Farmed shrimp in China has a quality problem
China’s top region for shrimp cultivation, the region of Zhanjiang in Guangdong province, has announced that the quantity and value of shrimp broodstock imported in the first 10 months of this year rose by 13.8 percent to 273,000 pieces, rising in value by 21.7 percent to USD 13.3 million (EUR 12.4 million).
The increase in broodstock imports is part of an effort to improve the quality and sustainability of Chinese shrimp production, according to the regional fisheries bureau, which has pointed to problems with viruses and inbreeding it wishes to address in the country’s shrimp hatcheries.
Yet these are depressingly familiar problems which have persisted for the past decade in China, and which look set to remain. Despite numerous plans and subsidies from government, the country simply hasn’t been able to effectively deal with issues like overuse of chemicals, bad breeding and poor quality feed, hence a shrimp supply of inconsistent quality.
“Standardization” is one of the most commonly used words in the lengthy documents published by China’s fisheries authorities in recent years; this is a reference to the need for consistency and higher standards in the country’s aquaculture sector.
To that end, demonstration farms have been set up and officials sent to check on facilities where seafood is produced. But quantity rather than quality remains the watchword of China’s seafood sector, with official targets set to consistently increase the quantity of seafood produced. This is largely down to the massively fragmented nature of the sector, and the lack of effective licensing and training standards, which would serve as barriers to entry to shrimp aquaculture for small-scale and low-skilled speculator producers.
Meanwhile, there is a steady but fundamental shift underway which will ultimately see China wind down its shrimp exports in favor of domestic sales and imports. The long-term outlook for domestic demand is very promising, and this is likely to gradually squeeze the amount of shrimp available for export. China’s exports have been on a downward trajectory in recent years, falling by nearly 14 percent last year to approximately 60,000 metric tons (MT) while imports of shrimp rose 10 percent to 78,000 MT.
Shrimp has become a daily consumption commodity in China where average urban nominal incomes grew by 12 percent per year over the past decade, massively ahead of the 1 percent in the United States and 0.3 percent in the United Kingdom over the same period, according to data from China’s National Bureau of Statistics and the World Bank. Consider that income growth in China has created wealth that’s here to stay – household savings increased by more than 300 percent over the past 10 years to USD 8.5 trillion (EUR 8 trillion), greater than the combined GDPs of Russia, Brazil, India and Italy, according to the World Bank.
But the gradual shift from export to domestic market will also, however, relieve some of the pressure to improve standards, which has been driven in particular by the U.S. Food and Drug Administration, among others, by consistently tracking and blocking Chinese shrimp exporters known to have excessive amounts of antibiotics and other chemicals.
The failure of the Chinese shrimp industry and officials to satisfactorily improve quality standards within the industry means that over the long term there will be demand for imports of quality shrimp, if problems which reared their heads in the export trade eventually also become issues in the domestic market. Already processors are complaining of the shortage of consistent, quality supply of shrimp in China and some have attempted to increase their own pond production, not an easy task given shortage of land, credit and affordable labor in southern China these days. A glut of low-quality supply has meant low prices for the past six months. Farm-gate prices for shrimp in China have only begun to improve this past month with the seasonal tightening of supply from ponds. The “China shrimp price index” maintained by the agriculture ministry rose 1.71 to 109.45 for the week ended 13 November.
China’s quality problem will impact prices, regional shrimp supply and pricing in the long run. While China’s supply of shrimp from Vietnam has been threatened by the latter’s entry into the Trans Pacific Partnership (TPP) free trade deal, China has been promoting alternative free trade deals such as the Regional Comprehensive Economic Partnership (RCEP), a proposed 16-nation free-trade area that would be the world's biggest such bloc, encompassing 3.4 billion people and including China as well as India, another major shrimp producer. With exports falling and domestic consumption rising China will need sources of quality shrimp supply.