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Recession fears loom over shrimp exports

Sajjadur Rahman
The shrimp industry foresees the toughest time this year on a continuous fall both in the price and demand in the troubled developed economies, main consumers of the item, according to industry people.
They said buyers in the US and Europe are pressing Bangladeshi exporters to reduce the price of the item in the wake of a deepening financial crisis.
Some buyers even have showed their reluctance to receive the goods from their respective coun tries’ customs authorities without a reduction in prices.
“I made a shipment to the USA last month, but the buyers asked me to renegotiate the price, without which he refused to receive the goods,” Kazi Belayet Hossain, president of Bangladesh Frozen Foods Exporters Association (BFFEA), told The Daily Star.
Hossain said: “If we don't reduce the price, buyers threaten to shift their orders to other countries."
The central bank in its latest semi-annual monetary policy that was announced Wednesday also predicted a weak export demand for shrimps in the coming months on the continued financial crisis.
According to the industry, the price of shrimp has dropped by SI per pound, or about Tk 155 per kilogram, in late 2008 compared to
the 2007 price.
In fiscal year 2007-08, thepriceof 16 to 30 grade shrimp, which accounts for around 65 percent of the total frozen shrimp export, ranged between S5.20 and $5.50, but now it has come down to as low as $4, marking a 30-32 percent decline, the BFFEA president said.
Frozen food is the second highest export earner after apparels in Bangladesh. In FY 2007-08, the country exported frozen foods worth $534 million. The government set a target of $574 million for this fiscal year, but exporters made it at $600 million.
Shrimp, which is considered as a luxurious product, alone accounts for over 80 percent of frozen food products.
The European Union, USA and
Japan are the three main markets for Bangladesh's frozen shrimp, with the EU and the US accounting for 48 percent and 40 percent respectively of the total exports. All the three destinations are now suffering acutely from financial crisis.
The export price of frozen shrimp started failing on the fuel oil price hike in June 2007. And after the onset of recession in the USA and Europe, the price has taken a nosedive.
"If the financial meltdown continues this year, no doubt the industry will be affected badly," a Khulnabased exporter said. The price fall has resulted in stockpiles of shrimp for him, he said.
Some one crore people are directly and indirectly involved with the business concentrated in Khulna zone, businessmen said.
To face the situation, the association has already requested the government to create an emergency fund for the shrimp exporters to protect them from liquidity crisis.
"We have asked the government to provide us interest-free loan as it was given in 2001 following the adverse situation stemming from the twin tower attack,” Belayet Hossain said.
The association feared that the exporters would fall in a liquidity crisis of Tk 500-600 crore because of the adverse impacts of the global financial turmoil.
"Formation of 40 percent interest-free block account facility for a period of four to five years will help us sustain the situation,” the BFFEA president said.
sajjad@thedailystar.net