September 18, 2015

 

 

 

 

    

     

    
Although the production of individual countries continues to be impacted by several years of EMS outbreaks, the world market has recovered from 2013's 19% plunge in farmed shrimp production –and finds itself transformed. The more superficial change is in price, which plunged from early 2014's record levels and subsequently declined another 25% to 30% in the first three quarters of this year. Beneath such market signals, former top exporters have been dethroned and everywhere from the Indian subcontinent to South America, new suppliers are emerging.

 

 

 

In 2011, Thailand for example, exported 163,000 tonnes of shrimp to the United States, 1.5 times more than India, its closest competitor. By 2014, however, India, Ecuador, Vietnam and Indonesia exported anywhere from 1.5 to 2.0 times as much shrimp to the United States as Thailand, which barely shipped 55,000 tonnes. In just four years, the world's dominant shrimp exporter has been surpassed by all these countries.

 

Taking advantage of Thailand's disease-driven exit from many world markets, India's shrimp exports jumped from 163,000 tonnes in 2009 to an estimated 410,000 tonnes this year. Similarly, Ecuador seized the opportunity to ramp up shrimp exports from a UN FAO estimated 140,000 tonnes in 2010 to more than 330,000 tonnes this year.

 

   

But not only have top exporters been dethroned, but also exporting regions. Whereas world shrimp output is higher today than it was four years ago, it is still below 2011 levels. China and Southeast Asia, which formerly dominated world shrimp exports are giving way to Latin America and the Indian subcontinent.

 

In 2014, China and Thailand saw their respective shrimp exports fall 14% and 21% respectively, while shipments from India and Ecuador jumped by 37% and 34% respectively. From 75% as recently as 2011, China and Southeast Asia's share of world shrimp exports fell to 66% in 2014. It would have fallen by a far sharper amount, had not Vietnam and Indonesia's rising shrimp production offset the EMS drops in output in China and Thailand.

 

 

Before EMS disrupted the market, Thailand exported at least two times as much shrimp as India, Ecuador, Vietnam or Indonesia. These nations now all export more shrimp than Thailand does. In short, half a million tonnes of Thai and Chinese shrimp vanished from the world market and India, Ecuador and Indonesia were more than happy to bridge the resulting gap between supply and demand.

 

 

 

Behind them, Bangladesh, Brazil and the Central American countries of Panama, Nicaragua and Guatemala stand ready with large stretches of unexploited, irregular coastlines. While India, Indonesia, Vietnam will continue to dominate world shrimp market supply growth for the next few years, they too will face competition from new players waiting to enter the market.

 

In fact, unless another epidemic comes along, shrimp prices are down 25% to 30% this year, and look poised to stay deflated for some time. Even without rapid supply growth in South Asia and Latin America, impending production recoveries in Thailand and China make it difficult to see the supply shortages of 2012-14 returning any time soon.

 

Furthermore, aside from concerns over the availability of fishmeal going forward (see September 10, 2015 Hot Topic, "Fishmeal bottoms out amid cooling Chinese demand, warming ocean waters."), the past few years have seen another development that implies that shrimp output will not ever be as focused in one country as it was as recently as five years ago.

 

Despite all research efforts, EMS remains problematic and difficult to control. To prevent EMS's recurrence, exporting giants like Thailand are being forced to take a conservative approach, keeping pond stocking densities lower than they did in the past. This issue will not impact new producers like Brazil or Ecuador for some time, as they can leverage unused water resources they can use in place of higher stocking densities. However, as these producers run out of fresh ponds or coastline, they too will face the dilemma of preventing outbreaks. With both EMS and the worldwide crackdown on antibiotic growth promoters are making the high stocking density shrimp rearing model seen in Thailand difficult to sustain going forward.

 

All this implies that while abundance has been restored, the days when a handful of countries had an almost oligarchic hold on world shrimp exports has passed.