2021 Industry Report:

June 2021

Written By

Market Intelligence Team 2 Executive Summary

Consumption One of the largest consumers of shrimp in the world is the United States. Within the US, it is the most popular seafood, representing over 25 percent of the national annual per capita seafood consumption, translating to 4 pounds of shrimp per year per the average consumer.

China, another one of the largest producers and consumers of shrimp in the world, had a forecast to increase by 350K MT, or 21%, over 2016 levels by 2020, with a 5% annual growth rate, a trend thought to be caused by the growing middle-class population within China. This increase would push their consumption levels past the US and EU combined.

Production In 2020, the total value of the global shrimp market reached USD 18.3 billion, and is projected to expand dramatically for the next 5 years, reaching USD 23.4 billion in 2026. Due to the Covid-19 lockdown measurement, global shrimp production during the first half of 2020 decreased compared to the previous season.

Shrimp production can be separated into two different categories: shrimp that is farmed, and shrimp that is fished. As of 2020, farms comprise 55% of the total shrimp produced globally and are continuing to take a greater share of total shrimp production compared to shrimp .

Total production of shrimp via farming has been, on average, increasing significantly since 2010. In 2010, approximately 3.75 million MT of shrimp were produced via farming worldwide; in 2019, this number reached around 4.75 million MT, a 26% increase.

COVID-19 and its Vietnam’s shrimp exports to the EU have recovered since the beginning of the Lasting Effects third quarter of 2020 due to solid growth demand in the European market after the pandemic. According to VASEP, shrimp exports to the EU in January 2021 increased by 16% from the previous year to reach USD 30 million. This same month’s total exports for the Vietnamese shrimp were USD 124 million, a 22% increase from the previous year.

Strict trade restrictions due to the pandemic, particularly in China, have stalled major shrimp suppliers from countries such as India and Ecuador. In addition, the spread of several shrimp diseases have been lowering supply yield across Southeast Asia since 2017. The combination of both the dramatic drop in demand and supply has caused uncertainty for both importers and exporters concerning future years.

Ecuador, the second-largest exporter of shrimp in the world, has been affected by COVID-19 worse than others. Prices for Ecuadorian shrimp are at an all-time low, with some importers worried that it could be so low that it crashes a significant part of the worldwide shrimp industry.

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Executive Summary Shrimp: ’s Most Prized Product

Global Shrimp Total Worldwide Export Value of Non-Coldwater & by Year in USD Billions (HS Code: 030617) Exports

Graph 1. Source: ITC Trade Map (HS: 030617)

Total Worldwide Export Value of Coldwater Shrimps & Prawns by Year in USD Billions (HS Code: 030616)

Graph 2. Source: ITC Trade Map (HS: 030617)

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Part I - Product Information

1.1 Major Varieties and Sources 6

1.2 Grade Classifications 7

1.3 Main Trade Regulations 8

1.4 Supply Chain 9

Part II - Global Market Dynamics

2.1 Consumption 10

2.2 Productions & Exports

Ecuador 13

India 14

Vietnam 16

Thailand 17

2.3 Imports

United States 21

China 22

Europe 23

Part III - Sources

Read more industry reports by Tridge https://www.tridge.com/market-reports Part I Product Information

1.1 Major Varieties and Sources

1.2 Grade Classifications

1.3 Main Trade Regulations

1.4 Supply Chain Part I 6 Product Information

Although they belong to different subcategories of the order , due to their similar appearance and qualities, shrimp and as terms are almost always used interchangeably in commercial farming and fishing. The food itself is an extremely popular and important seafood as it is consumed in almost all countries in the world. However, they are also common food allergens, and certain cultures, such as the Jewish laws of Kashrut and the Hanafi school of Islam, forbid the consumption of shrimp.

Frozen shrimp and prawns can be further separated into specific popular varieties, Pandalus spp. (cold-water prawn sources) and (brown shrimp varieties), which are defined by the HS Code 030616, whereas most other varieties (which will be the primary focus of this report) are defined by HS Code 030617. Details specifically on Pandalus spp. and Crangon crangon shrimp HS Code: 030616) will be clarified separately where applicable.

Sources for Shrimp Regions/Conditions Major Varieties and Description Varieties of Harvest/Farming Sources Cold-Water Shrimp Harvested in ocean Smaller varieties known as Pandalid shrimp. A (Pandalus spp.) waters in the popular species is the pink colored northwest and commonly used in salads, soups or chowders. northeast regions of Coldwater shrimp are only available previously the United States, cooked and peeled (shell removed). Europe and Canada

Warm-Water Shrimp Harvested and farmed Includes Penaeusand Litopenaneus species that are in tropical and more commonly sold by reference to basic shell sub-tropical regions colors (white, brown, and pink shrimp). Additional around the world names can include tiger, banana and hopper shrimp. Buyer preferences are usually directed by taste, texture, size and costs which will vary from one species to another

Wild Shrimp Harvested from Refers to either cold water or warm water varieties coastal ocean waters obtained through the aforementioned harvest with traditional method. They are often preferred in traditional vessels dishes and recipes. The harvesting of wild shrimp is regulated by management programs that set annual production limits.

Farmed Shrimp Grown in open and Refers to warm water varieties obtained through the closed pond systems aforementioned farming method. Shrimp diets and supplemented with pond waters can be controlled to influence formulated feeds production rates and sensory attributes of the shrimp. Over 90 percent of the shrimp eaten in the Table 1. List of Major Sources for United States come from farmed sources grown in other countries around the world. Shrimp Varieties

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Part I Product Information

Name of Variety Description

White Shrimp This variety has a sweeter taste but tends to taste nuttier than pink shrimp. There are also Chinese white shrimp and Mexican white shrimp which are farmed species and not wild-caught (usually less sustainable).

Pink Shrimp (Pandalus A common, well-known variety, typically seen behind the average seafood spp.) counter. They are pink when raw, hence the name.

Rock Shrimp While they start out in hard shells, this variety is typically deshelled before it is sold. They are often compared to because of their firm texture, and they can be substituted for lobster as a more affordable protein.

Brown Shrimp This variety has a more mineral flavor than white and pink shrimp, and they can (Crangon crangon) contain more iodine. They turn pink once they’re cooked and are commonly used in dishes like gumbo.

