ShrimpTails Specials: The Power of Collaboration- GOAL 2018

September 28, 2018

The New Priority- a Unified Approach to Increase Shrimp Consumption

By: Willem van der Pijl After walking onto the stage, during the opening ceremony of the conference, Jose Antonio Camposano, president of the Chamber of Aquaculture (CnA), introduced the theme of the conference, ‘The power of collaboration’. Camposano believes that the success of any collaboration is built on four pillars: accountability, transparency, inclusion and progressive leadership. These are the bricks on which trust is built. According to Camposano, the power of collaboration is often limited by the high level of competition in the sector, which comes with rivalry, sensitivity and jealousy. Because business is so competitive, sometimes we forget the power of collaboration. He calls on the audience to change this, from this day onwards. With this year’s GOAL conference taking place in Guayaquil, Ecuador, it’s not surprising that the conference program concentrated on shrimp. While addressing the audience, GAA’s president, George Chamberlain, emphasises that, while previously the shrimp producing members had to overcome production challenges, now, with an oversupply of shrimp in the market, the new challenge is to increase global consumption. Without increasing consumption, as Rabobank’s Gorjan Nikolik warned, the recent low shrimp prices might be here to stay. GAA’s new Executive Director, Andrew Mallison, stressed that increasing global shrimp consumption can only be accomplished through the power of pre-competitive collaboration across the whole industry, as has been seen in the Norwegian seafood industry and with the HASS Avocado Board. Well, the scene has been set.

500,000 More Tonnes of Farmed Shrimp Coming into the Market from 2017 to 2020

Photo: slide from Jim Anderson’s presentation showing production figures
Although on Monday, in a closed meeting with data collection experts, we learned about the challenges of shrimp industry data collection, I’m still excited about Jim Anderson’s presentation on the results of GAA’s annual shrimp survey. This survey includes production forecasts of all shrimp producing countries and results in much more reliable figures than you normally get from the FAO. The survey also includes questions about market supply and demand in terms of shrimp sizes and an overview of the main concerns that producers in the various origins have. The main takeaways from the production perspective are as follows: GAA’s survey respondents estimate that global farmed shrimp production will increase by 5 to 6% per year, from now until 2020, resulting in 2020’s production values being 18% higher than those of 2017. This means growth from about 4.5 mln tonnes in 2018 to at least (I personally think the estimates are quite conservative) 5 mln tonnes by 2020. This is an incredible growth in absolute terms and whether the market will absorb this without having prices dropping below sustainable levels like happened earlier this year, is a major concern. As a side note- an interesting and significant trend that Anderson highlighted is that, while the demand and market value for larger sizes are still high in the US and EU, global production is moving towards smaller sizes, with South America as an exception. Although this may seem like an opportunity for South America, companies there prefer to export HOSO shrimp while the US, and many other markets, mainly buy HLSO or peeled products. To benefit from this trend, South American producers are likely to either diversify (by producing more value-added (peeled) products) or export first to Asia for further processing and then into the US and other markets. Might we also see an increase of machine peeled shrimp from Ecuador?  
Photo: Shrimp pond in Taura, Guayaquil, Ecuador
After Anderson finished, Rodrigo Laniado, owner of Songa, one of Ecuador’s largest shrimp exporters, told us about Ecuador’s contribution to the projected growth. While farms in Ecuador used to produce about 8 tonnes per hectare, with investments in aeration, automated feeding, genetics and water quality management, farms now reach production volumes of up to 15 tonnes per hectare, mainly due to higher stocking densities, better survival rates, and shorter grow-out periods. With optimized production methods, Ecuador’s production is projected to touch 500,000 tonnes in 2018. Interestingly, and in contrast to the Ecuadorian model of growth, Allan Cooper, of Peru’s Marinasol, told his story about their 110 ha of super-intensive greenhouse farms. These farms are completely technified and produce about 100 tonnes of shrimp per ha per year. Allan’s presentation raised questions for Rodrigo Laniado, who wished Allan luck when technology fails. The overall message of GOAL’s production panel participants is that, though different producers go about this in different ways, the technification and scientification of shrimp production will be one of the main drivers behind the 20% increase in production we will see over the next three years.

