March 1, 2017
Shifting to a lower gear: The promise, challenge and growth path of Indian shrimp farming
By ERIC J. BROOKS
An eFeedLink Hot Topic
- Substituting white leg shrimp in place of tiger shrimp empowered five years of huge increases in production and pond yields
- In 2015, yields hit a 'wall' above which stocking density leads to serious disease or safety problems
- With pond acreage 90% undeveloped, production will rise with world demand even if yields stay flat
- Growth is shifting from dominant Andhra Pradesh state to India's western and northern coasts
Despite its increasingly daunting challenges things continue to look bright for India's booming farmed shrimp sector. From its low point near 80,000 tonnes in 2009 when Pacific Whiteleg shrimp was introduced, Indian farmed shrimp output expanded at a 28% annual in the seven years that followed, totaling approximately 455,000 tonnes in 2016. This was better than expected, as it was originally believed that diseases such as EMS and WSSV would keep output flat near 2016's 400,000 tonnes.
From being an inconsequential supplier fifteen years ago, India now has the second highest farmed shrimp production in the world after China and has overtaken Ecuador as the top exporter. Although disease and stocking density issues have become increasingly problematic in recent years, panelists at this year's Global Seafood Market Conference held in San Francisco in January expect another banner year, with output rising an estimated 8% to 10% (depending on the panelist in question), to approximately 495,000 tonnes.
While the USDA estimates Indian shrimp consumption around 500,000 tonnes, about 450,000 tonnes or 90% of domestic demand is accounted for by wild caught shrimp, which is almost entirely consumed domestically. Only 30,000 to 50,000 tonnes of farmed shrimp production is consumed within India itself. Over 90% is exported, as this offers appreciably higher returns. For this reason, Indian shrimp farming's success is felt far more on the world market than at home.
Since taking over wild catch shrimp as the primary market driver, exports have tripled in seven years, from 146,000 tonnes in 2009 to 410,000 tonnes last year; and are expected to rise another 12.2% in 2017, totaling 460,000 tonnes this year. It now exports as much shrimp as Thailand did in the years before EMS hit, and enjoys comparable world market influence.
The dominance of shrimp in Indian seafood exports can be seen in the aggressive expansion of shrimp feed production and demand, as it now accounts for roughly half of aqua feed output. The USDA reports 2015 shrimp feed use at 800,000 tonnes and 2016's demand is estimated at around one million tonnes, with production capacity at 1.5 million tonnes.
Due to its superior feed conversion, better digestibility and minimal wastage and pond contamination, extruded floating feed has overtaken pelleted feed in recent years. Depending on the shrimp species cultivated and pond management practices, industry feed conversion ratios range between 1.8:1 and 1.4:1.
Due to its superior feed conversion and disease resistance, the late 2000s saw a shift from almost exclusive cultivation of large black tiger shrimp to white leg shrimp. From a mere 1,000 tonnes and 1% of output in 2009, Pacific Whiteleg accounted for 55% of farmed shrimp output by 2013, 88% in 2016 and over 90% of 2017's production.
The opposite happened to tiger shrimp, which went from 99% of all shrimp grown in the late 2000s to 10% last year. For while overall shrimp output is rising rapidly, some of the white leg production increase is merely being substituted in place of black tiger shrimp. From a peak output of over 146,000 tonnes in 2013, tiger shrimp output fell to 52,000 last year and is expected to be around 41,000 tonnes in 2017.
On one hand, the move away from black tiger shrimp output has had consequences. India's once large share of the world market has been given over to Vietnam, which increasingly relies on tiger shrimp to maintain shrimp output and exports. Its withdrawal from the world tiger shrimp market also created high prices for this breed, which it cannot capitalize on.
On the other hand, white leg offers Indian farmers considerable cost economies and returns that cannot be ignored. It can withstand three to four times higher stocking densities, yields approximately three times more protein per hectare. While production costs are twice as high with white leg shrimp, the higher revenues make for profit margins more than 2.5 times wider than with black tiger shrimp.
