Disappointed again: More setbacks, downward revisions in world shrimp output and trade
By ERIC J. BROOKS
An eFeedLink Hot Topic
- The collapse of East Asian production has changed world shrimp trade flows
- 2017's strong production and export recovery is being held back by China and Southeast Asia's failure to recover from disease and stocking density constraints
- China's output looks stuck at least 30% or more below peak levels as disease spreads into new production areas
- Unexpected ongoing problems controlling EHP has halted Thailand's export volume growth far below the record levels of 2010-12
- Due to inaccurate government statistics and the re-exporting of processed imports, some countries contribute far less to the world market than official numbers suggest
For the third time in four years, the world shrimp market has failed to recover as expected. Six months ago, shrimp growers were confidently predicting that after five years of stagnation, the world shrimp market would recover strongly in 2017. We are only two months into our year but this already looks unlikely to occur. Across Asia and Latin America, disease afflicted producers or not recovering as strongly as expected or not boosting output as rapidly as before. The mid 2016 headlines of, "a recovery coming" to the world shrimp market can now be rewritten into, "another expected recovery dashed".A constellation of hard to treat diseases made world shrimp output fall from its 4.1 million tonne peak in 2011 to 3.4 million tonnes in 2013. At that time, most panelists expected output to be back at 4 million tonnes or higher by 2016 but instead last year saw production amounting to only 3.75 million, rising nearly 6% from the previous year's 3.53 million.
On one hand, the exports of the world's top six producers (China, Thailand, India, Vietnam, Ecuador, Indonesia) have finally exceeded their 2012 total. However, at approximately 1.7 million tonnes, a 7.5% supply increase in the five years from 2012 through 2017 is not enough to keep up with demand, making for tight world markets.
With nature and resource limits constraining producers far more than was anticipated, industry leaders recently concluded that 2017 would see world production rise a nominal 1%. At 3.8 million tonnes, output remains nearly 8% below the peak level set six years ago.
Six months ago, Robins McIntosh, senior vice president of agribusiness at Thailand-based CP
Stated that Thailand's shrimp farms had "learned to live" with EMS and predicted a strong production recovery for 2017. In January's Global Seafood Market Conference (GSMC) held in San Francisco, California in January, McIntosh was forced to partly backtrack on his earlier optimism.
After falling from over 600,000 tonnes five years ago to a mere 200,000 tonnes in 2014, Thai shrimp output staged a partial recovery. Output rose 25% in 2015 to 250,000 tonnes and by 20% to 300,000 tonnes in 2016. Confident that technical fixes like a flusher that removed pond waste that harbors EMS and EHP pathogens, allowing them to surmount problems with disease outbreaks, McIntosh initially predicted 2017 would rise another 20% to 25% in 2017.
The good news is that Thailand's 2016 shrimp exports of approximately 265,000 tonnes were approximately 25% higher than 2015's 210,000 tonnes. But there are also two pieces of bad news. First, despite the gain over 2015, exports are still nearly 50% below the peak volume of 540,000 tonnes achieved in 2012.
Second, not only does this leave with Thailand with a much smaller market share than it used to have, but 2017 will see its exports and trade status stagnate at around 260,000 to 270,000 tonnes. A stagnant 2017 trade performance was not what was expected even a few months ago.
According to McIntosh, "With further innovations and better animals, there looked to be a straight line to hit 360,000 to 370,000 tonnes [of production] in 2017. That would have enabled Thailand to export at least 310,000 tonnes of shrimp, the largest volume in five years.
Unfortunately, while CP's new farm management methods brought EMS under control, "we still had these EHP issues at the end of 2016." Noting that EHP does not kill shrimp outright but severely reduces their finishing weights, he now expects 2017 output to stay flat at approximately 300,000 tonnes.
Nor is Thailand the only exporter whose production is poised to come in below expectations. China, a leading producer and formerly a top exporter has seen its initial post-2013 FAO shrimp production estimates drastically slashed. Rather than the FAO estimated 1.1 million tonnes, the GSMC panel slashed its 2013 Chinese white leg shrimp production estimate to 550,000 tonnes.
Based on ground level reports and skyrocketing Chinese shrimp imports, both FAO and earlier industry production estimates of over a million tonnes for 2014 through 2016 have also been slashed. GSMC panelists concluded that China's shrimp production amounted to slightly under 800,000 tonnes in both 2014 and 2015.
Dogged not only by a multitude of shrimp diseases but outdated, antibiotic-centric pathogen mitigation methods that are no longer effective, GSMC panelists estimated that China's farmed shrimp output fell 160,000 tonnes to approximately 630,000 tonnes in 2016 and will fall into the 550,000 to 590,000 tonne range in 2017. Among Chinese regions, Guangdong province accounts for most of 2016's 160,000 tonne output decline, with the nominal production increases and losses of other provinces cancelling each other out
–All this is a far cry from even the industry estimates at a conference like the Global Aquaculture Alliance (GOAL) in 2016, which expected Chinese shrimp production recover to 1.5 million tonnes by 2017. Needless to say, in an industry with output near four million tonnes and China and Thailand collectively underproducing a combined one million tonnes below expectations, the supply available for trade is seriously impacted.
Noting their stubborn adherence to high antibiotic doses which do not work against new diseases (and result in export bans), McIntosh concluded that, "In China, I still don't think they have an understanding of what is happening with disease. Farmers are still confused; hey expanded to new areas, such as north of Fujian. Now, even the new areas have problems."
