< Previous06shrimptails | shrimpin’ ain’t easy10shrimptails | introduction to sourcing updates– and will not crash once the ﬁrst crop has been harvested, prices may drop again, depending on whether Vietnam’s competitors, especially India, will also have a successful ﬁrst crop.indiaFollowing the harvest of a moder-ate second crop by the end of this year, ShrimpTails expects India’s 2018 shrimp production volume and export volume to end up at a similar, or perhaps even slightly lower number than 2017. During the ﬁrst three months of 2019, India will see a relatively slow output; during the dry month January, for instance, farmers will be cleaning and preparing their ponds for the summer crop. In most areas, farmers will start stocking by mid-February when better weather will have arrived. Bearing in mind the second half of 2018 in terms of weather and the expectation that prices will likely increase during January and February when little product will be available in the market, ShrimpTails expects farmers to be eager to embark on this new crop and to stock at levels equal to or higher than 2017. In order to have an early understanding of what will happen in April when harvests of the ﬁrst crop start, it is crucial to keep a close eye on the sales of post-larvae and feed from India’s hatcheries and feed mills from February onwards. These factors will be important indicators of the size of India’s 2019 summer crop. indonesiaIndonesia does not follow the same pattern of crops as India and Vietnam. In October, Indonesia ﬁnished its second crop of the year. It was reportedly a good crop as weather conditions were favour-able and farmers were not confront-ed with as many disease-related issues as in the ﬁrst crop of 2018. The farmers have now stocked for a new crop – which will be harvested in early 2019 –, but the monsoon season, which arrived at the end of November, is causing problems for shrimp farmers in most parts of the country. Temperature, pH and salinity levels are ﬂuctuating and cause more disease-related prob-lems. As a result, we expect that most farmers will aim for a shorter cycle of the new crop and will har-vest from 65 to 75 days of culture, i.e. from early February 2019 on-wards at small sizes (mostly 65-80 count per kg). The monsoon season will continue until around April or May but will peak in January and February. Farmers in Indonesia are expected to stock for the second crop of 2019 from April onwards. banGladeshDecember marks the end of the season for black tiger shrimp (P. monodon) in Bangladesh, with most farmers draining their ponds to prepare for the new season. Over the past months, prices for 40 and 60 count per kg have exceeded those at the beginning of the season (September). A combination of low availability of quality post-larvae and the low farm gate prices in September due to the global price slump has made farmers reluctant to stock suﬃcient larvae in August and September. This has led to a low availability of raw material over the last months and an increase of prices. Following the trend of black tiger shrimp, farm gate prices for freshwater prawn (M. rosenbergii) have increased. ShrimpTails esti-mates that the production volume of freshwater prawn for 2018 is around 30% less compared to 2017. This has led to a price hike of over $2/kg for 10 count per kg of fresh-water prawn in two weeks. The cultivation season for freshwater prawn in Bangladesh runs up to February, and size availability will increase from 8-12 and 13-15 count per kg at the moment to including 6-8 count per kg in January.conclusionShrimpTails expects that farmers in India and Vietnam, after a tough second half of 2018, will be highly motivated to go for the ﬁrst crop of 2019 and that, even though markets will likely be ready to absorb more product than in early 2018, there will be an oversupply and farm gate prices and export prices are likely to decrease. In the short term, this may once again cause severe problems for farmers who may be struggling to cover their production cost. With regard to the long term, an important question recently raised by Simon Bush, professor of environmental policy at Wageningen University, at an EU-Vietnam shrimp dialogue is, even if there will be a situation of oversupply, how bad is this really for the industry? Shrimp has become a commodity product with big volumes being produced at a low price. While it will be crucial to promote consumption of shrimp globally, the key chal-lenge for producers around the world will be to be innovative, to diversify production and market strategies, and to make the indus-try more eﬃcient, from inputs to market distribution, and as such to reduce costs and increase mar-gins along the supply chain. 