supply”, said Lực.
According to VASEP, Vietnam’s shrimp export value reached USD 1.9 billion in July, 2023, down 30% y-o-y. Lực anticipated that Vietnam has suffered from the most serious slump among powerhouses of shrimp exports in the world. The export price in markets fell by 15% to an extremely low level which was just some percents higher than Ecuadorian shrimp.
The peak season of shrimp material supply has passed by. The production of shrimp in powerhouses will decline from now till the end of the year, leaving a limited supply and little options for importers. Thus, importers are stockpiling. Additionally, the year end festivals are coming with a higher demand.
“The consumption trend of shrimp in Vietnam is showing good signs in the last six months of the year. This is the time of festivals with ready-to-cook shrimp being favored by restaurants, service and entertainment providers. This promises an opportunity for Vietnam’s strength of deep processed shrimp products”, anticipated Lực.
However, he said that there were still unexpected factors, which would affect the shrimp export trend in the second half of the year, such as the recovery of the global economy and whether or not the inflation will stop rising?
“No one can answer this question. That’s why many experts can’t predict the shrimp price changes from now till the end of the year. We should consider 2024 a pivotal year for the recovery because the expectation for a higher demand in H2 is naive due to uncertain factors. Challenges of the shrimp factor will be there till mid-2024”, he said.
Besides, a low supply of shrimp material doesn’t mean the supply to supermarkets from factories will decline; because inventories in factories are high. As one clear example, India’s export volume just dropped 1% even though their production declined by 15% in H1.
Additionally, El Nino will leave a bad impact on shrimp farming activities in many countries, Vietnam included.
In this situation, Lực expressed his opinion that Vietnam’s shrimp sector need mount an effort to promote strength of deep processing as the production of Vietnamese shrimp is still 1 – 2 USD/kg higher than that of competitors’. The focus on deep processed products can bring in profit. Besides, businesses need to create new products to launch them first in the market and enhance competitiveness.
As for the weakness of high production cost, he said that post larvae must be improved, hence the success rate is improved. National institutes must tightly control hatcheries and prevent disqualified post larvae being sold in the market, resulting in a low survival rate.