According to the United Arab Emirates seafood trading company the KGT Group, the Grade standard USA trading grades are as follows:

Classifications Counts per kilo and per pound that are customarily used for both headless and peeled shrimp. These ranges are the ones normally used in international trade. Counts expressed per pound are the most used.

Most sales of shell-on shrimp are U-10 (under-10 per pound) through 100 /120 per pound. Shell-on smaller than 100/120 is rare and very unusual.

Peeled shrimp may be graded as fin­ished count, where the number it says on the label is the strict total number of shrimp, or as peeled-from count, where the label shows the size of the shell-on tail from which the shrimp was peeled.

The actual count, in this case, is about one or two sizes smaller.

Examples:

Number of shrimp per pound (used for Headless shrimp) U-10 , 10—15, 16—20 Number of shrimp per kilogram (used for Head-on shrimp) U-10, U–12, U–15 Number of shrimp per kilogram (used for Peeled shrimp) U-21, 22—33, 34—44

USA grading system:

Product types: Chilled, fresh (not previously frozen) / Unfrozen, thawed (previously frozen) / Frozen individually (IQF), glazed or unglazed / Frozen Solid pack, glazed or unglazed

For the U.S.A. Grade Standards, the count of shell-on shrimp is deter­mined by dividing the number of shrimp in the package by the net weight of the package in pounds. Therefore a 5-pound pack of 11/15 count shrimp must contain 55 to 75 shrimp. Detailed grades can be described as below:

(a) U.S Grade A Shrimp shall: 1. Possess good flavor and odor characteristics of the species beingevaluated in accordance with Grade Determination of this subpart and 2. comply with the limits for defects for U.S. Grade A quality in

accordance with Grade Determination.

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Part I Product Information

(b) U.S Grade B Shrimp shall: 1. Possess reasonably good flavor and odor characteristics of the species beingevaluated in accordance with Grade Determination of this subpart and 2. comply with the limits for defects for U.S. Grade B quality inaccordance with Grade Determination below.

The Codex standard for size grading suggests similar size grades and offers an alternative method, expressing the average count as a single figure rather than as a range. If this method is used, the larg­est and smallest shrimp in the pack should each be within ten percent of the size of the average stated on the label.

Grade Assignment (USDA/NOAA/Seafood Inspection Program)

GRADE ASSIGNMENT fLAVOR AND MAX. NUMBER OF ODOR DEFECT POINTS

U.S Grade A Good 15

U.S Grade B Reasonably Good 30

Main Trade The following documents are required for export out of Thailand:

Regulations Quality Management System (Global)

ISO 9001 - Quality Management System

Laboratory Accredited (Global)

ISO/IEC 17025 - Laboratory Quality Standards-Food Testing

Food Safety Management System (Global)

GMP - Good Manufacturing Practice - MANDATORY

SSOP - Mandatory

HACCP - Hazard Analysis and Critical Control Point - Mandatory

FSSC 22000 - Food Safety Management System

BRC - Global Standard for Food Safety

ASC - Aquaculture Stewardship Council

BAP - Best Aquaculture Practices

HALAL - Halal Product Certificate

Quality Product Symbol (Issued by Thai government agencies) Q MARK - Certificate of Thai Agricultural Standard TTM - Thailand Trust Mark

Thailand is involved in four major trade agreements, which include the ASEAN-Korea (AKFTA), ASEAN-Japan (JTEPA), EU GSP, and Canada-Thai FTA. Thai shrimp is given 0% tariff rates in all of these deals with the exception of the EU GSP trade deal, where shrimps are given a 12% tariff rate. Thailand is also involved in the USA-Thai Antidumping deal, where the rates for shrimp products vary depending on the packers, and thus buyers should check and confirm the rate with the packers prior to purchase.

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Part I Product Information

The following documents are required for export out of Vietnam:

Viet GAP

Global GAP

BAP (Best Aquaculture Practices).

Aquaculture Stewardship Council (ASC) Certification.

Marine Stewardship Council (MSC) Certification.

ISO 22000 (Food Safety Management Certification).

ISO 9001:2015 (Quality Management Certification).

HACCP (Hazard Analysis and Critical Control Points).

SSOP (Sanitation Standard Operating Procedures).

SA8000 (Social Accountability).

BRC (British Retail Consortium) Global Standard for Food Safety.

IFS (International Featured Standard ) Food.

In Vietnam, 200 shrimp processing plants in Vietnam are approved by the European Commission with periodic inspections. Shrimp and prawn, regardless of destination, are exported from Vietnam at a 0% tax rate. However, when shrimp and prawn reach destination countries, value-added tax and import tax are then applied. In addition, according to Japan’s commitment to Vietnam in VJEPA, from April 1, 2019, Vietnam’s shrimp products with HS code 030617 imported into Japan will be exempt from tax. Vietnam’s processed shrimp products with HS code 160521011, 160521019, 160521029, 160529010, 160529029 imported into Japan will be exempt from tax as well.

These tariff exemptions were put into place due to the Europe-Vietnam Free Trade Agreement (EVFTA) established in the beginning of April 2020. This echoes the similar Ecuador-Europe Free Trade Agreement that went into effect in 2017 where Ecuadorian shrimp were given similar benefits; this agreement is also still active today.

Due to using insufficient means of shrimp fishing that does not endanger sea turtles as lined out by the rules established by the US State Department, the US has banned all imports of wild-caught shrimp from China, Venezuela, and India. However, farmed shrimp are not a part of this import ban.

During the freezing of shrimp, shrimp can be frozen at sea by immersion in a cold Supply Chain brine or a solution of sugar and salt, by air-blast freezing, or by plate freezing. Shrimp can also be frozen satisfactorily in blocks 50 mm thick in a vertical plate freezer. The shrimp are poured into a polyethylene bag between the freezer plates, and the spaces between the shrimp are filled with water. The frozen blocks may sometimes need further wrapping, such as with fibreboard cartons, to make them easier and safer to handle on a moving ship.

HLSO, or headless shell-on, is a common term in the industry. During its production, the head and veins of individual shrimp are removed. This product is the most

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Part I Product Information

popular form of frozen shrimp sold in the market. Two related products to HLSO are Butterfly-cut and Easy Peel. Both are processed from HLSO with further cutting on the back. Easy Peel is highly popular and highly demanded from the USA, particularly recently.

Another form of processing is the peeled tail-on, or PTO. Most of the five-segmented shell is removed, and only the last segment and the tail fans are kept. PTO is rather common on the market, especially in the US, and is used in various dish preparations including the Western type of breaded shrimp.

