« September 2007 Table of Contents 
International Sourcing: Ecuador
Country's fisheries sector makes a comeback with shrimp, tilapia
By Nicholas Gill
September 01, 2007
The combination of warm El Niño and cold Humboldt currents
off Ecuador's small coastline has created an idyllic
environment for vast quantities of marine life. The lush,
equatorial mangroves on the Guayas and Santa Elena peninsulas
are superb homes for the country's shrimp and tilapia
industries, and the commercial fishing industry stretches as
far north as the Esmeralda province at the Colombian
border.
The country has rebounded from a series of unstable
governments, an extensive white spot virus outbreak, and a
complete dollarization of its economy in 2000 to reach seafood
production numbers that are significantly higher than those in
the 1990s. The margins are relatively low so the windfall isn't
exactly soaring, but the numbers are increasing.
The past decade has not been overly kind to Ecuadoran
seafood farmers. The white spot virus nearly wiped out the
shrimp industry in 1999. The disease also gave Thailand and
Vietnam the opportunity to gain ground on Ecuador, as both
countries increased their shrimp production.
The value of the country's shrimp exports reached a record
high of $875 million in 1998, but shrimp prices have fallen and
keep declining. Penaeus vannamei , also known as Pacific
whites, or white gold, isn't bringing in the dollars it once
did, even though production levels are at their highest
ever.
Worldwide output of farmed shrimp is inching higher and
higher, but many feel the ceiling has been reached. Farmed
shrimp prices will not drop anymore beyond the current
rock-bottom levels, say experts. Inflation is hurting the
seafood industry as a whole.
"[Ecuador] is pegged to the struggling U.S. dollar, and the
seafood is produced with the U.S. dollar," says John Schramm,
president of tilapia distributor Tropical Aquaculture in
Rutland, Vt.
However, Ecuadoran seafood shipments to the United States
have increased over the past five years. In 2006, Ecuador
shipped 110 million pounds of seafood to the United States,
consistent with the previous year, according to the National
Marine Fisheries Service. The figure is well ahead of
contenders Costa Rica, Honduras and Colombia and reflects
Ecuador's dominance in Latin America. Ecuador has also
benefited from the recent decision by the Department of
Commerce to eliminate the country's shrimp tariff.
Overcoming white spot
The highly infectious white spot disease ripped through
Ecuador like a knife in 1999 and nearly wiped out the country's
shrimp industry. Ecuador's annual farmed-shrimp output sunk to
a low of 37.7 million pounds and production hovered around 20
percent of normal rates. Most farmers began to treat the
disease with fungicides, antibiotics and pesticides, resulting
in the destruction of the mangroves and polluted ponds,
exacerbating production woes even more.
"The shrimp production almost collapsed at that time," says
Carlos Sanchez, sales manager at Promarisco, an Ecuadoran
seafood company. "We lost approximately 75 percent of our
[shrimp] production.
"The industry's hard work through those terrible years
finally resulted in better production management and recovered
the record production levels of 1998 last year," notes
Sanchez.
To mend the situation, farmers had to reduce pond stocking
densities to natural levels and improve larvae selection. Thus
far, subsequent outbreaks have been controlled using this
method. Nearly 200 hatcheries and more than 150,000 hectares of
shrimp farms are in operation, and more than 250,000 people are
employed by the country's farmed-shrimp industry. The money
isn't like it was in the '90s, but production is as good as it
has ever been, according to the 2006 numbers.
White spot turned out to be a blessing in disguise for some.
After the disease destroyed much of the industry on the Guayas
and Santa Elena peninsulas, many shrimp farmers seized the
opportunity to switch to organic farming.
"Sustainability and traceability are key factors for the
whole industry now," says Sanchez. "The market for organic is
still small, but could become important in the future."
The tropical mangrove forests that line the Ecuadoran
coastline were practically destroyed by farming, but have been
rebuilt with organic farming.
"We are reducing the wild fishmeal percentage and using less
and less everyday," says Santiago Salem, founder of Industria
Pesquera Santa Priscila S.A. in Guayaquil, Ecuador.
"We are using low-density ponds and we aren't depending on
the feed. We push a natural feed. If you go to the ponds you
will see that they are surviving," adds Salem. "We use 100
percent organic feed and no antibiotics," said Salem. "We don't
need antibiotics or chemicals the way
we produce."
Shrimp industry rebounds
The country has a mild climate and year-round farming season
where three annual shrimp harvests are the norm. Combined with
implementing modern aquaculture techniques, Ecuador has become
the second largest producer of cultivated shrimp in the world
and the largest in the Western Hemisphere. More than 20
different shrimp products are exported from Ecuador, ranging
from whole shrimp, tails and breaded to frozen blocks.
Shrimp production has recov-ered to 1990s levels, though the
earnings are lagging due to low shrimp prices.
The country's shrimp exports drew $597.6 million in revenue
in 2006, weighing in at 264.3 million pounds, with
approximately 50 percent exported to the United States.
Comparatively, in 2005, the country earned $480.2 million for
212.5 million pounds. This year's U.S. exports are on schedule
to match last year's, with 70 million pounds of shrimp being
shipped to the U.S. market from January to June, with a monthly
high of 25 million pounds in May, according to Ecuador's Cámara
Nacional de Pesquería, or National Chamber of Fisheries.
Dropping prices due to growing global output account for the
lower-than-hoped earnings. By comparison, the country's
earnings reached a record-setting $875 million in 1998.
"We aren't making any money, but the way we do it is the
right way," says Salem.
Peeled frozen shrimp is the country's single largest revenue
gainer and fetched approximately $78 million with 12.2 million
pounds in 2006, down slightly from 13.4 million pounds in 2005.
