China’s shrimp industry still leads, but problems loom

An announcement from the East China Sea Fisheries Research Institute this month regarding a supposedly innovative shrimp seedling is the latest example of the search in China for a game-changer to boost its flagging national shrimp industry.

The institute claims its ‘Huang Hai No.2’ shrimp seedling, which is currently in trials in shrimp ponds in Hebei Province in northern China, will increase the average body weight of vannamei shrimp by 30 percent. The promising new seedling could answer some significant problems in China’s shrimp farming sector, as vannamei shrimp has become the overwhelming leader in the Chinese shrimp market since it was introduced to China in the 1990s, displacing other varieties, including what locals term the ‘Japan shrimp.’

While China remains the top producer of farmed shrimp in Asia, growing almost 1.8 million tons in 2015, up from 1.01 million tons in 2014 and 910,000 tons in 2013, there are signs its dominance in the marketplace will not continue.

While China remains well ahead in terms of overall volume of shrimp produced (second-placed producer Indonesia farmed 630,000 tons of shrimp in 2014, up from 565,000 tons the previous year, and third-placed Vietnam recorded 509,000 tons of shrimp, compared to 500,000 the previous year), China’s production is growing much more slowly than other supplier countries in its region.

Partially as a result of that slow growth, its shrimp exports are also declining; Chinese shrimp exports fell by 16 percent in volume and 26 percent in value year-on-year in 2015, to 149,000 tons worth USD 1.62 billion (EUR 1.46 million).

Rising domestic demand for shrimp as well as continued demand for processed exports means China must focus on increasing its yields and overall productivity of its shrimp sector, even as its central and local governments pursue a tightening of domestic environmental regulations.

The ability of local shrimp production is also being limited by a new drive in China’s government to tackle water pollution through better regulation of water-intensive industries. Both national and local offices of China’s Ocean and Fisheries Bureau have issued statements warning that unlined ponds are causing salt and wastewater to contaminate groundwater supplies. China’s government is now requiring the completion of site evaluation forms for all newly proposed shrimp farms, responding to concerns that overstocking is hurting the entire industry and is depleting local land and shore space (intensive shrimp operations in China typically only last five years before pollution and pathogens render the pond unusable). As part of its evaluation, the government has been demanding proof that better layout, engineering, and management practices will be implemented before allowing the construction of any new farms.

Another limiting factor for Chinese shrimp farmers are the diseases present in their shrimp and caused or exacerbated by overcrowding. The diseases are commonly treated with chloramphenicol and the antifungals malachite green and gentian violet, but their use has resulted in many rejections of Chinese shrimp shipments by customs authorities in the E.U. and U.S., which have become much stricter about tracking and testing seafood imports from China.

The end result of the new government efforts to improve production quality, however, is a much lower available domestic supply of shrimp. As a result, Chinese shrimp firms and processors have looked to shrimp farms in Vietnam to supply cheaper shrimp as local supply has tightened.

While China’s exports fell 13.6 percent in 2014, its imports of shrimp rose by10 percent to 78,000 tons in 2014. And that figure may be a low estimate, as it includes only official imports and excludes a massive informal trade in imports from Vietnam, which supplies Chinese processors and the domestic market with shrimp from its own farms as well as imports funneled through Vietnam to avoid customs duties.

Meanwhile, India has cemented its position as the top supplier to the United States, the world’s biggest buyer of shrimp. Simultaneously, China reduced its shipments to the U.S. considerably, from 42,000 tons in 2009 to 32,500 tons in 2014. There’s been a similar pattern in China’s shrimp sales to the European Union, as shipments fell from 40,200 tons in 2009 to 28,800 tons in 2014.

Given these problems, the concurrent growth in both domestic demand and imports, and the fact that locally raised brood-stock generally suffers from poor reproductive qualities and produces shrimp that are slow-growing and irregular in size, there is certainly a need for higher quality in shrimp breeding in China.

So increasing the local supply of seedlings makes commercial sense, but the challenge for local breeders will come as they attempt to charge a premium price for quality larvae. The uphill battle they face is due to the poor reputation held by local breeders. Prices for each locally raised brood-stock range from USD 2.50 to USD 4.50 (EUR 2.25 to 4.06), deeply discounted compared to the USD 40.00 (EUR 36.00) average paid for imported larvae.

At the recent annual Seafood Procurement Fair Zhanjiang in the city of Zhanjiang – the country’s shrimp capital and a key trans-shipment point for shrimp imported from Vietnam – Pang Chao Hui, head of the Aquatic Products Committee at the China Industry and Commerce administration, a government body, said China’s government “wants sustainable shrimp aquaculture.”

Improving its breeding program to achieve better yields is a good start along the path of sustainability that Pang and the Chinese government ostensibly wants to go down. But China best look to fix the fundamental problems around quality and overcrowding if it truly wishes to achieve sustainability in its shrimp farming industry.


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