Thailand

Shrimp are sourced primarily from two places: shrimp farms, which comprise 89% of total shrimp production, and fishermen, which make up the rest of the 11%. Shrimp from fishermen are sold to the shrimp exchange market or the primary processed shrimp factories/cold storages. Regardless of the source, any shrimp sold to the shrimp exchange market will eventually be sold to the primary processed shrimp factories or cold storage. Once they are at these facilities, they are sold to the processed factories for export. Storage temperatures are kept at -18 oC while packing is done via plain bags in corrugated master cartons (~10 kgs) or via freezing containers.

Vietnam

Most shrimp are produced through farms instead of natural catching. Farms sell the shrimp to merchants or directly to food processing companies, primarily in live or chilled conditions. Exports themselves are handled by either food processing companies or third-party exporting companies. During storage, qualified shrimp and prawn are soaked into cold ice water and then put into heat-insulation containers with ice. They are then delivered to processing factories for processing or preservation purposes. Individual Quick Freezing (IQF) or cold storage is used to preserve shrimp and prawn, though IQF is preferred due to its low dehydration rate. Packing methods include vacuum plastic packages of 0.5 to 1.0 kg each, plain bags placed in master carton boxes at multiples of 5 kg, or freezing containers.

Indonesia

Shrimp is mainly produced in Lampung(Sumatra Island) and East Java Island in Indonesia. Supply chain in Indonesia shrimp industry consists of Farms -> Processing facilities-> Middlemen(not necessarily) -> Exports. There are more than 20+ processing facilities in Indonesia, but only 4-5 of them are officially registered as exporters. If middlemen are involved in the supply chain, they tend to keep a good relationship with the local farmers and exporters. The shrimp season in Indonesia is all-year-round, but the size availability could be different across the seasons, and size preference across the destination countries is also different. Indonesian government supports seafood exports by loosening the regulations, taxes and simplifying the export processes.

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2.1 Consumption

2.2 Production & Export

2.3 Imports Part II 12 Global Market Dynamics

One of the largest consumers of shrimp in the world is the United States. Shrimp also Consumption happens to be the most popular of seafoods, representing over 25 percent of the national annual per capita seafood consumption with over 4 pounds of shrimp per average consumer annually. In 2017, it hit a record high of 4.4 pounds per person, increasing by three-tenths of a pound per person compared to 2016.

China, another one of the largest producers and consumers of shrimp, is expected to surpass 2 million metric tons of consumption by 2020, a 350K MT and 21% increase over 2016 levels, or a 5% annual growth rate. This increase would push their consumption levels past the US and EU combined. This predictive increase in China is largely based on the growth of the middle-class population and its growing preference for high-quality proteins like seafood over other protein sources such as livestock and poultry.

In 2021, it is estimated that the EU consumption will remain stable, showing a steady growth overall, but China and the US are highly likely to experience strong demand. However, as China currently imports a lot less shrimp than the previous season due to supply chain disruption caused by Covid-19, the domestic price level has been high since the last season. Food service sectors are opening up in the US, and people start to eat out actively as the pre-pandemic era, as more people are vaccinated. Consequently, shrimp consumption in the US is projected to continue the increasing trends.

Shrimp production can be separated into two different categories: shrimp that is Production & farmed, and shrimp that is fished. As of 2020, farmed shrimp comprise 55% of the Export total global shrimp production, and is continuing to take a greater share compared to fisheries according to the World Wildlife Foundation (WWF). These are most prominent in China, though they are also practiced by many other Asian countries such as Thailand, Indonesia, India, and Vietnam.

The total production of shrimp via farming has been, on average, increasing significantly since 2010. In 2010, approximately 3.75 million MT of shrimp were produced via farming worldwide; in 2019, this number reached around 4.75 million MT, a 26% increase. In fact, according to a study by the Global Aquaculture Alliance, production was expected to reach around 5.25 million MT by 2021 with a projected CAGR of 5.4%, but it should be noted that this study was done in late 2019 before the COVID-19 outbreak. Nevertheless, these studies have predicted that China, Vietnam, and most notably Ecuador will be primarily responsible for this growth. Specifically, Ecuador is expected to take advantage of the shrimp disease crisis in Asia to increase exports and boast a staggering predicted CAGR of 11.3% between 2015 and 2020, potentially pushing the country to become the third-largest producer of farmed shrimp in the world. In 2019, farmed shrimp production reached 1.6 million MT, 1.4 million MT, and 1.0 million MT for Southeast Asia, China, and the Americas respectively.

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Part II Global Market Dynamics

Due to the large differences in production between shrimp fishing and farming on top of their intersecting market demographic, farmed shrimp and fished shrimp must compete against each other for price. As of late, has demonstrated increasingly lower average production costs while fuel for fishing among other resources necessary to preserve shipping fleets has become increasingly more expensive. As a result, wholesale price of farmed shrimp is decreasing domestically and internationally. At the same time, local fishing industries are gaining pressure across the world. Speculation of the severity of this effect was high enough to the point where local fishers in the US successfully lobbied for a trade restriction against imported farmed shrimp in 2003; at this time, prices paid to domestic fishers decreased from USD 2.13 to 1.73 after a 50% increase in imported farmed shrimp.

Though the export value of shrimp reached its peak in 2017 at a total value of USD 18.3 billion worldwide, shrimp exports have nevertheless enjoyed an overall net growth since 2015, reaching USD 16 billion in 2020. While many industries have seen increases over the last five years, the largest contributor to the rise in value is the growth of many Latin American countries and their shrimp farm industries. Argentina for example featured a 37.7% growth rate of nearly USD 300 million between 2015 and 2019, replacing China as one of the five countries to feature a total annual export value over USD 1 billion for shrimp. While not yet a major market force for shrimp, Venezuela’s production levels also increased by 206% within the same timeframe, making it the second fastest growing shrimp industry in the world behind the United Arab Emirates.

Ecuador

Ecuador coastline, where most of the shrimp farms are located, has two seasons the dry season between May and December and the rainy season from January to April. The off-season for the farmed shrimp is between March to June when the country is at the peak of the rainy season. In 2020, due to La Niña effects, the raining started earlier and has been affecting the shrimp farms.

Ecuador showed the most dramatic growth of exports in the shrimp industry, which grew from an already high USD 1.89 billion industry in 2015 to a USD 3.67 billion industry in 2019. This is equivalent to a 93.9% increase with consistent average growth of USD $445 million each year.

