Liquidity crisis hits frozen food sector
Monday, 6 October 2008
Doulot Akter Mala
The troubled frozen food exporting sector has sought government support to face the challenges of enhanced cost of production, packing, transportation and freight coupled with substantial decline in the international prices of shrimps.
The sector, as a result, now faces a liquidity crisis worth Tk 6.50 billion.
The Bangladesh Frozen Food Exporters' Association (BFFEA) recently urged the government to allow interest free loans of upto 40 per cent of their stock value as was done after the 9/11 catastrophe.
The Bangladesh Frozen Foods Exporters' Association (BFFEA) has sought the opportunity to repay the amount in five years on quarterly installments.
The second largest exporting sector also requested the government to raise the volume of cash incentives to US$ 5.25 from $ 3.79 per unit FOB (free on board) value.
The frozen food exporters made the request recently in an inter-ministerial meeting chaired by commerce adviser Hossain Zillur Rahman.
In the meeting, the commerce adviser has assured the exporters' that it will send letters to all state-owned commercial banks (SCBs) seeking their recommendations on increasing the cash incentives for the sector.
Last year, export of frozen foods fell short of target by 10 per cent. The earnings stood at $ 534.07 million against the target of $ 600 million.
Senior vice president of the BFFEA Maksudur Rahman said: "We are scared about maintaining export growth in the current year as we can not pay the shrimp farmers."
Substantial fall in shrimp prices in the international market since 9/11 has caused the fund crisis that turned acute in recent year, he said.
He said the government should communicate directly to the SCBs to expedite the fund allocations, as production time of black shrimp, that contributes 70 per cent of export, will come to an end this month.
"If we can not provide necessary financial support to farmers there will be shortage of supply of shrimp in the peak season which will affect the overall export earnings," he said.
He said the prices of frozen food products might further fall in USA this year for economic slow down, which will influence prices in other international markets.
Exporters said they have to carry out additional cost to comply with the food safety directives of the international buyers, increased prices of diesel, surge in transportation and packaging costs and also losses incurred in cyclone Sidr.
The troubled frozen food exporting sector has sought government support to face the challenges of enhanced cost of production, packing, transportation and freight coupled with substantial decline in the international prices of shrimps.
The sector, as a result, now faces a liquidity crisis worth Tk 6.50 billion.
The Bangladesh Frozen Food Exporters' Association (BFFEA) recently urged the government to allow interest free loans of upto 40 per cent of their stock value as was done after the 9/11 catastrophe.
The Bangladesh Frozen Foods Exporters' Association (BFFEA) has sought the opportunity to repay the amount in five years on quarterly installments.
The second largest exporting sector also requested the government to raise the volume of cash incentives to US$ 5.25 from $ 3.79 per unit FOB (free on board) value.
The frozen food exporters made the request recently in an inter-ministerial meeting chaired by commerce adviser Hossain Zillur Rahman.
In the meeting, the commerce adviser has assured the exporters' that it will send letters to all state-owned commercial banks (SCBs) seeking their recommendations on increasing the cash incentives for the sector.
Last year, export of frozen foods fell short of target by 10 per cent. The earnings stood at $ 534.07 million against the target of $ 600 million.
Senior vice president of the BFFEA Maksudur Rahman said: "We are scared about maintaining export growth in the current year as we can not pay the shrimp farmers."
Substantial fall in shrimp prices in the international market since 9/11 has caused the fund crisis that turned acute in recent year, he said.
He said the government should communicate directly to the SCBs to expedite the fund allocations, as production time of black shrimp, that contributes 70 per cent of export, will come to an end this month.
"If we can not provide necessary financial support to farmers there will be shortage of supply of shrimp in the peak season which will affect the overall export earnings," he said.
He said the prices of frozen food products might further fall in USA this year for economic slow down, which will influence prices in other international markets.
Exporters said they have to carry out additional cost to comply with the food safety directives of the international buyers, increased prices of diesel, surge in transportation and packaging costs and also losses incurred in cyclone Sidr.