Frozen food earnings set to rise


  • Business
  • Monday, 19 May 2003

By David Tan in Penang

THE frozen food industry is enjoying good demand for its products and expects to register a healthy increase in revenue this year. 

In fact, the Malaysian Frozen Foods Processors Association (MFFPA), which has 20 members and employs about 6,000 workers, projects their collective annual revenue to increase by about 10% this year from the RM1bil achieved last year. 

CH'ng Chin Hooi

“There are three factors that will have a positive impact on the growth of the industry’s revenue,'' said its chairman Ch’ng Chin Hooi.  

Firstly, the price of frozen seafood has returned to normal since early this year. Last year, the price of frozen seafood had dipped by about 30% as a result of an oversupply of prawns from Argentina in the world market. 

“Secondly, the presence of antibiotics in the prawns of our foreign competitors has also increased the popularity of Malaysian prawns. Thirdly, there is now a growing demand for frozen seafood from eastern European countries such as Russia. They are now obtaining our frozen seafood from the distributors. We plan to export directly to the eastern European countries in the near future,” Ch'ng said. 

To improve their earnings, Argentine fishermen doubled their efforts to increase their catch, eventually depleting the supply of prawns in their waters by the end of 2002. 

“Despite the plunge in prices, we were still able to generate a RM1bil turnover last year due to the huge market for frozen seafood in Europe, enabling us to double our exports. Subsequently, as a result of the depletion, prices began climbing back up again in January,” Ch’ng told StarBiz. 

He added that since January, the price had risen by between 15% and 20%. 

A twenty-foot container containing 10 tonnes of prawns is now sold in Europe for about RM250,000. 

Ch’ng said MFFPA members participated in the seafood fair in Belgium on May 6, 7 and 8 despite the Severe Acute Respiratory Syn- drome (SARS) outbreak. 

“The fair is an important avenue for us to tap into new customer base. Currently, some 80% of our exports go to Europe, while the remainder is absorbed by Hong Kong, Japan, China, and Singapore,” he said. 

Ch’ng said the Malaysia External Trade Development Corporation (Matrade) subsidised MFFPA members for the exhibition of their products and also set a pavilion for them at the fair.  

Workers sorting out prawns in a frozen seafood processing plan in Seberang Prai.

According to Ch’ng, MFFPA members will attempt to penetrate into the markets of the US, Middle East, and Africa this year. 

“The US is a very difficult market to penetrate as their demand is too large for our members to handle. For example, their seafood importers would demand a supply of 20-foot containers of frozen prawns per order, compared to an order of one to two 20-foot containers of frozen prawns from our European customers. This is why customers from the US prefer to order from Thailand which has the capacity to supply large orders at one go,” he said. 

Ch’ng said it might be timely for MFFPA members to consider forming mergers so that they were able to penetrate the US market. 

“At present, Malaysia does not produce sufficient prawns for the seafood industry in the country. We are only exporting annually between 40,000 and 50,000 tonnes of black tiger prawns, compared to the 400,000 tonnes exported by Thailand yearly. We also export per year some 25,000 tonnes of other types of frozen seafood such as squid, cuttlefish, and jellyfish,'' he said. 

According to Ch’ng, the big seafood companies from Thailand occasionally buy seafood from Malaysia, straining further the limited supply of seafood in the country. 

“Because they offer good prices for the prawns, the local breeders do not hesitate to sell to them,” he said.  

To strengthen the frozen seafood industry, Ch’ng said, the government should implement programmes to subsidise fishermen who wanted to enter the prawn farming business. 

“Thailand already has such subsidy programmes in place, which are effective in encouraging the setting up of the prawn farming business. The Malaysian government should look into this direction to support the frozen seafood industry. If there are more aquaculture farms for prawn breeding in the country, our supply will be enlarged. This also will drive down the domestic price of prawns and enable us to be more competitive in our pricing in the international market,” he said. 

About 30% of MFFPA members own prawn-breeding farms, located in Perak, Johor, Kelantan, Sabah and Sarawak. These farms collectively contribute about 5% to total annual exports of frozen prawns. 

Ch’ng also said members should explore going into the production of value-added seafood such as breaded prawns, breaded fish fillet and squid rings instead of exporting only raw frozen seafood.  

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