Ecuadorian shrimp exports to China represented 77% in 2019, and 65% in 2020 so far, which makes the Ecuadorian shrimp too dependent on the Chinese market. The detection of coronavirus in outer packagings of frozen shrimp caused a halt in exports to China. On top of this, one of the biggest Ecuadorian shrimp producers and exporters of shrimp had its shipments suspended as the white spot shrimp disease was detected in one of their latest shipments. Since then the countries entered into sanitary agreements to prevent such occurrences and the exports have picked up and dropped again but it will likely finish the year with around a 7% increase in volume exported, which is less than half of the usual 20% annual increase Ecuadorian shrimp segment was used to see. But due to the drop in prices, the export value shall be around the same as last year. According to the National Chamber of Aquiculture of Ecuador (CNA), the segment is looking into diversifying their buyers in 2021 so there is a smaller dependency in only one market, which is the case for the Vietnamese shrimps that are exported also to the US, Japan, South Korea and to the EU and they had a much smaller drop in prices for this reason.

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Part II Global Market Dynamics

Top 10 Export Destinations for Non-coldwater Shrimp & Prawn from Ecuador (USD Thousand) (HS Code: 030617)

IMporters Exported Exported Exported Exported Exported Exported Exported value in value in value in value in value in value in value IN 2013 2014 2015 2016 2017 2018 2019

World 1,223,394 1,941,021 1,894,670 2,254,581 2,671,265 2,922,812 3,675,300

China 59,146 109,521 171,312 73,683 107,881 572,194 2,033,640

United 361,477 507,758 365,522 377,132 401,691 399,409 435,164 States of America

Viet Nam 246,926 474,444 659,385 981,749 1,294,625 1,092,524 308,667

Spain 102,062 187,553 171,310 222,620 215,596 204,960 215,851

France 138,944 180,861 167,860 187,050 170,980 172,893 184,259 Table 2. Source: ITC World Trade Map (HS Code: 030617) Italy 104,326 168,666 116,609 141,845 140,305 144,263 131,435

Ecuadorian exporters and the CNA have taken on a diversification strategy for their product by aggressively promoting Ecuadorian shrimp in the US and European markets. With this strategy, Ecuadorian shrimp will try to enter the retail markets, such as supermarkets and online sales channels in both the US and Europe, by offering more sustainable products than their main competitors, mainly Asian countries.

India

India is the largest exporter of shrimp in the world, holding 23.2% of the total export share in 2020 at USD 3.8 billion. While growth rates have stagnated since 2017, India has nevertheless increased exports substantially since 2015, demonstrating a growth of 48.2% overall by 2019 with a USD 1.48 billion difference, followed by an abrupt fall in export volume in 2020 by 15%. Production of shrimp via shrimp farming accumulated to around 0.6 million MT in 2019; in terms of production volume and region, the country compares closely to yields of Indonesia and particularly Vietnam.

India’s largest export target is by no coincidence the largest importer of shrimp in the world, the United States, which takes up 45.8% of India’s total exports and is by far their largest target market. However, the bigger story of India’s export rates lies within two countries: China and Vietnam. On one hand, China has substantially increased exports from India between 2015 and 2019 by an unbelievably high 1483% increase, going from a USD 58.8 million to a borderline USD one billion import value from India by 2019. Even between 2018 and 2019 alone, exports grew by 243%.

On the other hand, nearly the opposite could be said about Vietnam. In 2017, Vietnam imported USD 1.16 billion worth of shrimp. In 2019, this number was reduced to USD 0.193 billion, an 83.2% decrease.

In 2020, India’s shrimp industry was greatly affected by COVID-19. Due to the after effects of stress harvesting, low breeding, and labor issues, many shrimp farmers expect a huge loss of shrimp by the end of the fiscal year. Some have opted to start their new cultures in 2021. Farmers in India have predicted that the production of shrimp will likely amount to a 15% decline compared to the previous year. A representative of India’s Central Institute of Brackishwater Aquaculture (CIBA) stated that COVID-19 related lockdowns have already cost India’s shrimp sector USD 1.6 billion. He is part of the many citizens and farmers of India who are currently calling

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Part II Global Market Dynamics

on the Indian government to provide stronger financial support. India’s shrimp relationship with China has been deeply threatened by the effects of COVID-19, with prices of headless shrimp dropping as much as USD 0.50 per kilogram.

On top of COVID-19, Southeast Asian shrimp industries are facing threats from the shrimp diseases decapod iridescent virus 1 (DIV1) and hepatopancreatic translucence virus (HPTV). The diseases are reported to have infected about 10% of farming areas and aqua-laboratories. Management to contain these diseases was insufficient due to the effects of COVID-19 lockdowns. The combination of all of these factors led to stress harvesting in which farmers frantically harvested their shrimp regardless of quality and sold them in the market at low prices, depreciating wholesale values. Other diseases affecting shrimp were recently present in other Southeast Asian countries as well; last year, approximately 6,200 hectares of shrimp farms were lost in Vietnam due to the combination of hepatopancreatic necrosis disease (AHPND), whitespot syndrome virus (WSSV), and enterocytozoon heptopenaei (EHP). The prevalence of these diseases has been increasing wariness on what actions need to be taken in order to minimize the effects on the shrimp industry.

India’s shrimp exports to the US are already down by 14 percent (likely thanks to a US ban on Indian shrimp exports in late 2019 after a failure of compliance with certain US State Department Rules), while sales volumes to China have already decreased by 80 percent. In light of these drops, many producers are already seeking to take advantage of markets elsewhere to decrease their reliance on the two major importing countries, considering export destinations such as Israel, South Korea, and the United Kingdom. That being said, Indian exports to the US are already showing signs of recovery as exports increased to 24,000 MT in July, increasing by over 104% compared to the previous month and showing comparable numbers to the last fiscal year in 2019.

