Supply Chain of Shrimp Production in Thailand

1 Introduction
The increased world market demand for shrimp has led many developing countries to enter this appealing market through massive use of shrimp farms which has had a significant impact on the world's mangrove forests because of over production and lack of care for the environment. Thailand has become the world's leader in shrimp exports, and in turn, the greatest violator of mangrove conservation.
The Thai shrimp farming industry started to boom in the 1980s and was subsidized by the government. Thailand quickly became an important shrimp export industry and has been the world's largest producer of tiger shrimp since 1991. Because of the financial incentives of producing shrimp from the viewpoint of a farmer are much more attractive, more and more farmers switch from growing rice to producing shrimp. In 2009 Thailand produced over 539,000 tons of shrimp. Due to this rapid expansion and the shift into shrimp farms across Thailand, mangrove ecosystems and other parts of agricultural land have been exploited of their natural resources.
The United States and Japan are the largest export markets for Thai shrimp and the demand is steadily increasing. Therefore the Thai shrimp industry has to find ways in which they can cater to the increasing demand while reducing the exploitation of their natural resources. In recent years the government stepped in and created laws to deal with shrimp farmers who damage the fragile ecosystem. Several countries also imposed import restrictions on shrimp which have been produced using shady methods. This trend in combination with the need to create a more sustainable industry has led to the introduction of several new farming methods and usage of new technologies.
In the following text we will highlight the shrimp value chain in Thailand and discuss the processes applied within this value chain.

2 Supply Chain Map of Shrimp Production in Thailand

2.1 Shrimp Breeding
As shown in the model above, there are two different kinds of shrimp-farmers in Thailand: The local farmers, which are small family farms, and the farming industry. Due to the fragile business environment and strict laws on quality, all areas of business operations are closely monitored and controlled.
The Thai shrimp farming industry is made up of over 80 % of small family owned operations. More than 1.5 million of these smallholder farms are located in Thailand.
Since Thailand doesn’t legally allows shrimp farms to operate inland, farms have migrated to coastal areas where they use net cages to grow shrimps. The location depends on the requirements of the shrimp species and the water quality in the ocean. The grow-out phase varies depending which kind of shrimp is being grown, but also on the water quality, which is recently pretty bad due to pollution around Bangkok. Because of that, massive filtering is needed to guarantee perfect living conditions for the shrimp. Unfortunately this is not always achieved, so farmers usually grow the shrimp brood inlands or in areas with very clean water and then transport the brood via trucks to the farms where they will grow-out.
The shrimp-farming process consists of three steps. The “Shrimp Brood”, the “Shrimp Post Larvae” and the “Shrimp”, which has to be fed to become bigger. Most local farmers are specified in one of these steps and work together with other local farmers. In recent years there has been trend to vertically integrate the industries related to shrimp farming from feed producers, processors and trading companies in the supply chain which become united through a common owner. The industry, however, leads from the entire farming process.
Once the shrimp is grown-out the, processing of the shrimp starts, either for being exported or sold in the domestic market.

2.2 Shrimp Processing and Trading
Fast processing, safe packing and acclimatization are very important when dealing with easily perishable goods such as shrimp. The good infrastructure and high standards in technology in Thailand allow processors as well as trading companies to create a very efficient value chain which results in fast delivery times, freshness and ultimately added value to the consumer.
An important change in the Thai shrimp industry was the introduction of a trace-ability system which allowed anybody in the shrimp value chain, but also consumers and government officials, to track the origin though the distribution, processing and production chain in case of safety concerns.
Most of local small holder farmers are not able to provide such value added services. Therfore processing (value added services, such as packaging, frozen, cooked…) is made by indurstry, available for both, export and inland. Some small holder farmers sell their products via a middleman (tokeh) to the processing industry and exporters.
Once processed the shrimps are distributed in Thailand to wholesalers, retailers, local markets where consumers will be able to purchase them. Shrimps which will be exported are mostly customised. Whereas some markets usually purchase shrimps as frozen goods other foreign counties will import just fresh or headless shrimps.

2.3 Processes in Foreign Countries
Shrimps will be imported by local wholesalers and processing industry. Whereas wholesalers prefer to import frozen shrimps, processing industry usually purchase raw material.
Wholesalers offer their products to the retailers and local markets. Processing industry will provide special customized products which can be made of shrimp raw material. Customer can buy various shrimp products, for example in Sushi variants, frozen or cooked shrimps.

3 Suggestion of Improving the Shrimp Supply Chain
The environmental problems of the shrimp industry are not only the problems of individual farms, but often of a large number of farms built in areas with limited carrying capacity.
Models have been developed to predict the capacity of coastal areas to support salmon cage culture (Makinen 1991, Barg 1992), but it remains to be seen whether similar approaches could be used to determine the long-term sustainable level of shrimp farming. Models or suitable guidelines to determine in a broad way the capacity of coastal environments to support shrimp culture would be useful to government planners, investors, and insurers, who could then assess the risks of environmental deterioration and plan accordingly.
A recent survey (NACA/ADB) showed that 67% of extensive, and 65% of intensive shrimp farmers had suffered from disease outbreaks, with the intensive farms suffering at least 1 outbreak per year (0.7 for extensive). The financial loss attributed to disease amounted to US$6,629/ha/yr. Most farmers are unable to identify the disease, and most treatments fail. However, to reduce this disease problem Seed quality can and should be improved. Specific Pathogen free (or low) seed certification (screening with DNA probe) is possible. Treatment of seed with formalin (100ppm) prior to stocking can reduce disease incidence. Challenging of seed, as a test of quality can also be done. Extended nursing of prior to stocking is undoubtedly beneficial in terms of subsequent survival.
Furthermore, in order to maintain sustainability of the shrimp industry in Thailand, the government should find ways to improve the water quality around the areas where shrimps are bred. In fact, this will not only improve the quality of the shrimp but also it will motivate farmers to breed their shrimps on the coastal areas instead of doing it in the land which is very polluting for the land.
Finally the quality management in the seafood supply chain, especially shrimp chain, is a very important task of the seafood companies. They need to control the quality from primary production to the distribution of the final sea products according to international standards in order to make sure that hygiene, safety and quality of the sea products are meeting the consumers’ requirements and expectations. To do this, the feasible quality management in the seafood supply chain is one of the main measures that the seafood companies could use for quality assurance. Apart from international quality standards that the companies have to follow, relevant other issues, such as organization, management, technology, training and human resources, are also important to obtain business objectives in an efficient and effective way.
Sources
BILL DIBENEDETTO. 18th February 2008 : Farm frenzy. Journal of Commerce, 1. Retrieved 24th March 2009, from ABI/INFORM Global database. (Document ID:1430749051)
EUROPEAN COMMISSION 2010: Fisheries Products – Shrimps on website: http://ec.europa.eu/trade/creating-opportunities/economic-sectors/fisheries/products/ , 8th March 2012
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT: A Value Chain Assessment of the Aquacultur Sector in Indonesia; Januar 2007, USA
Amporn Laowapong: Economist, Department of Fisheries; Ministry of Agriculture and cooperative, Thailand 2011