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January 31, 2020
 

Sri Lanka To Become The Next Competitor In The Global Pacific White Shrimp Market?

Reading time: 13 minutes
Currently, Sri Lanka produces a modest 8,000 tonnes of black tiger shrimp (P. monodon) annually. “Not too much,” you might say, but things are about to change. In 2019, the Sri Lankan government permitted the import of Pacific white shrimp (L. vannamei) broodstock for commercial purposes. Industry insiders are bullish about the potential to rapidly increase Sri Lanka’s shrimp production with this step.
Photo: Dilan Fernando, Tim O’Reilly, David Kawahigashi and S. Santhana Krishan amongst their employees at the TSG shrimp farm.

Having faith in the potential growth of the industry, later in 2019 CP Foods (CPF) announced its investment in Lotus Aquaculture, one of Sri Lanka’s leading aquaculture companies. Dilan Fernando, president of the Seafood Exporters Association in Sri Lanka and owner of Taprobane Seafood Group (TSG) also intends to profit from these buoyant predictions, even aspiring an output of 50,000 tonnes three years from now.
 
“How realistic are these projections of Sri Lanka’s production growth?” you ask. Well, read on to find out, as this article discusses Sri Lanka’s current shrimp industry, the standards necessary to successfully introduce Pacific white shrimp into the country and, finally, takes a closer look at TSG’s model farm.

Sri Lanka’s Shrimp Industry

Shrimp farming in Sri Lanka started on the east coast (Batticaloa District) in the late 1970s, but farming those operations were abandoned due to civil unrest. A new shrimp farming area was developed in the early 1980s along the coast of the Puttalam District in the north-western part of the country. There, the industry rapidly expanded due to the abundance of lagoons, swamps, tidal flats and estuaries well-suited for shrimp farming. The district’s vicinity to key infrastructure such as ports and processing facilities also contributed to the expansion. 

In 2004, Sri Lanka produced more than 4,000 tonnes of black tiger shrimp. Regrettably, a breakout of white spot disease collapsed production to just over 1,500 tonnes by 2005. Since then, black tiger shrimp production has recovered and even increased, reaching roughly 8,000 tonnes in 2019.

Although estimates vary slightly, there are now between 1,000 and 1,350 shrimp farms that cover more than 3,000 ha of grow-out ponds. A small number of farms are located on the east coast, while the remainder are located on the north-western coast. A study conducted in 2010 found that 73% of shrimp farms in

the Puttalam District were smaller than 2 ha, 18% were between 2 and 5 ha, andonly 9% of farms were larger than 5 ha.

Though some farmers use extensive production methods, the same study indicated that most farmers use semi-intensive systems in which ponds are aerated and shrimp are fed commercial feeds. Most small farms use open systems in which they pump water in and out of the waterbody they are connected to – one of the reasons why these farmers continue to struggle with disease outbreaks.



At the time of the study, in 2010, most of the medium-sized and large farms used semi-closed systems in which separate water inlets and outlets were connected to reservoir ponds, allowing them to treat the water before use. Although the study was conducted ten years ago, local sources observe that most farms in the Puttalam District haven’t significantly changed their farming systems.
 
In recent years, commercial shrimp farming has also developed north of Puttalam in the Mannar province. The new farms in Mannar are mainly of a larger scale. Mannar is also the location of the shrimp farm of Fernando’s TSG. Before discussing the TSG farm, let’s first dive into the prospects of introducing Pacific white shrimp in Sri Lanka.
Strict Standards Essential To Ensure Successful Introduction Of Pacific White

David Kawahigashi – owner of Hawaii-based technology transfer and training company Vannamei 101 – visited Sri Lanka in December 2019. The purpose of his visit was to assess the current status of the shrimp industry. In a brief report, Kawahigashi argues that Sri Lanka’s relative isolation and late introduction to Pacific white shrimp provides a healthy scenario for rapid but sustainable production growth. The main challenge for Sri Lanka, according to Kawahigashi, will be to make sure that the introduction of the new species is done in a very controlled way, according to strict standards and regulations. This will help prevent the outbreak of diseases that have struck other shrimp farmers in Asia, Kawahigashi told ShrimpTails.
 
The Sri Lankan Department of Fisheries and Aquatic Resources (DFAR) plays a decisive role in introducing Pacific white shrimp into the country. In 2018, the DFAR decided to grant permission to culture Pacific white shrimp in Sri Lanka and to start trials in order to identify the most important factors that would determine the successful introduction of the species. In this process, the DFAR worked closely with the two major industrial groups involved in Sri Lanka’s shrimp farming industry: TSG and Lotus Aquaculture (and indirectly with CPF through its investment in Lotus).
 