11shrimptails | farm gate price portalpre-regisTer for The price porTal seafood-tip.com/price-portal-reGistercomparison of farm Gate prices (in usd) of black tiGer shrimp in vietnam and banGladeshKhulna, Bangladesh Ca Mau, Vietnam 7.57 6.565.554.5420/76/824/810/91/1016/105/1123/11comparison of pacific white shrimp prices for 60 count per kG (in inr) in different indian statesAndhra PradeshWest Bengal Gujarat 350325 3002752502252009/726/713/827/85/912/101/1122/11100.00090.000 80.00070.00060.000pacific white shrimp prices for 40 count (in idr) in indonesiaLampungSulawesi East Java 20/88/827/816/97/1023/1010/1130/11launch of farm gatE PricE PortalShrimp prices all over the world ﬂuctuate continuously. While Paciﬁc white shrimp (L. vannamei) prices may drop in one part of India as harvests are starting, prices may be on the rise in another part of India where the harvesting season is coming to an end. And while black tiger shrimp (P. monodon) prices in Bangladesh may be stable, they may suddenly decrease in Vietnam if farmers harvest early because of heavy rains in Cà Mau. With its new farm gate price portal, STIP and partners – Jala, AquaConnect, Fresh Studio, Solidaridad, Andres Fajardo and Veriﬁk8 – support you in always having the latest prices in Indone-sia, India, Vietnam, Bangladesh and Thailand at hand. More origins will follow soon. For more information, e-mail firstname.lastname@example.org updateecuadorlooking back aT sepTember-november of This year, we see ThaT ecuador has conTinued To increase iTs exporT volume compared To 2017. however, The exporT value has not incrEasEd at thE samE PacE duE to continuEd low PricE lEVEls. comParEd to thE first half of 2018, PricEs haVE stabilizEd at a lowEr lEVEl than PrEVious years. one of The major challenges for ecuador’s ex-PortErs is that Ecuadorian farmErs tEnd to grow big-gEr sizEs in ordEr to fEtch bEttEr PricEs, whilE chinEsE cusTomers mainly demand smaller sizes (40-50, 50-60 and 70-80 counT per kg). Jasmijn Vennemanel oroguayasmanabiesmeraldas12shrimptails | ecuador sourcing updatelooking backEcuador’s total exports between January and October 2018 increased by 19% in volume and 13% in value compared to the same period in 2017. Every month of 2018 so far has contributed to this growth. Not one month dipped under the 2017 ﬁgures. Looking at the value of Ecua-dor’s exports instead of their volume, it is clear that the margins of Ecuador’s exporters and producers are still under pressure. In October, the value of shrimp exports merely increased by 3%, compared to an increase in volume of 11%. The average value per kg was $5.60 in October. Although statistics have not yet been published, rumour has it that prices in November have decreased to an average of $5.30. Since October, Ecuador’s 2018 export volume to Vietnam dipped under 2017’s export volume with a 2% drop, while the value of shrimp even dropped by 7%. Direct exports to China, on the other hand, increased rapidly. Looking at the year total so far (January-October), China im-ported more than 75,000 tonnes directly from Ecuador, an increase of almost 450% compared to the year before. In September and October, direct exports to China even increased by 602% and 802% respectively. These ﬁgures conﬁrm the rumours that – with border trade through Vietnam under pressure – Ecuador’s exporters are increasing their eﬀorts to export directly to China, despite the diﬃculties they face to get the necessary paper work done. While the introduction states that China mainly sources smaller sizes, several ShrimpTails sources report Chinese buyers ordering large amounts of 30-40 count per kg, especially brine frozen. At the mo-ment, there are only a few exporters in Ecuador that can brine freeze. At ﬁrst glance, not much has changed in Ecua-dor’s other markets. However, looking more closely, some interesting facts can be noted. Europe seems to consolidate its position as Ecuador’s second largest market. An interesting trend is that, in October, north-western Euro-pean countries like the Netherlands, Belgium and Germany imported record volumes of Ecuadorian shrimp, with year-on-year growth rates of 125%, 197% and 29% respectively. This may have been a response to the increasing farm gate prices in Asia in that period, which suddenly made Ecuador better able to compete with its Asian counterparts Vietnam and India. In previous months, Ecuador was also better positioned than Vietnam and India to oﬀer larger sizes. Although their total import volumes from Ecuador are still modest, this trend conﬁrms that north-western European buyers are ready to buy more Ecuadorian shrimp if and when prices are right. Outside Europe, in South Korea, issues with imports of Ecuadorian shrimp seem to have been resolved as imports increased drastically compared to September 2018, but also compared to October 2017 (both by respec-tively 50%). 