Shrimp farming: India, Ecuador down, new players stepping up
Shrimp farming has always been particularly susceptible to disease issues. Emerging in different regions and affecting different species, these problems have a tendency to dramatically alter the supply and demand landscape, with those unaffected quick to seize on the downfall of those that are.
The most recent disease challenging the industry globally has been early mortality syndrome (EMS), more technically known as acute hepatopancreatic necrosis syndrome (AHPNS). EMS began wiping out shrimp production sites across Southeast Asia and Central America in 2013 and the repercussions are still being felt by some sectors of the industry today. Nevertheless, the general recovery of the industry is having a major effect on prices and production growth.
When this multi-billion dollar problem struck a couple of years ago, it created a ripple effect, explained Gorjan Nikolik, associate director of animal protein with Rabobank International.
Nikolik said the disease created a major contraction in supply, which saw prices go up in 2014. In response, countries not affected by EMS, including India and Ecuador and to a certain extent Indonesia and Vietnam, stepped up their shrimp production, leading to a softening of prices throughout 2015.
However, in the second half of 2015, some of the countries originally hit hard by the EMS outbreak started to show signs of recovery. Thailand’s production went up by about 15 percent in H2 and Mexico and Malaysia also showed increases in their total output.
“Alongside the sustained growth in India and Ecuador, these supply increases resulted in an oversupply situation, where prices dropped considerably,” said Nikolik.
Toward the end of 2015 and early part of 2016, a lot of shrimp farmers – particularly in Vietnam and India – came to the decision that it was no longer profitable to farm shrimp and held back from stocking their production sites. There were also discoveries of new biological issues in certain regions.
“The profits are not raining in for shrimp farmers right now, that much is clear,” said Nikolik. “Our expectations are that some of the drivers of the recent past like India and Ecuador will hold back production growth for much of 2016, at least the first half of the year, because the prices are just not good enough yet for them to go to the next level of expansion. If the prices pick up then we can expect some growth; but if they stay low then we shouldn’t expect much growth in the shrimp sector this year.”
Any growth seen in the market will most likely come from the further recovery of Thailand, Mexico and Malaysia. Indonesia is also expected to continue its steady growth, he said.
“Most of the traders we have talked to have loaded a lot more shrimp coming out of Indonesia,” Nikolik said. “It has continued to grow – not as much as India in the last two years, but India is beginning to slow down and Indonesia has continued to increase its supply of shrimp in the past few months.”