In 2018 and 2019, farming trials with Pacific white shrimp were conducted on the west coast, in the Puttalam District. During the trial period, the DFAR conducted an Import Risk Assessment (IRA) which provided recommendations about the conditions under which the Department of Wildlife Conservation (DWC) would permit the commercial import of Pacific white shrimp broodstock. Based on this risk assessment, the DFAR developed guidelines for good aquaculture practices and procedures (GAP guidelines), with regard to the import of broodstock from abroad. Early 2019, the DWC approved the import of broodstock and the DFAR permitted Pacific white shrimp to be cultured in Puttalam, Mannar and Batticaloa, providing all conditions are met.
 
Part of the recommendations from the IRA relates to requirements and procedures concerning the import of broodstock. So far, the DFAR has granted permits to two suppliers to export specific pathogen-free (SPF) Pacific white shrimp broodstock to Sri Lanka. Broodstock is to be kept in a government-operated quarantine facility before they can be stocked in the Sri Lankan hatcheries approved by the DFAR and produce Pacific white shrimp post-larvae.
 
By early 2020, the only two hatcheries that were involved in the import of Pacific white shrimp broodstock into Sri Lanka were those operated by TSG and CPF. TSG works together with Kona Bai and imports broodstock from Hawaii, while CPF imports broodstock from its facilities in Thailand. Although both groups primarily import for their own facilities, in due time, they will also supply other smaller hatcheries, which follow the guidelines set by the DFAR.

According to the DFAR’s regulations, TSG and CPF can only supply post-larvae to farms that have been approved by the government. To obtain approval, farmers should follow the good aquaculture practice guidelines that were developed by the DFAR in partnership with the shrimp industry, with particularly TSG and CPF playing a crucial role.

The guidelines are not currently developed as a national standard to be promoted abroad (such as VietGAP or ThaiGAP).
Instead, they are very stringent, encouraging the professional management of farms and the prevention of disease outbreaks.

These GAP guidelines include recommendations for farm design and layout (e.g. the presence of water storage and effluent treatment ponds), the presence of high-density polyethylene (HDPE) liners (if stocking density is above 50 post-larvae per m2), farm size (at least 4 acres in size and with a minimum of 10 metres between two farms, where smaller farms can function as clusters), pond construction (e.g. minimum water depth of 1.5 m, shrimp toilets present in each grow-out pond, which in turn is connected to a treatment pond) and other biosecurity measures (e.g. fencing, bird nets, disinfectant baths).
 
Furthermore, the guidelines provide recommendations for post-larvae handling, feed management, aeration use, and pond productivity monitoring. They also prohibit the destruction of mangroves for the construction of new ponds, ensure that local communities maintain access to the beaches to be able to reach fishing grounds and demand that producers strictly follow provincial environmental regulations. Sri Lanka’s environmental regulations are said to already be one of the strictest in Asia.
 
Tim O’Reilly, Managing Director and owner of TSG, explains that the guidelines are so rigorous to prevent Sri Lanka from making the same mistakes that other countries have made. If guidelines are absent or not strictly enforced, diseases can quickly ravage shrimp farms and put the industry at risk. Kawahigashi and O’Reilly emphasize that cooperation between the industry and the DFAR, to adjust regulations where needed and to strictly enforce regulations in the field, will be key for the introduction of Sri Lanka’s Pacific white shrimp to be successful.
 
TSG expects that the introduction of Pacific white shrimp will be gradual. First, most of the commercial, larger-scale farms will switch from black tiger to Pacific white shrimp. Then, within a couple of years, 80% of all farms, including smaller-scale farms, are expected to have switched. According to TSG, few new farms will be built. Instead, existing farms will be upgraded according to the new guidelines.
 
In order to include small-scale farmers in the introduction of Pacific white shrimp, the government guidelines provide special conditions under which small-scale farmers can be organized as clusters. Once organized, they have to follow the same guidelines as the larger-scale farms. O’Reilly acknowledges the challenge for small-scale farmers to meet these requirements. Therefore, TSG is counting on NGOs such as ILO, which is active in Sri Lanka, to support the first small-scale farmer clusters in making the transition.
 
TSG and CPF both express their eagerness to support farmers in swiftly and successfully transitioning to Pacific white shrimp. CPF, with its joint venture Lotus Aquaculture, will soon open a demonstration farm in Batticaloa on the east coast of Sri Lanka, which will be designed in line with the GAP guidelines. CPF aims to support other farmers on the east coast in using the same technologies, by supplying those technologies and providing training.
 
TSG aspires to bring round-tank technology to Sri Lanka and to support farmers in adopting these new processes, a current trend increasingly being used by small-scale farmers in Vietnam. Moreover, TSG’s brand-new farm in Mannar, in the northern part of the west coast, is expected to function as a model for other large-scale farms.
Photo: TSG shrimp farm (by S. Santhana Krishnan, Marine Technologies).
Taprobane Seafood Group (TSG) – A Model Farm

During his visit to Sri Lanka in December 2019, Kawahigashi also stopped by O’Reilly’s and Fernando’s farm, a 57-acre investment built on a former extensive black tiger shrimp farm in Mannar, and an example to other farms in Sri Lanka and abroad according to Kawahigashi. The farm is constructed and designed entirely according to the GAP guidelines, the development of which O’Reilly and Fernando turn out to have played a crucial role in.
 