Top 10 Export Destinations for Non-coldwater Shrimp & Prawn from India (USD Thousand) (HS Code: 030617)

IMporters Exported Exported Exported Exported Exported Exported Exported value in value in value in value in value in value in value IN 2014 2015 2016 2017 2018 2019 2020

World 3,658,505 3,071,512 3,461,520 4,612,033 4,372,998 4,554,389 3,793,319

United 1,349,522 1,170,554 1,389,814 1,969,578 1,929,476 2,088,597 1,810,609 States of America

China 33,052 58,805 44,319 72,523 271,120 931,406 572,493

Japan 344,527 304,663 307,699 349,362 322,936 333,134 307,899

Viet Nam 561,992 493,871 733,320 1,158,185 825,903 193,730 183,785

United Arab 129,288 105,179 129,595 152,679 168,076 160,800 137,689 Emirates

United 140,399 101,028 128,324 154,020 115,136 116,032 101,750 Kingdom

Belgium 212,134 149,689 96,488 132,319 109,875 105,436 105,576

Canada 119,166 91,823 75,960 112,778 104,677 92,390 105,278

Netherlands 91,511 109,243 103,975 105,441 97,780 83,088 81,662

Table 3. Source: ITC World Trade Russian 65,401 21,276 42,219 47,369 60,678 81,632 74,159 Map (HS Code: 030617) Federation

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Part II Global Market Dynamics

Vietnam

In 2019, Vietnam ranked third in the world in terms of shrimp export value, holding 10.9% of the total export value with USD 1.96 billion. Vietnam’s export value has been relatively stable, hovering around USD two billion for most years since 2013. As of 2018, the country’s largest importers were Japan (18.8%), China (14.8% share), and South Korea (12.2% share), all in geographical proximity. In terms of shrimp farming, Vietnam was the largest producer in Southeast Asia in 2019, producing around 0.7 million MT of shrimp.

Top 10 Export Destinations for Non-coldwater Shrimp & Prawn from Vietnam (USD Thousand) (HS Code: 030617)

IMporters Exported Exported Exported Exported Exported Exported Exported value in value in value in value in value in value in value in 2013 2014 2015 2016 2017 2018 2019

World 1,988,909 2,481,753 1,731,416 1,820,293 2,204,604 1,973,110 1,961,743

Japan 449,694 449,300 345,861 350,049 437,000 371,494 384,198

China 293,047 304,501 239,790 297,527 377,838 293,417 348,125

Korea, 151,584 216,552 153,422 186,047 254,298 241,621 207,387 Republic of

United 439,511 560,997 301,879 297,991 247,432 224,981 278,690 States of America

United 55,873 65,670 51,271 61,454 105,114 119,017 102,844 Kingdom

Netherlands 22,727 70,229 47,142 61,023 130,969 91,847 64,746

Hong Kong, 49,611 67,936 71,351 72,077 77,666 89,264 76,853 China

Canada 84,171 119,948 68,166 66,130 82,629 81,863 76,364

Belgium 43,211 63,245 36,578 46,615 80,520 70,767 58,840 Table 4. Source: ITC Trade Map (HS: 030617) Germany 55,930 86,709 58,494 53,913 60,144 69,165 63,893

Vietnam’s shrimp industry was initially one of the many sectors to be harshly affected by COVID-19. By March 2020, exporters observed that orders for their shrimp had decreased by between 30 to 50 percent according to the Vietnam Association of Seafood Exporters and Producers (VASEP). As a result, between 35 and 50 percent of their shrimp orders to the US and EU were cancelled or postponed, even with a 30 percent reduction in price at local markets. In contrast to India where the sector saw large volumes of stress harvest, many Vietnamese shrimp farmers are electing to do the opposite. As uncertainty grew, farmers have stocked 6,000 hectares of shrimp farm, 24% of the total area of shrimp farming, a move that could affect Vietnam’s shrimp sector long-term.

On top of COVID-19, the Vietnam shrimp industry also faces a white spot disease in the Mekong Delta affecting shrimp farms, a phenomenon some speculate has occurred due to the shifting temperatures caused by global climate change. Combined with the uncertainty caused by unstable wholesale prices, shrimp production is expected to fall by 30 to 50 percent by the end of the year with processing plants operating at just 70% capacity. In addition, in 2018, approximately

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Part II Global Market Dynamics

6,200 hectares of shrimp farms were lost in Vietnam due to the combination of hepatopancreatic necrosis disease (AHPND), whitespot syndrome virus (WSSV), and enterocytozoon heptopenaei (EHP).

Despite everything, a combination of Vietnam’s efficient COVID-19 containment strategies and the newly established Europe-Vietnam Free Trade Deal (EVFTA) seem to be helping the shrimp sector look better than ever. In April, the export value of shrimp rose by 5.8 percent compared to a year prior, reaching USD 244.2 million. Sales to Japan increased significantly, rising 18 percent year-on-year in April, while the US also reached a 14 percent year-on-year increase within the same timeframe. These increases can be attributed to the decline of imports from shrimp industries in countries like India and Ecuador which failed to contain COVID-19 as effectively. South Korea also increased Vietnamese shrimp imports thanks to an exemption of import tariffs and an imposed quota of 15,000 MT per year, reaching a year-on-year rise of 5.8 percent by July 15. As of now, only 2,500 tonnes have been shipped. Additionally, shrimp exports to Canada surged by 32%, allowing the country to become the sixth-largest importer of Vietnamese shrimp.

Thanks to the EVFTA, shrimp exports have seen a 20% increase from 2019 starting this August. Tariffs for varieties such as frozen black tiger shrimps were reduced from 4.2% to 0% after the establishment of the trade deal in August. Projections for shrimp exports to the EU are expected to increase in the future even during the onset of the COVID-19 pandemic.

Thailand

Thailand is the sixth-largest exporter of shrimp in the world, having exported 3.7% of the total export share at USD 662 million in 2019. Apart from the outlier years of 2016 and 2017 when Thailand saw great demand from the American and Vietnamese markets, exports have been decreasing consistently and significantly since 2012. Between 2012 and 2019, Vietnamese exports of shrimp went from a USD 1.41 billion industry to a USD 0.662 billion industry, featuring a 53.1% decrease. Nearly all export destinations decreased their imports by more than half during this period, with each year yielding less value than the previous. A large exception to this trend is China, which has increased imports by 454% since 2012 from USD 31.8 million to USD 176 million and also increased imports by 68.7% between 2018 and 2019.

