Raw shrimp prices in the Mekong Delta have risen to the highest level over the past two years as Chinese traders boost direct purchase, leaving local traders with insufficient supply to fulfill export orders.

Since the beginning of this year, traders from China have bought a considerable volume of raw shrimp, even those with low quality. They even ask suppliers to inject impurities into shrimp or go to factories in the Mekong Delta to have local enterprises seek supply for them, said Nguyen Van Kich, general director of Cafatex Corporation in Hau Giang.

Meanwhile, Chu Van An, deputy general director of Minh Phu Seafood Corporation in Ca Mau, said Chinese traders went to shrimp farming zones in the Mekong Delta to buy raw shrimp at high prices to compete with local traders.

After buying raw shrimp, Chinese traders inject impurities to increase the size of shrimp and then export them at high prices. Vietnamese companies do not do so and thus they cannot compete with Chinese traders in buying material shrimp, said An.

Therefore, domestic shrimp processors and exporters are grappling with a shortage of raw shrimp.

“Several contracts for export to Japan and the U.S. have been signed but enterprises do not have shrimp to process and deliver to their partners. My company has received many orders for export to Japan, but can hardly find material supply. They (Chinese traders) have bought it all, big shrimp, small shrimp, everything,” said Kich.

The strong buying energy of Chinese traders greatly affects the local shrimp processing industry, said An.

“Workers lose their jobs, our potential markets like the U.S., Japan and South Korea will likely switch to other suppliers. Therefore, decent shrimp traders will suffer severely,” he said.

Raw tiger prawn is currently priced at VND240,000-245,000 per kilo of 20 units and VND150,000-155,000 per kilo of 30 units in Ca Mau. Notably, a kilo of 15 units now sells for VND310,000-320,000, hitting the two-year high, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

The increase in shrimp prices generates higher incomes for farmers. However, Kich said doing business with Chinese partners posed many risks.

“Chinese traders have raised prices for three years, but if one year they pushed down prices, Vietnamese farmers would suffer,” he stressed.

Truong Dinh Hoe, general secretary of VASEP, said that in principle, farmers sell shrimp to whoever offers high prices to buy their products. Even so, if Chinese traders kept buying a vast volume of raw shrimp in Vietnam, it would deal a hard blow to the local shrimp processing industry.

In 2012, Vietnam exported over US$193 million worth of shrimp to China, accounting for 8.6% of the total shrimp export turnover. In the first two months of 2013, Vietnam’s shrimp exports to China reached some US$31.6 million, said VASEP.