Good Agricultural Practice(GAP): Promoting shrimp farming standards in Thailand as a way to win export market share

By Jon Fernquest

To remain competitive in international export markets Thailand must continually upgrade product standards.

Two recent examples:

1. In 2005 Thai fruit growers suddenly lost market share in EU fruit markets due to a bacterial infection, a situation where adequate standards were lacking (Read article).

2. EU environmental laws will soon impose new standards on Thai products exported to the EU (Read article).

Upgrading shrimp standards in the future may also be necessary to win new market share in the lucrative EU shrimp market, a market that Thailand has barely penetrated:

"Although Thailand contributes 30 per cent to the global shrimp production, the market share of Thai shrimp in the EU is only 3 per cent...However, the EU accounts for 37 per cent of global shrimp consumption" (Source).

Good Agricultural Practice (GAP)

Today's article is about a set of local standards for Thailand's shrimp industry known as Good Agricultural Practice (GAP).

GAP standards address many different aspects of shrimp production and marketing including "food safety, food quality control, environmental management, social responsibility and animal welfare."

EU retailers have also initiated their own set of European GAP standards known as "GLOBALGAP" (Read article).

Meeting GAP standards is not always necessary to sell shrimp. Foreign shrimp buyers do not always require compliance with GAP standards when they are selecting shrimp suppliers.

However, over time Thai shrimp suppliers have faced increased pressure to comply with different kinds of standards (Read article #1 and #2). This pressure has included accusations that Thailand's shrimp industry was employing child labour and that Burmese migrant workers were working under substandard conditions (See New York Times article from 2007).

Also read a good paper on the Development of Good Agricultural Practices (GAP) for Fruit and Vegetables in Thailand that provides general background on GAP standards.

market share - the precentage of customers in a market that a company or country has
win market share - increase market share
lost market share - when market share decreases
penetrate a market - get customers in a market
barely penetrate a market - not get many customers in a market
a standard - an accetable level of quality or achievement
upgrade standards - make the standards you follow higher
continually upgrade standards - never stop making the standards you follow higher and higher
impose standards - force people to follow standards
adequate standards - standards are high enough to avoid problems
local standards - the standards within a country (not international standards)
compliance with standards - follow and meet standards
pressure to comply with standards - forced to follow and meet standards
migrant workers - people who move from poorer regions or countries to find work that pays better
working under substandard conditions - working in bad conditions (below an acceptable standard)
lucrative - profitable
global shrimp consumption - the total amount of shrimp that people eat around the world
Good Agricultural Practice (GAP) - high standards for agriculture, produced by many different organisations but the Food and Agriculture Organization (FAO) of the United Nations produces a wifely accepted set of standards (See Wikipedia)
GLOBALGAP - European GAP standards
accusations - bad things that others say that you have done (but not yet proven)

Economics
AGRICULTURE

Shrimp industry reforms endorsed

19/12/2009
Walailak Keeratipipatpong

Shrimp welfare and social responsibility are among the important criteria in the revised Good Agricultural Practice (GAP) code drafted to secure Thailand's lucrative shrimp export industry.

The new GAP, revised from the 2003 version by the Fisheries Department, aims to raise export standards and ensure shrimp meet freshness requirements demanded by foreign buyers in recent years, said Pradit Chonchuenchob, the director of the department.

"Issues such as how to produce healthy shrimp with good welfare, environmentally sound farming, as well as no employment of either child or forced labour are fresh requests from importers that Thai farmers have to comply with," he told about 200 participants at a seminar yesterday.

reforms - improvements
endorse - officially improve
reforms endorsed - improvements to a system officially approved
welfare - living in good conditions (with health, wealth, and happiness)
social responsibility - requirements for companies in addition to making a profit
criteria - one of the things or factors you use to make a decision or judgement
revised - written again, changed and improved
drafted - to write up an official document
secure - make safe, protect from harm
lucrative - profitable
fishery - a fish farm, a place that raises fish to be sold in the market (See Wikipedia)
Fisheries Department - the Thai government department that oversees fisheries
raise export standards - increase the quality of products manufactured and sold outside of the country (exported)
sound - in good condition
environmentally sound farming -
child labour - the controversial practice of having children work instead of go to school (See Wikipedia)
forced labour, unfree labour - when people are put in a situation where they are forced to work often in very bad circumstances, for example "debt bondage" essentially means they have been essentially sold by their family, with their labour going to pay off a loan (See Wikipedia)
comply with - follow rules and regulations