The good longterm news is that with no more than 150,000 hectares under cultivation but 1.2 million hectares suitable for shrimp farming, India will be able to expand output in lockstep with world market demand for several decades to come. Andhra Pradesh state dominates India's east coast and currently accounts for 65% of output. According to USDA estimates, it accounted for 279,040 tonnes of 2015's USDA estimated 426,500 tonne output.
However, according to the Economic Times of India, as of 2016, Andhra Pradesh had used up 57% or 86,000 hectares of its 150,000 hectares of suitable shrimp farming pond acreage. While this leaves plenty of room for expansion, 90% of the over 1 million hectares of undeveloped shrimp farming acreage is now outside the state that provides two-thirds of the country's production. Thus, the future should see states along India's southern, western and northern coasts account for a greater proportion of overall output.
In recent years, some of the most aggressive expansion and establishment of new shrimp pond cultivation areas has been in West Bengal state, which is located on India's northeastern coastline near the border with Bangladesh. These areas of damp, wet soil formerly given over to rice cultivation, which (based on 2015 prices) provided an average return of US$250/acre. With shrimp cultivation generating returns of over US$2,000/acre from this same land, the economic motivation to convert former rice paddy fields into shrimp ponds is very understandably strong.
Such expansion of shrimp farming area however, is not without controversy: The use of brackish water in ponds contaminates nearby rice fields with salt, making it impossible to grow crops on it anymore. This has resulted in lawsuits slowing down the expansion of shrimp pond cultivation in some parts of India.
Similarly, thanks to problems with white spot syndrome virus (WSSV), India has gone from shrimp output rising 30% to 50% annually at the turn of the decade to increases of 7% to 9% now. Indian shrimp output is projected to increase a still healthy 7.7%, from 455,000 tonnes in 2016 to a GSMC panel estimated 495,000 tonnes this year and over 500,000 tonnes in 2017.
Even so it was widely expected that India would be growing 600,000 tonnes to 700,000 tonnes of shrimp annually by this time. A December 2016 UN FAO report noted that, "Production in the southern Indian states of Andhra and Tamil Nadu has also been affected by disease outbreaks…despite these difficulties, overall supply has been balanced by farmers significantly shifting from black tiger to vannamei [white shrimp] around the southeastern belt of India."
You must read between the lines of the above report: Except for the fact that it has more frontier areas it can bring to production at lower stocking densities, Indian shrimp growers have not been any more successfully managing WSSV than Thailand's have been with EMS and EHP. Moreover, with tiger shrimp production sinking towards barely 41,000 tonnes in 2017, the substitution of hardier, disease resistant white leg shrimp in place of place of more disease prone tiger shrimp has run its course.
The dilemma this creates can be seen in production, whose growth is starting to level off. It can also be seen in once rapidly expanding shrimp yields per hectare. From just under 1,000kg/ha at the start of the decade, white leg equaled the 1,800kg/ha peak yield achieved by tiger shrimp within two years. Yields then skyrocketed to approximately 3,500kg/ha by 2015 –and that's when EHP, WSSV and other diseases began to challenge –and limit– Indian shrimp farms.
For the last two years, growth has been sustained by expanding pond acreage. Previously efforts to use high antibiotic doses to push yields higher resulted in mass export shipment rejections by America and Australia. Hence, for now, farmers dare not push yields too much higher than their current 3,500kg/ha level.
It is not a problem unique to India: From China to Thailand and even Mexico, overly ambitious attempts to boost yields have resulted in disease-driven setbacks. Even Ecuador, India's top world shrimp exporting rival, is cautious about boosting output at the India-like pace it did so for five or so years. But the situation carries implications, as anyone can notice how output growth has been slowing down since 2015. With yields hitting a wall and the scope for replacing tiger shrimp with white leg exhausted, output will grow more slowly than before.
On one hand, the resumption of favourable weather, new pond acreage and some good luck enabled India to defy 2016's predictions of flat production and expand far more rapidly than mature suppliers like Thailand could ever hope to do so. On the other hand, unless the global shrimp industry transcends disease problems which have plagued for the past five years. Indian shrimp farming and exports will shift to a lower gear. Until yields can be safely lifted above their current 3,500kg/ha level, output and exports will expand in proportion to new pond acreage that prices can justify bringing into production.
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