Loran co-founders José Lorenzo and Andrés Almada said the company, alongside the shrimp farmers with whom it partners, is looking to enter the U.S. marke after recent developments have made it a conducive time to attempt market penetration.
Loran, a Sonora, Mexico-based fishmeal and fish oil producer, commercializes animal feed products – from raw materials to finished products – including aqua pellet, pet food, fishmeal, fish oil, and grains and their byproducts. It currently has annual turnover of some USD 22 million (EUR 20.6 million), focusing mainly on the Mexican market with a smaller focus on exports to Chile.
The company is just beginning to export to the U.S. and Canada, too, Lorenzo told SeafoodSource.
“Due to our operation and market focus, we’re looking to add farmed shrimp to our range of products. We have experience working with this product – from harvesting to packaging, cold management, and inventories – and we see a good opportunity in exporting [shrimp] to North America since the certified producers are our own clients and business partners,” he said. “We have a good competitive advantage thanks to our geographical position. I understand that competition from countries like Ecuador and India is very strong, but if the U.S. applies duties, there is a good possibility for us.”
The U.S. Department of Commerce (DOC) leveled countervailing duties in March against shrimp from Ecuador, India, and Vietnam.
Ecuador was hit with the highest rate of the three countries and was facing a 7.55 percent countervailing duty on all shrimp exports to the U.S.; Ecuadorian shrimp company Santa Priscila in particular was given a 13.41 percent rate, while the Sociedad Nacional de Galapagos (SONGA) was penalized at a rate of 1.69 percent.
In a recent update, the DOC significantly reduced these duties and, in some cases, removed them entirely. Even though the duties have been lowered, Loran is hoping any duties at all will lead to less competition from larger shrimp-producing nations.
In Mexico, besides supplying aquaculture farms directly, Loran also supplies large agro-industrial firms such as Cargill and Nutec with raw materials and then distributes finished feed from those firms to shrimp farmers.
While it is impossible to compete with large firms in terms of financing and lines of credit, Loran’s added value, according to Lorenzo, is in partnering with the local producers to find new markets, getting better prices for shrimp on the market, and driving shrimp exports.
The ideal collaborators, according to the company, are Mexican farmers who are existing customers and whose operations already have Best Aquaculture Practices (BAP) certification.
“We can sell the feed to the shrimp farmer, but that farmer is in a difficult moment; they can try to sell shrimp in the domestic market, or they go through many different middlemen for the shrimp to get to the end consumer, which really affects prices,” Lorenzo said.
To alleviate some of the issues present in the Mexican shrimp industry, Lorenzo said he believes the sector can look toward produce – an industry in which the executive formerly worked.
“In produce, the relationship between the U.S. and Mexico is totally different: it is very organized and transparent. The brokers in the U.S. work very well in communications, there is transparency, and it is very structured,” he said. “That doesn’t happen with shrimp, so we’re looking to help out the shrimp farmers in placing their product and making this a more transparent business, helping the farmer to grow and gain economic stability. In that way, they can expand the business and purchase better-quality feed, which is what we provide.”
Loran is working on systems to establish traceability along the entire production and value chain, allowing consumers to utilize price look-up codes (PLUs) and bar codes to guarantee transparency and traceability.
Though Loran's efforts are gaining momentum, there are still hurdles that Mexico’s shrimp industry must overcome, according to Lorzeno.
The Mexican peso has gained strength when compared with the U.S. dollar, which does not help in exporting Mexican shrimp to its northern neighbor.
“Three years ago, the average price for the dollar was MXN 20 [USD 1.17, EUR 1.10], but now it’s about MXN 16.50 [USD 0.97, EUR 0.90]. Just because of the exchange rate, Mexican producers are losing out on 20 percent of the price. The government has not done much to help,” Almada told SeafoodSource. “As long as the dollar remains weak, exports will suffer and national production will have to fight for its place against imports.”
Similarly to U.S. shrimpers, Mexican shrimp farmers must also compete domestically with low-priced shrimp coming from Ecuador, much of which enters the country in unpredictable amounts.
“The situation of Ecuadorian shrimp coming to Mexico is serious. There is an issue of dumping that affects national production, but there is also a serious case of corruption in customs at the border; the level of shrimp entering the market is unprecedented,” Almada said. “Sales prices are very much below production costs. We’re expecting to see a 40 percent reduction in cultivation per hectare on a national level as a result. We can’t compete on equal footing with Ecuador, and this is jeopardizing the industry.”
According to Almada, Ecuadorian shrimp is entering Mexico not just from Central America but also from the U.S., where it enters Mexico at the northwestern border city of Tijuana from San Diego in California. From Central America, Ecuadorian shrimp is repackaged in Guatemala, and it enters Mexico as if it were a Guatemalan product, he asserted.
In December 2023, the Seventh District Court in the Mexican state of Sinaloa prohibited the entry into Mexico of farmed shrimp from Ecuador, as requested by the Sinaloa Confederation of Aquaculture Organizations (Coades).
The judge found that the prices of illegally imported shrimp from Ecuador and other Central American countries are well below those of national producers for sale to the public, which the court determined constitutes an unfair commercial practice and is a threat to national security, to food sovereignty, to the environment, to the Mexican shrimp industry, and overall public health.
Mexican producers generate around 40 percent of the farmed shrimp consumed in the country, employing 16,000 people directly and 80,000 indirectly, according to Coades.