Shell-on shrimp shipments are nearly as strong. In 2006,
exports of 41/50-count shrimp were 9.3 million pounds, up from
7.1 million pounds, while exports of 51-60s were 11.2 million
pounds, compared with 8.7 million pounds the previous year.
Varying factors contribute to the country's farming success.
For one, the low salinity in the brackish water allows shrimp
and tilapia to thrive in natural conditions and give the shrimp
their flavor, firmness and color. Ecuador is the only country
to not farm in freshwater. The natural salinity of the water is
sufficient for shrimp to reproduce, while the addition of salt
to freshwater ponds for shrimp farming has been proven to have
drastic affects on soil conditions. Two, the low-density ponds
allow for greater control and a better product than Asian
farms, which tend to use 10 times the density, according to
Salem. Some producers even use polyculture, where tilapia and
shrimp are raised in the same pond at the same time.
Tilapia's ascent
In addition to shrimp, other products are gaining ground.
Since 1999, tilapia has been one of Ecuador's most significant
exports, with numbers that have risen steadily annually. With
approximately 80 percent of the country's tilapia production
going to the United States, Ecuador maintains approximately 45
percent of the U.S. fresh tilapia market, with products found
in nearly every major supermarket, while Colombia, Honduras and
Costa Rica make up the rest. Total output is expected to rise
10 to 15 percent annually, and prices are expected to remain
stable.
Ecuador sent 23.9 million pounds of fresh tilapia fillets to
the United States in 2006, and the 2007 numbers are projected a
bit higher, at about 2.3 million pounds a month. Americans ate
0.99 pounds of tilapia per capita in 2006, making it the
fifth-most consumed fish in the country, according to the Top
10 seafood list released by the National Fisheries Institute in
McLean, Va., and compiled by H.M. Johnson & Associates of
Jacksonville, Ore. Tilapia consumption was up from 0.84 pounds
in 2005. Catfish dropped to 0.96 pounds in 2006 from 1.02
pounds in 2005.
In January, Ecuador became the first Latin American country
to export more than 1,000 metric tons of fresh tilapia fillets
to the European Union.
During the white spot outbreak, many shrimp farmers turned
to tilapia, and the shrimp industry's aquaculture expertise
made the transition to tilapia fairly easily.
"Ecuador's naturally brackish [water] is ideal for tilapia,
maybe better than any country in the world," says Schramm of
Tropical Aquaculture.
Tilapia "is a whitefish that people have come to rely on,"
adds Schramm. "The fluctuation in price is never more than 10
to
15 cents a pound over a 10-
year period."
Frozen tilapia is still dominated by China. "The Chinese
factor," as Schramm calls it, has led Ecuadoran producers to
focus solely on fresh tilapia, as it is nearly impossible to
compete with Asia on frozen product. Asia's frozen tilapia
exports rose 43 percent in 2006, to 139.5 million pounds, and
7- to 9-ounce fillets are offered at $1 a pound less than fresh
fillets from Latin America.
Another one of Ecuador's principal seafood exports is tuna,
which has a growing success in Europe, South America and Japan.
It comes fresh, frozen and canned in brine and oil.
Approximately 25,000 metric tons of tuna in various forms
were exported to the Unites States in 2006, according to
NMFS.
Other marine products such as mahimahi, swordfish, flounder,
sardines, crabmeat and squid also draw significant numbers.
Packaged ceviche, a dish that uses whitefish marinated in
lime juice and chili peppers that's popular in Ecuador and much
of Latin America has also been a big hit with several producers
as the dish gains in international popularity. Mexican-style
versions that come packaged with a spicy salsa are also
offered.
U.S. antidumping laws
The United States slapped antidumping duties on shrimp from
six Asian and Latin American countries, including Ecuador, in
2005. In late July, the U.S. Department of Commerce issued a
final rule revoking antidumping tariffs on Ecuadoran shrimp by
Aug. 20. The agency issued a preliminary rule on May 31
eliminating Ecuadoran shrimp tariffs, which ranged from 2.35 to
4.48 percent. The DOC recalculated the tariffs without the use
of "zeroing" and found that the dumping margins totaled less
than 2 percent, effectively eliminating them.
However, the tariffs have created competitive problems
against duty-free countries and cash flow limitations due to
the continuous-bonds issue.
The U.S. tariffs have forced many companies to turn toward
Europe, particularly Spain, France and Italy, which are slowly
gaining more market share. They pay the same prices, without
the antidumping tax.
"We still believe in production improvements for continued
growth of our exports," says Sanchez, "and the solution of the
dumping issue by end of this year, which would give Ecuador a
better position in the U.S. market."
Seafood in the future
Aquaculture in Ecuador is the oldest in Latin America at 27
years and has survived many challenges. In the past seven
years, shrimp prices have continued to drop and many companies
have gone bankrupt, but many see that the worst is behind them.
It isn't expected that China will destroy prices any further
and while no one expects prices to rise to levels seen in the
'90s, they do expect them to become at least reasonable.
"People are leaving the industry because it's not a place to
make money," says Schramm. "It's high risk, and little
return."
Schramm claims that Tropical Aquaculture started early and
maintained its position in the market. Several major tilapia
producers will be pulling out by the end of the year because
the money just isn't there, he concludes.
"In the future there will be bigger volume, but fewer
players," says Schramm.
Global production is rising and many major seafood suppliers
are being tested around the world. Ecuador has overcome several
major hurdles, from a devastating white spot outbreak to the
disadvantageous U.S. tariffs, proving it is in the game for the
long haul.
Nicholas Gill is an author, writer and photographer based in
Columbus, Ohio, and Lima, Peru