Supply chain braces for impact as 'panic' in India farmed shrimp sector spreads: April 6, 2020
John Evans: Intrafish
With fewer people working, companies along the supply chain — from hatcheries to feed suppliers, farms to processing plants and packing companies — are braced for impact.
The fallout from the coronavirus health crisis being felt in the Indian shrimp industry is expected to impact the US market in May with producers in the Asian country’s market forced to sell product on the domestic market to keep cash rolling in, industry sources told IntraFish.
The Indian shrimp processing plants that are open are running at between 20-30 percent of capacity as firms already operating with less labor struggle with absenteeism by workers concerned at contracting coronavirus.
Plants started shutting down during the last week of March. Some re-opened with skeleton crews as companies tried to avoid potential contagion between workers.
With fewer people working, companies along the supply chain from hatcheries to feed suppliers, farms to processing plants and packing companies are braced for impact.
“It is going to have a very interesting effect because shrimp is not getting harvested,” said Bill Hoenig, vice president of sales and operations at Delta Blue Aquaculture and renowned shrimp market authority.
Whereas stocking densities in Latin America are around 18-22 shrimp per square meter, in India, Indonesia and surrounding countries this can hit around 150 shrimp per square meter.
Without access to coveted markets overseas such as the United States, where demand from the foodservice sector has plummeted, producers may turn to the local market, preferring to accept whatever prices they can get rather than letting their product go to waste.
“I know there is a panic as some farmers are trying to harvest and some farmers are waiting,” said one US importer of Indian shrimp.
US has been ordering strongly from Indonesia for the retail sector meaning Indonesian packers are busy and prices firm amid the slow down from in India, Jim Gulkin, managing director at Siam Canadian said.
With the death toll in India’s standing at 72 among 2,567 confirmed cases at the time of writing, the country’s 21 day lockdown is scheduled to end on April 14.
There is expectation in India that the government may opt for a staggered exit to the lockdown on the vast subcontinent in a bid to avoid social unrest in a country of more than 1.3 billion where extreme poverty is rife despite strides forward in recent years.
But whatever authorities decide, the effects are likely to be felt further forward.
“Farmers will not really be willing to take a risk when they start restocking after the shutdown,” said the US importer, adding that prices are little changed, with reductions in supply and demand currently evening out.
‘Frozen in time’
North Carolina-based importer and processor Seafood Exchange sources shrimp mostly from Ecuador, a rival to India in the US market.
Company President Travis Larkin said the coronavirus crisis has left industry executives scratching their heads.
“It feels like everything is just frozen in time right now,” he said. “No one really knows what to do. We have never been in this situation.”
With consignments taking a month and half to arrive, a slowdown in supply from India and its neighbors could start to become apparent in mid-May, in Larkin’s view.
This leaves the industry wondering whether the fall-off in demand from US foodservice operators will be mitigated by extra orders from retail as consumers languish in the safety of their homes.
“I don’t know if it’s going to be fifty-fifty or even-stevens but it might be a pretty close match,” Larkin added.
Tim Moore, vice president of procurement at Tampa Maid Foods in Florida, agrees with that assessment and said supply problems in India are likely to be reflected in the closure of processing plants and hatcheries.
“Pretty soon you are going to end up having a void in time with nothing to seed,” he said.
Gulkin agrees adding the issue is likely to be widespread.
“I think very likely farmers across Asia will slow down seeding as a result of low prices and the extreme uncertainly due to the COVID situation,” he said.
“That being the case, I do believe we will be seeing a shortage halfway into Q3 and through Q4 2020. If markets are starting to return to normal by then, we will likely see price increase.”