'We are really hanging on by a thread': CP Foods exec says Asian shrimp farming in dire need of innovation

While the Asian shrimp farming industry has finally rebounded to the production volumes of the pre-early mortality syndrome (EMS) days, it is now facing the new threat of inefficiency, made worse by building competition from South American producers.

Robins McIntosh, executive vice president for technical development of shrimp culture with Thai food giant Charoen Pokphand Group, provided a stark warning at the recent InfoFish Shrimp conference in Kuala Lumpur: "We have to look at recovery in terms of efficiency, rather than just volumes, and that’s where we need innovation," he said. "We really are hanging on by a thread."

Part of the challenge facing the Asian shrimp farming sector is potential global oversupply with the rapid ramp-up of South American production over the last few years, alongside an Asian production comeback.

The pandemic and related trade and logistics disruptions is motivating consumers markets around the world to turn toward more localized trade economies.

With the United States, the world's biggest shrimp importer, situated on South America's doorstep, the days of an assured place on US consumer plates for Asian shrimp may be numbered.

Indeed, you just have to look at the numbers to understand that Asia is losing market share to the likes of Ecuador and others over the last 20 years: In 2008, Asia accounted for 82 percent of global shrimp market share, with the Americas holding 13 percent. Fast forward to 2022 and estimates are that Asia will serve just 65 percent of the market and the Americas 31 percent, according to McIntosh's figures.

The problem with oversupply is its impact on prices. In April, shrimp wholesale prices in the United States fell seven percent, making farmers the world over jittery.

As input prices for things such as energy, wages and feed ingredients rocket with inflation and shortages, this puts farmers in a precarious position of losing money on their production.

This is a global problem, but Asia's shrimp producers have the added cost of greater shipping distances to key markets. As the table below shows, container shipping costs to the United States and Europe have risen as much as six times for Asian countries over 2019, with shipping times also rising significantly.

But the biggest cost to Asia's shrimp producers is not freight or feed or labor or energy, but its mortality rates, according to McIntosh, who says that today's shrimp lack sufficient robustness to handle the increased stress they are under.

This stress comes not just from higher stocking densities, but from farms crowded together, low oxygenation and increased nitrates -- basically the stress of a deteriorating environment.

"The presence of pathogens does not mean disease," said McIntosh. "It is shrimp under stress that are the problem, as shrimp under stress become susceptible to disease.

"Lethal diseases have not changed, but non-lethal diseases are coming back and these are the ones that can really hurt economically," he said, adding that solutions must be found to increase the robustness of shrimp so the industry can sell at lower margins.

"You cannot have tight margins, when you have such high failure rates."

The solution? Innovation, said McIntosh, in genetics, in monitoring and in farming systems.

"Shrimp culture innovation must accelerate to provide competitive platforms for the Asian shrimp industry," he said.

Larger shrimp will also play a role as they sell for more money and cost less to produce if they are robust enough. There is also a trend towards smaller ponds in Asia, where waste removal is more efficient and oxygenation higher.

Asia still holds an advantage in its value-added processing experience, an area where it has excelled, McIntosh said.

"So while we are not the lowest cost producer, we do have the facilities and knowledge to add value."

But for McIntosh it is a broader approach, encompassing all of the above and more that Asian shrimp producers will need to take to stay in the game.

"Only a holistic approach for success will continue success of Asian shrimp," he said. "Improved genetics, good feed, good seed and pond management. All of it."