Falling shrimp prices prompting US importers to think collectively
A group of U.S.-based shrimp importers are considering the creation of a farmed shrimp marketing board, spurred in part by a lack of timely data on shrimp sales, as well as harmful volatility in the market.
During the recent GOAL 2018 conference in Guayaquil, Ecuador, Global Aquaculture Alliance executives and a number of executives representing shrimp importers and shrimp industry professionals met to discuss the possible formation of a shrimp marketing board. The proposed entity would be similar in structure to the Haas Avocado Marketing Board and would include a mandatory assessment of all imported shrimp, which could then be used for data collection and forecasting, as well as marketing.
Another option discussed at GOAL involved a voluntary nationwide shrimp marketing organization, which could also collect data and funds from industry for marketing.
“The problem we have seen this year is that shrimp prices have really dropped heavily and they have been depressed for several months,” GAA President George Chamberlain told SeafoodSource. “There is a lot of concern and a rumor within the shrimp farming business that maybe these depressed prices are going to continue for quite some time and maybe even into next year.”
Additionally, global farmed shrimp production is expected to increase around six percent annually for the next three years, James Anderson, director of the Institute for Sustainable Food Systems at the University of Florida, said at GOAL.
As is the case with other agriculture commodities – and many seafood species – when there is a glut on the market, price falls and demand increases, so the market stabilizes, Chamberlain said. However, this does not typically happen with the imported shrimp market, which provides an estimated 98 percent of all shrimp sold in the United States.
“The production numbers are not rock solid," Chamberlain said. "So buyers would say, ‘I am hesitant to change menus. What if the low price corrects tomorrow?’”
Because shrimp farming has become more efficient and environmentally-friendly, with less disease, production has grown, Travis Larkin, president of the Raleigh, North Carolina-based Seafood Exchange, a shrimp importer and producer of value-added shrimp products, told SeafoodSource.
“The objective [of a national shrimp marketing organization] is to strengthen the marketplace, so this continued growth in production can be sustained,” said Larkin, one of the members of a committee formed at GOAL charged with looking into the formation of a national shrimp marketing organization.
Other members include: John Pollock and Eric Buckner with Sysco, Jennifer Wandler with US Foods, Noemi Jenkins with Pacific Seafood, Gabriel Luna with Chicken of the Sea, Allen Cooper with Marinasol, Chowdary Kunam with AZ Gems, Karuturi Subrahmanya Chowdary with Apex Frozen Foods, Jim Kenny with Urner Barry, Jenni Davis with Sea Port, and Warren Connelly with Trade Pacific.
Larkin cautions that the discussions of a shrimp marketing board or voluntary group are “really in its infancy.”
“We are just trying to see if it is a good opportunity. Nothing can happen without the buy-in of all the major players,” he said.
Along with developing a possible shrimp marketing collective, Larkin also favors strengthening the overall shrimp market.
“When we look at ‘Beef, it’s What’s for Dinner,' ‘Got Milk?,' and ‘Pork, the Other White Meat,' we think about what could be done to also strengthen shrimp,” Larkin said.
The primary competition for shrimp is not necessarily other seafood species, according to Larkin. Rather, it is land-based proteins such as chicken and pork.
For such a large industry, data collection and marketing of shrimp is poorly managed, Chamberlain added.
“We don’t have great stats and we don’t have a plan for how to move the market, and how to expand the demand," he said.
While GAA collects production data on shrimp, “it is not a perfect system,” Chamberlain said. “We don’t have access to very accurate data from each country – especially China.”
Even though marketing boards overseen by the U.S. Department of Agriculture have worked well for many agricultural commodities, the shrimp committee may learn that the USDA does not consider shrimp to be an agricultural commodity or the industry may prefer a “much simpler, voluntary model,” according to Chamberlain.
Whatever the industry decides, a shrimp marketing board or voluntary organization is not a “quick-fix solution for a pricing problem this year,” Chamberlain said.
“This won’t have any material effect on anything in the next two to three years,Chamberlain said. "This is something you do when you recognize you want to growth this business in the next 20 years."