Mr Pradit said that currently, more than 17,000 shrimp farms complied with international standards, basically the Code of Conduct of the Food and Agriculture, and the existing GAP.

"But to secure the future of an industry worth 80 billion baht and [overcome] barriers raised by foreign importers, farmers must work more," he said.

To ensure proper conditions for shrimp, farmers are allowed to farm no more than 150,000 post-larval shrimp per one-rai of pond area to raise shrimp in the size of 50-60 head per kilogramme. For a larger size or 40-50 per kg, the number of post-larval shrimp must be between 80,000 and 100,000 to avoid density and reduce stress.

Appropriate waste water treatment, no farming in mangrove areas and well-irrigated sites are among the 56 additional rules in the revised GAP, which took effect this year.

complied with international standards - followed and obeyed international standards
Code of Conduct of the Food and Agriculture -
secure the future of an industry - make sure the industry continues to survive and is successful in the future
larva - the stage of an insect or fish after it has left the egg but before it has become an adult
post-larval shrimp - adult shrimp (beyond egg and larva form)
avoid density - avoid large numbers in a small area
stress - have a difficult life
waste water treatment - cleaning dirty water
mangrove, mangrove swamp, mangrove forest - a thick forest of bushes along the coast instead of beaches (See Wikipedia)
revised - change, rewritten and improved
took effect this year - became legally active

The department will allow shrimp farms three years to adjust their operations to comply with the new GAP. "Big farms would have no problem but smaller ones may need time to change," Mr Pradit said.

Further revisions to cope with changing trade circumstances such as carbon emissions will be made in the standard.

cope with - deal with a difficult problem
trade circumstances - the situation for trading goods
emissions - gases coming out of something like a factory or a car
carbon emissions, carbon dioxide emissions - a chemical coming from using fossil fuels such as gasoline or coal that hurt the environment (See Wikipedia)

"The new GAP would be a way to upgrade the Thai shrimp export industry to keep it ahead of rivals, notably Vietnam and Indonesia," said Varin Tanasomwang, director of the Coastal Fisheries Research and Development Bureau.

Improving marine shrimp farms and producing more hygienic shrimp to meet global standards are essential elements in the second strategic plan for the Thai shrimp industry from 2010 to 2012.

upgrade - improve
rivals - competitors, other companies or countries competing for the same customers and purchases
Coastal Fisheries Research and Development Bureau - a Thai government agency in charge of research and development of fish along the coast (Read description)
marine - something related to the sea
hygienic - clean
second strategic plan for the Thai shrimp industry from 2010 to 2012 -

Over the next three years, Thailand plans to increase shrimp production by at least 5% a year, with 525,000 tonnes in 2010, 551,000 tonnes in 2011, and 578,000 tonnes in 2012.

As economies of major importing countries remain uncertain, exports would expand slightly to about 375,000 tonnes next year, 380,000 tonnes in 2011, and 390,000 tonnes in 2012.

The plan also suggests Thai exporters balance markets and reduce dependence on any one by capping export volume to a single market at 45% of the total. At present, the United States is the major importer of Thai shrimp and consumes 49-50% of all shipments from Thailand.

reduce dependence on - change so that they do not need so much
cap - limit (set largest amount that it cannot go beyond)
capping export volume to a single market - limit the amount exported to one country or market such as EU

(Source: Bangkok Post, Shrimp industry reforms endorsed, 19/12/2009, Walailak Keeratipipatpong, link)

Near Free Trade within ASEAN to be phased in after New Years

By Jon Fernquest

Tariffs on goods imported into Thailand from nearby ASEAN countries will drop to zero after New Years Day 2010 this week (See table on right).

