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China is winning supply sweepstakes; Europe new target for cultured shrimp.

China is Winning Supply Sweepstakes; Europe New Target for Cultured Shrimp While EEC opportunities loom larger, well over one billion pounds of product weight forecast for main markets of Japan and U.S. Low dollar will cause product diversion, however. In the latter part of 1988, seafood traders, stimulated by predicted shortages from Taiwan, beat paths to the doors of producers and processors in China, Indonesia, the Philippines and Thailand in search of uncommitted supplies of shrimp. An estimated 15-20% of the world's shrimp production in 1988 came from cultured sources, mostly from semi-intensive and extensive farms in Latin America and the Asia-Pacific area.

Last year China and Ecuador were foremost in supplying markets in Japan and the United States. According to preliminary reports, exports from Indonesia, the Philippines, Thailand and Vietnam destined for either Japan or the U.S. rose, while those from India and Mexico decreased. The predicted increase in shrimp exported from China more than made up for the decline in volume of exports from Taiwan.

China's exports consisted mostly of white shrimp (p. orientalis) from extensive and semi-intensive farms. Taiwan's chief export has customarily been cultured black tiger shrimp (p. monodon). Each species has appealed to a different market segment, to a great extent.

The decrease in production in Taiwan proves once again that culturing shrimp comes within the definition of a high technology industry. As is generally known in the seafood trade, Taiwan has been the leading country in Asia--if not in all the world--in developing and applying advanced technology to the propagation of shrimp. As long ago as 1968, Dr. I-Chiu Liao was successful in rearing larva of p. monodon under controlled conditions at the Tungkang Marine Laboratory in Pingtung, Taiwan.

As a result of developing cooperation between the Tunkang Marine Laboratory, the Taiwan Fisheries Institute, and Taiwan's seafood industry, Dr. Liao created a shrimp aquaculture industry second to none. In the peak year of 1987, the island exported 108.5 million pounds of shrimp to Japan, and 37.1 million to the U.S. for a product weight total of 145.6 million pounds.

Several causes have been suggested for the decline in production, but it is safe to say that Dr. Liao and the Taiwanese shrimp industry will find a solution to the current problems and Taiwan will resume a leading position in exports of black tiger shrimp in the near future.

Members of the seafood industry in Indonesia, the Philippines and Thailand, among other countries, have learned much about the culturing of black tiger shrimp from the technology developed in Taiwan, and production of the species is expanding in each of those nations.

As for shrimp exports from Central and South America, preliminary reports indicate modest growth in 1988. At year's end, complaints were coming from Ecuador regarding a shortage of larva which may suggest diminished exports during the first part of 1989.

Stabilizing Factor

China's exports in 1988, much of which will reach the consumers of Japan and the U.S. in early 1989, should act as a stabilizing influence on these markets. The sizes exported from China's ponds will likely be suitable for supermarket sales, and that is where the growth will be in the U.S. market in 1989 and beyond.

Unquestionably, if the shrimp aquaculture industry in China continues to expand at the rate it has expanded during the last five years, new marketing concepts must be created--and will be created--to take advantage of this remarkable source of supply. Already Hong Kong seafood merchants are establishing businesses within the U.S. to handle the large volume of shrimp obtainable from China for the foreseeable future.

Global Marketing -- 1989

Japan and the U.S. have been competing intensively for supplies of shrimp for many years. During the past decade, with the exception of the year 1983, Japan has imported more shrimp annually than the U.S. The spectacular growth in consumption in both markets has depended upon an abundant and evergrowing supply of shrimp.

During most of 1988, supply and demand seemed to be pretty well in balance for most sizes. However, cold storage holdings in Japan increased during the year to a burdensome volume equated to about four to five months' supply compared to U.S. holdings of about one month's supply. During the early part of 1989, this inventory should be reduced a great deal owing to fewer supplies from Taiwan.

The cold storage holdings should only temporarily impede more purchases of shrimp by Japanese importers because the yen is much stronger than the U.S. greenback and is likely to remain so for a long time -- and demand for shrimp in Japan is still growing. The increase in cold storage holdings is considered to be the result of fluctuations in exchange rates which occurred in 1988, encouraging speculations in shrimp.

