Amid several challenges facing the global shrimp industry, Ecuador’s shrimp exporters in particular are dealing with tougher markets and an ongoing investigation by the U.S. International Trade Commission (USITC) into whether it engaged in illegal dumping.
The USITC investigation is one prong of a multifaceted campaign from U.S. lawmakers and the country’s domestic shrimp industry to crack down on imported shrimp.
On 16 January 2024, the USITC revealed the details of its investigation in a 200-page document, with evidence dumping is occurring. This came with the caveat that the U.S. may implement antidumping and countervailing duties in response. The document was cited in the USITC’s 12 December 2023 decision to continue its investigation but was only released in its entirety earlier this week.
“Based on the record in the preliminary phase of these investigations, we determine that there is a reasonable indication that an industry in the United States is materially injured by reason of imports of frozen warmwater shrimp from Ecuador and Indonesia that are allegedly sold in the United States at less than fair value and imports of subject merchandise from Ecuador, India, Indonesia, and Vietnam that are allegedly subsidized by the governments of [these countries],” it said.
The preliminary investigation determined U.S. shrimp producers and processors suffered a loss of sales and income due to foreign product being more available and cheaper than domestic product.
“One buyer stated that the price of farm-raised product from India was higher than that from Ecuador and that delivery times were much longer, which increased risks of fluctuation, while the product from Ecuador had lower prices in 2022 and 2023 with faster shipping times,” the report said.
Additionally, the report found eight of 13 responding buyers purchased imported shrimp rather than U.S. product, and of the eight, six bought shrimp from Ecuador and India, four from Indonesia, and two from Vietnam.
“Four of these buyers reported that price was the main reason for the decision to purchase ... rather than a product produced in the United States,” it said.
Two Ecuadorian companies – Santa Priscila and Songa – submitted trade data used by the commission in its report.
As part of the ultimate phase of the investigation, the report has been passed to the U.S. Department of Commerce, which will issue final determinations as to whether it will implement duties later in 2024.
Duties would be a huge blow to Ecuador’s shrimp sector, which is already struggling. It lost nearly USD 1.5 billion (EUR 1.4 billion) in 2023, according to the Ecuadorian National Aquaculture Chamber (CNA). Despite increasing total exports by 14 percent in volume to 2.44 billion pounds, or 1.11 million metric tons, through November 2023, the value of the country’s shrimp exports dropped USD 370 million (EUR 340 million) to USD 5.8 billion (EUR 5.3 billion), which was down from USD 6.2 billion (EUR 5.7 billion) over the same time period in 2022.
The CNA blamed China's economic weakness and the devaluation of the yuan against the U.S. dollar for reducing the purchasing power of Chinese importers, as well as ongoing inflation denting U.S. consumer interest in shrimp as the causes for its struggles.
"The global economy faces economic stagnation coupled with global inflation, leading to decreased purchasing power and subsequently, reduced demand for certain nonessential products," CNA said. "There's also an increase in the prices of raw materials used throughout the shrimp value chain.”
Ecuador’s shrimp sector is being hit by a liquidity reduction of USD 0.98 (EUR 0.90) per pound of shrimp produced, it said, and average prices fell to USD 4.81 (EUR 4.42) per pound in November 2023 – the lowest level seen since 2011.
"The industry faces competitiveness challenges due to the constant significant rise in operational costs in Ecuador, including fuel prices and increased raw material costs along the shrimp value chain," it said.
In response, Ecuadorian shrimp companies plan to lower production from 1.4 million MT in 2023 to 1.2 million MT in 2024 and will focus more on value-added products and peeled shrimp, according to the CNA.
“Ecuador's shrimp farming industry is … facing many difficulties, such as floods, epidemics, insecurity, degraded farming environments, plummeting shrimp prices, too much dependence on the Chinese market, and difficulties in the U.S. and E.U. markets,” it said.
Photo courtesy of Archer Dec24/Shutterstock
