Shrimp market Update: facing new challenges

Raw shrimp harvested in the Mekong Delta during the first month of 2023 has shown signs of a steady decline between 2,000 and 3,000 VND for a kilogram. Furthermore, seafood processing factories have slowed down production for the time being.

On the other hand, brackish water shrimp farming areas in the coastal provinces are preparing for the main farming season of the new year, shrimp farmers’ productivity remain largely unaffected. However, these farmers are concerned about the steep and prolonged price reduction that they hesitate to enter an early harvest.

The shrimp industry chain has seen great success in 2022, with the export turnover reaching 4.2 billion USD, an increase of 13% compared to 2021. This figure has contributed to the seafood industry’s impressive achievement of reaching nearly 11 billion USD in terms of export turnover for the entire year; making Vietnam the third largest seafood exporter in the world.

However, in an effort to take advantage of the market opportunity after 2021, a year heavily affected by the Covid-19 pandemic, businesses in the shrimp industry believe that efficiency is still limited.

Thanks to the changing market structure and increase in deep processing, FIMEX VN, one of the mainstay shrimp exporters in Mekong Delta recorded high export revenue.

In 2022, the sales of FIMEX VN reached nearly 230 million USD, an increase of nearly 10% and the profit is likely to reach over 340 billion VND, exceeding the planned of 320 billion VND.

One of the highlights in the export activities of FIMEX VN was that the market structure has changed quite strongly. FIMEX VN expanded its market share in Japan significantly, from 28.1% (2020), 38.9% (2021) to 43.8% in 2022. In 2022, FIMEX VN’s strategy also changed,  focusing more on deep processing. Deeply processed products accounted for about 55% of FIMEX VN’s products. Both of these changes are part of the strategy “Market, market segment, product, customer” that FIMEX VN has set out since the end of 2020.

This strategy will be the solid foundation for the upcoming years when cheap Ecuadorian shrimp hit the US market, causing the Vietnamese shrimp’s market share to decline.

According to Mr Ho Quoc Luc, Chairman of the Board of Directors of the company, in order to expand  its market share, as of 2021, FIMEX VN  has  offered Japanese consumers relatively soft selling prices. In 2021, thanks to successful shrimp farming,  FIMEX VN could lower the price of shrimp, which created  a foundation for other moves and generated good profit.

 At the meeting to summarize the agricultural sector in 2022 on the afternoon of January 10, the leader of the Department of Agriculture and Rural Development of Soc Trang province, said that the total area of aquaculture in the province reached 75,355 hectares (freshwater, brackish water, salt water ), exceeding 0.47% of the plan (75,000 ha) and increasing 4.28% over the previous year. Total seafood production of Soc Trang province reached 352,763 tons, exceeding 0.22% of the plan (352,000 tons), increasing by 0.6% compared to the previous year (2,121 tons).

For brackish water shrimp, Soc Trang stocked 54,660 ha, exceeding 7.18% of the plan (51,000 ha), an increase of 5.61% over the previous year. In which, whiteleg shrimp was 41,460 ha (75.9% of farming area), black tiger shrimp was 13,200 ha.

Shrimp production by the end of 2022 reached 201,000 tons, up 4.04% over the previous year. In which, the output of black tiger shrimp was 25,000 tons, exceeding 8.7%, and whiteleg shrimp was 176,000 tons.

The price of raw shrimp in 2022 was always fluctuating depending on the size and time of the year, but is higher than in 2021. The average price of shrimp sizes from 20 shrimp/kg or more increased by 38,000 VND/kg.

Australians are increasingly using Vietnamese shrimp, from restaurants to large Australian supermarkets or Asian stores, Vietnamese shrimp are abundantly present.

Since the beginning of the year, shrimp exports to Australia have grown strongly. As of October 15, shrimp exports to Australia reached nearly $214 million, up 62% over the same period in 2021, this is a record increase among Vietnam’s largest export markets.

The strength of Vietnamese shrimp is not only in quality and supply capacity, but also deep processing level, the trade promotion efforts of businesses, localities and representative agencies.

The southern coastal province of Bac Lieu aims to raise shrimp export revenue to 1 billion USD this year, against last year’s 853 million USD.

To realise the goal, the province will expand the areas of high-tech farming and create favourable condition for enterprises and households to boost their production towards sustainable development.

The linkage between farmers and enterprises will be strengthened in line with large-scale production.

Phan Van Sau, director of the provincial Industry and Trade Department, said a lot of local aquatic processing factories have been upgraded to increase their capacity.

To turn Bac Lieu into a shrimp farming centre, the locality is actively supporting businesses in renovating technology to diversify processed products and updating information on market demand and technical barriers. Trade promotion will be strengthened along with training courses  for farmers.