Collective Marketing as a Strategy to Increase Global Shrimp Consumption 

As mentioned, the shrimp industry pain point has shifted from production issues to that of overproduction and underconsumption. GAA’s shrimp survey mirrored the importance of this challenge, with market price developments being in the top 3 concerns identified by  respondents. The recent price slump proved that the market is not ready to absorb unlimited volumes of shrimp without prices dropping below sustainable levels. So, assuming that global shrimp production continues as expected, an important question is, “How to get consumers to absorb the high volumes of additional shrimp without the price dropping?” And thus, GOAL’s presenters and participants started to discuss the potential of collective marketing. To get us thinking and prepare us for Wednesday’s topic, Allan Cooper came back to the stage to present the success story of the collective marketing of the HASS Avocado Board, which comprises of US importers and producer associations from Chili, Peru and Mexico. The HASS avocado board was set up in the US after a majority vote of importers and producers; participation is mandatory for all. While prices remain firm, consumption of avocados in the US has been increasing rapidly and has almost doubled in the last 6 years. According to Allan, the two main success factors have been accurate and useful data, which helped to understand the market, and the collective marketing efforts of HASS members. Data collection, focused on the monitoring and forecasting of market demand and consumer preferences, enabled HASS members to improve their production practices and planning, to align with the market’s desires. Simultaneously, it allowed the HASS board to design marketing strategies based on consumer trends, like promoting the health benefits of avocados to match dietary trends. With HASS board activities being funded by members paying only 5 cents per pound of avocados sold, HASS has already conquered the US and has set its sights on China.
Photo: slide from Allan Cooper’s (Marinasol) presentation
The second day of the conference started where Allan left us on Tuesday evening. Should the shrimp industry find a joint marketing approach to boost consumption? Jeff Regnart used the example of the Alaska Seafood Marketing Initiative (ASMI),  a public-private partnership between the State of Alaska and the Alaskan seafood industry, established to foster economic development and increase the competitiveness of Alaskan seafood in the global market. Its work to boost the value of Alaska’s seafood product portfolio is accomplished through partnerships with retailers, foodservice distributors, restaurant chains, and the media. ASMI conducts consumer campaigns, public relations and advertising activities,  focusing on the branding of Alaska’s seafood around its sustainability. To create credibility, ASMI set up its own Responsible Fisheries Management (RFM) standard, which is broadly accepted in the market as it is also benchmarked by the Global Sustainable Seafood Initiative (GSSI). The RFM helped ASMI to continue to increase its competitiveness compared to the Russian pollock producers, for example, who were able to offer the same product at a much lower price. With its collective marketing efforts, Jeff claims that ASMI realises increased sales revenues of about 5 to 10% for Alaskan producers. ASMI’s budget in 2017 was about $16 mln, which is tiny compared to the money spent by the Norwegian Seafood Council (NSC). As the NSC was not present, GAA asked Ragnar Tveteras, from the University of Stavanger, to talk about their mandate. Ragnar was happy to do so but warned that not everything was positive. The mission of the NSC is to increase the demand for seafood from Norway and in 1991, the Norwegian government decided to introduce a collective financing law for the NSC. Exporters have to contribute 0.03% of salmon sales revenues and 0.75% of whitefish and other seafood. With this financial setup, NSC steps it up a level compared to ASMI. Alongside the growth of Norway’s seafood exports, NSC’s budget increased from around $20 mln in 2003 to about $50 mln in 2018. With a team of 70, based all over the world, NSC runs marketing campaigns, provides market intelligence to Norwegian companies, and manages reputational risks of Norwegian seafood.
Photo: snapshot of Norwegian Seafood from the NSC consumer website in Japan. Credit: NSC.
Ragnar shows figures which claim that the return on investment of its activities is somewhere between 5:1 and 10:1 for the increase of revenues for every dollar invested in collective marketing. However, Ragnar shares, not everyone in Norway is happy with the NSC. While the Norwegian companies can clearly see how much they put in, it’s difficult to see how much they get out. Furthermore, some complain that producers from other countries enjoy a “free ride” and profit from Norway’s collective marketing efforts, increasing the market for salmon, rather than just Norwegian salmon, for example. Some companies believe it better to spend the marketing money themselves, rather than collectively. Ragnar, concludes with saying that, although he believes in the strength of collective marketing, it’s not an all positive story. It brings challenges which require continuous dialogue, evaluation and renegotiation to be successful. While we at the GOAL conference are debating the value of collective marketing for the shrimp industry, Ecuador might answer this question for us. Jose Antonio Camposano, CNA’s president, starts and ends every meeting the same way. “Hi, I’m from Ecuador, and we have the best shrimp in the world”. Earlier in 2018, Camposano announced that a group of Ecuadorian shrimp companies, among which are OMARSA and SONGA, have launched the Sustainable Shrimp Partnership (SSP). SSP aims to reposition Ecuadorian shrimp as a premium product in the market, helping them better compete with producers in Asia. SSP’s marketing focusses on the sustainability of Ecuador’s shrimp farming sector and the exceptional quality of the shrimp it produces. Just like ASMI certifies fishing boats in Alaska, SSP will certify Ecuadorian farms. SSP’s standard adds some requirements on top of the ASC standard, to which all SSP members are committed. SSP aims to get premium prices for it’s certified shrimp. SSP has already launched in Europe and the US and will have a launch event in China during the Qingdao Seafood Show. The first SSP accredited shrimp is expected to hit the market in January 2019. Wanna know more about SSP? Read our interview with Avril Lavrim in ShrimpTails.    
Photo: snapshot of SSP’s website (photo credit: CnA)

