The problem with Asian shrimp aquaculture today

Zuridah Merican

After 18 months of enduring the Covid-19 pandemic and lockdowns overturning the ‘businessas usual’ mode, the Asian shrimp aquaculture industry also sees over 45 years of existence as a business. It would be timely to review the state of industry and perhaps the best way is to look at the takeaway messages from TARS 2021 – Shrimp: Markets, Margins and Productivity held from August 18-20 and the breakout panel discussion on September 9.

Let us start with demand and the major markets of the US, EU and China. The common theme is the lockdowns have increased the share of the retail market over food service. With the reopening of food service, the demand has shown a net increase in the US with strong replenishment of the supply chain. A notable surprise is the lack of growth in Asian shrimp in the EU markets while in China, Ecuadorian shrimp has a better reputation. While Ecuador has made headway with its Sustainable Shrimp Partnership (SSP), Asia is still unable to tell a coherent sustainable story. Is this due to the largely fragmented industry and lack of traceability in the non-integrated supply chain or competition between countries and even the lack of cooperation amongst players within a country or all three factors? Whichever case, the Asian shrimp is not only lacking a sustainability label but also lacks the impetus to do so. Willem van der Pijl suggested pre-competitive branding led by major players in India.

Does the SWOT analysis reveal that the Asian model is the correct way forward? With increasing demand for shrimp and a lack of resources of land and water, the answer is yes but most farms are still stuck in a model 2.0 while the wish is a model akin to the Industrial Revolution 4.0. The biggest consequence of the current Asian model is the higher production cost per kg resulting from low survival rates and high disease incidences. Asia can only remain competitive if demand continues to grow faster than supply and global prices hold firm, but we are already hearing numerous countries reaching for the 1 million tonne production mark. This outlook does not provide confidence to potential investors. The choice is clear; to be market-led with sustainable shrimp or production driven and struggle with low prices.

To build confidence in potential investors, the following constraints must be answered. Our model today lacks predictability and there are no preventative measures in disease mitigation. Furthermore, there is no learning from the previous failure. The shrimp model 4.0 requires innovations in both hardware and software. The RAS model meets the hardware requirement of climate control and total water management but the cost of production on a per kg basis is still prohibitive to move the industry to make this revolutionary change. Perhaps a hybrid system could be a way forward. Assuming we currently take 100 days to reach size 60, this could be broken down to 20 days in hatchery, 30 days in a RAS nursery and 50 days in a grow-out pond to reduce production costs.

The software comprises 3 components i.e. artificial intelligence for real-time monitoring and predictability, big data analysis for the iterative learning process and the internet of things (IoT) to link all together. In this software area, the industry already sees numerous promising startups and TARS 2021 showcased four of them. Another weak link in the supply chain is our lack of strategy in tackling climate change. Shrimp aquaculture’s early history has been tainted by deforestation of mangroves and this still plaques us today. Due to the unique geographical requirement of shrimp farms, many are located far away from the national electrical grid forcing them to rely on diesel generator sets and this is not winning any points on the SDGs agenda.

This TARS highlighted two challenges with information. The first is the ability to determine usable and true data from all the accumulated data but perhaps the bigger issue confronting the industry is the reluctance to share information. Asian players hold the misconception that sharing equates to losing their competitive edge, failing to recognise that a rising tide lifts all boats. Pushing for a disruption here may be expecting too much but we must think of ways to ratchet up the cooperation amongst all of us.

If you have any comments, please email: zuridah@aquaasiapac.com