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Species Focus: Pacific white shrimp

U.S. demand just keeps on growing, as does global production - despite economic and natural setbacks

By Rick Ramseyer
July 01, 2006

Whether they're farm-raised in Asia and Latin America or wild-caught from the west coast of Mexico to northern Peru, Pacific whites are burgeoning in popularity, thanks to ramped-up global production and a lengthening list of U.S. foodservice and retail customers.

Farmed Pacific whites from Asia are now the only shrimp served at casual-dining chains like Applebee's and Ruby Tuesday, while wild-caught and cultivated Mexican white shrimp are offered at many independent restaurants from coast to coast.

Major supermarkets and club stores, meanwhile, are sourcing organic whites cultivated by a fast-track company in Florida, and at least one regional specialty grocer is seeing Pacific whites gain favor over black tigers.

Further, in step with the introduction last year of 1-pound bags of frozen Mexican whites, Ocean Garden - a longtime foodservice supplier - now has a retail foothold in the Pacific Northwest and in New England.

U.S. consumers may be hard pressed to tell the difference between the two most common commercial varieties of Pacific whites, Penaeus vannamei and P. stylirostris . The meat of vannamei is creamy white, while stylirostris - farmed mostly in Mexico and Brunei - has white meat with a greenish or bluish tint and a taste that's a touch saltier than vannamei.

Pacific whites' higher profile comes at a challenging time in the shrimp industry. Front and center are antidumping-related tariffs and continuous bonds that are impacting the business worldwide.

Moreover, a turbulent monsoon season in Southeast Asia earlier this year lowered shrimp-farm­ing output in über-producing countries like Thailand.

Still, seafood representatives are convinced that interest in Pacific whites and shrimp in general is on an upswing, with consumption and production both strong.

"Shrimp will continue to rival other center-of-the plate proteins," says Eric Bloom, president of Eastern Fish Co. in Teaneck, N.J., which derives up to 75 percent of its shrimp business from Pacific whites.

And it doesn't hurt that shrimp overall remains the United State's most popular seafood, with 2004 per-capita consumption of 4.2 pounds, nearly 1 pound more than second-place canned tuna.

 

Production shift

Despite trade-related challenges, shrimp shipments to the United States remain robust. For the first three months of 2006, imports totaled 274.7 million pounds, up from 247.8 million pounds for the same period the previous year, according to the National Marine Fisheries Service.

Year-over-year figures also were positive: U.S. shrimp imports 
totaled 1.17 billion pounds in 2005, compared with 1.14 billion in '04.

In step with rising demand, Thailand and other Asian countries are gradually shifting production from black tiger shrimp ( P. monodon ) to Pacific whites ( P. vannamei ). And the reason for that is no mystery: White shrimp, though generally smaller than tigers, are more resistant to disease, have higher survival rates, cost less to feed and tolerate higher stocking densities. And they grow faster.

In Thailand, which accounts for 30 percent of U.S. shrimp imports, vannamei now constitute 90-plus percent of shrimp production. Compare that to the ratio in 1994, when Thai output was evenly split between vannamei and monodon.

Shrimp production in Thailand, though, has taken a hit in recent months. Wild-shrimp landings fell dramatically, as fishermen stayed off the water due to high fuel prices. And a viral outbreak in mid-2005 in freshwater shrimp hatcheries reduced broodstock supplies, resulting in a projected drop of nearly 35 percent in farmed freshwater-shrimp production.

Severe weather has been a factor as well. Heavy rain and flooding early this year across southern Thailand is expected to lower the country's cultivated-shrimp output by 8 percent, to 350,000 metric tons, from 2005 to 2006.

U.S. imports of Thai shrimp nonetheless rose 8 percent, to 75.2 million pounds, through the first quarter of 2006, after Thailand boosted its exports to 30.1 million pounds in March, up from 19.4 million pounds in February and 25.8 million pounds in January.

Other countries - including India, China, Indonesia, Malaysia, Bangladesh and Ecuador - picked up some of the slack by sending more shrimp to the U.S. market. All told, imports increased 4 percent, to 181 million pounds, for the first two months of this year.

 

Continuous hassle

A major trade issue that altered the global shrimp industry is tariffs of up to 113 percent, which the U.S. government slapped on importers from Thailand, China, India, Viet­nam, Ecuador and Brazil in early 2005.

The tariffs stemmed from an antidumping petition filed at the end of 2003 by the Southern Shrimp Alliance (SSA), a group representing Gulf shrimp fishermen and processors from North Carolina to Texas.

