“More shrimp, less ice, no cheating on the size!”

March 13, 2019

Bangladesh Shrimp Market Consultation, 26 February 2019

As a relative newbie to the shrimp sector, I went to Utrecht on 26 February to report on the Bangladesh Shrimp Market Consultation without knowing what to expect. In the lead up to this day, I was told that I was about to witness something special. Apparently, it’s not an ordinary occurrence to have Bangladeshi government officials, some of Bangladesh’s leading shrimp exporters, Dutch and EU government representatives, and shrimp importers from the EU come together in the same room. It was not easy to make this happen!   So, what brought all these people to Utrecht – not the shrimp capital of the Netherlands to my knowledge – on this remarkably sunny February morning? Well, as it happens, Utrecht is the conference capital of the Netherlands, and is also home to the Seafood Trade Intelligence Portal (STIP), Solidaridad Europe and the Aquaculture Stewardship Council (ASC). Together with the Netherlands Enterprise Agency, they organized this day to discuss the Bangladeshi National Action Plan for the shrimp sector, to see whether their plan resonates with market realities in the EU and to get feedback from importers in Europe.  

Reason for this consultation and the hoped-for outcome

  But why is Bangladesh interesting enough for all these people to make the journey to Utrecht and what were the organizers hoping to achieve with this consultation? In a nutshell, the issue is as follows: Bangladesh produces a beautiful product, black tiger shrimp (P. monodon). This shrimp – native to Bangladesh – is farmed on small-scale, extensive, some say almost organic, farms. Unfortunately, after the shrimp are harvested from the ponds, because of problems in the supply chain, it loses a lot of its quality and ends up being sold cheaply to price-focused markets, mostly in the foodservice sector in countries like the Netherlands, Belgium and the UK. The shrimp sector in Bangladesh is now at a crossroads. One option is to switch to improved intensive farming methods to increase production or even switch to producing intensively farmed non-native Pacific white shrimp (L. vannamei). The other option is to maintain its extensive ways, increase productivity and improve quality to reach more high-value markets. Which direction should Bangladesh take?  

Plenary: the official line from Bangladesh and the EU

At the start of the day, the attendees were told that the meeting would be held under the Chatham House Rule. This means that participants are free to use the information received but that neither the affiliation nor the identity of the speaker can be revealed. This, of course, immediately triggered my curiosity. What’s so sensitive here? Making my first strides through the conference venue, the atmosphere did not seem tense and shrimpers were joking with each other and casually catching up. Well now, the reason for this measure given by the organizers was that they want to encourage the attendees to be authentic and to speak freely and openly. And indeed, later in the day, I would notice that there are some sensitive points of discussion and, truth be told, I did run into some fiery discussions!  
  Getting down to the nitty-gritty, let’s first look at some interesting key facts about the shrimp sector in Bangladesh presented by Mr. Saleh Ahmed of the Ministry of Fisheries and Livestock in the plenary session at the start of the day:
  • The fisheries sector contributes to 3.57% of Bangladesh’s GDP.
  • The shrimp sector employs 210,000 small- and medium-sized farmers.
  • Bangladesh produced 122,550 tonnes of shrimp in 2017-2018.
  • 98.48% of its shrimp is extensively farmed.
  • The shrimp sector contributes more than 70% of Bangladeshi agriculture exports.
  • 82% of Bangladeshi shrimp is exported to the EU.
  • The EU’s biggest importers are the Netherlands, the UK, Belgium and Germany.
  What is clear from these figures is that the shrimp sector represents a huge economic potential for Bangladesh with so many people involved and the sector making up such a large percentage of the country’s agricultural exports. Moreover, the EU is a hugely important market for Bangladesh.   Now, what does the National Action Plan say about the future of the shrimp sector in Bangladesh? It gives preference to increasing productivity in the (modified) extensive farming of black tiger shrimp by improving extensive farming methods. Some of the methods to achieve this are increasing pond depth, introducing more bio-secure nurseries, introducing specific pathogen free (SPF) post-larvae (PL), and conducting regular water and soil testing. One of the main ways to increase productivity and improve the supply chain is to introduce the cluster farming model. Another important point in the plan is to market black tiger shrimp as a premium brand in the international market.   In its presentations, the government of Bangladesh proved to be very confident that its produce is compliant with EU standards. This was indeed confirmed by DG SANTE of the European Commission (EC), which presented its audit on the safety of aquaculture products from Bangladesh. What struck me is that what appeared to be a very technocratic presentation to an outsider, such as I am, was actually received with the keenest of interest from the Bangladeshi side. Of course, the EC’s standards and their reports are of huge importance when you (want to) export shrimp to the EU. In any case, the EC’s main findings were very positive with few issues remaining in Bangladesh. Those issues that are still causing problems are mostly laboratory issues. Such good news for the delegation from Bangladesh was even met with applause from the audience.

