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International Sourcing: Mexico
Shrimp farming a larger part of the country's seafood landscape
By Chris Anderson
July 01, 2007
Like agriculture, the fishing industry in Mexico remains an
important part of the fabric of life in many rural, remote
areas of the country, notably in the northwest regions where
the arid land has locals turning their eyes to the sea for a
food source and to make their living.
The highest volume of fish landings are concentrated in the
pelagic species and much of this ends up canned, never to see
the U.S. market, says Rafael Ruiz Moreno, president of Grupo
del Rey in Tampico, Mexico, and president of the Cámara
Nacional de la Industria Pesquera, a government organization
that helps set fishing policy and regulations. Quoting
government statistics, Moreno notes that in 2006, Mexican
fisherman caught more than 1 billion pounds of sardines and
more than 220 million pounds of tuna. Of that amount, between
the two species, only 55,000 pounds entered the United States
last year.
Instead, Mexican exporters long have found a willing and
growing market to the north to feed Americans' voracious
appetite for shrimp. In terms of Mexican seafood imports in the
United States, there is shrimp at No. 1 with all other species
combined running a distant second. According to National Marine
Fisheries Service data, Mexican shrimp of all sizes and forms
brought into the U.S. market last year totaled 331,350 pounds,
or 41.7 percent of the country's total gross weight seafood
imports for the year. But the real story is in the dollar value
of that shrimp, which rang up 2006 receipts of nearly $18
million, or 62 percent of the total dollar value of U.S.
Mexican seafood imports.
By comparison, the next most lucrative species exported from
Mexico was grouper, but at only 70,500 pounds and a value of
$1.85 million, it represented only a little more than one-tenth
of shrimp. Snapper, the only other species that topped more
than $1 million last year, has remained steady over the last 10
years, despite a small drop in 2002, with a typical annual
export quantity of between 60,000 and 80,000 pounds.
Overall, despite a strong market for shrimp, Mexican seafood
imports over the past decade have seen a steady decline. Total
gross weight exports in 1997 registered 13.5 million pounds,
which has dropped to roughly 60 percent of that amount, or 7.9
million pounds in 2006. In terms of total dollars, Mexican
seafood imports fell 38 percent over the decade to $28.8
million from $46 million.
But much of this decline can also be traced to shrimp's
overwhelming portion of the pie. Ten years ago, Mexican shrimp
exports covered the entire range of sizes including smaller
sizes like 51/60s, 61/70s and 70-plus. These totaled about 30
percent or about 1.3 million pounds of the export total in
1997. In 2006, the same sizes accounted for only about 22,000
pounds, and in 2005 NMFS numbers show that not a single pound
of Mexican shrimp entered this country in the 51/60 or 61/70
sizes.
"We focus on producing the bigger sizes for the United
States market, because that is what they like," says Enrique
Diaz Castro, GM of shrimp producer Diazteca, based in Mazatlan.
"The smaller sizes we will sell in Mexico or in other markets
because we can get a better price."
The move to farmed shrimp
Farm-raised shrimp didn't take off in Mexico until the late
1990s. Prior to 1994, private interests and companies were
prohibited by law from running aquaculture operations to raise
shrimp.
"Before the law was changed it was only cooperativas (large
government-sponsored cooperatives) that could have aquaculture
for seven species and shrimp was one of them," explains Moreno.
"When the law was changed, then it made it possible for private
people to come in and make investments and that is when [shrimp
farming] started growing."
Private interests began building shrimp farms, first in the
state of Sinaloa in northwest Mexico on the eastern edge of the
Sea of Cortez. But the early years of raising shrimp were not
particularly kind to the new investors. Broodstock for the
operations was caught in the wild - a practice that has since
been outlawed by the Mexican government - and yields from these
were not particularly high. Many operations, like shrimp farms
in other parts of the world, struggled with infections and
bacteria that killed significant portions of the shrimp before
they were big enough to harvest.
"There was a learning curve," Moreno notes. "It was
expensive to start the farms and the shrimp quality was not as
good as from other parts of the world."
But the struggles lasted only a few years. In the late
1990s, shrimp farms began migrating north into the state of
Sonora, and with this surge came a commitment from the farmers
to document their best practices not only for how to raise
shrimp, but how to do so using methods that were
environmentally responsible.
One such effort was coordinated by the Pacific Aquaculture
and Coastal Resources Center at the University of Hawaii at
Hilo, which counted a handful of project partners from Mexican
aquaculture groups, government agencies and local universities.
The program also sought out and brought to Mexico managers and
technicians of shrimp farms in Ecuador - one of the first Latin
American countries to develop a sustainable shrimp aquaculture
industry.