13shrimptails | ecuador sourcing update On 21 August, the Ecuadorian government announced changes in the structure of the state, in which the elimination of the Ministry of Aquaculture and Fisher-ies is foreseen. This would mean reducing resources designated for the institutionalization of ﬁshing and aquaculture activities, which puts exports at risk, con-sidering that the shrimp sector alone contributes to more than $3bn of exports, according to Central Bank ﬁgures. It also generates around 261,000 direct and indirect jobs, according to José Antonio Camposano, president of Cámara Nacional de Acuacultura (CNA). In October, for the ﬁrst time in history, Omarsa was Ecuador’s largest exporter – in October alone, the company exported more than 7,500 tonnes. In 2019, Omarsa will incorporate a new shrimp processing plant expanding its processing capacity by 400 tonnes, which, together with expansion of the older plant, will bring Omarsa’s total capacity to 800 tonnes per day. The new factory focuses on head-on shell-on (HOSO) production. Songa is also about to start operating a new plant, which will increase its processing capacity from 120 to 250 tonnes per day. With this increased capacity, Son-domestic news company news omarsa songa paciﬁ c white shrimp january february march april may june july august september october november decemberecuadorharvestingcalenderlooking aheadDecember until April are normally challenging months for Ecuador’s farmers, ﬁrst due to the low temperatures in the winter season, and second because it is simultaneously the rainy season and El Niño might leave its mark on the country. Lower temperatures combined with lower salinity levels related to heavy rainfall make it diﬃcult for farmers to grow shrimp into bigger sizes. Moreover, if El Niño strikes this year, there is a risk of ﬂooding and farmers need to protect their ponds carefully. If prices for smaller sizes do not increase rapidly, there is a chance that independent farmers decide to stock less or pause stocking their ponds entire-ly. Vertically integrated farms are expected to continue to increase their stocking densities in order to keep the factories running and meet customer demand. Unless the weather will be extremely bad, it is expected that Ecuador’s shrimp output will continue to show year-on-year increases. The average price per kg, howev-er, is not expected to increase rapidly as there is an abundance of shrimp in the market and prices are not expected to recover signiﬁcantly any time soon, at least not in the coming six months. Farmers, therefore, will have to deal with lower proﬁt margins. While visiting the China Fisheries and Seafood Exhibition (CFSE) in Qingdao, we heard that Chinese demand for Chinese New Year has luckily increased, with orders being conﬁrmed during the show. Ecuador’s exporters are, how-ever, confronted with a challenge in terms of expected harvests during the Christmas season. There will be a full moon just before Christmas and farmers are expected to harvest their ponds massively during the day of the full moon. This means that exporters will have to keep their factories running during the holiday season to get everything frozen, packed and ready to ship. However, most banks and customs oﬃces will be closed during the holidays and it might be diﬃcult for Ecuador’s exporters to obtain all necessary paperwork. Some exporters, there-fore, signalled that shipments to China might get slightly delayed. ShrimpTails expects Ecuador’s direct exports to China to increase further in the ﬁrst months of 2019. Partially driven by the need to diversify from the border trade route through Vietnam, Chinese authorities have now renewed their eﬀorts to take severe measures against illegal trade and to start regulating the border trade more strictly. Another reason for our prediction is that Ecuador’s exporters increasingly see the beneﬁt of having access to China’s premium market, which is expected to grow further in the coming years and in which prices and demand are more stable. Besides exports to China, ShrimpTails also expects exports of peeled prod-ucts and ASC and organic certiﬁed products to grow further, as Ecuador’s exporters continue to invest in the certiﬁcation of farms and expansion of their processing capacity. However, the ex-pansion of the European market will be a gradual one and not a steep one. ga will be able to process all shrimp from its own farms in its own facil-ity, resulting in a projected export increase of about 30-40% in 2019. In an attempt to serve markets that have demand for peeled and other value-added products, Songa also invested in more value-adding processing equipment in its new facility.14shrimptails | ecuador breaks recordsoPtimization, not intEnsification While visiting Ecuador, we met with Skretting’s Ecuador General Manager Carlos Miranda, who was quick to tell us that even though Ecuador is increasing the pro-ductivity of its shrimp farms per hectare, this does not mean that Ecuadorian farmers will follow the Asian example of intensive farming. Similarly, proud Ecua-dorian shrimp farmers state that the robust shrimp sector in their country still exists after 40 years, and the ﬁrst pond that was dug 50 years ago is still being used today, because they have stayed true to themselves. They believe the drivers of the robustness of the sector to be the dedicated work-force with its long experience in shrimp farming and dedication to a high-quality product, and there is conﬁdence that the current structure of the sector will sup-port tomorrow’s