Ecuador’s shrimp industry finds silver lining in COVID-19 pandemic
The COVID-19 pandemic walloped the health sector and seafood markets worldwide, but Ecuador took the opportunity to diversify its USD 3.6 billion (EUR 3 billion) shrimp export market.
Prior to the pandemic, the country’s shrimp industry had mainly been oriented around the foodservice segment, according to Ecuador’s National Chamber of Aquaculture (CNA) Executive President José Antonio Camposano. That focus had to change rapidly once COVID-19 began forcing restaurant closures worldwide, Camposano told SeafoodSource.
“The pandemic arrived and forget about foodservice – no restaurants, hotels, cruises, events, nothing. When that happened, Ecuador was faced with a hard reality: How to sell shrimp if we can’t process the 120 million pounds that are exported every month from the country?” Camposano said. “I’d say February through September [of 2020] were very difficult months. Prices bottomed out, and Ecuador and its producers lost lots of money.”
The country saw a clear need to reinvent and redesign its industry to service the retail industry - in fact, sector observers had known this for some time but the pandemic accelerated those plans, Camposano said. At the start of the pandemic, Ecuador’s shrimp sector was partially servicing the supermarket segment, but with people locked down at home, online retail sales began to surge.
“The online segment, including retail, grew so much that we saw it was Ecuador’s chance to make the leap because we knew the numbers would be there. If you look at the U.S., it was the only country that actually increased shrimp consumption during the pandemic, particularly driven by the online segment,” Camposano said. “The other countries, including China, lowered their imports of shrimp.”
China, prior to the pandemic, was the main destination for Ecuador’s shrimp exports.
“China was our main market during the 12 months of the year. A total 65 to 70 percent of our volume was sold to China, even surpassing 80 percent in some months. But that’s now changed,” Camposano said.
In mid-summer 2020, China placed multiple bans on Ecuadorian shrimp after finding potential instances of COVID-19 on shrimp packaging. That forced Ecuador to find new markets, something it did successfully, Camposano said.
“Looking at figures from April and May, today Ecuador has demonstrated that thanks to that process of adaptation, it could diversify the markets. We’re sending more product to the U.S. and gaining market share there, and maintaining the leadership in Europe,” Camposano said.
According to CNA’s latest export numbers, Ecuador exported USD 406 million (EUR 341 million) and 161 million pounds (73,028 MT) of shrimp in the month of May, up 3.2 percent and 1.3 percent, respectively, year-over-year. In volume terms, exports to China dropped 40 percent to 69.3 million pounds (31,434 MT), representing 43 percent of Ecuador's total exports, compared to 73 percent from one year previous, while shipments to the U.S. and Europe surged 144 percent and 119 percent, respectively, to 46 million pounds (20,865 MT) and 35.6 million pounds (16,148 MT), representing weighting of 29 percent and 22 percent.
During the month of April, Ecuador hit an all-time high in export value and volume, shipping over USD 404 million (EUR 332 million) and 167 million pounds (75,873 MT), respectively, of shrimp abroad. In terms of volume, the Chinese market represented 49 percent of all of Ecuador’s shrimp exports, compared to 82 percent in April 2020.
“In the U.S., it wasn’t just selling to that market; it’s that within that market, with the restaurants, hotels, catering, and events closed, we were able to sell to the retail segment, to which we hadn’t sold in a long time.” Camposano said. “So we diversified destination markets and diversified market segments.”
Diversifying markets wasn’t as simple as just sending the same products to a different place, Camposano said. The nature of the demand in different regions meant Ecuador had to adapt its products and its production, he said.
“The markets have cyclical demand. China’s high demand for shrimp is different than that in the U.S., which in turn is different than Europe," Camposano said. “Ecuador can now meet the different peak demands throughout the year. There will be months in which the U.S. is our main market, others in which it will be Europe, and still others when it will be China. That’s healthy for Ecuador.”
Size and processing are key issues when addressing the different markets. While Ecuador has traditionally sent blocks of whole shrimp to China and Europe, the U.S. market prefers shrimp tail blocks, and the retail market demands packaged IQF.
“What I like to highlight here about Ecuador’s shrimp market is its capacity to react quickly. It’s made enormous efforts – big investments, hiring of personnel as this is a manual process – to process the shrimp and add value," Camposano said. "It’s a process that not everyone in Ecuador will be able to do. There will be plants that continue to attend the traditional markets and others that are in the process of investing to generate more value-added volume for those markets.”
Looking ahead, Camposano said Ecuador's shrimp industry has ample room for improvement in working with the government on issues including signing trade agreements with Ecuador’s main partners; lowering protectionist tariff policy for raw materials, supplies ,and capital goods; and doing away with value-added taxes on foreign currency exchange.
Camposano said that in terms of market projections, significant sector growth will depend on when the pandemic ends.
“Last year we grew 7 percent in volume and this year to date we’re up 10 percent. [The shrimp sector in] Ecuador has traditionally grown at about 18 percent a year, so we’re way below that now,” he said. “Returning to those growth rates after 2022 will depend on the pandemic. I’ve changed my speech on this because the U.S. is in plain recovery, but look at Chile for example, where there is a high rate of vaccination but contagion remains stubbornly high and they’re going back to lockdown. Then you look at what the WHO is saying about Europe, that due to the low rate of vaccinations, going into summer it is not recommendable to lift the restrictions so that the same thing doesn’t happen as last summer, when they had to close.”
As such, Camposano said he expects the growth rate in Ecuador's shrimp sector will be similar to this year, at about 8 to 10 percent, with a possible recovery in strong growth from 2023.
Photo courtesy of José Antonio Camposano/Twitter