Thailand's shrimp industry hauled in huge losses in the past few years due to the Early Mortality Syndrome (EMS). Many industry watchers believed this year would bring a recovery -- but after nearly five months into 2014 production levels are still at a historical low.
Caused by a long-lasting drought, and a slower-than-expected recovery from the disease, it is unlikely farmers will find back their old strength.
Production of Thai shrimp peaked in 2010 at 610,000 metric tons, then consequently dropped to 450,000 metric tons in 2012, and 250,000 metric tons last year.
Then 2014 came, and hopes went up. The Department of Fisheries touted a recovery, predicting 350,000 metric tons of Thai shrimp this year in a move which is now described as "speculative optimism," by some industry watchers.
2013 -- a year of losses
"Thailand used to be the No. 1 shrimp supplier but lost this market position due to EMS," Satasap Viriyanantawanit, general manager for Thailand for Bangkok-based Siam Canadian, told IntraFish. While the whole of Asia has been suffering, last year was particularly hard for the Thai industry.
India, Indonesia, and even China and Vietnam gained market share on the back of suffering farmers in Thailand. "Thailand was a huge loss last year," he said.
Exporters and processors struggled alike. Vertically integrated company Asian Group was one of the victims. The company recently had to suspend shrimp processing at one of its six plants in Thailand due to the ongoing crisis, Attapol Mongkonrat, marketing executive at the firm, told IntraFish at the Thaifex show in Bangkok last week.
"We had to shut down and are now waiting for the situation to improve," he said, adding EMS had a "terrible" impact on the $300 million (€220.3 million) turnover company.
Smaller processors were hit especially hard. Crystal Frozen Foods (CFF), based in Samutsakorn just outside Bangkok, reported a "horrible" year, halving its turnover in 2013.
"EMS affected us a lot; we had to downsize our production to 60 percent of our capacity," Pornchat Achakulwisut, managing director at CFF, told IntraFish.
This was reiterated by Choopong Lueskprasert, managing director of Samutsakorn-based shrimp processor Marine Gold Products. "EMS is the biggest crisis [in the Thai shrimp industry] since I started," he told IntraFish. "When I came in it was tough anyway, but it was at a much smaller scale than now."
The consequences are dire, especially for the workforce, he said. The more than THB 8 billion (€179.6 million/$244.6 million) (€179.6 million/$244.6 million) turnover company had to let a lot of staff go.
"That's the tough part," Lueskprasert said.
But bigger companies are also still suffering. Wales Group-backed SeaWealth put the launch of a brand on hold due to the difficult situation in the shrimp business, Wannasiri Aramwattananont, manager at the company, told IntraFish at Thaifex.
What's causing EMS?
While 2013 saw some development in terms of finding out what EMS is -- a bacterium -- the cause is still unclear.
This is one of the biggest problems, Mongkonrat believes. Some see the cause in the broodstock, but others talk about environmental causes such as salinity levels, cleanliness of ponds and stocking density.
Farmers are now trying out new "models" of farming, which often involve more control, higher oxygen levels, higher sanitary levels and extensive test for EMS.
But despite all efforts, mortality rates remain extremely high.
Piriya Chuaypikroh, owner of the independent CPK Farm, reports survival rates of 30 percent. The farm covers 800,000 square meters on 12 zones. Currently, Chuaypikroh only operates five zones -- producing 200-300 metric tons per zone, down from 600 metric tons before EMS hit.
In 2013, the farm reported losses of THB 20 million (€449,028/$611,624) due to EMS. However, it could make up for it in the first four months of this year -- despite low survival rates.
Achakulwisut is hopeful the recovery will nevertheless come with the new models. "Shrimp are still falling like leaves," he said. "These methods create additional costs but are quite successful."
However, with new farming methods come new costs, Achakulwisut said, and many farmers are not able or willing to invest.
"Farms are now controlled 24 hours day, which can become very costly," Viriyanantawanit told IntraFish.
"Through the crisis we saw a lot of consolidation in Thailand, with independent farmers turning to new investors."
Many turned to the big gun in shrimp: Charoen Pokphand Foods (CP Foods). CP has the technology, the medicine, and feed -- which covers about 60 percent of the cost -- readily available, he said.
Processors are often turning to diversifying their product portfolio, and value-added processing, including CFF, which shifted its production from commodity to VAP.
Asian Group is also turning to species diversification and fish re-processing for Japanese customers to take some pressure off its shrimp business, said Mongkonrat.
Instead of developing a brand for its shrimp products, SeaWealth is now putting all its focus on diversifying its product mix to overcome the crisis without major damage.
Squid and cuttlefish are high on the list and the company is now producing about 1,200 metric tons of pre-fried items, ready-to-cook dishes, skewers and more. As a result, its processing factory is still running at 100 percent capacity, Aramwattananont said.
Farmers are now waiting for the rainy season to restock currently fallow ponds. This should bring salinity levels -- and consequently the risk of EMS -- down, Varagorn Pornwongthong, one farmer just outside Bangkok told IntraFish.
But whether the long-expected recovery will materialize this year yet remains to be seen.
Poj Aramwattananont, president of the Thai Frozen Foods Association (TFFA), is convinced Thailand "will get through it but it will take time."
"We need to set up a long-term solution, proper methods, proper models and then I believe maybe we could go back to our old strength," he told IntraFish at Thaifex.
"We already passed the worst part so it only can improve," Viriyanantawanit added.
But just how large should Thailand grow to this time around?
"I think we need to change, and slow down [production]," Achakulwisut said, putting his finger at 400,000 metric tons instead of the record figure of 600,000 metric tons.