growth. There is no intention among farmers to transition from the big ponds they use now (often of multiple hect-ares) to smaller ponds (of under .1 or .2 hect-ares), which are used for the Asian way of in-tensive shrimp production. The question remains, howev-er, without changing the basic infrastructure of their farms too much, how Ecuador will realize its growth ambition. For Ecuador-ians, the answer is easy: optimi-zation instead of intensiﬁcation. with Production VolumEs incrEasing EVEry yEar, thE shrimP sEctor in Ecuador is VEry much aliVE. oVEr thE nexT few years, The producTion volume is expecTed To incrEasE to 700,000 tonnEs, which would consolidatE Ecuador’s Position as onE of thE toP 5 global shrimP ProducErs. ShrimpTailS dEcidEd to diVE dEEPEr into thE Vibrant world of shrimP in Ecuador, and VisitEd thE country’s farms and factoriEs last sEPtEmbEr. wE wantEd to know how Ecuador Plans to rEalizE its am-bitious Production targEts – and got somE answErs. ecuador breaks recordsbut not the asian wayOptimization in Ecuador means “doing more with less”; more sustainable farming practices with higher outputs. A combination of improved genetics, increased use and implementation of nurser-ies, improved feeds, automated feeders and aeration in ponds can signiﬁcantly increase the output of Ecuador’s farms. A fully op-timized farm could increase its stocking density to up to 30 pl/m2, which is almost double the cur-rent average of 16 pl/m2. Although this is a drastic increase, densities of Ecuadorian farms remain far below those of their Asian com-petitors which range from 60 to even 250 pl/m2. Optimized ponds on Ecuadorian farms can produce about 15 tonnes/ha per year – double the average of the 8 tonnes they currently reach. optimization in ecuador means ‘doinG more with less’”15shrimptails | ecuador breaks recordsAlthough the transition in Ecua-dor has already started, currently only 10% (20,000 ha) of all farms in Ecuador have optimized their ponds with aerators and a sim-ilar percentage of farmers have installed automated feeding machines.thE nEEd to ElEctrifyOne of the major constraints to Ecuador’s drive to optimize its shrimp farms is that almost 99% of its shrimp farms are not con-nected to the electricity grid. As a result, farmers have to buy ma-chinery that is powered by diesel and diesel aggregators that come with high costs in terms of fuel and maintenance. The use of diesel is not only detrimental to the environment, it’s also not good for the farmers’ wallets. Especial-ly because the Ecuadorian gov-ernment has recently increased fuel prices, also for the shrimp industry. To solve this issue, the current government is expanding on the previous government’s investments in hydroelectric power plants, which did not entail investment in electrical distri-bution (substations and electrical power distribution lines). The current government, however, is willing to invest in this last part of the infrastructure, but it is also an opportunity for the private sector. Patricio Salazar Benitez, CEO of GPS Group, a consulting ﬁrm in Ecuador for the aquaculture almost 99% of ecuador’s shrimp farms are not con-nected to the electricity Grid”Quality measurements of shrimp in Ecuador.shrimptails | shrimpin’ ain’t easy16shrimptails | ecuador breaks recordsAn example of a company invest-ing in specialized feeds is Skret-ting, which developed a special feed for farmers that have recently started farming shrimp in the Tau-ra region, a freshwater area close to Guayaquil. The feed provides the shrimp with the diet they need to ﬂourish in this area. The company also wants to convince farmers to implement Skretting’s 360+ concept and the accompany-ing AquaSim app. Farmers make smart use of the competition between the feed companies, us-ing more than one feed brand and having the support of diﬀerent technical teams at their disposal. sector, has been working since 2016 to join forces with the government and the shrimp industry to get the job done. He told ShrimpTails that various ministries are willing to support the industry to make the necessary investments. GPS Group is prepared to lead this public pri-vate partnership focusing on elec-trifying Ecuador’s shrimp farming sector. In Patricio’s proposal, with an investment of $1.2bn, Ecuador could (1) connect 100,000 ha of shrimp farms to the electricity grid and (2) implement technology and electrical infrastructure inside farms, optimizing ponds with elec-trical aerators, automated feeding systems and electrical or auto-mated pump systems. This could increase Ecuador’s shrimp produc-tion by at least 30% and generate an additional $355m of annual export revenues. According to Patricio’s calculations, the investment would not only have an economic impact, but also an environmental and social one; increasing the produc-tivity, operational eﬃciency and competitiveness of the Ecuador-ian sector. The electriﬁcation and implementation of technology in the shrimp farming sector would save the use of 87 million gallons of diesel annually; 877,000 tonnes