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Top Species - Are farmed shrimp woes in the rearview mirror?

Road to recovery: Industry turns corner after EMS devastation

Buyers are considering all options in the wake of early mortality syndrome.  - Photo courtesy of National Aquaculture Group
By Joanne Friedrick
June 01, 2014

It is a case of lessons learned and contingency plans put into place for the farmed shrimp industry as it continues to deal with the aftermath of a global shortage brought on by early mortality syndrome (EMS).

In the wake of EMS, farmed shrimp supplies dropped and prices rose. In March, the U.S. Bureau of Labor Statistics reported that shrimp prices had jumped by 61 percent over the previous year.

The outbreak of EMS in Southeast Asia impacted suppliers in Thailand and Vietnam, which historically have been major farmed-shrimp producing countries. Fortunately, other countries have picked up some of the supply slack and that has brought prices down.

Gorjan Nikolik, associate director of animal protein for Rabobank International’s Food & Agribusiness Research and Advisory sector in Utrecht, Netherlands, says, “from a supply point of view, we did expect strong growth from Ecuador and India, which clearly happened. The expansion of vannamei farming in India is continuing and the region has strong momentum. The growth of supply from Indonesia and Vietnam, at least based on trade data of the first few months of 2014, is impressive and was not expected.”

Chicken of the Sea Frozen Foods “has moved a large percentage of its purchases away from affected countries to more stable ones” in an effort to “remain competitive and maintain continuity of supply for our customers,” according to Bogdan Serbu, marketing manager.

“We are seeing a new balance of supply and demand,” adds Serbu, “and while we feel that there will be volatility over the intermediate term, we anticipate that supplies will adequately fill demand on most sizes and product forms.”

Part of the equation, says Serbu, has been a lessening in demand because prices have risen. “We’ve seen demand on a customer-by-customer basis decrease moderately less than the corresponding increase in price,” he says. “For example, if prices have increased by 30 percent, we’ve seen customer-specific demand decrease by 20 to 25 percent, depending on the channel of trade.”

Scott Williams, associate VP of quality assurance and environmental stewardship for BJ’s Wholesale Club, which is headquartered in Westborough, Mass., acknowledges that his price changes have mirrored those experienced by the industry, and that supply is now shifting to new locations.

In April, Williams visited India and Indonesia looking for new sources after current suppliers in Vietnam and Thailand were affected by EMS. “We rode out last year,” says Williams, “and this year the conversation has been about what if those countries don’t come back?”

Williams is finding a “mixed bag” in terms of the quality of factories, and has approached them on an individual basis, scoring them as A, B or C factories based on what they can supply. 

“A big part of it is just the new infrastructure,” says Williams, noting that Thailand and Vietnam had been supplying shrimp for so long that many of the systems were already in place. “Some of these other countries are new to it and we have to figure out what information they need from us,” he says, referring to production quality and standards.

Although Thailand and Vietnam are likely to resume production at some point, Williams says moving to new suppliers is not a temporary solution. Rather, he says, BJ’s is looking to establish relationships that are for the long term. “Our goal is where can we get the best quality at the best value. If Thailand and Vietnam come back, we could continue a partnership” there as well, he says.

The outcome will be a more diversified selection, says Williams. That still doesn’t preclude another outbreak of disease, however. “When you look at farmed product, the possibility of disease is always present,” he says. “But what we’ve learned is we have to diversify who we buy from.”

Williams believes farmed seafood, like shrimp, is the future, especially as demand for seafood grows internationally. “We can’t ask the oceans to take on the burden [of increased production]. We can do more to control farmed seafood.”

Planning for the future 

Among the steps being taken by the industry in the aftermath of EMS is studying best practices and drawing some conclusions that can be used to manage the risks of disease in the future.

The St. Louis-based Global Aquaculture Alliance is working on a case study that surveys farms in six countries in Asia and Latin America that have achieved positive results despite being located near farms affected by EMS. The case study countries are China, Vietnam, Malaysia, Thailand, Mexico and India.

The plan is to have a report on the results available by October, says Steven Hedlund, communications manager for GAA. 

“Hopefully, we’ve turned the corner on EMS,” says Hedlund. “They are stocking ponds now in Asia and the coming crop of shrimp will be the test.”

The GAA serves as a facilitator, bringing together members of the industry to study the disease and make recommendations based on survey results. 

“Disease is a problem because the industry is so fragmented,” he says. “Disease risk management is becoming a big challenge within the industry. You can be doing everything right,” Hedlund explains, “but if your neighbor isn’t, you’ll have a problem.”

He says the industry is taking a more proactive approach, acknowledging that issues such as EMS, which first appeared in 2009 in China, have cost the shrimp industry more than $1
billion annually. 

Chicken of the Sea’s Serbu says the shrimp industry has taken several steps to stop the spread of EMS, including a change in the supply of broodstock and better management of ponds to optimize growing conditions. “This may include use of biofloc, feeds and stocking post larvae after they have been reared in nursery ponds or raceways,” he says. Farms have also used early harvest programs to reduce the time the shrimp are in that environment, he notes.

BJ’s Williams says because some shrimp are being harvested earlier there has been a shortage of larger sizes, so while prices have come down, the reductions are size-dependent.

In early May, prices at the New Fulton Fish Market at Hunts Point in the Bronx showed headless shell-on 16/20s in the $6.90 to $7.60 a pound range when sourced from Ecuador, Indonesia and India. Farmed whites from Mexico were slightly higher, at $9 for 16/20s. 

Rabobank’s Nikolik says global shrimp prices have contracted somewhat in the first quarter of this year relative to the fourth quarter of 2013. “We expected a stronger price correction due to a shift in demand,” he says and was surprised to see relatively high prices continuing.

“Consequently, we expect shrimp prices to come down during the summer,” he adds, “but as always, the shrimp market remains very hard to predict.”

Not EMS, but white spot 

National Prawn Co. in Saudi Arabia, which recently changed its name to  National Aquaculture Group, hasn’t been impacted by EMS, but did struggle with another shrimp disease — white spot syndrome virus (WSSV) — that impacted its Red Sea shrimp, Penaeus indicus.

Pedro Lopez-Sors Alonso, GM marketing and communications, says after three years of problems with WSSV, “our farms are now back in production and we are hopeful that we can supply volumes to overseas markets that are still coping with the supply issues from EMS-affected countries.”

Lopez-Sors Alonso says  the company is strengthening its market position so it can maintain any ground it has gained.

The company currently supplies buyers in the Middle East, Asia, Europe and the United States, he says. “Depending on the specific market, we are selling to many different types of customers, from seafood importers and distributors to supermarkets.”

To address the WSSV issue, he says the company changed from Penaeus indicus to Penaeus vannamei, “which allowed us access to commercially available SPF (specific pathogen free) broodstock.” Additionally, he says, “we consulted with many industry experts who had experience with previous WSSV outbreaks in both Asia and Latin America and deployed many of their recommendations in our grow-out operations.” The company also designed a strong biosecurity program and diversified into other products to ensure its future, says Lopez-Sors Alonso.

Looking at the larger picture, he says, the farmed shrimp market will remain undersupplied “as the global aquaculture community continues its work to better understand and recover
from EMS.”

The economic recovery in markets will also be a factor, adds Lopez-Sors Alonso, and should help maintain favorable prices as demand for shrimp improves.

Contributing Editor Joanne Friedrick lives in Portland, Maine 

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