Breakout discussions: not just a good news show

After the plenary session, we were split up into groups to have breakout discussions, and this is where the real fireworks of the day happened. As you now know, these discussions were held safely behind the protection of the Chatham House Rule, and this presented the opportunity to be very candid in some of the discussions that ensued. I, therefore, won’t disclose the identity of the participants, but will summarize the main gist of what was discussed.   I could feel a slight sense of frustration among the importers. Yes, they acknowledged that there is some good news, and that on paper the developments seem to be looking good. But according to them, there also remain some major issues in Bangladesh that need to be overcome before it can sell its shrimp to higher market segments. Most of these issues were related to the supply chain, which needs better handling, fewer middlemen, more speed, and better organization. In another breakout session it became clear that although there is potential to improve the position of Bangladesh’s shrimp in the market, legal issues relating to labelling, origin, and claims need to be dealt with. Without solutions for those issues, the success of any other investment may be doubtful, according to many of the EU participants.   On the other hand, participants from Bangladesh stressed that a fair price needs to be paid for its product. Pressure from the side of importers to get shrimp for the cheapest possible price leads to cost-cutting and a product that is deteriorated in quality. This point of view also resonated with a lot of importers from the EU: if you want a better product you have to be willing to pay for it. Moreover, in talks with exporters, I got a sense that they feel they can’t do it alone, and this feeling was echoed by some importers. One solution that was mentioned is for importers to forge closer links to producers and really invest in partnerships. On this point, one importer countered that the importers are not there for charity and it’s hard to invest time and money in these partnerships if there is no security about the product.   Next to these discussions about where and how to start improving the current situation, the Bangladeshi government’s and exporters’ efforts in the field of positioning black tiger shrimp from Bangladesh as a premium brand on the international market was also debated. In this regard, one importer pointed out that there can be a lot of talk about branding, but that there is also a need for concrete results in the field of certification, otherwise products from Bangladesh will never reach a high-value market. This feeling was shared by many importers. Currently, there are no ASC-certified shrimp from Bangladesh and it has proved hard for shrimp producers in Bangladesh to certify their shrimp, because there are a lot of small-scale farmers. On a positive note, the ASC, who also participated in the conference, does have plans to introduce group certification which could make it easier for small-scale producers in Bangladesh to become certified. It was also acknowledged by many EU importers that, if certified, Bangladeshi black tiger shrimp could certainly be sold into EU retail as a premium product set aside from cheaper pacific white shrimp.   So in the eyes of several EU importers, concrete action is now needed to actually improve the quality of the end product by solving the supply chain issues that currently plague the shrimp sector in Bangladesh, and less focus on branding. From the discussions, it is however clear that importers and exporters have a joint responsibility and that cooperation is needed in order to achieve a better situation.  

Conclusions and way forward

  To conclude, there was a lot of positive energy in the morning, some frustration during the breakout sessions in the afternoon, but there was certainly a willingness to work together towards improvements in the supply chain of Bangladeshi shrimp. In a bid to recapture that positivity and to find some concrete ways forward, during the last plenary session the organizers summarized the main issues together with the participants in order to come to some recommendations for the sector. They concluded that the situation in Bangladesh boils down to four main issues:
  • Lack of certification: work towards certification, which is needed to offer reassurance to importers and to enter high-value markets.
  • Problems related to quality: cut out steps in processing and cut out middlemen, go for larger size shrimp, and form partnerships to improve supply chains.
  • Legal issues: stop overglazing, no cheating on the shrimp count, achieve true traceability.
  • Marketing and branding: position black tiger shrimp from Bangladesh as a premium brand in the international market in order to get a higher price.
  An apt unofficial slogan for these recommendations could be “more shrimp, less ice, no cheating on the size”. The organizers also put forward the idea of starting structural working groups to work towards joint solutions to, over time, fix supply chain issues and improve the lives of farmers in Bangladesh and everybody in the Bangladeshi shrimp industry.   In addition, a large part of the value of organizing a day like this is found on a wholly different level. This might not be progress in the form of tangible results, but in the mere fact that all these people found themselves in the same room together for the first time. As one exporter from Bangladesh said: “We are extremely happy to be here today, it means so much to our country and sector”. Another Bangladeshi exporter told me that there have not been such frank discussions yet in Bangladesh on, for example, the topic of the enforcement of rules, with input from EU market parties. Until now, discussions have always been bilateral and it’s very positive that policy-makers get this feedback from market parties.   I could feel a sense of opportunity and that there is a genuine appreciation for the black tiger shrimp product from Bangladesh among importers in the EU. Their message is clear: stick to your unique and beautiful product, extensive black tiger shrimp, and if you focus on quality by improving supply chains and processing methods, markets will open up.   So, in summary, what we have is a receptive EU market and an optimistic shrimp sector in Bangladesh. All in all, a good basis to start improving, and a positive note to end the day on.  

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