What’s Behind Thailand's Waning Shrimp Exports?

Published 2023년 6월 9일

Thailand continues to lose its share in the US frozen shrimp import market after being the top origin a decade ago. High import prices derived from high production costs, declining production over the years, and overall relative trade disadvantages against its competitors are some of the main reasons.

In 2012, Thailand was the US's main import origin for frozen shrimp, representing 20% of total US import volume of this product. Historically, the US has been the top destination for Thai frozen shrimp, although China displaced it at the top spot in 2022.

However, as the years progressed, US frozen shrimp imports from Thailand considerably dwindled. US imports from this origin went from 77.2 thousand mt in 2012 to 12.3 thousand mt in 2022.

This decline goes on so far into 2023. Imports from Thailand are falling much faster than the US average. In January to April 2023, the US imported a total of 182.8 thousand mt of frozen shrimp, falling 14% compared to the same period in 2022. Of this 2023 total, imports from Thailand totaled 1.8 thousand mt, which represents a much faster decline pace of 52% YoY.

Source: Tridge and USDA

What’s causing Thai shrimp exports to decline?

One of the main reasons is uncompetitive pricing. In Jan to Apr 2012, the average import price for this product in the US was USD 8.8/kg. The import price for Thai-origin shrimp was USD 9.2/kg, only 4.5% higher than the average and below the import price for frozen shrimp originating from India, Indonesia and Vietnam. Meanwhile, so far into 2023, the average import price in the US was USD 7.9/kg. The import price for Thai-origin shrimp was 78% higher, at USD 14.1/kg. This level was the highest among the top eight origins, and more than double the USD 6.6/kg price in Ecuador, which is the second largest and the fastest growing major origin. In Jan to Apr 2023, the Thai import price actually increased 13% YoY, while the price from every one of the top four origins: India, Ecuador, Indonesia and Mexico managed to decline in annual terms. Thailand exports more expensive shrimp varieties, such as black-tiger shrimp, which augment its average import price, but this is not the main cause of its higher price.

Source: Tridge and USDA

The higher price of Thai origin shrimp is derived from higher production costs. The largest component of farmed shrimp production in Thailand is feed, which has increased in price in recent years. This was exacerbated last year with the Russia-Ukraine conflict. Some of the feed components are also imported, and a weaker Thai baht against the US dollar make them more expensive for Thai producers. In addition, energy and labor prices are also reportedly higher for Thai producers relative to its competitors. Other major producers, such as Mexico and Ecuador, possess a logistical relative advantage to export into the US.

Domestic shrimp production has also been declining in recent years. Shrimp production in Thailand fell from 298 thousand mt in 2018 to 257 thousand mt in 2022, according to data from Kasikorn Research, an economics research company which is part of Thailand-based Kasikorn Bank. In contrast, Ecuador’s output rose from 500 mt to 1,350 mt in the same period. High production costs in the context of lower shrimp global prices disincentivize more production. Before 2018, Thai shrimp production had also been considerably dwindling on the back of early-mortality syndrome disease outbreaks.

Source: Tridge and ITC Trade Map

Other factors affecting Thailand’s uncompetitive price are less trade advantages relative to other main producers. Thailand doesn’t have an FTA agreement with the US, unlike Mexico, or a GPS agreement, unlike Ecuador. Meanwhile, according to Kasikorn data, Thailand is subject to US anti-dumping measures, while Ecuador, for example, is not.

Moving forward, Thailand is planning to increase its domestic shrimp production, which will likely trigger more exports. The Thai government launched in 2022 a production restoration plan aiming to increase production to 400 thousand mt. If the plan is successful, it’s likely that more exports will ensue. Nonetheless, Thailand will continue to face intense price competition with India and Ecuador. It will also increase production in a context of waning demand in the US market, which remains oversupplied since mid-2022. Chinese demand, which is expected to continue growing, will likely gobble up any growth in Thai exports. However, other producer countries, such as Ecuador, continue to strengthen their position in this market as well. To regain some of the lost ground, Thai shrimp producers will need to focus on having more competitive export prices.