Such activities have today
translated to a vibrant and
sustainable industry.
"We are much better at finding disease early and treating
it," says Castro. "And the broodstock is getting stronger
genetically, is more resistant to disease and that helps
increase yields."
Fighting the price battle
While the shrimp farmers have overcome early struggles with
the farms themselves, a new challenge has emerged: pricing.
Fueled by increasing U.S. demand for shrimp, other countries
around the world, including Thailand, Vietnam, Brazil and
Ecuador, have flooded the market with large volumes of
inexpensive shrimp that could spell trouble for the Mexican
shrimp farmers.
While prices have been creeping a bit higher in recent
months, "I think you are going to have to wait and see what
happens, two months doesn't make a trend," says John Filose, VP
of sales and marketing of Ocean Garden Products in San Diego, a
major importer of Mexican shrimp.
The folks at Diazteca, which three years ago opened an
office in Rio Rico, Ariz., to sell its farmed shrimp direct to
U.S. distributors, have felt that pinch.
"The prices right now for 16/20 shrimp are 45 percent lower
than they were just a few years ago," says Castro.
The sheer import volume from competitors whose operations
are cheaper can be daunting, but it is not impossible to
overcome, says Tonatiuh Carillo, manager of Consejo Mexicano
del Camaron (Mexican Shrimp Council). "Shrimp producers have
been getting less and less due to the competition with other
countries like the Asian countries," he says. "Everyone is
growing shrimp now, but that doesn't mean it is the same
quality."
For that reason, the Mexican Shrimp Council is educating
U.S. retail and foodservice buyers on the quality of Mexican
shrimp compared with some of the shrimp produced by the
high-volume importers.
"Our shrimp doesn't have any chemicals [or] shrink less when
you cook it so it has a higher yield and is produced in a way
that is not as intensive as in other countries," adds Castro.
"Selling quality is one way for us to get a little better price
for our shrimp."
Diazteca hopes to accomplish this by creating distinct
brands for specific segments of the market, including the
Tekila brand that will feature its highest quality shrimp and
by targeting upscale markets. It has also instituted, as have
other producers and importers, a more stringent quality-control
process that will follow the production of the shrimp from
larvae through harvest and processing.
"We are placing a team of 10 new quality inspectors in
Mexico," says Rod Diaz, VP of sales for Diazteca. "We want to
be able to tell the farmers that how they raise the shrimp and
the quality is one way we can get them a higher price."
But even with a push toward providing the message that
Mexican shrimp is of higher quality, the competition has at
least slowed the growth of new shrimp farms.
"If it is growing, it is not growing very much," says
Carillo. "Right now it is a bit of balancing act."
Castro's view is more pessimistic, adding that some farms
this year have empty ponds because the price decline has been
so severe.
While selling quality can help boost the price by a few
cents here and there, Jim Salierno, owner of Crystal Cove
Seafood in Floral Park, N.Y., says Mexican shrimp producers
need to take another step to get a higher price: Begin selling
value-added products.
"The quality of Mexican shrimp is really very good; it's
second to none," says Salierno. "But they are still selling it
as a commodity. What could help them get a better price is to
spread production out over more than just a few months and to
add some value to the product."
Ocean Garden last year successfully introduced a Pride of
Mexico value-added retail brand, which includes raw IQF farmed
shrimp in 1-pound bags in both shell-on 21/25 and P&D,
tail-on 26/30s.
While Ocean Garden has made inroads with the brand in
upscale markets, other seafood companies face significant
hurdles to providing value-added product.
"The season for wild and farmed is about four months in the
fall each year," Salierno notes. "Then what are they going to
do with it the rest of the year?"
Moreno, whose Grupo del Rey exports about 30 percent of its
wild shrimp to the United States, says it is not directly a
question of money as much as it is credit. "We don't have a lot
of things you have in the United States and one of them is
access to financing," he notes. "It is hard to get and very
expensive."
While the price struggle may continue, everyone believes
that Mexico's shrimp farms will find a way to survive and
thrive. Ocean Garden's Filose says that 10 years ago he bought
roughly 10 percent farmed to 90 percent wild shrimp. Today,
that figure stands 60-40 in favor of the farmed product.
And Moreno, whose company only handles wild shrimp, shows
that he is perhaps hedging his bets on the wild fishery: He and
eight other partners recently invested in a small 60-acre
shrimp-farming operation on the Sea of Cortez that should
produce its first shrimp this year.
Contributing Editor Chris Anderson lives in Scarborough,
Maine