of CO2 (which equals planting 330,000 trees). As such, this initia-tive nicely complements Ecuador’s Sustainable Shrimp Partnership. Patricio’s GPS Group has set up the Aqua 2.0 project to achieve the goal of connecting 100,000 ha of shrimp farms to the electricity grid by 2030. Several industry players, such as Santa Priscila, Naturisa, Produmar and Empagran among others, have already joined the initiative.thE PiVotal rolE of fEEd comPaniEsMultinational feed companies like Biomar, Cargill, Nicovita and Skretting play an important role in the optimization of Ecuador’s shrimp farms. Increased competi-tion between these international players have compelled them to increase the quality of their feed and service. This is the only way for them to create loyalty among farmers and maintain or expand their market shares. For example, feed companies invest in spe-cialized feeds adjusted to local farming conditions, or innovative digital solutions enabling farmers to optimize their farm manage-ment and feeding practices. 17shrimptails | ecuador breaks recordsstill a sourcE for sustain-ablE shrimPWhen ShrimpTails started to dig into Ecuador’s drive to optimize its shrimp farms and increase its output, we wondered whether this optimization would conﬂict with the country’s image in the inter-national shrimp market. Ecuador is well known internationally for the quality of shrimp it produces and the extensive character of its shrimp farming sector. Imple-menting more intensive farming methods brings about risks like increased use of medicine, more environmental impact due to water discharge and increased use of shrimp feed with associated risks related to overﬁshing and forced labour. Ecuador has to be disciplined to prevent these risks from aﬀect-ing its brand in the international market. After having seen the optimized farms, ShrimpTails is convinced that, although opti-mization generally equals inten-siﬁcation, intensiﬁcation the Ecuadorian way has nothing to do with intensiﬁcation the Asian way. That said, and keeping in mind the Sustainable Shrimp Initiative, ShrimpTails expects Ecuador to remain a source for high-quality and sustainable shrimp.ecuador is well known internationally for the quality of shrimp it pro-duces and the extensive character of its shrimp farminG sector”18shrimptails | ecuador’s need and ambition to diversify19shrimptails | ecuador’s need and ambition to diversifyecuador is expecTed To increase iTs producTion signifi-cantly to about 700,000 tonnEs by oPtimizing its Pro-ducTion sysTems. ecuador’s leading exporTers have bEEn PrEParing for this through inVEstmEnts in thEir processing capaciTy. buT whaT abouT The markeT? in 2018, PricE dynamics haVE shown that thErE is no longEr a suPPly shortagE of shrimP on thE global markEt and ThaT prices are expecTed To sTabilize aT a lower level than bEforE. for Ecuador, which is confrontEd with rElatiVEly high labour costs, it will bE a challEngE to comPEtE on PricE with its asian countErParts. how will ecuador deal wiTh This challenge? ShrimpTailS diVEd into it to gEt an undErstanding of thE stratEgiEs ThaT ecuadorian exporTers are applying. to China’s wholesale market, in the premium market, consumers are looking for products that are branded as safe, healthy, sustain-able and of high quality. Recent export data shows us that while direct exports to China from Ecuador are still relatively small compared to the total volume of Ecuadorian shrimp that reaches the Chinese market, it is where growth happens. Direct exports from Ecuador to China increased by more than 400% from 13,000 tonnes in the ﬁrst three quarters of 2017 to almost 70,000 tonnes in the ﬁrst three quarters of 2018. Over the same period, exports to China through Vietnam were almost ﬂat at around 170,000 tonnes. This demonstrates that marketing eﬀorts of companies, like Songa, who have developed a oVErdEPEndEncy on thE chinEsE wholEsalE markEt China is by far the world’s larg-est market for head-on shell-on (HOSO) shrimp, and logically Ec-uador, the world’s largest produc-er of HOSO shrimp, is its major supplier. The total volume of Ecuadorian shrimp that reached the Chinese market in the ﬁrst three quarters of 2018 was about 240,000 tonnes, which is about 60% of Ecuador’s total exports. So far, Ecuador has mainly been selling its shrimp to China’s enor-mous wholesale market, which is mainly supplied through the bor-der trade with Vietnam. Although this market is good in terms of demand for larger volumes and absence of complicated product spec-iﬁcations, it’s not so good in terms of stabil-ity of demand and prices.In an eﬀort to diversify their markets in China, Ecuadorian exporters target China’s premium shrimp market. China’s premi-um market channels consist of upper-class retail chains, high-end restaurant chains and B2C e-commerce platforms. Contrary ecuador’s need and ambition to diversify its marketsin an effort to diversify their markets in china, ecuadorian exporters target china’s premium shrimp market”Next >
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