Farmed shrimp. (Photo Credit: TUF)

TUF supports guaranteed shrimp price scheme

Thai Union Frozen Products (TUF) has created a shrimp price guarantee programme intended to prevent a possible shortage of the crustacean output.

The programme, which will be effective until March 2016, was announced by TUF’s global shrimp business president Rittirong Boonmechote, who stressed the need of such a plan given the consistent fall in domestic price, which has discouraged farmers from investing, The Nation reported.

"Without a guarantee, this could negatively affect the industry in the next 3-4 months. This impact would be felt domestically and internationally, as shrimp is one of Thailand’s top export items," Boonmechote pointed out.

Among the factors that urged TUF's executives to launch such a scheme, the entrepreneur mentioned the decline in Thailand's shrimp exports due to the weakening purchasing power in the large economies, the supply shortage and low global prices because of an outbreak of early mortality syndrome (EMS).

"The lack of supply for export will prompt buyers to consider our rivals instead. That means we will have pushed them to place their orders with our rivals," he said.

"Even the weaker baht, which normally would help us with shipment orders, now has no effect at all since our competitors are stronger than before," he added, The Bangkok Post reported.

Under the scheme, TUF expects to buy 12,000 tonnes of shrimp at the guaranteed price of THB 150 (USD 4.1) per kg.

Meanwhile, those farmers participating in the scheme can sell their products to other buyers if the market price then is above the guaranteed price.

“The price guarantee is more beneficial than contract farming since it allows farmers the freedom to choose the buyers themselves,” TUF’s president highlighted.

He also informed that all output from the scheme will be processed at its three shrimp processing units for export.

Boonmechote expressed being more concerned about the strong competition than by the EU's yellow card imposed for illegal unreported and unregulated fishing and the US keeping Thailand on its bottom Tier 3 ranking for or human trafficking.

"So far, our buyers have remained confident in our product quality. The problem is more about not having enough supply to serve their demand, which opens chances for our rivals,” he concluded.

According to TUF’s statistics, in the first eight months of this year, Thailand’s shrimp output totalled 135,057 tonnes, an 18 per cent increase from the same period last year.

TUF expects the full-year output to increase 20 per cent from last year, to 250,000 tonnes, thanks to its price-guarantee scheme.

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