October 25, 2024

 

Honduran shrimp industry faces crisis amid falling prices and lost export markets

Honduras' shrimp industry is grappling with a severe crisis caused by declining prices, rising production costs, and failed export agreements with China, Latin American Post reported.

 

The sector, a crucial part of the country's economy, is now seeking new markets to recover.

 

Honduras, one of Central America's major shrimp producers, is facing an economic crisis that threatens thousands of livelihoods. The industry, once a key pillar of the aquaculture sector, is now struggling to survive as low market prices and high production costs erode its profits. This situation has been worsened by unsuccessful attempts to open new export markets, particularly in China, and the loss of established markets like Taiwan.

 

The National Association of Aquaculture Farmers (Andah) recently stated, "We are going through an unprecedented crisis, impacted by a global market crisis with low prices and high production costs." Losses in 2024 have already exceeded US$47.7 million, with 6.2 million kg of shrimp left unsold after the Taiwanese market closed. Additionally, the temporary shutdown of Mexican customs for shrimp imports has resulted in further losses of US$14.5 million and 2.2 million kg of shrimp.

 

The collapse of the Taiwanese market, once a reliable destination for Honduran shrimp, has left producers scrambling to find new buyers. This challenge is exacerbated by the global market conditions, with many countries experiencing economic difficulties and reduced demand for imported seafood. As a result, shrimp prices have dropped, making it difficult for Honduran producers to cover increasing costs such as feed, labour, and transportation.

 

Andah expressed the frustration felt by the industry, stating, "Our shrimp farmers are being hit from all sides. They're facing higher costs to produce shrimp while struggling to sell it fairly in a saturated global market."

 

Hopes were high when Honduras made a diplomatic shift from Taiwan to China in 2023, with the aim of alleviating the crisis. A pre-agreement to export 250 containers of shrimp to China was signed with a Chinese company, but the deal quickly fell apart due to pricing disputes.

 

In July, the first shipment of two containers carrying 36 tons of shrimp arrived in China tariff-free, marking a significant step in entering the Chinese market. However, Andah later announced that the larger deal had "failed due to pricing issues," leaving both small and large shrimp producers in a difficult position as they continue searching for new markets.

 

Despite the setback, the Honduran aquaculture industry is pressing forward. Andah is actively seeking new buyers and market opportunities, including participation in the global seafood expo in Qingdao, China. The event will showcase Honduran shrimp under the national brand "HONDUMEI," with the hope of attracting new business partnerships.

 

In addition to trade shows, the Honduran ambassador to China, Salvador Moncada, has been working with the shrimp industry to facilitate meetings with Chinese business leaders. These efforts aim to revive negotiations and secure deals that could help stabilise the industry. However, the outlook remains uncertain, and the industry is under pressure as it navigates these challenges.

 

The crisis has far-reaching consequences for Honduras' economy. The shrimp industry provides approximately 20,000 direct jobs and contributes around $300 million annually. Coastal communities, where shrimp farming is a primary source of income, are particularly vulnerable.

 

As global shrimp prices remain low, many producers find it difficult to break even. Small-scale farmers are struggling the most, as rising production costs, including feed and energy prices, cut into already narrow profit margins.

 

"The industry's workforce is bearing the brunt of this crisis," said an Andah spokesperson. "When farmers are forced to cut costs, it often means reducing their labour force or cutting wages, which directly impacts the families who rely on these jobs."

 

The crisis also affects suppliers of feed, equipment, and other materials necessary for shrimp production. As production slows, so does the demand for these inputs, impacting businesses throughout the supply chain.

 

In response, some shrimp producers are adopting cost-saving technologies such as more efficient feeding systems and energy-saving practices. Others are diversifying their customer base by selling to domestic markets or exploring niche markets where higher prices can be achieved.

 

Despite these efforts, many fear the situation could worsen without access to stable, profitable export markets soon. "We are at a crossroads. Without immediate support or new markets, the future of Honduras' shrimp industry is uncertain," the Andah representative warned.

 

Andah has called on the Honduran government to intervene, emphasising the importance of government support in finding new markets and securing favourable trade agreements. "The government must continue supporting the shrimp industry, which directly provides 20,000 jobs and generates $300 million annually," Andah stated.

 

Expanding trade agreements with regions such as Europe and North America is one potential solution. Access to these markets could provide much-needed relief as global demand for seafood continues to grow. Improvements in infrastructure, such as better transportation networks and more affordable inputs like feed, are also critical to reducing production costs and helping producers stay competitive.

 

Honduran government and industry leaders are working to re-establish strong trade relationships and open new markets. International seafood expos, such as the one in Qingdao, will play a key role in showcasing the country's products to potential buyers.

 

-      Latin American Post