Who is connecting the dots?
In the last week or so There were three headlines in the last week or so that are well connected to shrimp, sometimes it makes me wonder “what the…?”
The first headline was about the U.S. Department of Commerce (DOC) increasing the preliminary shrimp duty rates over prior final rates for major U.S. shrimp suppliers in Thailand, Vietnam and India, primarily as the result of the department’s use of a new calculation methodology, which is called “differential pricing.” This new method abandons the previous method of taking the average export price and average cost. The rates are preliminary and will not apply retroactively or on current shipments until the final review period is completed sometime this summer. Clearly they will have an effect and importers will, no doubt, tread wearily.
The next headline was about Thailand’s Charoen Pokphand Foods Plc (CPF) laying off nearly 1,200 migrant workers from Burma in April due to a material shortage caused by early mortality syndrome (EMS), a disease that has been raging unabated on shrimp farms for some years.
The final headline highlighted that major U.S restaurant chain, Red Lobster (Darden Restaurants) had reported how high shrimp prices have increased the franchise’s annual shrimp costs by $30 million. This clearly has had an impact with the company’s accounting showing an 8.8 percent decline in the seafood chain’s 3Q sales.
You can see the impact at Darden’s Red Lobster chain and, no doubt, that story would be repeated by many of the larger companies that sell shrimp. This could have an impact on staffing in the United States and meanwhile the disease continues. There are few winners in this situation.
Thailand’s export-driven shrimp industry, which earns approximately US$1.5 billion annuallyemploys about 650,000 people, mostly migrants from Burma who have suffered previously when shortages have occurred.
This time CPF has promised to pay 50 million baht (US$1.67 million) severance for termination of the subcontracted labour. The employees would be paid from 9,000 baht to 100,000 baht compensation depending on their time and level of service. According to all reports, the compensation being offered by CPF is the highest in Thailand’s history. The severance agreement was reached after negotiations between the Thai government, employers, workers and the Migrant Worker Rights Network.
Shrimp is an important commodity: Supplies and purchasing are already under pressure and this extra uncertainty does not help the industry.
Clearly there are going to be difficulties in the shrimp industry over the next period and this is going to have an effect on all players in the supply chain. Good workers will be lost and no doubt the overall costs of the disease will continue to escalate into the billions.
The questions I pose are:Is this the time for the DOC playing around with complicated shrimp duty rates? Secondly, who is investing in trying to solve EMS? Lastly, why are we not connecting the two issues?