June 19, 2019
China becomes the world's top shrimp buyer but its output remains a mystery
Whether China produces closer to 400,000 tonnes or a million tonnes of shrimp annually is no longer in question: In less than a decade, a top shrimp exporter has turned into the world' leading importer.
By Eric J. Brooks
An eFeedLink Hot Topic
Of all the changes that have come over the world shrimp trade, the most dramatic has been the role of China, which has seen output collapse, consumption grow and its terms of trade reversed. Less than a decade ago, China was a world-leading shrimp exporter. It now appears to be overtaking America, Europe and Japan to become the world's top shrimp importer. With up to 90% of the nation's post-2010 shrimp imports smuggled in illegally and official production statistics exaggerating domestic production by more than a million tonnes, this transformation has occurred very quietly and amid much rumor and uncertainty. Fortunately, the recent trade war has forced much of the black market trade into official channels. For the first time, this is giving industry observers an objective picture of how China's appetite for shrimp has outgrown its productive capacity.
Beijing recently cracked down on smuggling while slashing import tariffs and simplifying foreign shrimp's official entry into China. As a result, official government statistics indicate that from January through April, China's official imports surged from 36,400 tonnes a year ago to 160,700 tonnes.
Ecuador, which normally supplies a large proportion of smuggled shrimp saw its shipments to Vietnam (which are then smuggled to China) fall 35% over the first four months of 2019. On the other hand, its direct shrimp shipments to China were up 428% over January-April 2018, totaling 69,372 tonnes.
Though smuggled shrimp will now make up less than half of foreign supplies, 20,000 to 25,000 tonnes of shrimp is thought to be still be smuggled duty-free every month.
At the Asia Pacific Aquaculture Expo held in Zhuhai, China during May, China Aquatic Products Processing and Marketing Alliance (CAPPMA) president Cui He predicted that China's official and smuggled shrimp imports will total 800,000 tonnes in 2019.
Cui's estimate implies that China will overtake America as the world's top shrimp importing nation. On the present trend, China will also jump ahead of the European Union as the top importing region no later than the early 2020s. It also implies that from 2010 through 2019 inclusive, China's annual shrimp consumption will have risen by at least 30%, to approximately 1.3 million tonnes, with approximately 62% or 800,000 tonnes of this demand satisfied by imports.
The speed of this transformation cannot be understated. Output rose at a 9.5% annual rate from 2005 through 2010 inclusive. From an FAO estimated 192,000 tonnes in 2000, China's production across all farmed shrimp species touched 1.3 million tonnes by 2011, with almost a million tonnes consumed domestically in that year.
Trade-wise, from an FAO estimated 94,000 tonnes in 2000, shrimp exports more than tripled, peaking at 305,000 tonnes in 2011. That made it the world's second largest shrimp exporter after Thailand from 2003 through to 2012.
Thereafter, a constellation of devastating shrimp diseases such as EMS, AHPND, WSSV and others devastated China more than other large producers. At first, domestic output was thought to have fallen to around 800,000 tonnes by 2015 but within the last two years, industry observers have revised their estimates first to 600,000 tonnes and later, closer to 500,000 tonnes –and even these new figures might be too high.
At the Asia Pacific Aquaculture Expo, Alfredo Medino, a China-based technical sales support manager for aquaculture nutrition company INVE Aquaculture stated "It maybe won't make me very popular to say so, but I don't think China's production is greater than 400,000 tonnes." That not just below the 2.2 million tonnes in official Chinese government figures. After living in China and touring shrimp farms across the nation, Medina's estimate greatly undercuts 1 million tonnes+ in UN FAO figures and even the 550,000 to 800,000-tonne figures stated by aquaculture conference panelists since 2016.
Medino's low estimate being correct was given credence by Rabobank senior aquaculture analyst Gorjan Nikolik who stated "When I asked in China why is there a big difference they told me that FAO [Food and Agriculture Organization of the United Nations] numbers also have vannamei farmed in freshwater included. This is an artisanal sector for which no one knows what the volumes are. This sector might in part explain the huge difference in volumes, but over-reporting is the main reason in my view."