But tariffs are just part of the story. Under a policy that U.S. Cus­toms and Border Protection began enforcing in 2005, importers must post continuous bonds to help prevent tariff evasion.

Continuous bonds are calculated by multiplying the value of a seafood company's imported product from the previous year by the tariff. So if Company X imported $30 million of shrimp subject to a 10 percent tariff in 2005, it would post a $3 million bond in 2006, in addition to the $50,000 bond required under the old policy.

The federal government was set to recalculate the tariff amounts earlier this year - potentially raising them and, by extension, increasing the bonds - but foreign shrimp exporters are instead reaching settlement agreements with the SSA.

The settlements ensure the tariffs remain at the rates the U.S. De­partment of Commerce originally set and stave off a one- to two-year review process for each exporter.

As of early June, with a July 6 deadline looming, SSA had struck settlement agreements with nearly 30 exporters - including companies in Vietnam, Thailand and Ecuador - in effect freezing their duties at the current rates.

For example, Empacadora Gran Mar SA and Negocios Industriales Real SA, both of Ecuador, and CP Foods of Thailand will continue paying duties of 3.58 percent and 5.95 percent, respectively.

In turn, the SSA dropped its requests for administrative reviews of participating importers. There also was a "financial element" to the settlements, an SSA spokeswoman told SeaFood Business last month, declining to reveal how much the exporters paid SSA (see June SFB , page 4).

With or without the tariff increases, U.S. importers say the antidumping brouhaha has had a chilling effect on business.

"It's probably reduced our growth by 5 to 7 percent," says Bloom of Eastern Fish. "We're tying up our money guaranteeing a bond, rather than utilizing it to buy shrimp, sell shrimp and make money."

 

Prices firm

Despite uncertainty surrounding tariffs on imports, shrimp prices have remained relatively stable.

In late May, headless, shell-on Asian-raised whites held firm at up to $4.25 for 21-25s, $3.85 for 26-30s, $3.15 for 31-35s, $3 for 36-40s, $2.80 for 41-50s and $2.70 for 51-60s, according to Urner Barry in Toms River, N.J.

Latin American whites, meanwhile, held steady at up to $4.50 for 21-25s, $3.90 for 26-30s, $3.30 for 31-35s, $3 for 36-40s, $2.85 for 41-50s and $2.75 for 51-60s.

And wild No. 1 Mexican whites fetched up to $8.90 for U15s, $6.50 for 16-20s, $5.35 for 21-25s, $4.85 for 26-30s and $4.35 for 31-35s, f.o.b. West Coast, according to Urner Barry.

"Prices had been on the rise for the first half [of 2006], but I do expect them to ease back down," one East Coast importer says.

"Even with the continuous bonds, average prices have remained the same as or lower than those in previous years."

John Filose, VP of sales and marketing for Ocean Garden Products in San Diego, says importers are seeing more smaller sizes, 36s and up, from throughout Asia.

"What we may see going into the second and third quarters is stable to maybe even firmer pricing in the United States, and some pressure on the inventories of larger sizes, say, 26-30s and larger," Filose says.

Ocean Garden's core business is Mexican shrimp, including P. vannamei and P. stylirostris . The company handles 40 million to 50 million pounds of wild-caught and farmed shrimp a year, with the vast majority bound for the United States. Pacific whites represent 75 percent of the total.

And Mexico's aquaculture output clearly is climbing: For the 2005-06 season, farm-raised shrimp represented 57 percent of Ocean Garden production, compared with 37 percent for 2000-01.

Pride of Mexico

Uwajimaya, the largest Asian specialty retailer in the Pacific Northwest, sells about 40,000 pounds of Pacific whites per year, sourced entirely from Ocean Garden, plus a smaller number of Asian black tigers.

"Shrimp is one of the backbone items for us," says Kris Kosugi, seafood merchandiser for the buying arm of Uwajimaya, which has stores in Seattle and Bellevue, Wash., and in Beaverton, Ore.

Uwajimaya carries two sizes of Mexican white shrimp in its full-service seafood cases: a 16-20 shell-on and a 41-50 head-on, "since head-on shrimp is very important in Asian cooking," Kosugi says.

Moreover, Uwajimaya is among the retailers in the Seattle area that are testing frozen, 1-pound retail bags of farmed Pacific whites from Ocean Garden. Available since late 2005, the bags - carrying the Pride of Mexico brand - come in two varieties: peeled, deveined, tail-on 26-30s for $10.99 and shell-on 21-25s for $8.99.