The rise and fall of hard currencies play an important part in shrimp trading between major markets and producers in developing countries. Not only does Japan enjoy the benefits of a strong exchange rate, but so do European countries. Therefore, it is almost certain that the U.S. shrimp market will feel the impact of a low dollar during 1989 as many suppliers will direct their products away from North America. The exception is China, which will find it advantageous to divide its vast volume of exports between the major markets.

Poised for Euro-Growth

The European market is poised for growth in consumption of tropical shrimp, at a rate of expansion which is likely to exceed that of the markets of Japan and the U.S. By the end of 1992, when trade barriers are scheduled to be eradicated from the European Economic Community, tropical shrimp should be well established in most Western European countries. Per capita consumption will probably rival that of the U.S.

The rising popularity of tropical shrimp in Europe was evident from the numerous displays at the 13th Salon International de L'Alimentation (SIAL) in Paris last October. This enormous food show with almost 4,000 exhibitors from at least 70 countries housed in five buildings -- each as large as a football field -- demonstrated beyond doubt the dynamism of the European food industry.

Continental food merchants and marketers are aggressive and highly competitive. There is every reason to believe that given abundant, quality shrimp in appropriate product forms and packaging (and in continuous supply), European importers, distributors, multiple stores, and re-processors will develop the demand for tropical shrimp to the No. 1 seafood in much of Western Europe. The price range of cultured shrimp within the next two years will stimulate activity by the seafood trade in Europe, and producers in developing countries will find an attractive market in such countries as France, Germany, Italy, the Netherlands, the United Kingdom, Spain, and, to a lesser extent, Portugal and Greece.

The opportunities for "value added" shrimp products are many. Inasmuch as the predicted growth in consumption will depend upon retail sales in all three major markets, new marketing concepts and innovative packaging will be required to market the volume of shrimp available from the farms of Asia.

Is there going to be too much shrimp produced by means of aquaculture in the 1990s resulting in ruinous prices for farmers and fishermen? This question is frequently asked when forecasts of production in the leading Asia-Pacific countries are discussed. Any reply involves the following considerations.

About 65 million babies were added to the world population of 5.2 billion last year. It is estimated that the grand total will swell to 6 billion by the turn of the century. As much as 25% of the earth's population is now 14 years of age or younger. Most of the predicted growth will take place in developing countries where shrimp is being farmed or fished. It is reasonable to assume that a large proportion of the shrimp will be consumed there and in minor markets in proximity to them.

But Risks Abound

The current problems existing in Taiwan point to the fact that the technology involved in culturing shrimp is subject to a variety of external factors beyond the control of the scientists and technicians. Then, there are natural events such as typhoons, hurricanes, and even droughts which can disrupt shrimp farming.

Political interference and economic problems in developing countries where shrimp is grown or fished are often distracting. The list of risks involved in the culturing and farming of shrimp is sufficiently long to temper one's assessment of the volume of production which can be relied upon year after year in many parts of the world.

To satisfy the growth pattern of the past decade as shown in the table on page 60, well over one billion pounds of shrimp product weight must be made available to the markets of Japan and the U.S. in 1989. Shrimp marketers know that shrimp sizes, species, product forms, brands, and even countries of origin are all-important factors in appealing to innumerable customer bases. So, producers and processors are limited in their flexibility in shifting from one market to another. Accordingly, U.S. buyers may be short of various sizes of shrimp in 1989 because of exchange rates while Japan and Europe gain. But the shortages will be moderated because of the inflexibility of many producer/processors to switch markets.

All things considered, this should be another year in which progress will be made based on increased world production of shrimp with the three major markets and the minor markets all eager for supplies.

PHOTO : A bird's eye view of the Tungkang Marine Laboratory in Pingtung, Taiwan, one of the

PHOTO : world's foremost aquaculture research facilities.
COPYRIGHT 1989 E.W. Williams Publications, Inc.
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Author:Branstetter, Henry R.
Publication:Quick Frozen Foods International
Date:Jan 1, 1989
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