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September 17, 2015

Thailand

Update on TUF’s Guaranteed Price Plan

 

Thai Union Frozen Products (TUF) has introduced a six-month price-guarantee plan for shrimp farmers and expects to use it to buy $41.9 million worth of shrimp.

 

Rittirong Boonmechote, president of TUF’s global shrimp business, said, “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.”  Some foreign importers have already switched to Vietnamese shrimp.

 

“We hope the six-month shrimp price guarantee scheme for farmers can boost the market price and ensure shrimp farmers stay in business,” he said.

 

The guaranteed prices for whole shrimp are set higher than the current average prices for shrimp.  For example, the price for 100-count shrimp to the kilogram is set at $3.54, while the price for larger 70-count shrimp per kg is set at $4.19.

 

TUF expects 12,000 metric tons of shrimp or an average of 2,000 tons a month from the 1,600 shrimp farmers participating in the program.  Under the six-month plan, farmers can decide to sell their shrimps to TUF at the guaranteed price, or to other companies when their market price is higher.  The price guarantee is more beneficial than contract farming since it allows farmers the freedom to sell to any processor, Mr Rittirong said.

 

Participants have until October 7, 2015, to register, and the plan will run from October 1 to March 31, 2015.  The plan will provide TUF with sufficient supplies, which will entice importers to purchase Thai shrimp, he said.

 

Rittirong is more concerned about the strong competition from regional shrimp farming nations than the EU’s yellow card imposed for illegal unreported and unregulated fishing and the USA’s placing Thailand on its bottom Tier 3 ranking for 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,” Rittirong said.  “And we can prove the Thai fishing fleet is now ‘clean’.”

 

Source: Bangkok Post. TUF Guarantees Price of Shrimp for Farmers.  Chokphiphat Chaikitkosi.  September 17, 2015.

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