A recovery path for the world shrimp market?
By Eric J. BROOKS
An eFeedLink Hot Topic
- The past three years have seen India, Vietnam, Indonesia and Ecuador take huge market share portions from China and Thailand -but not enough to offset the latter's huge export fall-offs
- Barring any serious disease outbreaks, annual output and export growth are poised to rise by 7% and 10% respectively over the next two years
- Promising developments in the search for a solution to EMS imply that Thai output may rise faster than expected from late 2016 onwards
An interesting aspect of aquaculture's ongoing evolution is the role disease is playing in transforming the world shrimp market. Devastating one-time top exporters like Thailand and China faster than newer producers could expand output, early mortality syndrome (EMS) led to nearly record high prices and an extended period of market volatility.Although they have now fallen, shrimp price inflation's persistence is at least partly the fault of UN FAO statistics, which appear to have overstated 2013 to 2015 production by up to 5% or 500,000 tonnes in some cases. Seeing that market prices did not move in line with UN FAO estimates, the Global Alliance on Aquaculture (GAA) conducted its survey. It found that not only were production drops steeper than expected, but output actually fell in years when FAO data stated it had risen.
According to new GAA survey results, after peaking at 4.15 million tonnes in 2011, world shrimp output retreated 3.5%, to approximately 4.0 million tonnes in 2012. After EMS became endemic in Thailand and spread into Vietnam and China, production dropped an even steeper 11.1% in 2013, to 3.58 million tonnes. This resulted in a whopping, near 90% jump in shrimp prices from late 2012 to the start of 2014.
The supply decline was due to the impact of EMS on two countries. From 599,600 tonnes in 2012, Thailand's shrimp output fell 58% to 250,000 tonnes in 2014 –and would be fortunate to reach 300,000 tonnes in 2015. China's shrimp production fell 29%, from 1.7 million to 1.2 million tonnes. Although China's output did not suffer as much as Thailand, rising domestic consumption further constrained exports, making its impact on the world market just as severe.
Emerging producers were of course, happy to take advantage of the situation. Shrimp production increased 19.5% in Indonesia, 13.8% in Ecuador, and 41% in India. Exports increased even faster, with Ecuador's shipment rising 39%, from 200,000 tonnes to 278,000 tonnes over the same two years. India saw its shrimp exports total 229,000 tonnes in 2012, 345,000 tonnes in 2014 and 381,000 tonnes in 2015 –a whopping 66% increase over three years.Though statistically impressive, booming emerging producers' output could not counterbalance production losses in Thailand, China and Vietnam over the same period. In particular, Thai shrimp exports plunged 71% or 384,000 tonnes, from 540,000 tonnes in 2012 to 156,000 tonnes in 2014 and a GAA estimated 240,000 tonnes in 2015. While China staged a near-complete recovery from EMS, rising domestic consumption cuts it export volume by a third, from 330,000 tonnes in 2012 to 220,000 tonnes in 2015 and perhaps 245,000 tonnes this year.
Following the 14%, 580,000 tonne output drop over two years amid record high prices, 2014 saw a strong 21% recovery in world production, to 4.31 million tonnes. Essentially, output stayed 60% below pre-EMS levels in Thailand and more than 25% down in China, but this was partly check-mated by large output increases in India, Indonesia Ecuador, Ecuador and Vietnam. The latter shipped 300,000 tonnes and took over from Thailand the position of leading Southeast Asian exporter.
Soon however, the resulting price shock caused a fall in US and European per capita shrimp consumption. With supplies staging a partial recovery, 2015 saw prices fall by nearly 50% from their 2014 record highs –and reduced the incentive to expand production accordingly. With returns falling, recessionary conditions taking hold in major consuming markets, producers were conservative.
They weighed the risk of tempting EMS outbreaks against falling returns, and this caused output in India, Ecuador and Indonesia to level off after several years of aggressive expansion.
Alongside a bad weather aquaculture season in China and new EMS outbreaks in Mexico and other parts of Latin America, 2015's world shrimp output fell back again by 2.5% or 100,000 tonnes, to 4.2 million tonnes. Despite the aggressive supply growth in India and Latin America, with Asian shrimp output still at least 100,000 tonnes below its 2010 peak of 1.9 million tonnes, the past year's scope for output gains was constrained.
Going forward however, the GAA is far more optimistic and new technical developments (see box article) imply that world production bottomed out in the 4.2 to 4.3 million tonne range, and has nowhere to go but up. Barring any further calamitous outbreaks, it expects world shrimp output to rise by 7% over each of the next two years. That would bring global shrimp production to 4.5 million tonnes in 2016 and 4.8 million tonnes in 2017. There are sound reasons behind the optimism, and one shadow factor.