Top 10 Export Destinations for Non-coldwater Shrimp & Prawn from Thailand (USD Thousand) (HS Code: 030617)

IMporters Exported Exported Exported Exported Exported Exported Exported value in value in value in value in value in value in value in 2014 2015 2016 2017 2018 2019 2020

World 827,533 629,883 917,392 918,686 696,292 662,545 562,723

United 308,673 258,442 419,615 378,608 227,859 202,960 194,084 States of America

China 20,060 43,176 51,835 57,825 104,527 176,334 130,400

Japan 139,764 108,615 123,890 135,503 138,622 119,980 93,481

Canada 58,863 41,989 60,941 57,070 41,245 33,302 18,819

Taipei, 20,925 15,735 20,240 45,602 34,014 28,396 37,254 Chinese

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Australia 38,619 27,805 32,951 28,976 24,336 23,379 18,505

United 66,941 23,429 27,602 21,627 17,813 20,745 17,467 Kingdom

Korea, 34,480 24,139 20,528 28,224 20,124 19,489 26,766 Republic of

Viet Nam 43,611 51,318 125,524 124,416 53,532 9,071 2,067

Table 5. Source: ITC World Trade Map Hong Kong, 13,725 10,396 8,824 7,963 6,018 7,243 7,154 (HS: 030617) China

This decline could be partially associated with overall declines in production, such as the proliferation of the Mortality Syndrome (EMS) disease that plagued Thai cultured shrimp production in 2013. A 2018 report by the United States Department of Agriculture said that despite the high level of progress made towards diagnosing and containing the disease, production levels still have not matched pre-2013 numbers.

In 2015, it was reported that the total production of Thai fisheries had been declining since 2011, an outcome likely due to the heavy pressure from large importing nations like the US and EU. These power states specifically restricted Thai fishers from fishing practices after it was releaved the industry had prevailing issues involving human trafficking and illegal, unregulated, and unreported fishing activity (IUU).

Although shrimp only accounts for 2.5% of the amount of seafood caught through fisheries annually, fisheries are also responsible for providing large amounts of fishmeal, which are vital towards the sustainability of shrimp farms. Since 2011, the amount of shrimp captured through fishing saw a 35.1% decline from 48.6K MT to 31.5K MT. Shrimp produced through aquacultures declined from 611.4K MT to 294.8K MT in the same period, accumulating a 51.7% drop.

It should be noted, however, that Thai shrimp fisheries have shifted to become less dependent on fishmeal in general, from roughly 30 percent in usage to around 10 to 15 percent. The industry has looked to alternatives such as insects and other processed protein sources. The shift has allowed shrimp farming to become less dependent on shrimp fishing as a result. Overall, the industry has made significant strides in humanitarian and sustainability efforts since the controversies of 2011, enough to the point where it is often referred to as an ideal example for both the possibility of growth as well as one of the more sustainable industries in the market. These improvements have encouraged more importers to open their doors to Thai shrimp exports for the upcoming years.

Overall frozen seafood exports from Thailand, which historically were made up of large amounts of shrimp (comprising 32.3% in 2017), dropped 9.8% at the beginning of the 20 year due to COVID-19 restrictions. However, Poj Aramwattananont, president of the Thai Frozen Foods Association, is optimistic that exports will recover in the third and fourth quarters of the year, growing by more than 10% compared to 2019 numbers. The US Food and Drug Administration (FDA) also has approved of a record low amount of imported seafood, declining only 18 shrimp entry lines in the first seven months of 2020, a stark contrast to the 61 denied line entries in 2019; this is a promising trend considering that the US was and still is Thailand’s largest importer of shrimp.

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Canada

Apart from Greenland, which has only very recently become a global exporter of the variety, Canada is the largest exporter of coldwater shrimp in the world. Shrimp of this variety, including pink (Pandalus spp.) and brown shrimp (Crangon crangon), are identified by HS code 030616, as opposed to the common 030617, which so far has been the primary variety discussed in previous sections. In 2020, Canada exported USD 236 million worth of coldwater shrimp, which comprised 18.6% of the total export value. Canada’s export value for shrimp has been relatively stable between 2014 and 2020, averaging around USD 309 million each year with a deviation of only USD 24 million or an 8% change.

Top 10 Exporters for Coldwater Shrimps & Prawns Worldwide (USD Thousands) (HS Code: 030616)

Exporters Exported Exported Exported Exported Exported Exported Exported value in value in value in value in value in value in value in 2014 2015 2016 2017 2018 2019 2020

World 2,000,447 1,705,213 1,524,811 1,829,142 1,574,698 1,645,924 1,366,033

Greenland 125,693 96,462 130,383 153,858 136,888 348,538 425,754

Canada 330,635 348,671 282,530 297,429 303,724 277,847 236,792

Denmark 270,699 244,278 257,714 287,343 296,123 273,241 291,304

Ecuador 568,453 381,476 325,572 366,593 311,904 215,231 -

Netherlands 74,058 63,332 61,869 76,519 83,691 139,024 107,070

Russian 82,033 51,230 79,539 103,002 93,053 106,582 77,250 Federation

China 56,654 53,647 54,880 71,242 69,108 69,139 50,093

Morocco - 57,538 60,335 52,134 48,836 28,821 21,619

United Arab 9,904 3,263 2,140 5,451 7,525 20,697 13,357 Emirates Table 6. Source: ITC Trade Map (HS: 030616) Thailand 28,000 23,473 27,526 31,834 22,826 17,862 12,514

Canada’s largest importer of coldwater shrimp is China, which brought in a value of USD 118 million in 2020, comprising 50% of Canada’s total exports. China is the only country to exceed more than USD 100 million worth of export. Only six other countries have values that exceed USD 10 million otherwise, which includes Denmark (USD 39.5 million), Japan (USD 21 million), the United Kingdom (USD 12.8 million), Morocco (USD 10.5 million), and Iceland (USD 10.4 million).

Unlike countries in Southeast or East Asia, the majority of Canada’s shrimp is produced through fishing rather than through farms. In fact, farm-grown shrimp are considerably rarer to the point where even as recently as 2016 they were seen as local delicacies rather than any product remotely considered for national production, much less for export. However, the fishing industry for Canadian shrimp has been recently going through some small but frequent adjustments towards total allowable catch (TAC), generally in terms of decreases. Most recently, the Department of Fisheries and Oceans Canada (DFO) issued a notice that the TAC would be reduced

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by 25% in major coldwater shrimp fishing zones on average for the 2020/21 season, a downward trend that already followed a 16% cut in 2019.

