Tsunamis, US sanctions overpower Asian shrimp industry

Last month's tsunamis and anti-dumping sanctions leveled by the United States have dealt Asia's shrimp industry a double blow that experts say it could take years to recover from.The December 26 tsunamis that devastated large swathes of the Indian and Thai coastlines also rocked shrimp harvesters in those countries, destroying farms and stocks of the delicacy.

Coupled with heavy anti-dumping sanctions that also affect China and Vietnam, "the loss of production will certainly have an effect on the industry and on jobs," said Jim Gulkin, managing director of Siam Canadian Group Ltd.

On January 6, the quasi-judicial US International Trade Commission (ITC) ruled shrimp imports were a threat to the US shrimp industry.

 
It issued a final anti-dumping order that singled out Thailand, India, China and Vietnam, as well as two South American countries, for selling their shrimp to US markets at below the cost of production.

The investigation was initiated in December 2003 when American shrimpers, under the umbrella of the Southern Shrimp Alliance, an eight-state industry coalition, filed a petition calling for punitive tariffs.

The alliance claims shrimp imports from the six countries under investigation jumped 71 percent from 2000 to 2003 to 360 million kilos (795 million pounds) while import prices plummeted 42 percent.

Nearly 90 percent of shrimp consumed in the United States is imported.

"With the anti-dumping issue, the profit margin is low to begin with. The industry will have to be very competitive," said Dr. Panisuan Jamnarnwej, president of the Thai Frozen Food Association

"It is a scary situation."

But for Indian and Thailand, the ITC said it would "collect information and invite submissions on whether the tsunami's impact" on their shrimp industries warranted a so-called "changed circumstances review".

The action is particularly important for New Delhi, with the US market accounting for as much as 45 percent of Indian shrimp exports.

"Post-tsunami, a lot of areas under culture have been affected. Therefore, it is important that the United States considers abolishing the duties to support this sector," said Sudarshan Swamy, national president of the All India Shrimp Hatchers Association.

"As far as aquaculture is concerned, the southern region has been affected. There will be a delayed stocking and reinvestment will have to be made to re-do the farms and ponds that have been destroyed."

The UN's Food and Agriculture Organization (FAO) estimates losses in the state of Tamil Nadu alone top 13 million dollars.

On the other side of the Bay of Bengal, the tsunamis cost Thai shrimp exporters an estimated 500 million dollars, according to Somsak Paneetassayasai, president of the Shrimp Industry Association.

Somsak said it would take at least six months for Thai shrimpers along the country's southern coast to rebuild their farms and replenish shrimp stocks.

"About 30 percent of the breeding stock and hatchery industry was destroyed," he told the Bangkok Post last week.

"More than 100 workers were killed, and about one billion baht (25.5 million dollars) worth of property was damaged."

But experts say the effects of the tsunamis would be easier to overcome than the US' sanctions.

"With the tsunami, we can say it will all come back in six or eight months," said Dr. Panisuan of the Thai Frozen Food Association.

"With the anti-dumping, we look at five years."

Each year, Washington reevaluates its sanctions and applies them retroactively for each export company.

"The main problem is the risk factor for importers. There are a massive amount of uncertainties," said Gulkin.

Because of this, China and Vietnam -- untouched by the tsunamis -- have felt the full effect of the US sanctions, with some Chinese companies being taxed as much as 112 percent.

"The losses to the Vietnamese shrimp industry could be very significant in 2005 and the following years if one doesn't succeed in changing the decision of the Americans," said Nguyen Huu Dung, secretary general of the Vietnamese Association of Seafood Exporters and Producers.

According to Dung, Vietnamese shrimp exports to the United States have already dropped nearly 28 percent in the last year.

But some Asian countries could benefit from the sanctions leveled against their neighbors, in particular Bangladesh, Sri Lanka and Indonesia.

Tsunamis caused just 73 million dollars in damage to farms in Indonesia's hardest-hit Aceh province, which only produce 10,000 of the 240,000 tons of shrimp that come from that country.

Source - AFP via Yahoo! Australia & NZ News