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« November 2006 Table of Contents

Pacific white shrimp

Vannamei is plentiful, thanks to Asia's production spike and Ecuador's recovery from white-spot

Elgin Hanes, VP of purchasing for Joey's Only Seafood Restau­rants, was ahead of the curve five years ago when he switched the shrimp on the casual-seafood chain's menu from black tigers ( Penaeus monodon ) to Pacific whites ( P. vannamei ).

Pacific whites represented only 21 percent of the global farmed-shrimp harvest of 1.3 million metric tons in 2001, reported the United Nations' Food and Agriculture Organization.

Over the next two years, production of Pacific whites more than doubled, to 723,858 metric tons, accounting for 40 percent of the global farmed-shrimp harvest of 1.8 million metric tons in 2003, the latest figures available from the FAO.

That year, vannamei production surpassed monodon production for the first time. Asia is largely responsible for the sharp increase.

Now several of Asia's largest shrimp-producing countries are raising more Pacific whites than black tigers. In 2005, Pacific whites represented about 70 percent of Thailand's farmed-shrimp harvest, 65 to 70 percent of Indonesia's harvest, 50 to 60 percent of China's harvest and 40 percent of Vietnam's, says Bill More, director and VP of the Aquaculture Certification Coun­cil in Kirkland, Wash.

Pacific whites represented about 60 percent of Asia's farmed-shrimp exports in 2005, says More. The continent accounted for 75 to 80 percent of the world's 2 million-metric-ton farmed-shrimp harvest in 2005, which is expected to increase by 12 to 15 percent in 2006, he adds.

"Almost all of the increase will be from whites," notes More. "I wouldn't be surprised if, within five years, 80 percent or more of [Asia's farmed-shrimp harvest] was whites."

Nice price and flavor

So what did Hanes see in Pacific whites that only a handful of his peers saw five years ago?

Hanes prefers Pacific whites because the meat is sweeter, more flavorful and firmer than that of black tigers.

He told his two shrimp packers - one in Los Angeles and one in Toronto - that they'd save 40 to 50 cents a pound, "and they almost fell to the floor," says Hanes.

Now Hanes imports from Asia about one container of 31-40 Pacific whites a month for the chain's 115 Canadian and U.S. restaurants (Embers America Res­taurants of St. Paul, Minn., operates the U.S. units).

Pacific whites are included in several menu items at Joey's Only, including appetizers such as Classic Shrimp Cocktail ($6.49) and Malibu Coconut Shrimp ($6.99) and entrées such as Half Pound Shrimp Feast ($13.99), Shrimp Trio ($13.99) and Cajun Combo ($13.49). Diners can also add six shrimp to any entrée 
for $3.99.

Pacific whites' taste and texture attributes - and attractive prices - have landed the species on casual-dining menus and in retail seafood cases across North America.

At several grocery stores last month, 31/40-, 41/50- and 51/60-count cooked Pacific whites were retailing for just $5.99 a pound, according to Urner Barry Publications of Toms River, N.J.

But restaurateurs and retailers are not what's driving the dramatic shift from black tigers to Pacific whites.

It's matter of economics at the production level.

According to a 2004 FAO report, shrimp farmers prefer vannamei 
for several reasons:

• Specific-pathogen-free vannamei broodstock is far more readily available than SPF monodon broodstock, making vannamei more disease resistant. Vannamei's survival rate averages 80 to 90 percent in high-density ponds, compared to 45 to 55 percent for monodon. And, according to a 2006 FAO report, Thailand, China and Indonesia are developing the capability to produce their own SPF vannamei broodstock.

• Vannamei yields two to three crops annually, compared to one to two for monodon. Vannamei females reach a minimum spawning size of 35 grams in only seven months, while monodon takes 10 to 12 months to reach a minimum spawning size of 100 grams. Vannamei can be harvested at 100 to 120 days, monodon at 150 to 180 days.

• Vannamei is more durable than monodon. It tolerates stocking densities of 60 to 150 shrimp per cubic meter but can be raised at up to 400 shrimp per cubic meter. The species also tolerates lower salinities and temperatures. As a result, vannamei can be farmed year-round, even from October to February, when it's too cold in Asia to raise black tigers.

• Vannamei requires less protein. In Thailand, vannamei feed usually contains 35 percent protein, compared to 40 to 42 percent for monodon feed. As a result, vannamei feed costs 25 to 30 percent less. In Asia, it costs $2.33, on average, to produce a kilogram of vannamei, compared to $3.41 for a kilogram of monodon.

"Simply put, whites are easier and cheaper to produce," says More.

A sourcing dog fight

As vannamei production climbs worldwide, so does availability. But that doesn't necessarily mean the species is getting easier for U.S. buyers to source.

Trade barriers are changing the landscape of the U.S. shrimp-importing industry, driving up the cost of doing business and bringing 
confusion and uncertainty to the 
marketplace.

"It's a dog fight," says Ernie Wayland, executive VP of Interna­tional Marketing Specialists in Wilmington, N.C.

In early 2005, the U.S. Depart­ment of Commerce slapped tariffs on shrimp, including Pacific whites, from six Asian and Latin American countries, following an antidumping petition the Southern Shrimp Alliance filed in late 2003.

In early 2006, U.S. Customs and Border Protection enacted a new continuous-bond policy designed to curb tariff evasion that forced several U.S. shrimp importers to consolidate or abandon the shrimp trade 
altogether.