This could mean big changes in Thailand's economic future.

ASEAN economies may follow the same path as European economies which grew stronger from unity under the European Union.

Countries that are close economically will also, hopefully, fight less.

Cooperating as economic partners, friendship between Thailand and Cambodia may grow in the near future.

Thailand's government is taking action to help soften the negative impact of the new arrangement (Read article).

Today's article begins after the vocabulary:

AFTA (ASEAN Free Trade Area) - a trade agreement by the countries in ASEAN to reduce and end tariffs within ASEAN (See Wikipedia)
free trade - when goods and services can pass between countries without being taxed
phased in - introduced slowly and gradually (in stages)
tariffs, import tariffs - taxes paid on goods brought into (imported into) a country
ASEAN - the grouping of countries in Southeast Asia for political and economic cooperation, includes Thailand, Malaysia, Singapore, Brunei, Indonesia, Philippines, Laos, Cambodia, Myanmar and Vietnam (See Wikipedia)
follow the same path - do the same thing (and gain same benefits)
European Union - the economic and political union of 27 European countries and their economies (See Wikipedia)
cooperating - working together to achieve goals
economic partners - the other countries that a country works with to achieve its economic goals
negative impact of Y - bad things that happen from doing project Y
soften the negative impact - try to make the bad things that happen less bad

Economics
REGIONAL AGREEMENT
Free trade's bottom line
Consumers should notice benefits from Afta tariff cuts, but should also remember that they get what they pay for.
28/12/2009
Phusadee Arunmas

Consumers are likely to emerge as the biggest gainers once import duties on most products are eliminated at the dawn of the Year of the Tiger.

But shoppers in search of bargains should also be aware of and educated about the quality of the products and sanitary standards of foods, says Dusit Nontanakorn, the chairman of the Thai Chamber of Commerce.

"Consumers are of course entitled to have a greater choice to buy products at cheaper costs, but what they should be concerned about is the quality of the products and whether the imported products are safe," said Mr Dusit.

"Authorities need to strictly enforce sanitary standard measures for imported products to protect the interests of the country and local consumers."

the bottom line - the most important (but unpleasant) thing, that you must think about (example: "the bottom line is that it didn't work"....so what are we going to do to make it work?)
tariff cuts - reducing tariffs
get what they pay for - an equal deal (no surpriging bargain, good deal, or special benefits)
likely to emerge as Y - likely to become Y in the future
the dawn of the Year of the Tiger - the beginning of 2010 (known as the "Year of the Tiger" by the Chinese, See Wikipedia)
sanitary - keeping things clean (removing garbage, removing waste water, keeping water supply clean)
sanitary standards - requirements for keeping things clean

Asean on Jan 1 will usher in almost unlimited free trade among six of its 10 member countries - Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Duties under its common effective preferential tariff (CEPT) scheme will fall to between zero and 5% for all products, including those previously deferred on countries' sensitive and highly sensitive lists.

The four less developed members of the regional bloc - Cambodia, Laos, Burma and Vietnam - have until 2015 to reduce their tariffs to 0-5% under their Asean Free Trade Area (Afta) commitments.

Import tariffs will fall to zero for a wide range of agricultural goods (see table [above on right]) and Thailand is obliged to eliminate import quotas for those products as well.

A handful of products remain on Thailand's sensitive list. Those that will carry a 5% tariff include coffee beans (down from 20%), copra (from 15%), potatoes (from 10%) and cut flowers (from 10%).

usher in - introduce something new, for the first time
duties - tariffs
common effective preferential tariff (CEPT) - the low 0 to 5% tariff that all ASEAN countries must limit themselves to on goods traded within ASEAN (See Wikipedia)
deferred - delayed, waiting for the future to do something
sensitive - an issue that must be dealt with very carefully, an issue that people are worrying about
a bloc - a group of countries
the regional bloc - a group of countries in a region
commitments - things you must do (because you promised to do them)
obliged to Y - must do Y
quotas - limits, the greatest amounts possible
import quota - the greatest amount of a good that can be imported
obliged to eliminate import quotas - must end limits on imports
a handful of products - a small number of products (could fit in your hand)
copra - the dried meat of the coconut (See Wikipedia)

Mr Dusit said a number of Thai sectors should gain substantially from free trade due to a decline in production costs. They include textiles and garments, leather products, food products, gems and jewellery, vehicles and parts, mineral products, and electronics,

But he remains concerned about the impact on some key agricultural products such as rice and palm oil.

