Shrimp farmers and processors have sunk into hard times after a slump in demand and depreciation of major importers' currencies.
Industry operators said many buyers have pushed back the shipment of their orders, while a section of them are even seeking discounts. As a result, the stockpiles are rising at the processors' end.
“It is a very bad situation. Prices are falling fast, while sales are down. The business has been dormant for the past two months,” said Khan Habibur Rahman, deputy managing director of Lockpur Group, one of the main shrimp processors.
The ample production of vannamei in India and Vietnam has been blamed for the most part for the slump in demand for the locally-grown black tiger shrimps.
“Exporters in these countries are offering very low prices,” Rahman said.
A pound of black tiger shrimps is now selling for $6.5, which was $9.2 as recently as two months ago, said Shoyeb Mahmud, general manager of Jahanabad Seafood Ltd.
“I doubt if the farmers will be able to break-even, but the small ones will definitely be hit hard.”
So dire is the situation that many buyers are renegotiating prices of already placed orders, he said, adding that stocks are piling up in almost every factory. The sinking euro and the recent slide of Russian ruble against the US dollar have added salt to the injury.
The ruble has lost 60 percent of its value against the dollar since the beginning of the year, hit by Western sanctions over Russian's support for the separatist insurgency in Ukraine and the fall in oil price.
The two currencies' slide increased the import costs in Europe and Russia, which together account for nearly 75 percent of the country's shrimp exports, said Md Amin Ullah, president of the Bangladesh Frozen Foods Exporters Association (BFFEA).
“We are completely stuck. Many buyers have totally stopped buying. And the tension in Ukraine instigated by Russia has compounded our woes,” he said, adding that many of the buyers have asked local processors to halt the shipment of previous placed orders and some have even withdrawn orders.
Although shrimp exports started the fiscal year on a good note, it began falling in the latter months. Between July and November, it raked in $276 million, down 4.55 percent year-on-year, according to Export Promotion Bureau.
“Come the end of December, the decline might be 15 percent,” the BFFEA president said.
The sector logged in $550 million in exports last fiscal year, a 21 percent rise from the previous year.
The sector provides livelihood for 8.33 lakh farmers, who cultivate shrimps on 2.75 lakh hectares of land in the coastal areas of the southwest, according to the Department of Fisheries.
“All of us, from large farmers to small ones, are counting huge losses because of the price collapse,” said Mohammad Shah Alam Sheikh, a shrimp farmer from the Chandpai union under Mongla, the southwestern coastal upazila.