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June 13, 2017
Four years of failed recovery predictions: Asian, Latin American shrimp suppliers keep running to stand still

An eFeedLink Hot Topic
 •  Optimistic production recovery forecasts thwarted for a fourth straight year
 •  Despite new, sustainable disease management methods, output will be no higher in 2017 than two years ago
 •  Skyrocketing consumption, plunging output and black market imports make China the world's (unofficial) second largest shrimp buyer after Japan
 •  With stocking density limits constraining consumption even in emerging suppliers, new suppliers may need to emerge from Africa or Latin America
It has become an annual tradition. From 2013 onwards, at industry conferences, shrimp market decision makers announce that the industry has finally turned the corner. They then confidently predict that within two or three years, output will finally exceed its early 2010s peak output. Within six or so months, output predictions are revised drastically downward and world output stagnates. Exactly the same thing happens next year -and this has now go on for four years in a row.
Leading the way in shrimp sector disappointments is Thailand. Not merely a reputable top producer, Thailand is an important technologically advanced industry bell weather for actual production trends.
Thailand's inability to revive its shrimp sector growth, let alone match even half its output of six or seven years ago, bodes very badly for the industry. For they are all at least several years behind Thailand on the industry learning curve.
A year ago, Thai shrimp farming executives declared that they had shaken off years of disease-depressed output and ready to resume growing their industry. Thereafter, optimistic forecasts give way to increasingly conservative projections and ultimately, little or no progress was made.
In August 2016, Robins McIntosh, CP's senior vice-president for agribusiness announced at The Aquaculture Roundtable Series in Phuket, Thailand, that his company had developed a means of flushing accumulated wastes that harbor EMS pathogens.
In December 2016, Somsak Paneetatyasai, president of the Thai Shrimp Association told the Bangkok Post that Thailand's 2016's shrimp output would rise 15%, from 2015's 260,000 tonnes to 300,000 tonnes.
Like McIntosh did four months earlier, Paneetatyasai projected a 20% 2017 output increase, to 350,000 tonnes. That would have been the highest Thai shrimp output volume since 2012, when EMS and EHP started wreaking havoc on the industry.
Shortly thereafter, at January's Global Seafood Market Conference in San Francisco, McIntosh was forced to admit that EMS and EHP were still dogging Thai shrimp farms. Within a month, industry sources revised Thailand's 2016 output estimate to 250,000 tonnes. McIntosh scaled back his 2017 output estimate to 300,000 tonnes.
Though significantly lower than the 350,000 tonnes he predicted five months earlier, 300,000 tonnes still would have been a 20% increase 2016's shrimp production volume, which itself had disappointed expectations. Unfortunately, even this more conservative forecast was soon scaled down even further.
When Q1 2017 results came in below expectations, industry sources cut their 2017 Thai shrimp production estimate to a 10% to 15% increase, projecting output of somewhere between 275,000 and 287,500 tonnes. Blaming heavy rains, Q1 2017 Thai shrimp production defied its predicted output rise and came in 6% below what was produced a year earlier.
By early June, in an interview with Undercurrent News, Preerasak Boonmechot, managing director of Thai Union's shrimp division stated that 2017 shrimp output would range from being unchanged to rising no more than 5%. -Hence, rather than early optimistic projections of 350,000 tonnes or later revised 300,000 tonnes, Thailand's 2017 shrimp output is now expected to amount to somewhere between 250,000 and 262,500 tonnes -almost unchanged from 2015 and 2016 levels.
For a country that once produced over 600,000 tonnes of shrimp annually, it will be the fourth consecutive year that output remains below 300,000 tonnes, more than 50% below peak levels. This dearth of production leaves Thai Union's three shrimp processing plants operating at only 60% to 70% capacity. It was not supposed to be this way: In late 2015, Jim Gulkin, founder of Siam Canadian group was not alone in predicting that by 2018, Thailand would be growing 450,000 tonnes of shrimp annually.
This is by no means the fault of CP, Thai Union or other leading Thai shrimp growers. In fact, Thai aquaculture integrators may possess more experience and expertise in these matters than rival producers from other countries. The truth is that Thailand and all other leading shrimp growers are wrestling with problems that did not even exist a decade ago.
Alongside early 2017 floods, Boonmechot said the disappointing performance was due to "ongoing disease issues." Even after grappling with EMS and EHP for five years, Thai shrimp farms still cannot raise stocking densities to former high levels without triggering serious animal performance issues.
These new shrimp diseases most acutely impact East Asia, where most of the world's shrimp is cultivated. Hence, despite India's booming output Asia's share of world shrimp production fell from 85% in 2013 to 67% this year.
Alongside Thailand, China's shrimp farming ponds rank among the oldest, most mature -and disease prone in the world. China's even sharper shrimp production decline is why world shrimp output will be probably around 3.80 to 3.90 million tonnes in 2017, even though industry sources projected it above 4.5 million tonnes by this time less than two years ago.