Kawahigashi argues that the design and management of the farm checks all the boxes in terms of efficiency and sustainability:
  • The farm was built on land that was previously used for extensive shrimp farming. As such, no deforestation occurred.
  • The water is being recirculated – with 30% of the farm’s water surface dedicated to sedimentation and treatment ponds, almost 100% of the water is recycled. Heavier organic material is periodically removed and dried to serve as fertilizer or used in other land replenishment activities.
  • The farm is multi-trophic – sedimentation ponds are stocked with tilapia, oysters and sea cucumbers, providing the dual benefit of enhanced water quality and resulting in marketable by-products, of which sea cucumbers are particularly high-value, provided enough juveniles can be sourced.
  • It has a multi-phase design – a two-phase grow-out system optimizes efficiency and lowers risks by shortening the culture period to 30 days (nursery) and 70 days (grow-out), achieving a 40+ count per kg of shrimp.
  • Optimal performance through genetics – the match between the culture system and the right genetic performance of the animal is optimized. SPF certified broodstock imported from Hawaii bring fast growth and uniformity to the TSG farm.
  • Biosecurity – the combination of disease-free Pacific white shrimp post-larvae produced in a high-quality hatchery using imported SPF broodstock, coupled with a 100% recirculation farm in a relatively isolated location significantly reduces the risk of pond failure due to disease.
  • An added bonus of TSG’s shrimp farm is the presence of a 1,200-litre round grow-out tank, following Vietnam’s recent example.
 
The multi-phase farm design has proven to be the best defence against the ubiquitous Vibrio-triggered diseases (EMS, EHP, White Feces Syndrome, Vibriosis, etc.) that are ravaging some of the largest shrimp farming countries in Asia, such as India and Vietnam. According to Kawahigashi, the TSG farm takes a huge leap into the future, rather than just one step.
 
The trial period of culturing Pacific white shrimp at the TSG farm is officially over, with successful harvest results from the third grow-out cycle, totalling approximately 1,500 metric tonnes for 2019. Also, December 2019 marked the first stocking of a former black tiger shrimp farm, with more to come.
Will Sri Lankan Pacific white shrimp hit worldwide supermarkets anytime soon?

All things considered, how realistic is it for Sri Lanka to become the next competitor in the global Pacific white shrimp market, with a production target of 50,000 tonnes over the next few years? In truth, the stringent regulatory conditions under which the Sri Lankan government permits the production of Pacific white shrimp could be the basis of a sustainable and successful expansion of shrimp production. In line with Kawahigashi’s report, however, we must prevent unregulated expansion of Pacific white shrimp culture – as witnessed in other countries. In order to achieve this, it is crucial for government and industry to cooperate in adopting and enforcing regulations throughout the country.
 
Kawahigashi concludes his report by mentioning Sri Lanka’s unique opportunity to create its own success story of a sustainable shrimp industry. Government standards require farmers to adopt an efficient production model while at the same time safeguarding the environment and society. If done well, global shrimp markets could embrace Sri Lankan Pacific white shrimp as a product from a former conflict area with full BAP/ASC certification standards. A unique story, wouldn’t you say?
 
While we agree with Kawahigashi that Sri Lanka’s government and industry are in an exceptional position to set the country apart from its Asian competitors, in recent years the Pacific white shrimp market has rapidly become a commodity market, in which it’s increasingly difficult to set yourself apart. In order to be successful, the Sri Lankan government and industry have to work closely together. The government and industry could perhaps jointly further develop the GAP guidelines into a national standard that guarantees the sustainability of all Sri Lankan Pacific white shrimp, thus creating an in-demand national brand.
 
If shrimp farmers manage to increase their production, the surrounding industry will also need to develop further. For the shrimp industry to be price-competitive, domestically-produced feed and additional processing capacity might be required to process high-quality raw material into high-quality consumer products.
 
What is more, should Sri Lanka manage to increase its exports to 50,000 tonnes, it will have to develop its export markets. The country has quite a strong domestic market for shrimp, which so far has been able to absorb the majority of shrimp produced. Fernando expects that the first 10,000 tonnes of Pacific white shrimp might be supplied to the domestic market. As soon as that volume is exceeded, the remainder will need to be exported. So far, 80% of Sri Lanka’s black tiger shrimp exports went to Japan. With the switch to Pacific white shrimp, Sri Lanka will need to find other markets for its products, preferably markets in which consumers are receptive to Sri Lanka’s unique story and are willing to pay a premium price for its shrimp products.
 
Although Sri Lanka has many challenges to overcome – and will need the utmost commitment to maintain and enforce standards, guidelines and regulations – conditions seem favourable to the rapid expansion of the country’s shrimp farming industry. We might thus soon see Sri Lankan products in supermarkets around the world!
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