Sri Lankan shrimp industry on a nosedive
Sri Lanka’s shrimp farmers and exporters in 2024 face the challenge of being wiped out on the back of rising operational costs, declining demand from source markets, and record-low global prices.
Sustaining operations are unviable anymore, shrimp exporters and farmers lament.
The high cost of production, including expenses such as electricity and taxes on exporting shrimp post-larvae, has doubled in the last two years.
An entire industry is affected by high energy costs, A. S. M. Muzamil, Director Ceylon Foods told the Business Times on Thursday.
Furthermore, shifts in source markets have added to the challenges faced by local shrimp exporters. Demand for shrimp in traditional markets like the United States, the European Union, and Japan has reached an all-time low, with consumers turning to cheaper proteins like chicken and pork. Shrimp imports in Asian markets, including Japan, Taiwan, Hong Kong, and Singapore, have also weakened. China, the world’s top shrimp importer, saw record volumes in 2023, but the overall demand recovery in this market was slower than expected.
Also, global shrimp prices have hit a 10-year low due to Ecuador, the largest shrimp exporter globally, increasing production by 14.1 per cent in 2023, Rabobank, the Dutch financial services company in its latest aquaculture report has said, adding that this has resulted in a severe market oversupply and plummeted prices.
Currency fluctuations are also an issue, Mr. Muzamil added noting that since the Japanese Yen has depreciated, the black tiger shrimp imports from Japan have weakened.
“For exporters such as us who export to the Japanese market, shrimp costs are extremely high,” he said.
On the other hand, shrimp farmers, in most farming areas use generators as electricity is restricted to these places. “Most farmers in these areas are leaving the industry as energy costs are exceedingly high. The diesel they use for generators has escalated considerably,” a shrimp farmer said.
Farmers in regions such as Puttalam have had to deal with disease issues caused by heavy rains, some shrimp producers said. This has led to a drop in overall shrimp production in the country and escalated the price point of local shrimp for export companies, making it unaffordable for many.
Shrimp exporters also noted that most concessions given by the government to the industry have been provided for shrimps that are exported. However, to sustain businesses, most exporters are now selling in the local market. “A fair number of exporters are now selling in the local market. They do not see any other way out,” a shrimp exporter said.
To navigate these challenges, strategic interventions and collaborative efforts are crucial, M. Naurooz, owner D.S.P. Farms said. “The cost of production has escalated. All equipment including motors, pumps, paddle wheels etc has escalated in price. A paddlewheel cost Rs. 35,000 about two years ago and now it is at Rs. 250,000.” Similarly, he added that the electricity bill which was about Rs.16,000 about two years ago is now at Rs. 700,000 which is about a 180 per cent increase.
Mr. Naurooz also said there is a cost escalation in feed. “It is really important for Sri Lanka to have a shrimp feed plant because we import the feed from Vietnam, India, Thailand etc which is exorbitant.”
From the 900 shrimp farms over a decade ago, the country’s shrimp industry has been dwindling considerably.
Mr. Naurooz said that due to the white spot, and yellow spot viruses, shrimp farms closed down a few years ago and due to the cost escalation, another 150 closed down about one year ago. “Currently, only farms with 50 to 100 acres are operational. The challenge faced by these farms is the inability to close down temporarily due to the corrosive effects of saltwater on equipment. As a result, larger players in the industry have resorted to importing shrimp from India for value addition and export.” He also pointed out that these four to five processing plants cannot close as over 1000 people are working for them.
The shrimp farming industry in Sri Lanka plays a pivotal role in the country’s commercial aquaculture sector and has gained significant traction in key export markets. “Therefore, it is crucial to find solutions that support both shrimp farmers and exporters to preserve the industry’s contribution to the country’s commercial aquaculture sector and export earnings.” Mr. Naurooz added.
Shrimp exporters stressed that by adopting a collaborative approach and investing in the development of the shrimp farming industry, Sri Lanka can yield immediate and long-term impactful results, contributing to the country’s economic growth and foreign exchange earnings.
They said it is essential to find solutions to support both shrimp farmers and exporters in the country, as they are critical to the country’s export earnings.
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