Then in mid-2006, more than 100 foreign shrimp exporters inked agreements with the Southern Shrimp Alliance to bypass the administrative review and lock in tariffs at the rates set in early 2005.

By settling, the exporters avoided the possibility that the DOC would raise the rates during the review, an expensive, time-consuming process. In turn, the exporters agreed to pay the SSA an undisclosed sum and help the group in its effort to increase testing of shrimp for banned substances and limit transshipping, mislabeling and other forms of tariff evasion.

As a result of these trade barriers, program business is on the rise. Purchasing shrimp on the spot market is riskier. And more restaurateurs and retailers are buying shrimp directly from foreign packers, cutting the middleman out of the equation and saving money.

About half of U.S. shrimp imports have already been sold when they reach the port of entry, reports Wayland.

"Right now, there's not a lot of life at the street level versus the program level," he says. "The spot market and the game of sitting on product are dwindling."

While the cost of doing business is rising, the product itself is getting cheaper. In mid-October, raw, Asian-raised Pacific whites were priced in the mid-$2 range for 41-50s, down 25 cents a pound from mid-August, says Wayland.

During the last sizable demand surge in summer 2005, 26-30s from Asia fetched $4. Now they cost $3.75, notes Wayland. In 2000, 41-50s from Mexico commanded $6.45. Now they're tagged in the mid- to high-$2 range, he adds.

According to Urner Barry, in mid-October raw, shell-on, Asian-raised Pacific whites were priced in the mid-$4 range for 21-25s, mid- to high-$3 range for 26-30s, low-$3 range for 31-35s and high-$2 range for 36-40s. Latin American-raised product cost 5 to 10 cents a pound more.

Replacement costs for Pacific whites are high overseas, but prices in the U.S. market are soft because "there's too much product around," says Wayland.

About 100 million pounds of U.S. shrimp imports due to be sold during the late-2005 holiday season carried over into early 2006, and the domestic Gulf shrimp catch, which exceeded 100 million pounds through August, is nearly double what it was a year ago.

Moreover, U.S. shrimp imports continue to increase steadily, despite tariffs and the new continuous-bond policy.

Through August, total shrimp imports were up 11 percent, to 751.3 million pounds, from a year ago, according to the National Marine Fisheries Service.

Imports from Thailand, China, Indonesia and Ecuador - the United States' leading shrimp suppliers in 2005 - collectively were up 22 percent, to 503.6 million pounds.

Another wave of Pacific whites is due to hit U.S. shores for the upcoming holiday season.

Prices are expected to remain soft through year's end. But beyond that, it's anyone's guess.

"It's a guessing game," says David Silverstein of MB Seafood in Flushing, N.Y. "I take it one day at a time."

Inclement weather, disease, political unrest and regulation, to varying degrees, are affecting vannamei production in Asia.

Global supply challenges

Some of the world's top shrimp-exporting nations are facing a variety of production challenges.

In Thailand, the bloodless military coup that ousted Prime Minister Thaksin Shinawatra while he was in New York in September had little, if any, impact on the country's shrimp trade.

"All the feedback we've received is that it's business as usual," says Wayland.

Thailand exported 354.7 million pounds of shrimp to the United States in 2005, far more than any other country.

Vietnam is reportedly committed to continuing to boost vannamei production. But Mother Nature is making it difficult for the country's farmers to do so; they've lost $3.8 million so far this year due to a turbulent 
typhoon season.

Sudden changes in air temperature and heavy rains, which reduce the water's salinity, are stressing shrimp.

"Some parts of Vietnam are exporting 30 to 40 percent of what they did last year," says the ACC's More.

"Production has been squirrelly" in Vietnam, adds Wayland.

Through August, U.S. shrimp imports from Vietnam were down 8 percent, to 45.4 million pounds, from a year ago.

Indonesia is also battling inclement weather and expects its shrimp production to fall shy of its 350,000-metric-ton projection for 2006.

Nonetheless, through August U.S. shrimp imports from Indo­nesia were up 22 percent, to 91.3 million pounds, from a year ago. That's largely because Indonesia is not subject to tariffs.

The Philippines exported only 4.4 million pounds of shrimp to the United States in 2005. But the country's farmers are pushing their government to lift a 2001 ban on imports of live shrimp, allowing them to obtain SPF vannamei broodstock so that they can raise Pacific whites competitively.

China was hit with tariffs of up to 113 percent in early 2005, more than any other country. But that hasn't stopped it from continuing to boost its shrimp exports to the United States.

In fact, through August, U.S. shrimp imports from China were up 44 percent, to 79.7 million pounds, from a year ago.

Ecuador's shrimp-farming industry was nearly wiped out by a white-spot outbreak in the late 1990s. But now the country, which farms predominately Pacific whites, is producing as much shrimp as it did before the virus hit.

Through August, U.S. shrimp imports from Ecuador were up 21 percent, to 92.8 million pounds, from a year ago.

"It took Ecuador five years to recover," says More, "but now it's back to where it was."

With Ecuador back in the mix and most Asian countries steadily increasing production, availability of Pacific whites will only continue to increase in the coming years.

And that's good news for casual-seafood chains like Joey's Only that are constantly adding shrimp items to their menus.

Associate Editor Steven Hedlund can be e-mailed at shedlund@divcom.com.