« January 2010 Table of Contents
Top Species: Farmed shrimp
Customers make the call on value-added presentations
By Joanne Friedrick
January 01, 2010
Customization is the buzzword in the global farmed shrimp marketplace, as more buyers look for products that will fill specific niches among their customers.
The trend is away from commodity product, such as frozen blocks, and into value-added products, ranging from headless to easy peel to P&D to specific sizes matched with other requirements.
"Everybody wants value added and they are being a lot more specific," says David Troutman, who handles purchasing for Beaver Street Fisheries in Jacksonville, Fla. As a result, companies are trying to do as much processing at the source to fit these custom orders, he adds.
Before, he says, Beaver Street offered bulk shrimp and P&D in all sizes. But with the more focused orders, there isn't always a need to carry all sizes anymore, he explains.
Additionally, with more special orders coming in, Beaver Street has added two shrimp department buyers who can travel to the source.
It makes sense to go to the source for these value-added presentations because labor is cheaper in the major exporting countries, says Eric Bloom, president and COO of Eastern Fish in Teaneck, N.J. He agrees that pre-peeled and easy peel are popular applications, as are new packaging formats or more environmentally sound packaging options.
Asian restaurants, which are staffed to handle the preparation, now mainly purchase block shrimp, says Ernie Wayland, executive VP at International Marketing Specialists in West Newton, Mass.
Other restaurants are interested in easy peel, while
retailers are looking for cooked tail-on or raw shell-on Pacific whites ( Penaeus vannamei ), adds Wayland.
Asia leads the way
Farmed shrimp, either
Pacific whites or black tiger shrimp ( P. monodon ), continues to be the focus of Asian and some Latin American countries. Through September 2009, Thailand was the leading exporter to the United States at 287.1 million pounds, the majority 31-40s and 26-30s. Indonesia, at 122.3 million pounds, and Ecuador at 103.7 million pounds, were also major exporters, although much of Ecuador's production goes to Spain, Italy and France as head-on shrimp, says Wayland.
Other top shrimp-producing countries exporting to the United States were China, with 65.9 million pounds; Vietnam, 65.5 million pounds; Mexico, 46.5 million pounds; India, 33.4 million pounds; and Malaysia, at 26.8 million pounds. Most of China's
production is in breaded shrimp, while Vietnam and India supply mainly P&D and raw shell-on product.
"Vietnam exports have been slowing dramatically, which will impact the larger sizes in the market," says Brenden Beck, VP-sales and marketing for Chicken of the Sea Frozen Foods in El Segundo, Calif. Vietnamese plants, he says, have shipped almost all of what they have and there is little inventory on hand.
Another sector likely to tighten up, says Beck, is black tiger shrimp in all forms, but Mexico is likely to provide good volumes on whites, particularly raw, shell-on product.
Bloom notes that with Mexico's wild shrimp production off by 50 percent from last year there is a good chance that more shrimp farmed there will remain in the country.
Both Malaysia and India, says Wayland, are poised to become bigger players in the coming years. While India has focused much of its production on black tigers in recent years, the country is looking to build its inventory by adding white shrimp to its roster. The Philippines, which shipped 1.9 million pounds of shrimp to the United States through September, is another country that should emerge as a major exporter in two to three years, notes Wayland.
Exports from Indonesia were actually down this year, because farms there were dealing with a disease issue and lost crop in the spring and early summer, says Wayland. Treatment for this new, yet-unnamed virus, which is different from the white spot virus "that has given fits over the past 10 years," hasn't been perfected yet, notes Wayland.
Eastern Fish's purchases from Indonesia were also down because of the reduced harvest. But with product coming from 14 to 15 different countries, there are usually sources available to make up the difference, says Bloom.
The United States, which once aimed to compete in the farmed shrimp market, has for the most part succumbed to high land and labor costs. The other factor inhibiting U.S. production, Wayland says, is the climate. "Other countries have a better climate and can produce two or three crops versus just one for the United States."
Lower price, bigger size
The economy continues to impact how people shop, and Wayland says nervousness has impacted shrimp consumption, which is down about 10 percent, or 0.3 pounds per person. According to 2007 figures from the National Fisheries Institute, per-capita shrimp consumption was 4.1 pounds.
"While prices are cheaper than they were five or six years ago," he says, "they are still not as low as some meat and poultry products."
Additionally, Wayland says companies are holding reduced inventory in an effort to reduce overhead.
