2022: A new equilibrium post Covid

Zuridah Merican

The year 2022 saw the opening and normalising of the economy in Asia. This meant back to in-person events such as AquaIndia 2022 and the Infofish Shrimp conferences in June. Towards the end of 2021, there was already a rebound in seafood consumption in the US and Europe – both retail for home consumption and food service, leading to a net increase. Unfortunately, in China, Asia’s largest shrimp market, uncertainty still prevails. What we also learnt from the last two years is that Chinese buyers were not ready to keep stock. It was a case of once bitten twice shy with stocks for the festive Chinese New Year which was muted for two years.

At the end of Q1 2022, we saw the inflection point, a consequence of several factors - supply chain disruptions and effects of the Ukraine invasion, raising feed costs and higher shrimp prices leading to drop in consumption. Since Q2, high inflation and an increase in interest rates as well as the high US dollar were pain points for aquafeed producers, said Piet Verstraete during TARS 2022. Unable to hold margins, feed millers started to raise feed prices, passing along costs, albeit in stages, to farmers. This was exacerbated by astronomically high wheat prices for shrimp feeds, in addition to the continuing high prices for corn, soybean meal and plant oils.

We are reminded of higher shrimp production from almost all countries in South America. Ecuador recorded almost a million tonnes of shrimp exports in 2021 and is on track to add more supply in 2022. GOAL in October, projected 1.3 million tonnes production from Ecuador while Asia would experience lower production by 0.1% in 2022. In September, at the Global Shrimp Forum, Ravi Kumar Yellanki expected a slow growth in India, with production down by 11% in 2022, mainly because of weather and disease factors. Asian players rationalised by explaining the price factor in the US market. For Ravi, Indian shrimp sell at higher prices than Ecuadorian shrimp.

Robins McIntosh has often reminded us that Asia is losing out with lower survival rates leading to higher production costs. Asian production has been expanding with new culture areas while Ecuadorian farmers work on improving efficiency with nursery systems and marginal higher stocking density within the same infrastructure. What is also impressive is how Ecuadorian producers could pivot quickly, distributing its shrimp into the three markets (US, Europe and Asia, including China), as these markets change. Ecuador’s National Chamber of Aquaculture (CNA) continues to attract attention with its efforts to differentiate its shrimp with Sustainable Shrimp Partnership (SSP) giving it better access into markets in Europe and the US.

Seafood Expo Global saw the first gathering of seafood players since 2019 and for the first time, the importance they are giving to sustainable feed ingredients and ESG (environmental social and governance) risk. Feed is a black box in the eyes of consumers who want to know what their fish and shrimp eat. The target is for a more sustainable food system and towards a 100% traceable and transparent supply chain. In addition, discussions also centered on the effects of climate change. Here Europe’s large aquafeed companies show that they are already leading with sustainable sourcing targets.

Are stakeholders expecting a return to normal prices for feed ingredients? At TARS 2022, Karla Canavan, WWF stated, no, it will not. Volatility will be here to stay and industry needs to adapt to this new reality. With rising costs of traditional ingredients, there is an opportunity for novel feed ingredients like insect meals and single cell proteins. Despite there being many suppliers, they seem to be missing the points of price versus functionality and scalability.

Innovations in aquaculture are plenty and there was no doubt that investments abounded in 2022. However, as the salmon industry has taken advantage of the market demand and limited supply growth, the marine fish industry in Asia seems to be very slow. Despite the volatility, high inflation and looming recession, the recent Rabobank report (October 2022) predicts high hopes for premium aquaculture. Apart from shrimp, here in Asia, we have to ask, which other products we can develop?

OUR MISSION

We strive to be the beacon for the regional aquaculture industry. We will be the window to the world for Asia-Pacific aquaculture producers and a door to the market for international suppliers. We strive to be the forum for the development of self-regulation in the Industry.

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