Shrimp problems in Vietnam portend possible global shortage

Published on
April 22, 2020

Glimpsing beyond a current lack of demand from Vietnam’s major export markets, executives at the country’s top shrimp trading firms are expressing deepening concern about a possible global shortage of shrimp in the latter half of the year.

Once COVID-19 began to spread beyond its origins in China, one by one, Vietnam’s shrimp-trading partners have significantly throttled down their imports. Starting in late February and early March, many importers in Europe stopped receiving cargoes, and by mid-March, customers in North America, the rest of Asia, the Middle East, and South America also increasingly decided to cancel or postpone orders. Stockpiles rose as companies could not export as planned, according to numerous executives interviewed by SeafoodSource. As a result, Vietnam’s export value of shrimp declined nearly 15 percent year-on-year to USD 207.7 million (EUR 190 million) in March, according to Vietnam Association of Seafood Exporters and Producers (VASEP).

That downturn has led to a sharp drop of shrimp prices, and while prices have rebounded from their lows in later March, the level of increase varied, depending on size, data obtained by SeafoodSource showed.

Facing unprecedented uncertainty, many farmers in the country have chosen to hold off on their latest round of pond-stocking. In Soc Trang, the most-productive shrimp-farming province in Vietnam, farmers have thus far in 2020 stocked on 6,000 hectares, just 24 percent of the total areas of 25,000 hectares. Soc Trang-based shrimp company Fimex Chairman Ho Quoc Luc told SeafoodSource the farmers are acting out of fear, and that unfounded rumors have fueled the trend, which he said could result in material shortages that could result in longer-term pain for Vietnam’s shrimp sector even if and when markets return to some semblance of normalcy.

“If they do not start stocking ponds, processors will lack a lot of material this year,” he said.

Luc said he is hoping farmers will change their minds and start stocking ponds in May, when weather conditions are typically more favorable and the risk of disease is lower.

Overlooked amidst the crisis thrust upon the global seafood industry caused by the impact of the coronavirus has been an uptick in the incidence of white spot disease in the Mekong Delta in the past few months. The disease, which normally appears during cooler weather conditions found at the end of the year, is possibly related to environment changes created by ongoing saltwater intrusion in the region.

Calling it a “toxic wind” for the current crop, Luc said the disease is affecting production in Mekong Delta, with several terrified farmers rushing to harvest shrimp in March after just one-and-a-half months of growth to reduce losses. Therefore, shrimp of small sizes of 100-250 count per kilogram were sold in large volumes, mostly destined for processing and export to China. 

Le Van Quang, the chairman and CEO of Minh Phu Seafood, Vietnam’s biggest shrimp company, also expressed concern about a possible shortage of material shrimp this year – and in fact, said the crunch is already underway. Quang told SeafoodSource his firm has seen an increase in demand for retail and online shopping sales from Minh Phu’s customers in mainland China, Hong Kong, Taiwan, and elsewhere, but its processing plants are operating at just 70 percent of capacity.

“Shrimp production in Vietnam is expected to fall between 30 to 50 percent this year as the volatility of prices are discouraging farmers to stock ponds,” Quang said, adding that the measures taken by local government to contain the outbreak of the pandemic are affecting farming activities as well.

Truong Huu Thong, the chairman and CEO of Thong Thuan Seafood, a shrimp producer based in central Vietnam, is also worried about a possible shortage of shrimp this year. Thong said farmers are hesitant to stock ponds because of uncertain market conditions. Many were wrongly told that buyers have suspended shrimp purchases as major markets were closed, while banks have turned their back on farmers, he said.

The material shortage is going to be costly, both Minh Phu’s Quang and Fimex’s Luc said. With lockdowns imposed in many countries – including India, the world’s top producer of shrimp, which recently extended its lockdown through 3 May – global production is likely to decline sharply. In Ecuador, the coronavirus outbreak is striking the country’s main shrimp producing, hampering production even more than other countries, they said.

In an attempt to address the predicted shortage, Vietnam’s Department of Fisheries has asked the governments of coastal provinces to stabilize production and do everything they can to ensure a sufficient supply of shrimp for processors once the pandemic comes under control. The Vietnam Association of Seafood Exporters and Producers (VASEP) has made a direct appeal to shrimp farmers to continue on as normal, predicting global demand is likely to bounce back within the next three to nine months.

Doing their own part, several companies have begun offering carry-out sales programs to encourage farmers to stock their ponds. And Viet Uc, the country’s leading supplier of postlarvae shrimp, has been offering an assistance package to local farmers that includes a 50 percent discount for its postlarvae shrimp.

Photo courtesy of Toan Dao/SeafoodSource

Reporting from Hanoi, Vietnam

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