Potential of the South American Shrimp Market in Europe
The comparative advantage of the Latin American market lies in the production of Head On shell On (HOSO) shrimps that do not have treatments.
South American varieties include the Pacific white shrimp (L. vannamei) and the red shrimp from Argentina (P. muelleri). Pacific white shrimp are sought by the Southern European cooking sector, which is willing to pay more for higher quality HOSO. This is because the heads of the shrimp remain intact during the cooking process, while the second is recognized for its lasting colour after cooking.
In 2017, Spain imported 56,000 tonnes of red shrimp (P. muelleri) from Argentina and 33,000 tonnes of Pacific white shrimp (L. vannamei) from Ecuador. France imported 30,000 tonnes of white shrimp from Ecuador, while Italy imported 21,000 tonnes of Ecuador and 16,000 from Argentina. Although China bought more than 50% of Ecuador's production in 2017, during the first quarter of 2018, Europe already imported 10,000 tons of shrimp, covering 23% of exports from this country.
In the case of Peru, the market is still relatively small, but Europe stands as its second export destination. In fact, in the last quarter of 2017, Spain bought 5,200 tons of Peruvian shrimp establishing a record of imports from this country, and France also increased its imports. The comparative advantage of Peru over Ecuador is that, due to the smaller dimensions of its market, it offers greater flexibility in its customer service.
A special case is set by Argentina, a producer market that increased its exports of red shrimp (P. Muelleri) by 80% from 2014 to 2017, from 129 to 233 thousand tons. These cold water shrimps are considered a premium product because of their good size, colour and sweet taste that resembles lobster, without treatments or additives.
Challenges To Sustainability
The southern European market tends to focus on HOSO shrimp and prioritizes quality over certification. In the case of the northern European market, having a sustainability certification from the Aquaculture Stewardship Council (ASC) or Marine Stewardship Council (MSC), is a prerequisite to sell in supermarkets, food service and wholesale sectors. This represents a great market potential for South American shrimp, but also challenges.
Some European importers, for example, question how the sustainability of the Argentine sector will be guaranteed to respond to the growing demand and maintain current levels of productivity in the future. In fact, Argentine shrimp suppliers appear on the red lists of US Seafood Watch. It is expected that better fisheries management and MSC certification will improve the current level of sustainability of the sector. NGO CeDePesca is one of the organizations that carries out Fisheries Improvement Projects in Latin America.
From a commercial point of view, South America also presents two strong challenges in relation to the Asian market:
The competition for prices. South American shrimp has a quality positioning that translates into slightly higher prices than its Asian counterparts. Consequently, Ecuador, for example, has lost 25% of its market segment in the US because it is unable to compete for prices with India. Jasmijn Venneman, STIP Commercial Outreach Manager says:
"The best thing that the region can do to counteract this trend is to invest even more in quality and focus more on markets that recognize this added value and are willing to pay more for it.”
Dependence on the Chinese market. Currently, China is acquiring lower volumes from South America than expected and it is estimated that its demand will not grow until September. As the South American production responds to the specifications (size, treatment, etc.) of the Chinese market, it becomes difficult to find substitute markets that absorb the volumes already produced. Diversifying markets will be necessary to remain competitive.
Benefits for Buyers & Suppliers
"There are many investments in agro commodities’ sustainability, but not so much in the case of aquaculture as a result of the sector fragmentation", explains Jasmijn.
"Through our portal we seek to add transparency to the sector to facilitate investments in sustainable seafood."
In many sourcing countries, seafood supply chains are composed of relatively small companies, which tend to operate anonymously. As a result, it is difficult for purchasing companies to find business partners that match their sustainability standards, and jointly develop roadmaps that lead to less complex and better organized chains.
STIP offers information on shrimp export markets in 13 countries free of charge through its website. Its magazine Shrimptails provides free of charge, up-to-date information on the North and South European import markets, which is useful for shrimp producers.
In the future, the platform also aims to have a database of retailers and importers to facilitate access to markets for sourcing companies with export ambitions.
Learn more Solidaridad's aquaculture programme here.