However, Beaver Street's Troutman says with prices low, retailers are taking advantage and buying larger sizes than they normally would.
From a customer's standpoint, says Bloom, five or six years ago 40-50s or 51-60s were promoted because those sizes fit the value equation. "Now we're getting better values with larger sizes," he says.
For the week ending Nov. 22, wholesale prices of imported farmed headless, shell-on 21-25 easy-peel whites from Indonesia were $3.80 per pound. Black tigers, also from Indonesia, were selling for $4.35 for 21-25s. And farmed Thai whites, also 21-25s, commanded $3.60 per pound.
The Seafood Center, which operates three stores around Madison, Wis., says shrimp is still the No. 1 seafood, and was especially popular during the recent holidays.
Scott Kennedy, The Seafood Center's seafood buyer, says a depressed market overall has made shrimp more affordable to buy, "and we've passed that along to the customer."
Although he prefers wild shrimp for the fresh seafood counter, the retailer uses farmed whites for menu items such as shrimp and chips and other cooked applications. "We like the 26-30 farmed because it has a good taste," says Kennedy.
As an independent shop, Kennedy acknowledges it's difficult to compete with supermarkets on packaged shrimp, so The Seafood Center peels, deveins and cooks its own product.
For some shoppers, says Kennedy, farmed shrimp still carries a negative food-safety stigma because of media attention on overseas growing conditions and shrimp feed additives, especially among higher-end shoppers.
But that is changing, notes Troutman, because as retailers demand higher quality, suppliers are responding and demanding product certified by the Aquaculture Certification Council. The council, based in Kirkland, Wash., enforces and certifies plants based on Best Aquaculture Practices set forth by the Global Aquaculture Alliance.
Troutman says retailers and restaurateurs want to know about testing, cleanliness, safety standards and child labor practices at overseas facilities.
"It's up to each individual company to react to what the marketplace is demanding," says Troutman. If that means getting hatcheries, farms and feed certified, he says, then that's what is needed to set a company apart from the competition.
From red to green
This year, suppliers and consumers will also have new resource information on both the domestic and international shrimp farming industries, thanks to studies prepared by FishWise and the Monterey Bay Aquarium (MBA).
FishWise, a sustainable seafood organization based in Santa Cruz, Calif., releases its report this month on the sustainability of the U.S. farmed shrimp market. Sian Morgan, director of science at FishWise and a co-author of the report with science analyst Victoria Galitzine, says the industry is ranked using five sustainability criteria: use of marine resources, risk of escaped fish to wild stocks, risk of disease and parasite transfer to wild stocks, risk of pollution and habitat effects and management effectiveness. Together, these are used to generate a "traffic light" score, via assessment methods designed by MBA.
Much of the U.S. farmed shrimp industry, which is based in Texas, is ranked yellow, meaning the shrimp is a good alternative if a green, or best choice, isn't available. Most coastal Texas farms are open systems where some farm waters are exchanged regularly with coastal ecosystems. Green operations use either closed, recirculating systems or inland ponds, minimizing biosecurity risks.
Morgan says the rankings are often used by large retailers looking for product that meets certain environmental sustainability and corporate social responsibility criteria. Consumers also look to the Seafood Watch recommendations when buying shrimp.
The U.S. study, says Morgan, will be available on both the FishWise Web site ( www.sustainablefishery.org ) and that of the MBA ( www.seafoodwatch.org ).
A series of reports on international shrimp farming will be released throughout the year, according to Peter Bridson, aquaculture research manager at MBA.
Currently, product coming from international shrimp farms is ranked red, or "avoid." While it was too early in the process for Bridson to announce ranking changes for imported shrimp, he acknowledged the industry, especially in Southeast Asia, has improved dramatically.
That includes a shift
from from black tigers to Pacific white shrimp, which have a more disease-free and disease-resistant larvae, and a move toward closed systems in which the water volume is maintained through one or more growing cycles.
While pressure from suppliers can be connected with some of the changes, Bridson says economics and practical considerations, such as a need to avoid white spot disease, are mainly responsible for the new approach to farming.
Reports on Thailand and Mexico will be available in early 2010, says Bridson, followed by ones on shrimp farming in Ecuador, Indonesia and Vietnam.
Many buyers are eagerly anticipating the release of these reports, as retailers and restaurants put more and more pressure on the shrimp industry to meet sustainability criteria.
Contributing Editor Joanne Friedrick lives in South Portland, Maine