Industry sources state that in Guangdong province where most of China's shrimp is grown, a pond cannot be used for more than half a decade before the buildup of waste and pathogens makes shrimp cultivation uneconomical. After falling by 10% or more several years in a row, 2016's production fell by at least 15%.
As if the disease situation is not bad enough, low cost shrimp imported from Vietnam is undercutting returns, causing growers to abandon their ponds. Thus, overall Chinese shrimp output is down by approximately half since 2010 and that of white leg shrimp has fallen by even more.
With demand rising sharply, Chinese shrimp supplies and consumption are on a collision course. At January's Global Seafood Marketing Conference in San Francisco, panelists estimated that China's output of white leg shrimp declined 150,000 tonnes in 2016 -far more than the cumulative output fluctuations of expanding shrimp producers such as India, Ecuador and Indonesia. Nor was 2016 a one-off output drop: China has suffered a post 2010 shrimp output decline estimated by industry sources at anywhere from 500,000 to 700,000 tonnes.
Consequently, China's supply of surplus, exportable shrimp is rapidly disappearing. On one hand, farmed shrimp output is down more than 50% from the nearly 1.5 million tonnes produced in 2010.
On the other hand, China's consumption of shrimp has risen from 0.76 million tonnes in 2005 to 1.06 million tonnes in 2010 and 1.7 million tonnes in 2016.
This has reduced shrimp exports from 305,000 tonnes in 2011 to a little over 100,000 tonnes this year. At the same time, imports have skyrocketed far above the 53,000 tonnes in 2011 to over 200,000 tonnes in 2015 -and official statistics grossly underreport the actual volume.
A January 2017 Undercurrent News report uses the customs data to show that in 2016, China imported approximately 270,000 tonnes of shrimp from Vietnam. -Most of this shrimp was imported into Vietnam from India or Ecuador, then re-exported into China via black market channels. With China preparing to overtake Japan as the largest shrimp importer, a large, very important supplier has been lost to the world market.
With collective Chinese and Thai shrimp output slumping by more than a million tonnes from levels taken for granted five years ago, it is very difficult even for rapidly expanding producers such as India and Ecuador to bridge the resulting supply deficit -especially not that their own output is no longer growing rapidly.
Impacted with their own outbreaks of EMS, EHP and WSSV, rival producers in Vietnam and Indonesia have only had limited success in taking advantage of the market vacuum created by declining Thai and Chinese production.
The world shrimp market's supply shortfall would have been far worse had it not been for near exponential increases in Indian and Ecuadorian shrimp production after 2010. Unfortunately, as production rises and new ponds accumulate waste over several growing seasons, even Indian shrimp producers are burdened by a mounting number of disease and shrimp performance issues.
As a result, after skyrocketing from 101,000 tonnes in 2010 to 426,000 tonnes in 2015 (with the entire increase exported), Indian shrimp output growth has sharply decelerated. Increasingly boxed in by rising incidences of WSSV, EHP and EMS, Indian output increasingly looks likely to top out near the 500,000 tonne volume projected for this year -but even this may turn out to be too optimistic.
Three years ago, analysts believed India would be producing over 600,000 tonnes annually by this time, not the half million tonnes now hoped for. Sree Alturi, an executive at Devi Seafoods, believes that last year's output increased by 5% and not the 8% to 9% implied by recent government and industry announcements.
At May 2017's Aqua Aquaria India, CP's McIntosh noted "While India is expected to produce 500,000 metric tonnes of shrimp in 2017, the average rate of farm [shrimp] survival is only 50%. Productivity [growth] is reducing year on year, with the produce being hit by white spot syndrome, which is the single largest pathogen affecting shrimp farming in India." The situation is one of sharply decelerating productivity growth that may soon turn negative.
Similarly, after expanding output by seven times and exports 10 times from 2000 through 2015, Ecuador finds it too cannot push output much higher without triggering outbreaks of EMS. From the heady 10%+ growth of previous years, Ecuador's shrimp output and exports have increased approximately 4% annually since 2015 -and look poised to rise by even less in years to come.
Hence, rather than an impending production recovery, world shrimp buyers will soon face a serious supply squeeze: We have a situation where former top exporters China and Thailand and Vietnam can only produce 50% to 60% of the shrimp volume they did before. Other tier one exporters such as Indonesia and Vietnam, while not suffering such catastrophic output declines, have stagnant, below peak output constrained by stocking densities.
New suppliers such as India and Ecuador can no longer grow at the 10%+ pace to make up for the stagnation or steep output decline of previously dominant market players. Moreover, when conventional means of boosting stocking densities are tried, top shrimp importers including America, Australia and the EU reject shipments for having too many antibiotics or banned, unsafe supplements.
Consequently, despite our growing understanding of what triggers EHP, EMS and WSSV outbreaks, shrimp farming is now constrained by unbreakable stocking density ceiling. Perhaps what is really required is the entry of new frontier areas such as African coastal states or Brazil into the world shrimp export market.

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