August 19, 2013

 

Disease push shrimp prices to record high

With the world's three largest prawn producers Thailand, China and Vietnam facing a shrimp disease that is plaguing, global shrimp prices have risen to record-highs.

 

White shrimp prices are nearing US$6 a pound, up 56% from a year ago, according to an Urner Barry index.

 

Interestingly though, the Cadillac of crustaceans is cheaper than it has been in a long time. Lobster prices, while still a lot higher than shrimp, have fallen recently.

 

The world is facing an "acute shrimp shortage," the worst of its kind since industrial shrimp farming emerged, say Rabobank analysts in a report aptly named "Shrimp in a crimp."

 

Thailand is the world's largest shrimp producer and has been hit hardest by the disease. The country alone supplies about 30% of the tropical shrimp in the United States and the European Union, and is expected to see its supply cut in half this year.

 

Each year Americans eat an average of four pounds of shrimp per person, but consumption will probably drop in 2013, the Rabobank analysts say.

 

"After a decade of explosive growth, the global farmed shrimp industry has reached a turning point," they said.

 

Back in June, Darden Restaurants (DRI, Fortune 500), the parent company of Red Lobster, Olive Garden and other chains, noted higher food costs partly due to "shrimp supply disruptions" could cut into future sales. Seafood alone accounts for about a quarter of Darden's total cost of goods sold, of which shrimp is the most popular protein.

 

And the disease is not the only thing pushing shrimp prices higher. In other news on the shrimp beat, the Commerce Department ruled Tuesday (August 13) that China, Ecuador, India, Malaysia and Vietnam have all unfairly subsidised shrimp that is exported to the United States.

 

The ruling could lead the US to enact duties on shrimp from some of those countries, leading to even higher shrimp prices.

 

It was welcomed by shrimpers in the Gulf Coast, who suffered setbacks from the BP oil spill three years ago and now struggle to compete with cheap shrimp farmed in Asia. American suppliers account for less than 10% of the shrimp consumed in the US.

 

As of August, the average 4 oz. lobster tail cost US$13.25, according to Urner Barry. That still costs more than two pounds of shrimp, but it is the lowest price in 11 years, as warmer water and fewer predators have led to an abundant supply of lobsters.

 

In fact, over-supply has become such a problem for Maine fishermen, the state recently approved a US$2 million campaign to promote their lobsters both in the US and abroad.