November 11, 2020
Ecuador is the future of shrimp farming
By Eric J. Brooks
An eFeedLink Hot Topic
Ecuador endured similar, though less serious challenges. Like India, it was coming off a banner year: 2019 output skyrocketed 24%, from 540,000 to 670,000 tonnes. That enabled a 27% export surge, from 510,000 to 648,000 tonnes. where COVID-19 disrupted production early in the year.
At first, exports to America fell but shipments to China remained steady despite the latter's severe recession. In June, the COVID-19 virus was detected on shipments arriving at Chinese ports; exports plunged from 27,000 tonnes in May to 8,000 tonnes in June and almost nothing in July. To Ecuador's relief market access was restored in mid-August, as China had been buying over 60% of Ecuadorian shrimp exports.
Going forward, Ecuador is blessed with ultra-low stocking densities, untapped ponds, and lower production costs than any other major producer. All this means that at any given price, Ecuadorian shrimp growers have lower production costs, higher, lower disease risk, and lower capacity expansion costs than their Indian rivals. This plays a role in letting Ecuador recover and expand more quickly, both over the short term and over the long run.
When US and EU shrimp demand recovering in late Q2, Ecuador filled the supply vacuum created by Indian shrimp's mid-2020 unavailability: It diverted shipments temporarily banned by China to western markets. Ecuador doubled July exports to America to 15,330 tonnes from just under 7,000 tonnes a year earlier. By comparison, Indian shrimp exports to America fell to 7,750 tonnes in July 2020 from 30,300 tonnes in July 2019.
Similarly, Ecuador's July exports to the EU rose to 15,910 tonnes, up 56% from 10,200 tonnes on-year. Indian exports fell from 5,333 tonnes in June 2019 to 1,000 tonnes this year, forcing EU buyers to import more shrimp from Ecuador.
Relative to India, Ecuador's favorable supply-side fundamentals gives it a smaller eFeedLink estimated 17.9% shrimp output decline to 550,000 tonnes, from 670,000 tonnes in 2019, with exports falling 16.6% to 540,000 tonnes.
Ecuador can enjoy 10 to 20 years of easy, rapid growth but we're not as certain about higher density, higher cost and resource-constrained Indian and Southeast Asian shrimp sectors. They will grow rapidly back to previous stocking density levels for several years –and then face an important question: Have they developed techniques and disciplined shrimp farm management to sustain production increases by continually boosting stocking densities beyond 2010 levels? Ecuador will not be confronted by this question for at least another decade or two.
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