Is the global shrimp market in danger of oversupply? : Mar 14, 2018
Dominic Welling : Intrafish
Global shrimp production continues to grow and volumes from Ecuador, Vietnam, China, Thailand, Indonesia and India will all increase in the coming months, industry watchers expect.
While the lack of disease or any other surprise issues in these countries is positive, “a big challenge will be the possibility of a general oversupply in the market,” Jim Gulkin, managing director at Siam Canadian, told IntraFish.
Production in Thailand, India, Indonesia and Vietnam will be in full swing from April onwards, so “unless demand substantially picks up, I expect the market to remain relatively flat/soft over the next six months,” he said.
A major US-based shrimp importer told IntraFish the production outlook from major producing countries looks good and there are hardly any reports of disease incidences, “but the low prices would keep farmers less interested in new stocking.”
In response it is likely farmers will adopt strategies involving low stocking densities with less risk and crop holidays.
However, surprise supply issues could occur through weather-related issues mostly caused due to monsoons and flooding.
China and Thailand now irrelevant for the EU
As for production in countries such as China and Thailand, both countries continue to have less of an impact on the world supply.
In fact, Jiro Takeuchi, director of EU importer Bonmea Finest Foods said, in terms of production, China and Thailand are “quite irrelevant to EU markets nowadays but I hear that volumes are to improve a bit.
“In an ideal world, I would be much happier to hear if those two countries do manage to sell all their shrimps into their own domestic consumption,” he said.
Both countries have a few things in common: a population large enough to consume their total production if wanted to and a strong steadily growing middle class able and willing to spend.
Gulkin confirmed China production is improving to some degree, but consumption continues to outpace domestic supply and shrimp imports in the country will continue to grow.
Likewise, Thailand is expected to improve production this year but “there is a big disconnect between farmers and processors in Thailand,” Gulkin said.
While processors need more shrimp, farmers are reluctant to increase production too much as they want to maintain high prices.
Processors want to import shrimp from India and other origins to make up for the shortfall in Thailand production but the farmers “are doing their utmost to block this by lobbying the government, threatening demonstrations and other civil action.” And these tactics have proved very successful for Thai shrimp farmers in the past.
The US-based importer, however, told IntraFish China continues to struggle with diseases resulting in poor production quantities in many regions, and Thailand continues to struggle with issues post-EMS.
“Farmers had been experimenting with low densities which also lower production quantities amid the risk of mortalities, slow growths, and weather,” he said.
India to continue to boom
Of all the shrimp producing nations, India is the sector developing and growing hard and fast at the moment.
Last year saw a potential blip, however, with the European Union threatening a ban on imports from the country due to use of antibiotics.
There was also talk, quite likely due to this situation, of a number of EU buyers shifting their purchasing to Vietnam instead.
Gulkin confirmed some EU buyers shifted to Vietnam due to concerns about India shipments into the EU being banned and/or more strictly regulated, but said “so far India continues to ship product to the EU and it seems unlikely that a ban will be put in place.”
The US-based shrimp buyer said the EU antibiotics issue from India which dominated seafood news in 2017 would be less an issue as the Indian government and MPEDA have been proactively addressing this issue.
“I think this would be a bigger issue for any origins if it’s not addressed properly as we know the farming systems are mostly similar in all countries,” he said.
Takeuchi, said the shift from India to Vietnam mostly concerned the commodity segment of the market.
“Interestingly for the retail segment, and the industry supplying this segment, I actually see a trend the other way around, not yet buying, but coming to see what is happening in India.
“ I guess, if one wants to deal with shrimp, can’t ignore the fact that India will become one of the largest producer of shrimps in the world and in addition to that, we have witnessed heavy investments in farms, factories and certifications in the last couple of years.”
Additionally, Takeuchi said more and more retailers in Europe have requirements for ASC-certified products, which is probably another reason why Vietnam is an increasingly important supplier.
Over in the United States, buyers are still hungry for Indian shrimp, the US buyer said.
“I see more and more acceptance and good reviews for Indian shrimp,” he said. “Some of the large buyers had been increasingly covering most of their needs from India origin shrimp.
Just looking at the increase in import quantities from India in the United States “reiterates the confidence with which the US buyers have on Indian shrimp.”
Breaded shrimp a new opportunity for India
India will continue its dominance on the peeled shrimp category, while Ecuador and Indonesia and other major producers will focus mostly on headless or easy peel categories, the US buyer said.
“Vietnam can be another peeled shrimp supplier but they had been focusing on markets other than the United States,” he said.
Meanwhile, new farms and modern processing plants will help India produce more value-added items like skewers, marinated, shrimp rings, etc., said the buyer. Cooked shrimp exports from India are also expected to increase during next couple of years.
“I don’t see any breaded shrimp facilities coming up in India, but there is an opportunity for someone to soon start up breaded shrimp production in India,” he said.
Challenge lies in innovation
For Europe, Takeuchi is expecting firm shrimp prices to remain combined with steady demand in the coming months.
“There are signs of a price slide, cheap offers in the market but the fact is that there is not so much activity either to be able to justify this as a market trend,” he said.
On one side, EU retailers have taken shrimp firmly and there is still room for innovation giving consumers new experiences. “That is the challenge that lays ahead in my mind right now.
“Shrimp prices have been firm but stable in the last few years and that has been beneficial towards steady demand and room for innovation”.
As long as there are no unexpected diseases, or drastic measures such as a red listing of a major country, or any other sort of crisis in the US or China market, “I am all in for a stable and strong market ahead,” he said.