Meltdown takes a toll on frozen food export

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Mahmuda Shaolin
The country's frozen food exporters are feeling the squeeze as major American and European buyers, devastated by the global financial meltdown, are demanding price-cuts and delaying fresh orders.
They said US and European majors such as Eastern Fish Company of USA, Nordic Seafood of Europe and Kyo Kuyo Company of Japan, which are the large importers of frozen food products from Bangladesh, have asked for a reduction in prices by at least one dollar per pound from the existing rates.
Usually, exports surge when importers stockpile frozen food targetting 'Christmas' during the peak season of July- August. But now exporters fear that exports of frozen food, could go down in the upcoming months, thanks mainly to the tight budget of consumers of the wealthiest nations.
"We're already feeling the pinch. Price fall coupled with less orders will simply increase our losses," said president of Bangladesh Frozen Foods Exporters' Association (BFFEA) Kazi Belayet Hossain.
He said importers offered $5.5 for a pound of shrimp a few months back. But they cut down the price to $ 4.50 very recently and now they are offering only $ 4.0 per pound for the frozen food items that include 88 per cent shrimps.
"Demands have fallen sharply, especially in the USA and European countries. Importers are increasingly bargaining with us for reducing prices that force us to hold up our exports," he told the FE.
Local frozen food exporters had a huge stockpile of around 500 containers worth about Tk 5.0 billion (500 core) just a month back, said Mr. Hossain, the industry lobby chief.
The USA, Europe and Japan are the country's major destinations of frozen food products.
"If the financial recession prolongs, further price fall is inevitable" Mr. Hossain, also owner of Chobi Fish Processing Industry Ltd., said.
The stock of frozen food items have now risen to 700 containers worth Tk 7 billion (Tk 700 core), said a BFFEA source.
The United States, the world's biggest economy that has been hit hard by the financial crisis, consumes 35 per cent of the total export of frozen food products, while the EU countries consume 52 per cent. The remaining 13 per cent are consumed by Japan and other countries including Russia, according to the BFFEA.
"Things are getting worse day by day. Some of the buyers are forcing us to cut prices from their existing orders," said one of the largest frozen food exporters of the country, speaking on condition of anonymity.
"I sold a pound of frozen food product to a USA importer at $ 5.25 one and a half months back but the same buyer is now offering only $ 4.40 for the same item. The American importers just point out to the financial meltdown," said president of Seafood Export Buying Agents Association of Bangladesh Kamal Ahmed.
But he said if exporters can ensure timely delivery and keep quality intact, the temporary setback would be over.
The country exported frozen food worth $ 574.00 million in the 2008-09 fiscal.