Moreover, China and Thailand are hardly the only leading exporters to come in below expectations. A similar over estimation of shrimp production appears to have also occurred in Indonesia. On one hand, official Indonesian government statistics paint a rosy picture. They project output somewhere between 400,000 and 500,000 tonnes, exceeding its pre-EMS crisis of nearly 400,000 set in 2011. On the other hand, Brendan Curran, vice president of procurement for leading producer Aqua Star sees serious contradictions between these estimates and the country's performance on the world market. Speaking at the GSMC conference, Curran noted that Indonesian exports to America usually account for 70% of its output.
Based on that longstanding ratio and seeing that it only exported 170,000 tonnes to America last year, Curran states that, "If you do the math and calculate back, that would mean around 250,000 tonnes to 260,000 tonnes of [Indonesian] production."
One to two years ago, Indonesia was touted as a disease control success story: After output fell from 400,000 tonnes in 2011 to 240,000 tonnes in 2013, word was it had recovered to 280,000 tonnes by 2014 and was expected to total close to its record 400,000 tonne range by 2017.
Instead, once we get past government statistical miscalculations, output fell to 250,000 tonnes in 2015 and slumped to 230,000 tonnes last year, which is below even its 2013 low. Apparently, Indonesian problems with EMS and EHP are much worse than initially reported. For 2017, GSMC panelists concluded it would produce 255,000 tonnes, not the 400,000 initially hoped for.
Similarly, thanks to problems with white spot syndrome virus (WSSV), India has gone from shrimp output doubling annually at the turn of the decade to increases of 7% to 9% at this time. On one hand, Indian shrimp output is projected to increase a still healthy 7.7%, from 455,000 tonnes in 2016 to a GSMC panel estimated 490,000 tonnes this year.
On the other hand, 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 and flooding. 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.
Stocking densities, disease and trade flows also limit Vietnam's ability to contribute to the world shrimp market. Superficially, it is a success story, with production going from 70,000 tonnes in 2000 to nearly equaling that of Thailand today. Even so, its contribution to the world market is less than what appears.
For example, while Vietnam's government boasts that 2016 exports totaled 460,000 tonnes, that does not count the 200,000 tonnes of shrimp mostly imported from India and Ecuador. It was processed in Vietnam and subsequently re-exported as if they had been raised in the country, which is not the case. When the re-exporting of imported shrimp is factored out, the 260,000 tonnes of net Vietnamese shrimp exports is only 3% more than the 252,200 tonnes it shipped in 2011.
In fact, from 2012 through 2016 inclusive, Vietnam's shrimp imports quadrupled, from 50,000 tonnes then to 200,000 tonnes last year. Domestic shrimp production by comparison less than doubled, rising 83% over this same time. Gross exports (including re-exported processed shrimp) grew by 153% by volume over this time –but when re-exports are factored out, Vietnam's net shrimp export growth of 97% is far less than the 300% increase in shrimp imports over this same time. In fact, at 460,000 tonnes, gross exports far exceed domestic production of 255,000 tonnes. That is not possible unless a huge amount of shrimp is imported. It means that Vietnam's net contribution to the world shrimp market is far less than initially meets the eye.
Going forward, there is another thing which makes Vietnam far less of a shrimp exporting success story than it would otherwise be: Well over half its output continues to be accounted for by less productive, less efficient black tiger shrimp and not Pacific white leg. The reason being that under its primitive shrimp farming practices, it cannot completely transition to this more efficient species without disease outbreaks obliterating its production numbers and trade position.
Last year, producers tried to boost production but the Vietnam Association of Seafood Exporters and Producers (VASEP) reported that expanded production area was check-mated by more disease outbreaks, keeping output unchanged. –The point being, just like China, Thailand and Indonesia, Vietnam is yet another East Asian country that is expected to hold up the sky for the world shrimp market –but which is failing to do so.
In sum, the world shrimp market's old heartland of East Asia is still limited to producing significantly smaller harvests than it did in the past. Thailand and China, the former leading producers and exporters are entering a fifth year with harvests at least 30% below peak levels, and their full recovery a year away.
In the frontier regions of Southeast Asia, disease and statistical over reporting have combined to disappoint the expectations of many who thought that Vietnam, Indonesia could fill the production shortfall enough to keep the region's output growing
With the old shrimp growing heartland of East Asia operating far below its former output levels, new regions like India and Ecuador, while not devastated by disease, are seeing the mere threat of outbreaks level off their production growth. Slower supply growth in Latin America and South Asia is mostly checkmated by East Asian production losses, leading to noticeably lower output and exports than was once taken for granted.
At the same time, the resulting collapse of Chinese and Vietnam's once strong shrimp trade positions has led to a curious market anomaly. Asia has just overtaken America for the lead in world shrimp imports.
GSMC conference panelists reported that from under 180,000 tonnes five years earlier in 2011, Asian shrimp imports totaled at least 850 million pounds (382,000 tonnes) in 2016 and are estimated to come in slightly under a billion pounds (450,000 tonnes) in 2017. This gives Asia a 33% share of world shrimp imports. This is higher than America's 30% or 916.9 billion pound (413,000 tonne) proportion of 2016 world shrimp purchases in 2016 and estimated 947.5 million pounds (413,000 tonne) estimated for 2017.
Hence, there is more than just nasty disease problems or stubborn resistance to new farm management methods holding back the world shrimp sector. As the accompanying graphs show, the industry's growth and production centre is shifting away from China and Thailand and into frontier regions of ASEAN, South Asia and Latin America. Even so, until Asian shrimp farm management recovers enough for mature regions to recover their previous productivity levels, a complete recovery from this decade spanning crisis seems to be some time away.
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