A well-known seafood website coverage of the Vietnam shrimp situation recently greatly ‘announced’ a ‘dipping raw material price for shrimp’. The facts on which the report is based were questioned by large buyers. We find the article misleading and we give you facts checked on the ground and an alternative explanation.
According to the article, the price of Vannamei in Vietnam has been coming down strongly. It is a result of both factories reducing their production capacity to apply the “3TC” strict lockdown rule, as well as the annual peak harvesting time of Vannamei season. Farmers continue to harvest in big volumes, pushing raw material prices to go down.
This article has provided only one angle of the current seafood situation in Vietnam, not the complete picture. The price or raw material has dropped, but factories cannot collect the raw material and make saving on existing contracts or new competitive offers due to following reasons, commented by Mr. Do Ngoc Tai, owner of Taika Seafood group:
In the first 6 months of 2021 reached 371 thousand MT (up 12% over the same period in 2020), of which black tiger shrimp reached 113,000 Mts and Vannamei reached 258,000 Mts. However, in the 2nd crop, this number will drop significantly under Covid’s turmoil.
In normal conditions, every month 7bil PL and 150,000 Mts of feed meal are transported from Central Vietnam hatcheries and plants to the Mekong Delta farms.
Transports have been totally disrupted since Jul-Aug so many big farmers have no chance to restock for 2nd crop (assuming they have managed to harvest the 1st crop under current restrictions), or they simply let the shrimp grow in the farm until the logistics and workers situation improve.
Cat Lai Port, HCMC’s largest port, has suffered a container jam for over 90 days. The shrimp producers have been facing rocket ocean freight plus expenses of local transportation. They also find difficulty finding containers for export.
All big factories have been fully booked with orders before Covid’ time, so now they only use their limited capacity to process for pending contracts. Madame Phi Anh, owner of TP seafood confirmed they won’t offer for new shipment till end October or early next year, depending on their pending contracts balance, and price will be much higher.
So with the above factors and more, the drop of raw material price won’t be reflected in export price and in fact we expect new offers post- Covid to be much higher than pre-Covid time.
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