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Compassion is soo yesterday…

Posted by Richard Sunday, July 03, 2005

At the height of the tsunami crisis in January, Thai prime minister Thaksin Shinawatra told the international community that, rather than giving financial aid, it could help Thai tsunami victims directly by giving back tax and trade concessions for Thai exports, including shrimps.

It was not money his country wanted but technical assistance. Even better, Shinawata said, the EU could restore the Generalised System of Preferences (GSP) for marine exports to EU countries. Prior to 1997, fresh shrimp and preserved shrimp from Thailand enjoyed a tariff rate of about 4.2 per cent and 7 per cent respectively. However, in 1999 tariff rates were increased to punitive levels of 12 and 20 per cent, respectively.

As a result, Thai shrimp exports to the EU have collapsed, from 33,000 tons in 1995 to 5,000 tons in 2003. Thailand's market share now stands at a meagre 0.7 percent of the EU's total shrimp imports of about 700,000 tons a year. The restrictions have cost the Thai economy over £3 billion since the higher rates came into force. This is considerably more than the £1.5 billion aid pledged to the tsunami relief fund to cover the whole region.

Of course, then, back in January, the compassionate ones were falling over themselves to "care" for the victims of the tsunami. But no one listened to Shinawatra as they poured out their compassion and shook the collecting tins, although Peter Mandelson did make some noises about easing trade restrictions.

All those months later, however, and nothing has happened. Hence a story in Monday's Bankok Post which bemoans the fact that there is "no relief in sight".

It appears that hatchery farmers hit by the tsunami are still struggling to rebuild, complaining of insufficient state aid, falling shrimp prices and other negative factors. In fact, Taweesub Chuayjun, owner of the Lamduan Farm shrimp hatchery farms in Khao Lak district in Phangnga and president of Andaman Shrimp Hatcheries Club, said the plight of hatchery farmers has grown progressively worse since 26 December.

In addition to the tsunami destruction, the price of shrimp has been in continuous decline because of the US anti-dumping penalties. And now they have been further set back by an EU decision to delay until early next year the announcement of which countries will receive reduced tariff rates under the GSP. These were supposed to take effect last week, and last for three years. Instead, the EU has delayed their introduction until the beginning of 2006.

However, it is not all the EU. Farmers are also fretting over a new customs bond requirement by the United States. The US Department of Commerce announced the 5.95 percent anti-dumping tariff on Thai shrimp last December. Then, on March 15, US Customs adopted the new bond rule, requiring higher bonds, amounting to full collateral for the possible punitive dumping tariff. The rule applies across the board to imports of all agriculture or aquaculture products liable to anti-dumping duties.

To comply with the rule, an importer of Thai shrimp must post a bond to the value of the previous financial year's imports multiplied by 5.95 percent, the rate of the anti-dumping duty. The bonds are valid for a year, but cannot be redeemed until after three years, creating a situation where companies need to have two or three bonds running concurrently, which few can afford. As a result, exporters are trimming orders from shrimp farms, which in turn has hurt hatcheries.

According to Mr Taweesub, his farm now sells one million shrimp fry for about £275, a significant decline from £1,200 in the recent past. Worse still, he said, because of the poor market, shrimp farms are delaying or refusing fry purchases, forcing the hatcheries farms to offer them at least four months' credit as an incentive.

"Over the last six months, we have tried our best to stand on our own feet," he said. "We have formed the Andaman Shrimp Hatcheries Club to create greater bargaining power. Despite that, we are now in a terrible plight and are all deeply depressed." According to Mr Taweesub, the hatchery farmers, most of whom do not own the land on which they operate, find it difficult to access loans to rebuild their farms.

"The [financial institutions] generally require collateral, but most of us just lease the property," he said. "Once we apply for loans at the Bank for Agriculture and Agricultural Co-operatives (BAAC), we have to form a group with at least five people for a maximum loan of £4,000 each, and act as one another's guarantor." But £4,000 will only keep the average hatchery running for three or four months, he said.

Phangnga's hatchery farmers were the hardest hit by the tsunami. They account for about 50 percent of the shrimp fry supply. Shrimp farmers along the Andaman also were critical of the state financial aid of just £275 per person, and called it insignificant compared with the losses the farming industry sustained. Mr Taweesub said the affected hatchery farmers appealed for more financial aid but had yet to see any help.

But hey! Doesn’t Mr Taweesub know that the caravan has moved on? The tsunami is sooo yesterday, dahlings. We're all into Africa with that lovely Mr Gandolf.