Shrimp industry experts: Some COVID related changes to US market here to stay: Sep 30, 2020
Jason Huffman: UnderCurrentNews
Jump into a time machine and travel some months into the future, or — gasp -maybe even a whole year ahead — to the end of the coronavirus pandemic. Will shrimp consumption patterns return to what they were before?
Neither Jim Gulkin, the CEO and founder of Siam Canadian Group, a frozen shrimp and seafood supplier based in Bangkok, Thailand, nor Jeff Sedacca, CEO of the Sunnyvale Seafood Company, a Union City, California-based division of China’s Zhanjiang Guolian Aquatic Products, think so.
On the contrary, both revered shrimp industry experts said last week that they wouldn’t be surprised to see more people eating shrimp at home in the future, whether it be from retail or take out.
“I think the entire foodservice sector — and tourism is certainly part of that, cruise lines, theme parks, hotels, et cetera, et cetera — it is going to take some time for all of that to fully recover,” Gulkin (see a clip of Gulkin from the webinar below) said during a 90-minute webinar on the state of the shrimp market hosted by Undercurrent News.
“That isn’t going to happen overnight. It may happen quicker than one might have imagined a few months ago, but that’s all going to be very much dependent on the speed of a safe and effective vaccine and how long that’s going to take to get that through to 7-billion-plus people.
“So, it’ll be a few years until things really go back to normal,” he said. “And maybe things will not return to the way they were. There will be more consumption at home, whether it be from retail or whether it be from ordering from home.”
Sedacca, another panelist, agreed. He said COVID-19 might have expanded the market.
Consumers have traditionally “looked at shrimp as something that a lot of people ate when it was Valentine’s day and mother’s day, but because of the pricing and because of the shortage of other proteins and just the general panic, a lot more people have bought shrimp and learned to cook shrimp”, he said.
“And that might just be the new paradigm or the new normal and, in the long run, it doesn’t hurt our industry for the retail consumer to begin to see shrimp as a standard item, like chicken or hamburgers or so forth. So, we see that happening now.”
US restaurant industry to lose $240bn in sales in 2020
The webinar in which Gulkin and Sedacca made their encouraging comments preceded the release by the National Restaurant Association (NRA) of its latest COVID-related US restaurant survey on Monday.
The pandemic has caused about one in six US restaurants (representing nearly 100,000 businesses) to close either permanently or long-term. Sales were down 34% in August after the industry lost $165bn in revenue from March thru July. It’s on pace to lose $240bn in sales by year’s end, NRA reported.
The details were among those included in a letter NRA sent Monday to national legislators as part of the group’s effort to plead for short-term action.
Meanwhile, some states have begun to slowly peel back the restrictions that kept restaurants from serving customers. New York governor Andrew Cuomo announced on Wednesday (Sept. 9) that he would allow restaurants to maintain indoor dining at 25%. Florida governor Ron DeSantis said Friday (Sept. 11) that he is planning to ease restrictions that have limited restaurants in the state to 50% capacity.
Many restaurants had earlier expanded their outdoor eating capacities to deal with such limits and also to ease the trepidation of consumers. However, with no vaccine immediately available and warnings that the US might see another spike in cases in the fall, Sedacca and Gulkin expressed concern last week that cold weather in some parts of the country might soon eliminate the outdoor dining option.
“We’re coming into the fall and then winter, when outdoor dining doesn’t work well, especially in New York and Maine, in December and January, you know, when the snow starts,” Gulkin said. “So I think we’ll see a much lower level of foodservice there.
The high rate of failure by restaurants has led credit insurance companies to reduce the amount of coverage they will allow wholesalers, Sedacca said, noting a trend previously reported by Undercurrent concerning efforts by wholesalers to sell Canadian snow crabs. The credit insurance market, which is dominated by ve or six companies, has reduced coverage offers to as little as 20% or 30%, and some have canceled coverage.
It’s another problem that might not go away quickly, Sedacca warned.
Shrimp market divided in two
While foodservice sales look to remain down across the US, retail sales have picked up even more than expected, Gulkin said, noting how many retailers are now pushing for faster deliveries to keep up with the demand. It’s been a challenge as material prices are lower than they historically have been, but costs are higher in some countries, he said.
Meanwhile, overall shrimp production hasn’t been as down as what was initially expected, Gulkin and Sedacca said.
“The real question is production going to be down sufficiently to offset the demand drop?” Sedacca said (see a clip of Sedacca from the webinar below). “And from our perspective, we’re not seeing that. India has been producing shrimp pretty steadily for us.
As reported earlier by Undercurrent, US monthly shrimp imports roared back to the highest level for the year in July, led by a strong showing from India, the US’ largest shrimp supplier. The US took in 68,341 metric tons of shrimp worth $574.5 million in July 2020, 34% more in volume and 36% more in value than in June 2020, according to the National Ocean and Atmospheric Administration.
It was also 13% more in volume and 14% more in value than the 60,471t worth $502.5m.
However, while overall production and imports remain high, the shrimp market has largely divided itself into two, Sedacca explained during the webinar.
“What we’ve had is, we’ve had this dichotomy develop where we have an abundance of headless shrimp that’s focused on the foodservice business, which obviously doesn’t really exist that much, and a shortage of value-added goods as a result of the labor issues in India,” he said. “So we, basically, have had two markets develop, one long and one short.”
Because so much of the shrimp being produced is still for foodservice, freezer space and transportation availability have both caused bottlenecks for the retail geared shrimp that’s more in demand, as Undercurrent reported earlier.
However, as Sedacca explained, the shrimp market has become more uid. Retailers that were not able to get easy-peel or peeled-and-deveined shrimp have begun to accept and sell some IQF headless shrimp, he said. That opens up Ecuador, for example, to sell more shrimp.
“COVID may have created a new market or an expanded market,” Sedacca said.
Additionally, Ecuadorian processors have begun to shop for the peeling equipment needed to provide more value-added shrimp after being recently locked out of China, by far their largest market, he said.
Another trend Sedacca reported seeing: Argentine red shrimp showing up at retail counters, “not in place of vannamei” but as just another item. “The sales have been very, very brisk,” he said, and prices haven’t fallen, as the Argentinian shrimp is getting a premium for being wild-caught.
One thing that won’t change as much as might’ve been thought is shrimp producers growing more small shrimp to satisfy market demand, advised Robins McIntosh, a senior vice president at agribusiness giant Charoen Pokphand Foods, another one of the webinar panelists.
“People don’t understand this, but actually growing a large shrimp is cheaper than growing a small shrimp,”
McIntosh said. “…So farmers, if they have the capability to produce a large shrimp will produce a large shrimp. … So you will see more and more large shrimp being produced with the efciency of the stocks that are available.”
McIntosh said future production also depends on what the US market does.
“You know, if US consumption continues to increase to record highs [and] European consumption [increases], production will be there to meet it,” he predicted. “But on the other hand, if consumption doesn’t increase, I think that we will basically maintain a lower level just because farmers have to have a certain price to stay in business.”