August 26, 2013

The discovery of a solution against the Early Mortality Syndrome, trade cycles and rising productions may depress shrimp prices soon, thus suspending the current upswing in global shrimp prices by 2014, according to a Rabobank report.

Early Mortality Syndrome has drastically reduced shrimp production in Thailand, China and Vietnam. Production in Thailand, which supplies nearly a third of the developed world's shrimp requirements, has reduced by half this year. This has increased demand for shrimp from India, Bangladesh, Myanmar and Ecuador, causing higher prices.

Combined with higher global prices following the supply bottlenecks in Thailand and other countries, the depreciation of the rupee has helped the shrimp industry in India to increase its earnings.

Though the US, the major consumer of Indian vannamei (white shrimp), imposed a countervailing duty and anti-dumping duty (together totalling about 10% of the value), Indian farmers and exporters made huge benefits this year due to the global price increase.

Andhra Pradesh, which switched to vannamei aquaculture a few years ago, has emerged as the hub of farmed shrimp industry. As a wave of farmers took to vannamei farming, production has jumped in Andhra Pradesh as well as in Tamil Nadu and other East Coast States.

However, the Rabobank study forecasts that the global shrimp shortage will cease in 2014 and prices would drop. Its rationale is that Thailand, the most technologically advanced shrimp producer, will find a solution to the syndrome soon and normalcy in production would resume.

The study also points out that following the current high prices, many other Asian and Latin American countries have taken to extensive shrimp farming and that this would tremendously increase output next year. While the global demand would not increase, there would be an upswing in supply leading to fall in prices, even below the cost of production.

Still, the study states that India can still take advantage of the global scenario as its cost of production, particularly in labour, is low. In the short-and-mid-term, India's shrimp farming industry is expected to grow. However, prices may not be as attractive as of present.