Four Lessons That The Shrimp Sector Can Learn From The Salmon Industry

December 14, 2021

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Shrimp and salmon are some of the world’s seafood favourites. Both have successfully found their way to the plates of consumers around the world: they have become two of the most-traded seafood products in the world, in volume and value. In 2020, salmon trade reached 2.6m tonnes, valued at approximately USD 17 bn. Meanwhile, shrimp’s trade value reached around 3m tonnes with an approximate value of USD 22bn.

The two industries have a lot in common. Both contain mostly products of aquaculture and have a diverse set of markets and suppliers. However, compared to the salmon sector in terms of consolidation and modernization, the shrimp industry is still in its infancy.

This article takes a look at the shrimp industry through the eyes of one of the salmon sector’s most forefront names – Kontali’s Head of Analysis, Ragnar Nystøyl. Kontali systemizes the world of aquaculture and fisheries through data and intelligence, specializing in the analysis of coldwater species such as salmon, seabass and other pelagic fish. With 25 years of data collection for the salmon sector, Ragnar shares some of the lessons learned from a much more advanced industry, which Kontali hopes to apply to the shrimp sector.

Increase transparency within the sector
Possibly the most important insight gained from decades of gathering data is the fact that, much like the salmon sector, the shrimp industry will not progress without improving the sector’s data analysis and information sharing. “There is far more to be gained than lost by gathering additional data and increasing transparency within the sector,” Ragnar says.

The salmon industry is much more advanced in this regard, with regular and frequent release of data on production, trade flows and consumption. Kontali also uses other data sources to understand the dynamics within the salmon industry, including stocking levels, feed sales, productivity estimates, cost-margin estimates and qualitative insights from different industry players.

The shrimp industry is harder to map in terms of data collection due to a high level of fragmentation at the sourcing side. “It is a challenge to have an overview of the shrimp sector, because there are multiple players involved,” Ragnar explains. This includes lots of small to medium companies from different sourcing countries. “Only following several industry leaders is not enough to have the complete picture.”

Shrimp production also has a shorter cycle (2-3 months) compared to salmon, which usually takes 25-30 months. The shorter production time – with many factors that could influence the harvest such as quality of post-larvae, feed prices, water quality or disease outbreaks – makes data on shrimp much harder to collect and consolidate.

“There is far more to be gained than lost by gathering additional data and increasing transparency within the sector.”





To make this easier, the shrimp sector needs industry data that enables the stakeholders to not just track and forecast shrimp production but also consider other important markers or drivers, such as price volatility, new technologies, trade flows and changing market demands. To truly understand the shrimp sector, one must comb through the different levels of the supply chain and gather information at each level until the bigger picture reveals itself. That’s why having a strong network in this sector is key to understanding the nuances and gaps that pure quantitative data cannot fill.

Building a reliable data model takes hardwork and patience
Data are the building blocks of any successful analysis, but constant data surveillance is key to unlocking and
establishing a reliable data model.

Data modelling is a big part of Kontali’s success and the company aims to apply its knowledge of the salmon sector to the shrimp industry. “In building a model for the salmon industry, we found huge gaps. It is not always perfect, but we have consistently attempted to establish models that help us understand the industry’s dynamics. We do not just use data; we have a lot of qualitative information and insights as well. That is also an approach we are looking to apply to shrimp,” Ragnar says.

Shrimp market insights are vast and cover all levels of the supply chain, from production down to trade and consumption. “We have to track continuously with the aim of carrying out permanent surveillance. Through this, we can strengthen the quality of data that we have, model and estimate where there are data gaps, and carry out better analyses and interpretations,” Ragnar explains.

In the end, better information quality allows for much sounder decision-making. Reliable and constant information isn’t just important for producers and buyers but also for other players, such as banks, investors, suppliers of new technologies, researchers and governments.

Sector uncertainties are opportunities, not merely challenges
Much like salmon, shrimp has a high potential for growth. According to the recent Global Shrimp Aquaculture Production Survey and Forecast (GOAL 2021), global shrimp production in 2021 was predicted to be 8.9% higher than in 2020. A growth forecast of over 5% is expected for 2022. 

However, there are many ifs and buts that could tip the scale and change the dynamics, especially amid uncertainties brought about by the COVID-19 pandemic. Having worked in the industry for many years, Ragnar knows that analysts are bound to meet roadblocks of uncertainties. The high level of fluidity and volatility of the seafood sector due to its diversified suppliers and markets makes it an extremely challenging industry to track, but he believes that that same unique circumstance is what makes the sector full of opportunities.

“When you have many suppliers in terms of geography, cultures, dynamics and changing trade flows and markets, it creates a lot of uncertainty. That is the core concept of Kontali. Where there is uncertainty, there is an opportunity to offer market insights,” Ragnar says.

“If more stakeholders are willing to take calculated risks and informed decisions, they can add a lot of value to the industry. This means new and broader markets, financing solutions, innovations and increased governmental support.”

Target the right audience
The last piece of advice that Ragnar shares from his years of experience is that data is useless if you don’t have the right audience.

One thing that’s lacking in the shrimp industry which the salmon industry clearly has is capital. “There is a need to raise more capital for the shrimp industry. Salmon is capital intensive but the shrimp industry is not. The shrimp sector has less investments and less fixed assets, which makes it more difficult to consolidate,” Ragnar says.

“But this will change as the world sees more of the potential of the shrimp sector. Better insight, continuous sector surveillance and improved predictability represent risk reduction for players in all parts of the value chain.”

Part of the reason why the shrimp industry remains a challenging sector is the overall lack of consolidation and financial means to take the next steps in technical advancements and innovations in the areas of production, logistics and research.

 

And what’s a better way to increase capital in the sector than to encourage investors to engage and take part in it? Collecting more data and making the industry more transparent will establish trust and confidence.

“If more stakeholders are willing to take calculated risks and informed decisions, they can add a lot of value to the industry. This means new and broader markets, financing solutions, innovations and increased governmental support,” Ragnar explains.

There’s much to be done and a lot of data to be mined, organized and analysed before the shrimp sector can reach the level of consolidation of today’s salmon sector. But Kontali believes that it’s possible to elevate the shrimp sector and inspire it to become better informed and more advanced. With Kontali and Seafood TIP working hand in hand, the building blocks are being established. Surely it will take time and perseverance to translate a vision into reality. But these are all steps that need to be taken in order for the bigger picture to be revealed.

Disclaimer:
Kontali has acquired Seafood TIP in 2020, with the aim of strengthening its position as the leading global player in systemizing the world of fisheries and aquaculture. As a member-based social enterprise, Seafood TIP specializes in the analysis of production and trade of shrimp through monitoring weekly farmgate prices as well as trade analysis both of shrimp suppliers and markets. The author of this article is Sophia Balod, editor-in-chief of Seafood TIP.

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