Moreover, the idea that Chinese shrimp production may have fallen to this level is borne out by feed production statistics. According to fellow conference panelist Bill Hoening, vice-president of Delta Blue Aquaculture "Most of the estimates are actually based on feed numbers from which a production number is 'deduced'."
–With this in mind, it should be noted that according to Alltech's Global Feed Survey, China produced less 32% or 7.3 million tonnes less aqua feed in 2018 than it did in 2013 –but its aquaculture production of most non-shrimp species is higher. Declining shrimp production offsetting higher feed demand for other aquaculture species could explain why this is happening.
Part of the answer lies in the fact that China started cultivating shrimp several decades before most of today's leading exporters. It then ran out of new frontier regions while its aging ponds suffered large accumulations of biohazard waste through years of wear and tear combined with overstocking. Medina concurred that "Chinese farmers have been stocking ponds in some areas for many years, which means there is a lot of organic matter in the ponds."
The deeper reason, however, appears to be intertwined with stubborn, outdated shrimp farm management practices. Noting that he detected biohazard friendly problems in every node of China's shrimp supply chain alongside feed quality issues, Medina notes "You can have very good shrimp broodstock, but if the larvae feed or biosecurity at hatcheries is not good then the larvae might not survive."
Pathogen-friendly farm mismanagement usually over-emphasizes short-term returns and this leads to over-reliance on antibiotics and the accumulation of pathogen biomass to dangerous levels. Whereas Ecuador (which has a reputation for high-quality sustainable shrimp) grows 10 to 15 shrimp PL per square meter, China stocks them in the 100 to 1,000 per square meter densities. Medina notes that once biomass has accumulated, the resulting high nitrogen and ammonia levels means "bacteria can proliferate very quickly."
Medina's concerns are reflected by He Jianguo, a scientist at China's National Shrimp and Crab Industry Technology System, who spoke at the China Shrimp Industry Development Forum in May. He notes that of 100 shrimp ponds he tested in Guangdong province (which has the highest shrimp output of any province) 44 had had ammonia and nitrogen levels high enough to stress shrimp immune systems.
According to He, 60% of tested shrimp ponds were susceptible to diseases such as WSSV, which usually only breaks out when shrimp are stressed by the type of high pond densities taken for granted in Chinese prawn cultivation.
One factor that accounts for both China's low aqua feed consumption and Medina's low shrimp output estimate is his observation that it is no longer profitable to operate a large proportion of Chinese shrimp ponds as accumulated biohazard has put their output below break-even levels.
Even in areas with newer facilities such as the island province of Hainan, the physical and spatial arrangement of many shrimp production facilities creates scope for easy cross-contamination. According to Medina "In Hainan often there are a lot of shrimp farms close to hatcheries. When the shrimp farm has problems, such as white spot or EMS, they want to harvest very fast and release the discharge in the sea. Then the hatchery needs to use sea water the next day. This is something that is not regulated properly."
With no frontier areas available for cultivation, China is stuck with a declining number of shrimp ponds in poor condition, with many falling victim to encroaching urbanization. This makes it unlikely China will ever get its shrimp output too far above 500,000 tonnes every again.
On the other hand, if seafood demand is rising by approximately 3% annually, that means that from the current 800,000 tonnes of shrimp being imported annually, we can expect imports to increase by 40,000 to 100,000 tonnes annually, depending on both consumption growth and whether domestic output can stabilize or perhaps recover slightly.
Consequently, whichever way you look at it, China will become the first nation to import a million tonnes of shrimp annually by some time in the early 2020s. As major exporters such as India and Ecuador exhaust their own frontier pond regions, it is very possible that Chinese demand will boost shrimp demand and set market prices the way it already does for commodities ranging from soybeans to red meat or fishmeal.
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