Gulf shrimp prices soar on disease scare, CVDs
Prices on Gulf of Mexico brown shrimp are rising after overseas shrimp producers report problems with disease and the U.S. government set preliminary countervailing duty (CVD) rates for shrimp imports.
“The pricing is the highest I have seen in six years. You are paying twice as much for product after the BP oil spill,” said Randy Pearce, owner of processing company Doran Seafood in Independence, La.
As a result of higher ex-vessel prices on domestic shrimp — as much as USD 1 (EUR 0.77) per pound higher than last season — many buyers are switching to smaller sizes to save money, according to Pearce.
Domestic shrimp prices have risen “dramatically,” agrees C. David Veal, president of the Biloxi, Miss.-based American Shrimp Processors Association.
Gulf fishermen are simply catching less shrimp, Pearce and other buyers report. “Last year, BP paid these guys [certain shrimping boats] a lot of money. They are not doing anything until the money is spent,” Pearce said.
In addition to Gulf fishermen catching less shrimp, the impact from disease problems overseas cannot be denied. Thailand’s U.S. shrimp exports fell from 39,352 metric tons (MT) for the first four months of 2012 to 30,000 metric tons (MT) this year. Buyers are also concerned about disease problems in Mexico and Indonesia.
Plus, foreign shrimp producers are also feeling the effects of the U.S. Department of Commerce’s CVD rates ranging from less than 1 percent to more than 62 percent on shrimp from seven countries.
In late May, the U.S. Department of Commerce (DOC) announced its preliminary determinations on frozen warmwater shrimp from China, Ecuador, India, Indonesia, Malaysia, Thailand and Vietnam. While Ecuador and Indonesia escaped without any collectable duties (most producers were assigned rates less than 1 percent), the DOC found that many producers and exporters received countervailable subsidies.
For example, in China, Zhanjiang Guolian Aquatic Products Co. and its affiliates received a rate of 5.76 percent; all other producers and exporters in China were also assigned a preliminary subsidy rate of 5.76 percent.
“Prices got higher all of a sudden when we filed the trade action. All of a sudden, producers are having these problems,” said a Gulf processor who did not want to be named. The processor was happy that Gulf shrimpers are fetching higher prices this year. “They need it. Imports have really done a number on our industry,” he said.
While shrimpers are being paid more, Gulf shrimp processors are still struggling after the oil spill, according to Veal.
“The processors are the ones that are buying the high-priced shrimp and the margins that they are seeing have not changed. Continued pressure from imports leaves the margins razor thin. Sooner or later that has to change, or many of them simply won’t be able to exist,” Veal said.