"The 26-30 is the bestseller by 2 to 1," Kosugi says, "probably based on convenience."

The bags represent a new revenue stream for Ocean Garden, long known for serving foodservice 
accounts.

"The product is more expensive than Asian whites, but it's very high-quality," Filose says. "We've had a good response."

That success led to the recent introduction of the Pride of Mexico retail bags in around 40 Whole Foods markets in New England.

Ocean Garden also has found the bags are of interest to traditional foodservice customers.

"One guy told me, 'Hey, this is good for smaller restaurants that want to buy a smaller amount of shrimp,'" Filose says.

 

Going organic

Despite all the activity by foreign producers, one U.S. company is making waves with its Florida-raised, certified organic shrimp.

Ocean Boy Farms in Clewiston, Fla., grows a domestic variety of Pacific white, Litopenaeus vannamei . And plenty of big-name retail customers are stocking it frozen, including Wal-Mart, Publix, Harris Teeter, Winn-Dixie, Kings and Costco.

"We're in most major chains," says Steve Walton, president and COO, noting that Ocean Boy is making inroads in foodservice channels and also sells shrimp directly to consumers via Costco's Web site. (In early June, Costco had 24 12-ounce bags of IQF, 31-35 Ocean Boy shrimp priced at $179.99.)

Ocean Boy, one of only two U.S. shrimp farmers that can label product as organic, will raise more than 3 million pounds of shrimp in 2006, up from nearly 1 million pounds last year.

"And we're going to ramp that up quickly, as demand is more than our supply right now," Walton says.

Ocean Boy shrimp is priced 30 percent to 40 percent higher than conventional Pacific whites, he adds, given the steep cost of production. Indeed, the shrimp is grown 60 miles inland in lined, low-salinity ponds using proprietary processes, systems and feed.

(The shrimp is certified as organic livestock by a third-party agent of the U.S. Department of Agri­culture. The USDA is in the midst of developing organic standards for seafood.)

"[Our protocols] allow us to develop a very healthy profile for our shrimp," Walton says. "We're focused on ensuring the taste is consistent, pure and sweet."

 

Chain reaction

Want further proof of Pacific white's muscle? Casual-dining leader Applebee's International in Overland Park, Kan., which franchises and operates more than 1,800 Applebee's Neighborhood Grill & Bar restaurants worldwide, only sources farmed white shrimp from Asia.

Applebee's menu varies by location but may include Crispy Buttermilk Shrimp, Shrimp Fettuccine Alfredo Bowl, Grilled Shrimp 'N Spinach Salad and Weight Watchers Grilled Shrimp Skewer Salad. In addition, Tuscan Shrimp Salad is one of the selections in Applebee's new Salad Perfection lineup.

Ruby Tuesday - another casual-dining giant, with approximately 825 outlets in 42 states, plus Washington, D.C., and Puerto Rico - buys around 2.4 million pounds of shrimp per year, all of it farmed in China and the Pacific Rim.

"Usage grows every year, because we open about 85 new restaurants and also have same-restaurant sales increases," a spokesperson stated via e-mail.

Among the seafood favorites at Ruby Tuesday are the Coconut Shrimp appetizer and entrée for $7.99 and $12.99, respectively, and Shrimp Alfredo Pasta for $11.99. Pacific whites also are part of combos like the Triple Play, a half-rack of barbecued ribs, fried chicken tenders and fried shrimp for $16.99.

The chain has sourced Pacific whites for at least six years, but it has been the exclusive species for the last four, the spokesperson noted. Lots of independent restaurants rely solely on Pacific whites, too.

"I've been a stickler for white shrimp for most of my career, spanning about 30 years," says Allan Katz, chef-proprietor of Allyn's Restaurant and Café in Millbrook, N.Y.

"The taste is just [superior]."

And Katz gets plenty of mileage from the 600 pounds of Mexican whites he purchases annually, whether it's peeled IQF shrimp for lunchtime salads or six sautéed jumbo shrimp for a $22.95 dinner 
entrée.

Doug Kracht, purchasing agent for the Hubbell House in Man­torville, Minn., and Michael's in Rochester, Minn., is also a fan of Pacific whites.

"I've been here 37 years, and we were using wild Mexican whites probably for 15 years even before that," Kracht says.

Together the two restaurants use about 350 50-pound cases of U15s and 200 cases of 16-20s per year.

"I like the firmness, the sizing and, of course, the taste," Kracht says. "Our customers know they are going to get good shrimp here."

 

Contributing Editor Rick Ramseyer lives in Cumberland, Maine

 

 

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