The negative environmental impacts of fishing in addition to the skepticism directed towards foreign imports was exemplified by a CBC broadcaster’s investigation in early 2020, revealing that antibiotic-resistant bacteria was present on imported shrimp and has led to an increased interest for domestic shrimp farming. Companies such as Good4Ushrimp, Waterford Farms, and Planet Shrimp are paving the way for a Canadian shrimp farm industry, but that reality is still distant.

Top 10 Export Destinations for Coldwater Shrimp & Prawn from Canada (USD Thousand) (HS Code: 030616)

Importers Exported Exported Exported Exported Exported Exported Exported value in value in value in value in value in value in value in 2014 2015 2016 2017 2018 2019 2020

World 330,635 348,671 282,530 297,429 303,724 277,847 236,792

China 65,192 114,632 106,370 133,052 155,351 136,371 118,599

Denmark 63,461 69,994 42,123 50,328 37,271 39,462 27,745

Japan 17,730 11,510 16,462 14,224 11,721 21,025 11,358

United 33,264 45,195 41,080 29,565 15,887 12,878 8,962 Kingdom

Morocco 7,477 8,919 9,150 6,760 8,603 10,534 6,426

Iceland 32,804 40,520 21,531 21,140 25,259 10,445 20,310

Ukraine 6,982 1,532 3,387 4,104 8,897 9,567 10,715

Albania 0 138 2,459 3,803 7,004 7,031 5,676

United 11,274 8,179 5,504 5,450 6,718 6,105 5,551 States of America Table 7. Source: ITC Trade Map (HS: 030616) Bulgaria 2,539 2,643 5,130 3,083 7,703 6,015 6,186

Imports Imports of shrimp have increased by 60% between 2012 and 2020, a trend that can almost solely be linked to the enormous increase of shrimp demand in China. In 2012, imports were USD 10.7 billion. By 2020, it had increased to USD 16.5 billion. Similarly, Chinese imports started at USD 152 million in 2012 and rose to USD 3.97 billion, an almost comical 2500% increase. Between 2015 and 2019, imports saw a whopping 793% increase, and between 2018 and 2019 alone, the increase was more than doubled at 193%. The exporters participating in this jump in growth include Ecuador, India, Thailand, Vietnam, and Argentina.

Otherwise, aside from a small spike in demand in 2019 from Vietnam, most foreign markets have stayed within a relatively consistent range of shrimp imports. Some importers and exporters, however, fear that the balance may shift downwards as a result of COVID-19. The pandemic has already forced Ecuador to sell shrimp at historically and unsustainably low prices, an effect that could potentially ripple across the rest of the industry.

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Top Importers for Non-coldwater Shrimps & Prawns Worldwide (USD Thousands) (HS Code: 030617)

IMporters IMported IMported IMported IMported IMported IMported value in value in value in value in value in value in 2015 2016 2017 2018 2019 2020

World 13,077,001 13,699,240 15,380,305 15,914,286 17,805,232 16,555,514

United States 4,269,370 4,565,437 5,182,841 4,844,219 4,814,028 4,874,656 of America

China 440,605 444,814 472,710 1,355,605 3,973,351 3,103,671

Japan 1,466,692 1,563,541 1,678,286 1,505,497 1,442,958 1,324,693

Spain 1,112,556 1,145,777 1,216,386 1,209,338 1,128,888 993,900

France 692,180 739,560 815,632 803,166 709,483 722,006

Italy 444,077 490,604 492,158 555,668 481,302 446,219

Table 8. Source: ITC World Trade Korea, 343,255 357,362 434,825 460,837 450,221 441,702 Map (HS Code: 030617) Republic of

United States

In 2020, the US imported US 4.8 billion worth of frozen shrimp, leading the global import share at 27% market share. Mexico is the fifth-largest supplier of shrimp to the US, with 6.3% of the US import market, behind leading suppliers; India (46%), Indonesia (17..8%), Ecuador (11.1%), and Vietnam (6.4%). As the biggest consumer of shrimps worldwide, the US has increased its imports by 32% from 2012-20. According to The National Oceanic Atmospheric Administration (NOAA), over 90% of the seafood consumed in the United States of America is imported, with shrimp the main imported species above .

There was a decrease of 2% in global shrimp imports, mainly driven by China’s COVID-19 restrictions. However, the US had shown an increase in both volumes (2.5%), and value (1.24%) of shrimp imports increase in 2020, confirming that demand for seafood in the US is still rising. For Mexico to reinstate export certification as soon as possible, it will have to request a verification visit at the start of the new shrimping season in September. If the US does not lift the suspension on Mexican high sea shrimp by then, the export losses for the shrimp sector in Mexico could escalate to USD 300 million.

On May 2021, The US State Department suspended shrimp certification on high seas shrimps from Mexico. US claims that the Mexican sea turtle protection program no longer complies with the standards set between both nations. Therefore, it has suspended the certification that allows Mexican shrimp to enter the US. The suspension on the commercialization of shrimp to the US only applied to the high seas shrimp. The river shrimp and the aquaculture will be able to be exported without a problem. During the suspension, which coincides with the end of the fishing season of this species, it will not be possible to export trawl shrimp until the permit is recovered.

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Mexico’s high sea shrimp ban will remain suspended until September of this year, when a new US verification occurs. Conapesca estimated that this would potentially cost the sector USD 180 million in export losses. High sea shrimp from the net fishing sector accounts for around 45% of total shrimp exports. According to the Ministry of Rural Development (SADER), Mexico is the seventh-largest producer worldwide, and Mexican shrimp consists of 3 out of every 100 tons consumed in the world.

Top suppliers for Non-coldwater Shrimps & Prawns for the United States (USD Thousands) (HS Code: 030617)

Exporters Imported Imported Imported Imported Imported Imported Imported value in value in value in value in value in value in value in 2014 2015 2016 2017 2018 2019 2020

World 5,386,569 4,269,370 4,565,437 5,182,841 4,844,219 4,814,028 4,874,656

India 1,311,760 1,234,131 1,438,649 2,034,850 2,053,030 2,212,479 2,021,743

Indonesia 1,119,469 890,926 924,996 961,428 943,184 859,100 1,008,577

Ecuador 897,331 628,290 583,759 569,736 511,475 536,591 759,789

Viet Nam 681,985 410,338 390,892 313,258 272,780 308,354 255,688

Mexico 301,094 316,509 291,575 335,163 281,515 303,362 263,902

Thailand 373,054 319,432 450,048 412,461 245,751 218,496 193,086

Argentina 44,481 44,315 68,470 116,588 119,975 145,322 191,470 Table 9. Source: ITC Trade Map (HS: 030616) Peru 127,647 86,332 84,270 91,356 90,433 58,634 51,564

China

China is the second-largest importer of shrimp in the world in value, taking up 21.9% of the market at USD 3.97 billion in 2019. However, while China is the second-largest importer of shrimp in value, it was actually the largest shrimp importer in the world by volume in 2019 at 718,000 MT, a 462,000 MT increase from the previous year. However, the total import value has decreased dramatically by 20%, from USD 3.9 billion to USD 3.1 billion, mainly due to the supply chain disruption caused by Covid-19.

