2021: The good, the bad and the ugly

from Aqua Culture Asia Pacific November/December 2021

2021: The good, the bad and the ugly

Zuridah Merican

Contrary to our worst fears, in 2021 some shrimp producers have done well, that is if their major market is the US, while uncertainty remains for others. Mass vaccinations have prompted revenge dining and increasing seafood demand.

While US imports for the retail sector have risen as consumers learnt to cook seafood at home, the reopening of food service has provided a net gain. Angel Rubio, Urner Barry (TARS 2021) predicted that we will soon see the highest shrimp consumption in the US. YTD July 2021, shrimp imports in the UK and EU27 countries are now recovering strongly with volumes above pre-pandemic levels, according to Rabobank’s Gorjan Nikolik at the IFFO conference in October. Global shrimp supply in 2021 is expected to be up by 8.4%, or perhaps up by 10% (as the year is still not over), led by Ecuador, according to GOAL 2021, held recently.

Post lockdowns, salmon and shrimp are winners, breaking records. In shrimp supply, India and Ecuador have pushed ahead. India has increased its share in the US market and Ecuador has pivoted quickly with value added shrimp, and from China to US and EU markets. The notion that Ecuador would always be a HOSO exporter and cannot do value adding cost effectively is no longer true. Integration in Ecuador could be the answer for its success.

Stakeholders have suffered from the disruptions along the supply chain. A New York Times article attributed this to retiring containers in 2020, containers going only one way, trapped containers, log jams and with no idea when this will return to pre-pandemic traffic. An important takeaway is how Asian producers lose with 6 weeks freight time versus 2 weeks for Latin American producers for the US market. Whether the added costs are shared by importers and exporters, it is still higher prices for consumers.

A new risk was introduced into the supply chain, led by China. While the US FDA, European Commission and other countries have always focussed on contaminants in seafood imports, China added inspections for the coronavirus on seafood packaging resulting in more delays.

Escalating prices for soybean meal, wheat and corn since the third quarter of 2020, continued into 2021. Soybean prices rose 57% over the September 2020-May 2021 period. High feed prices hurt more the producers of pangasius and other low value fish. Our May aquafeed report, noted that pangasius feed prices rose by 16% in Vietnam. Recently, the rise in shrimp feed prices in India was 8-12%.

Costs of production have been rising across species. Across supply chains, there are increases in energy, farm inputs and the expectation of more to come. Despite this, the industry has been living with the pandemic rather well. Open exchange of information was rampant across countries with a proliferation of webinars connecting people as the alternative to faceto-face meetings. Technology -savvy rose across the industry; not only farmers spending time to communicate online and with online training but how innovators have offered solutions. There is still hesitancy among stakeholders on the adoption of digitalisation to improve the ‘Internet of Things’ but imagine the pace if we did not have lockdowns. In 2021, we saw some IPOs; Barramundi Group was listed on the Euronext Growth Oslo Exchange, and Thai Union Feedmill on the Stock Exchange of Thailand. Both have large expansion plans using IPO proceeds.

In August, we had a successful virtual TARS 2021 covering the shrimp sector. One lesson from this TARS was that while Asia’s intensive farming continues to progress, it will be technology that will keep us ahead of competition together with a sustainability story, amicable to our markets. Read the story on pages 4-6.

In 2021, we have seen ‘the good (seafood as a winner), the bad (high feed and production costs) and the ugly (supply chain disruptions). In the next editorial in January, we will talk about anticipating a rebound. Happy New Year