Ecuador's shrimp producers are forking out 24 percent more in overall costs since 2021, shrimp producers' trade body Camara Nacional de Aquacultura (CNA) said in an update.
The main three factors piling on the pressure are the removal of a government diesel subsidy, spiraling raw material costs and the high costs of security as producers try to combat a surge in organized crime.
In December, Ecuador's government, led by Guillermo Lasso, ended a diesel subsidy targeted at shrimp farms with more than 30 productive hectares, sparking outrage among the country's larger producers who calculate this adds $0.16 (€0.15) to a pound of shrimp produced across 82 percent of the country's farms.
While feed costs account for 55 percent of production, since 2019 the cost of wheat used to produce feed has risen 71 percent, soymeal has increased 45 percent, fish oil 105 percent and fishmeal 24 percent, CNA reported.
A sharp increase in violence and robberies against shrimp producers and their property is forcing them to spend $80 million (€75.5 million) a year on tracking, video and communication equipment, in addition to private security guards working round the clock shifts as they try to stem the flow of incidents.
So far this year, violent attacks on the shrimp industry have caused one death and 20 injuries.
Compounding these problems, Ecuadorian producers are also struggling with access to credit lines and recent increases in US interest rates because the South American nation uses the US dollar as its official currency.
They also face competitive disadvantages against lower wages paid to workers by Indian and Vietnamese producers.
To support Ecuadorian producers' calls for help, CNA cited research by analysts Walter Spurrier and Alberto Acosta Burneo showing that for every 1 percent decline in Ecuadorian shrimp production, 791 jobs are lost, along with $1.5 million (€1.4 million) in government tax receipts.
"It is too early to make projections because the year has just begun and we are at the beginning of the winter stage with rains just two to three weeks ago," said CNA Executive Director Jose Antonio Camposano, when asked separately by IntraFish whether he expects Ecuadorian shrimp production to fall in 2023.
Camposano is renewing calls for help for the industry under the "drawback" system, which provides exporters with a refund of customs duties paid on unused imported goods, or goods that will be treated, processed or used to produce other goods for export.
"When a sector has costs of $80 million (€75.5 million) due to insecurity, drawback is compensation for those costs that we should not incur," Camposano added.
Meanwhile, Ecuadorian shrimp exports valued at more than $518 million (€490 million) totaled 209 million pounds in January, a 30 percent increase on the same month in 2022, according to latest CNA numbers.
Numbers were bolstered by a new monthly export record of just over 130 million pounds to China, by far Ecuador's largest market. This is 47 percent higher than in January last year.
Exports to the United States increased 13 percent in the opening month of the year to 35.4 million pounds.
Shipments to Europe rose 4 percent to 32.3 million pounds, helped by increased orders from Italy, Spain, the Netherlands and Belgium.
Ecuador exports as much as 99 percent of its shrimp production. Shipments last year hit a record 2.34 billion pounds worth over $6.6 billion (€6 billion).
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