Thai Frozen Food Unit Opposes Shrimp Subsidy

Thailands shrimp industry doesnt need a bailout, according to the Thai Frozen Foods Association, whi…

Thailands shrimp industry doesnt need a bailout, according to the Thai Frozen Foods Association, which has come out against the government's plan to launch a pledging program to shore up prices, arguing that the measure would instead ruin the quality of Thai exports and create losses for the Kingdom.
The association's reaction, reported in The Nation, came after the official Farm Policy and Assistance Measures Committee announced plans to allocate at least a billion baht for purchasing 10,000 tons of vannamei (white) shrimp to help farmers hit by low prices. The association said it could solve the problem by negotiating with farmers to purchase shrimp at better market prices.

The pledging scheme would lead to huge losses for the country,said Dr. Panisuan Jamnarnvej, president of the association, who argued that the government would only be assisting a small group of farmers and others well placed to take advantage of the subsidy, while shrimp prices would not rise as predicted.

"Although the government has announced pledging for shrimp, prices will not increase because of low demand in the world market. The government will lose a large sum of money from such inefficient subsidization," he said. The current market price is quoted at 110 baht per kilogram, while farmers have called for a government subsidy to ensure that 145 baht a kilo is achieved.

But 145 baht is too high a subsidized price, Panisuan said, because shrimp prices in the world market have dropped continuously as a result of increased supply in many producing countries. In 2009, he noted. the government allocated 1.4 billion baht for shrimp pledging, but was faced with huge losses as it could not release produce to the market because most of the stock rotted while in storage. Now, he added, the association, acting on behalf of 21 groups of companies in the shrimp industry, is urging talks with shrimp farmers' clubs and cooperatives with a view to solving the problem of slumping prices by other means.