Wish list for 2021: Markets must lead production

By Zuridah Merican

A wish list for our industry is more akin to a five-year plan such that the wish list for 2020 in the editorial of Jan/Feb 2020 remains relevant today. However, Covid-19 really threw a spanner in the works and from February onwards, the industry spent more time firefighting than planning for the future. We can look at this as a stress test which exposed all the weaknesses in the current model but at the same time, showed us there are opportunities.

The immediate challenge was falling demand and route to market. This is still relevant. Moving forward, the lesson to be learnt is that the market must lead our production strategy. The pandemic has highlighted the product preferences between the food service and retail segments. HOSO shrimp in various sizes is the mainstay of the food service segment while most consumers want value-added and ready-to-cook shrimp from online channels and supermarkets.

1. Producers need to offer a variety of products ranging from preparation, processing, marination and packaging. The pandemic also highlighted the need for value adding at source. Being over dependent on restaurants and fresh markets, live and chilled marine and freshwater fish faced significant reduced off-take. Processing and freezing for longterm storage and value adding for local and export markets are needed.

Shrimp is an elastic commodity. The retail market has learnt that with promotions and price discounts, demand increases but how far can the price drop before the farmers are impacted and may have no choice but to reduce supply. We now see direct cost of production for the vannamei shrimp to be in the region of USD 3.60-4.00/kg for 18-25g shrimp, and farmers in Asia may skip cycles with unsustainable ex-farm prices.

2. Will generic marketing help increase demand for Asian shrimp? The consensus is yes but unlike the generic marketing of salmon in Norway and shrimp from Ecuador, we are from numerous countries and a multitude of industry players such that cooperation remains more of a dream today.

The black tiger shrimp is indigenous to Asia and we have a unique tropical product and a competitive edge. Bangladesh has not forsaken the black tiger shrimp for the vannamei shrimp yet while Vietnam is still the leader.

3. The past three years has seen a renaissance of the black tiger shrimp with the availability of domesticated and SPF broodstock. What is required now is branding and sustainability for a premium price and to differentiate it from the ubiquitous vannamei shrimp.

Ranging from salmon and shrimp to pangasius, supply has been chasing the China market over the past 5 years but the pandemic has shown the weakness, of an over reliance on a single market.

4. Market diversification is the only way to ensure stability. A lesson to learn is how prices for Ecuador’s shrimp, reliant on the China market were the lowest globally in 2020.

The GOAL survey 2020 showed that rising feed costs was the major complaint of the shrimp industry. The root cause was the strength of the US dollar and all feed ingredients are denominated in USD. Feed quality depends on quality ingredients and the industry pays for what it gets.

5. AAP has always promoted the industry move away from cost of feed to the value of feed cost per kg of fish produced. This is where survival rate is the biggest determining factor. Any improvement in survival rate, whether for fish or shrimp, will automatically reduce feed cost per kg of fish produced. Today, we have added tools for optimising feed consumption, ranging from automatic feeders to artificial intelligence for real-time monitoring. Farmers must realise that overfeeding is not only money lost but also deteriorates the water quality leading to disease outbreaks, in both shrimp and fish farming.

The Asian industry comprises many small and medium scale farms. Today’s consumers are willing to favour them and pay a premium for products with provenance, traceability and even better, with a story to tell. However, all of this is ‘lost in translation’ as the product moves along the supply chain of brokers, processing plants and distribution.

6. Yes, the market must lead production but the industry has to work out the kinks in the supply chain such that the product does not become commoditised.