For rice, Vietnam's lower production costs and rising output are expected to eat into Thailand's market share, while Thai palm oil is also more expensive than that produced by Malaysia and Indonesia.

mineral - a substance formed naturally in rocks such as tin, sulphur, or even salt (See Wikipedia)
market share - the percentage of a market's customers that buys a company or country's products
eat into Thailand's market share - reduce Thailand's market share

Nuntawan Sakuntanaga, director-general of the Foreign Trade Department, said the elimination of tariffs should result in product price reductions while also encouraging higher market competition.

However, she played down concerns over a possible influx of farm produce, particularly rice, saying Thailand is self-reliant in agricultural products, with no need for imports.

As well, she said that the government's new approach to agricultural support through a price insurance system that targets farmers directly is likely to help reduce smuggling, which occurred rampantly under the traditional crop-mortgage programme.

concerns - things or issues that people worry about and think a lot about
played down concerns over Y - tell people they should not worry about issue Y
influx - large amounts of things or people coming into a place
price insurance system - a way to make sure that farmers get a fair price for their crops
smuggling - take things illegally into a country or other place
occurred rampantly - many many people were doing it
traditional crop-mortgage programme - the old system of buying some crops from farmers at a high price and storing them in government warehouses until they can be sold for a profit

Prime Minister Abhisit Vejjajiva said last week that Afta expansion would affect the Thai economy both negatively and positively but the good would far outweigh the bad.

Agricultural produce, forest cultivation and some entrepreneurs may be affected but the government has mapped out assistance measures funded by various ministries, he said.

the good would far outweigh the bad - good things would be greater than bad things, benefits would be greater than costs
cultivation - growing plants
forest cultivation - growing trees in a forest
measures - actions taken to solve a problem
assistance measures - actions taken to help people people with a problem
mapped out assistance measures - planned assistance measures

The government has also pledged stringent import regulations to ensure the quality of farm goods, as well as to protect Thai consumers. Genetically modified products will be barred from entering the country.

However, the premier has called on entrepreneurs to adjust to be more competitive and lessen the negative impacts.

pledge - promise
stringent regulations - strict regulations, regulations with a lot of control over an activity
pledged stringent import regulations -
Genetically modified products, Genetically Modified (GM) food - food and products that come from genetically modified organisms(See Wikipedia)
Genetically Modified Organisms (GMO) - a organism (plan or animal) whose DNA has been changed using genetic engineering methods (See Wikipedia)
barred from entering - cannot enter, prevented from entering

In 2009, Thailand's exports to Asean countries were worth US$40 billion while imports were worth $30 billion, for a trade surplus of $10 billion.

Wiboonlasana Ruamraksa, deputy director-general of the Foreign Trade Department, said Thailand was competitive enough against other Asean rivals, with higher production capacity and technology. "This will help Thai products gain access to a regional market that incorporates many substantial advantages: a population of more than 580 million, $1.5 trillion gross domestic product, convenient transport systems, huge international trade worth $1.7 trillion a year, and foreign investment of $60 billion," said Ms Wiboonlasana.

"And at the same time, our processing factories are expected to enjoy cheaper imported raw materials in the face of the tariff elimination, cutting their production costs."

Asean rivals - ASEAN countries that Thailand competes with in the same markets, with the same products
production capacity - the most that can be produced (given current current factories and resources)

(Source: Bangkok Post, business section, Free trade's bottom line, 28/12/2009, Phusadee Arunmas, link)