Prawns feel heat from tariffs... and killer cod

A heady cocktail of unusual weather, floods and diseases put a squeeze on prawn supplies last year, leading to higher wholesale prices for many species.

The floods have abated, but buyers hoping for calmer waters this year are likely to be disappointed as potential new trade tariffs and greater demand from Asia promise to keep supply tight and prices high.

Eighty-five percent of prawns eaten globally - and 50% of those eaten in the UK - are warmwater prawns farmed mainly in Vietnam and Thailand. The former was hit by disease in 2011, resulting in the loss of more than 81,000ha of black tiger shrimps - 5% of its total prawn production.

Farmers used antibiotics to combat the problem, and high levels of the antibiotic enrofloxacin were subsequently detected in prawns exported to Japan, damaging Vietnam’s reputation and spurring buyers to seek alternative sources.

Thailand would be an obvious alternative - its prawn industry has started to recover from the floods last year - but it currently faces a World Bank review of its status as a “developing nation”, under which it is eligible for tariff reductions on its exports. If it loses that status, EU buyers - and, ultimately, consumers - will have to pay a lot more for Thai prawns.

The problems in Vietnam and Thailand have already caused warmwater prawn prices to rise by 5% year-on-year, to £3.12/kg.

There are also problems closer to home with coldwater prawns, with West Greenland stocks declining because of an increase in cod - one of prawns’ key natural predators - leading prices to soar 50% to £3.35/kg over the past 12 months.

If global demand for prawns stays high, particularly as emerging economies in Asia increasingly compete for warm-water prawns with Europe - and if Thailand does not manage to dodge a bullet on its World Bank review - suppliers and consumers will face yet another year of high prices.