Thai Shrimp Guide

Frozen Shrimp Value Chain

Harvest (Farmers) -> Sorting (Farmers) -> Processing (Processors) -> Freezing (Processors) -> Packaging (Processors) -> Export

Farming

 - Private farmers working together (cooperative) is the norm and is a lucrative business yielding higher net profits than other occupations.

 - Monoculture, meaning these farms only produce prawns and not other crops.

  1. Fry Production   

•  Large-scale hatcheries operate fry production
  
• Fry production is centralized in the regions of Chachoengsao, Chonburi, and Phuket
  

  2. Aquaculture

• When the fry/larvae has matured, it is transported to aquaculture ponds for further shrimp growth
  
• Aquaculture ponds are mostly operated by families and small businesses
  
• Only a few conglomerates operate in this stage of the value chain
  

Local Trade

Once the shrimp has fully matured, they are harvested and sold to:

-Local Market

-National wholesaler or retail outlet

-Processors

- Exporting Companies

Some producers employ local agents to sell on their behalf, but this is not very common. More often, brokers will approach farmers and purchase from them, and sell to processors at a slim margin.

Processing / Logistics

Done by large unions like Thai Union.

• Bulk of exported shrimp is minimally processed - sold whole
  
• HOWEVER, import markets like the US and EU prefer cut shrimp for easy use of the frozen good
  
• Large industrial scale processing plants and peeling sheds will further process the shrimp before exporting (peeling, deheading, deveining, cutting → labour-intensive)
  
• Once peeled, the shrimp is frozen and shipped to the exports market
  
• Only companies that are registered under the Thai Frozen Foods Association (TFFA) can export
  

Wholesale, Retail, Import

Importing entities are usually large conglomerates that buy in large quantities and redistribute to various channels:

-Food Manufacturers

-Retailers → make branded producers

-Food service providers (e.g. restaurants)

-Consumers & Retailers

Players

Thailand’s top five notable shrimp suppliers:

- Thai Union Group (25% of national market share)

- CP Foods & Industry

- Siam Canadian Group Ltd.

- S&D Marine Products

- Chaivaree Marine Products

Large processors have contractual partnership with farmers and purchase on a spot-basis all year round. 

• Reported by an ex-Thai Union worker, large manufacturers take in, on average, 100 MT of raw shrimp daily which is processed into 50 MT of ready product.

• Can export between 80-100 FCL monthly
  

• Even Thailand’s top manufacturers do not have vertical integration of the full supply chain
  

• Too much resource and cost to directly invest in feedmill, hatcheries, and farms
  

Small to medium sized processors purchase from brokers or smaller farmers

• Mid-tier manufacturers process about 60-80 MT of shrimp and export 2-4 FCL monthly
  

As of H1 2022, in terms of value in Thai bahts, the US is the largest destination for Thai frozen shrimp, with 26% of total Thai frozen shrimp exports. It was followed by China, with 25% of the total, and then by Japan, with 20% of the total. Several other destinations amount to 28% of the total. 

Source: Tridge and Thai Customs

Source: Tridge and Thai Customs

1. Both exports and production are decreasing in Thailand due to decrease in demand during the COVID pandemic

2. China drastically increased its imports (200%) since 2018

3. Key obstacle for the shrimp industry in Thailand is the baht, which has strengthened by 11% from 2017, while Indian rupees and Vietnam’s dong (competitors) have weakened

As of June 2022, Thai frozen shrimp exports are following a very similar path to the one they took in 2021, but at higher levels, averaging 16% YoY growth so far 2022. 

Source: Tridge and Thai Customs

The top four destinations for Thai frozen shrimp are US, China, Japan, and Taiwan, which together comprised, as of H1 2022, 81% of total Thai frozen shrimp exports. The US and China are vying for the top spot, while Japan and Taiwan remain without much change in the third and fourth sports, respectively.

At the onset of 2022, exports to the United States were growing at a rate of 60% YoY, but as the year advanced the rate weakened. Meanwhile, exports to Taiwan, which started the year down compared to the same period in 2021, have accelerated their growth pace. The growth of exports to Japan has remained considerably stable near 30% YoY.

Source: Tridge and Thai Customs

Exports to China started 2022 on a very strong note, but the growth pace has been diminishing since. 

Source: Tridge and Thai Customs

Meanwhile, exports to countries outside the top 4 destinations remain considerably below 2021 levels. Although

the decline has become less sharp as 2022 advances. 

Source: Tridge and Thai Customs

Historically, prices tend to fall fall in March to reach their lowest level in May. Afterward, prices recover in June-July to then resume their decline until September-October. Prices then recover in the last two months of the year. 

As of June 2022, prices stood at $4.55/kg, slightly higher compared to the previous two months. From their peak in January 2022, which was the highest level in three years, prices were down 22%.

Source: Tridge and Thai Union