Collective Marketing is the Way Forward

Throughout the week, panelists representing retail and food service in the US (among others Red Lobster, Sysco, Walt Disney, Captain D’s), China (JD.com) and Japan (Japanese Consumers Co-Operative Union) emphasized that, in order to get the consumer to eat more shrimp, the industry needs to support retailers and wholesalers to share the positive aspects of shrimp and seafood with the consumer. Almost all panellists agree that much positive change has happened over the past decade and farmed seafood has become a much more sustainable and responsible option. They all also stress that efforts to get consumers to see farmed seafood as a healthy and responsible source of animal protein need to be stepped up. Although I was a little bit afraid that GOAL 2018 would be talk without action, I was positively surprised by the outcomes of the final roundtable lunch. George Chamberlain, GAA’s president, asked the roughly 50 participants to think with him about how a unified approach towards marketing shrimp would look. The first question about which the attendants exchange thoughts is “Whether a mandatory or a voluntary approach should be taken?” The success story of the HASS avocado board was built on a mandatory approach, as was that of the NSC. Under US law, it is possible to establish a marketing board for agricultural products. If a majority of exporters and importers of the product, in this case, farmed shrimp, vote in favour of the establishment of the board, it would be compulsory for every exporter and importer to contribute financially. While a mandatory approach would have the benefit of not having free riders in the case of shrimp, it would be a long-term strategy and some participants called for some more direct action. With time running out, Chamberlain raised the question, “Who would be willing to take an active role in this joint endeavour?” At least 10 hands raised and this lunch meeting may have been the start of a unified approach to improve the consumer perception and to increase the consumption of farmed shrimp.   After a week of listening and talking at the GOAL conference in Guayaquil, my key takeaway is that to increase shrimp and seafood consumption, collective marketing and consumer education, driven by accurate data on market needs, is an absolute must. Without collaboration and a unified approach, the industry may see difficult times ahead. During the concluding lunch, it was clear that those present saw the potential of a collective marketing effort and several “progressive leaders” identified themselves and volunteered to take the lead.The buy-in of this diverse group and the formation of a committee of committed leaders makes me go home with dreams of a new and global marketing strategy for shrimp and hope for good things to come. MORE ABOUT THE NEED FOR COLLECTIVE MARKETING IN THE NEXT EDITION OF SHRIMPTAILS.
 

Wanna see a movie which aims to market aquaculture to consumers? Check this one: Journey of the Waterman.

FUTURPENOL, VAKSEA and OSMO SYSTEMS competed for the Aquaculture Innovation Award, sponsored by Skretting. The Winner?! OSMO SYSTEMS!  

WANNA KNOW MORE ABOUT OUR FINDINGS AND FUTURE PLANS IN ECUADOR? CONTACT Jasmijn Venneman (Jasmijn@seafood-tip.com). She will tell all…

Photo: Jasmijn Venneman at work in Ecuador

The GOAL conference

After previous editions of the Global Aquaculture Alliance’s GOAL conference taking place in Dublin (2017), Ho Chi Minh City (2016), and Vancouver (2015), this year Guayaquil, Ecuador’s shrimp capital, hosts the GAA community. 350 public and private sector representatives from the major shrimp producing countries, and the major shrimp markets came together to discuss the status of the industry and the challenges ahead. From the CEO of Biomar, to the owner of Omarsa, the purchasing director of JD.com and the person responsible for seafood at Disney- a diverse range of stakeholders with a common purpose: to prepare the global industry for an unpredictable future. The conference started Tuesday 25th in the morning with a presentation about the latest status of the GAA’s BAP certification program. During the finishing lunch on Thursday 27th, participants agreed that a collective push was needed, a joint effort to market shrimp and increase global consumption, and the beginnings of a committee were formed. Next up:
   

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