China is no stranger to exceptional import growths: Chinese shrimp imports for example witnessed an unbelievable 2500% increase between 2012 and 2019. This dramatic increase is not only due to a natural increase in demand but is partially a result of a Chinese government crackdown on illegal smuggled shrimp from neighboring Southeastern countries such as Vietnam, where illegally imported shrimp are now properly being redirected towards official Chinese ports. According to Undercurrent News, the value of the smuggled shrimps into China was estimated to be as high as several billion dollars per year, explaining part of the wide discrepancy between 2012 and 2019 values.

However, what is likely natural are the exports that came from Ecuador’s shrimp industry, which accumulated to USD 1.85 billion in 2019, a 46.5% share of China’s total imports, and a 970% increase since 2015. Ecuador is by far China’s largest-recorded exporter of shrimp, doubling the value of China’s second-largest exporter, India, in 2019. However, as part of China’s strict initiatives regarding the fight against COVID-19, China has issued suspensions of shrimp from several major

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Ecuadorian suppliers around July 2020 after detecting a disease on the shipments that month. While sales have dropped since then, disputes between Ecuador and China have led to the release of one of the accused suppliers imprisoned in early August 2020 with Ecuador expecting the release of the rest in the future. This is good news for Ecuador as they have been disproprotionately affected by the COVID-19 pandemic. With exports and prices at an all-time low at the beginning of the year, Latin American news source Díalgo Chino went as far as to state that Ecuador was clinging to China to save its shrimp industry “from crisis.”

India faces similar circumstances to Ecuador. India is China’s third-largest exporter at 22.7% of China’s total import share at USD 0.903 billion in 2019, a 1413% increase since 2015. The improvements in trade relations with China’s shrimp industry could help India move out of its over-dependent relationship with the US. However, according to a report by The Times of India in late July of 2020, there has been a noticeable slowdown in customs clearance between the Indian and Chinese borders with no confirmed reason as to what the causes are. Some speculate that the slowdowns are a consequence of a severe border clash that occurred in June. The slowdowns and lack of transparency regarding their cause have resulted in uncertainty among many Indian shrimp farmers who are now facing difficulty exporting to China.

Top Suppliers for Non-Coldwater Shrimps & Prawns for China (USD Thousands) (HS Code: 030617)

Exporters Imported Imported Imported Imported Imported Imported Imported value in value in value in value in value in value in value in 2014 2015 2016 2017 2018 2019 2020

World 308,840 440,605 444,814 472,710 1,355,605 3,973,351 3,103,671

Ecuador 141,880 171,968 95,700 107,489 480,425 1,848,793 1,689,444

India 34,197 59,725 38,915 68,889 206,679 903,747 607,017

Thailand 20,767 39,000 50,003 68,860 171,379 254,818 165,502

Viet Nam 6,232 5,361 7,658 11,248 88,754 254,255 182,183

Argentina 43,057 51,808 182,163 138,051 284,886 253,986 183,082

Saudi Arabia - - - - 430 180,635 37,271

Malaysia 4,050 2,226 5,921 7,658 23,394 71,700 69,126

Indonesia 16,443 64,992 27,237 14,097 30,892 51,954 61,187

Mexico - 2,858 1,903 6,285 2,888 43,155 24,851 Table 10. Source: ITC Trade Map (HS: Peru - - - - 787 29,700 19,942 030617)

Europe

Spain, France, and the United Kingdom are some of the largest importers of shrimp in Europe, holding 6.22% (USD 1.13 billion), 3.91% (USD 0.709 billion), and 2.39% (USD 0.433 billion) of the total import value respectively. In fact, the EU altogether comprises 22.3% of the total shrimp import value.

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European countries have a wide variety of different exporters for shrimp, but one large importer that they all have in common is Ecuador. One of the larger causes for this pattern is the existence of an Ecuador-EU Free Trade Agreement established at the beginning of 2017 that removed tariffs on all shrimp exports coming from the South American country. By April of that same year, European imports from Ecuador were already up by 10 percent, with the Commercial Consul at the Embassy of Ecuador in Paris stating that France was one of the most important EU export destinations for shrimp.

Vietnam will likely reap similar benefits as Ecuador due to the establishment of the EVFTA at the beginning of April 2020. Tariffs for shrimp were reduced from around 12 to 20 percent to zero and will remain as such until 2027. The EU already accounted for about 22 percent of Vietnam’s shrimp exports before the trade deal took place. In August 2020, shrimp exports to the EU have already been estimated to have increased by 20% compared to the same period in the preceding year. Since Vietnam has recovered from COVID-19 effectively, export forecasts are not expected to be affected by the ongoing pandemic.

However, as a result of COVID-19, the Ecuadorian shrimp industry is facing unprecedented uncertainty. Prices are massively volatile, with some recorded prices dropping between 3 to 9 percent within just a few days, and many Ecuadorian shrimp farms have already gone out of business, unable to stay afloat due to prices dropping too low to sustain production. Despite that, according to several EU importers of Ecuadorian shrimp in late July 2020, a number of pre-pandemic stocks have not been sold at their original price, and as a result, the current EU market has not yet been affected by the drop in price of Ecuadorian shrimp, causing uncertainty among importers. Cost-and-freight (CFR) prices for shrimp in Europe have dropped staggeringly, going as low as USD 4.00/kg for around 40 to 50 shrimp. Consumption is predicted to increase due to the drop in prices, but many importers suspect that an eventual lower supply will cause a dramatic spike in prices and force many companies both in and outside of Europe to go bankrupt.

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Tridge. Guide.

ITC World Trade Map. HS Codes: 030617, 030616

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Calgary Herald. “‘The future of food’: Shrimp farm flourishes in land-locked Strathmore.”

Díalogo Chino. “Ecuador clings to China to save shrimp industry from crisis.”

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