On one hand, Thailand, once the largest exporter, is officially taking a conservative approach, but may not do so for much longer. As the accompanying box article implies, if a solution to EMS is really found, it can take a far more aggressive approach to boosting restocking densities. If that happens, other large producers can be expected to follow its lead.
Moreover, a 2016 return to normal Chinese shrimp growing conditions would create a large increase in output –and with China's economy and domestic demand slowing, much of the resulting output increase would be available for export.
On the other hand, current low prices and demand stifling recessionary conditions could undermine the incentive to expand output as aggressively as forecast. However, with feed costs much lower today than five years ago, the impact of low shrimp prices on output is somewhat muted.
Thus, on the whole, the latest technical and market developments do favour two years of aggressive, 6% to 8% increases in world shrimp output, with exports rising by 10% over the same time. It goes without saying that should the next article's innovations take hold; both these forecasts could be exceeded.
An EMS cure with giant-sized market implications?
Can better genetics, an end to in-breeding and giant shrimp varieties restore Thailand's place in the world market?
By Eric J. BROOKS
Has a solution to the EMS outbreaks plaguing Southeast Asian and Latin American shrimp farming been found? The odds appear to be shifting in that direction.
Dr. Roger Doyle, a Canadian geneticist who is CEO of Genetic Computation Limited claims that EMS outbreaks occur in countries such as Thailand and China –which notorious for minimizing re-stocking expenses by in-breeding broodstock for several generations.
In a February 2 2016 interview with Undercurrent News, Doyle stated that, "In first generation broodstock sent to farms, "All the male parents are brothers and all the female parents are sisters. "Consequently, "If farmers grow these shrimp to maturity and then breed them, the offspring from the second generation will be inbred and not perform well." He then notes that, "In Thailand, as many as 60% of the farmers are purchasing parent larvae bred from farm grown, second-generation [or later] broodstock."
According to Doyle, "The copying goes on and on through several generations, and the offspring get weaker and weaker and more susceptible to disease with each new generation." He cites Mexican studies demonstrating that edible yields from original shrimp parent larva broodstock are 1.5 to 3.0 times higher than those from second or further in-bred generations.
Simultaneous with Doyle's findings, Panama-based Farallon Aquaculture claims that its genetically engineered shrimp, which have bred to resist disease, are not falling victim to EMS -even when the grow out period is extended from 60 to 90 days, which is when this disease usually strikes. Allegedly due its ability to achieve giant sizes without falling ill, Farallon claims to have sold its Megalarva brand parent larva stock to over 500 local shrimp farms in the four months since it commenced operations in Thailand –and this is already transforming the attitudes of Thai shrimp farmers.
In a Google-translated press release, Farallon CEO Jose Bolivar explains that, "Since Thailand's EMS outbreaks, farmers have been told to stock a fast growing parent larva so that they can harvest commercial size [10 grams] shrimp before 60 days [after which EMS usually breaks out]." With the threat of EMS outbreaks looming, especially after 60 days, "They re-stock with fear, and are ready to have emergency harvests. [in the event of an EMS outbreak]"
According to Boliver, not only have Farallon's giant Megalarva shrimp not had any EMS outbreaks under normal growing conditions but, "We have ponds stocked with our genetics that exceeded 80 [grow out] days, with the shrimp still healthy and growing at a good rate." He basis his confidence on past experimental successes under similar tropical conditions, stating that, "We hope they perform as well as they performed in Mexico during the white spot virus and EMS crises of 2013 to 2015; and during a Central American EMS epizootic episode during 2015,"
Bolivar predicts that as word of his shrimp's EMS resistance spread, "[Thai] shrimp farmers are already planning longer farming cycles, which implies that, at some point, Thailand will recover its market share for larger size shrimps exceeding 22 grams, on the back of our nauplii supply." Both Bolivar and common sense imply that if such a scenario unfolds, "It will take until the end of 2016 for the market to reflect the impact of this new genetics."
The discovery of a genetic basis to EMS resistance and a potentially rapid roll out of a technological prevention for this disease is loaded with world market implications: Not only may world output rise more steeply than forecast, Thailand could grab back a large chunk of the large shrimp market segment that it has been entirely driven out from.
Industry observers need to keep close watch on these developments but for now, it looks increasingly likely that the world shrimp market could stage a far more rapid recovery –and subsequent price deflation episode– than anyone anticipated.
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