The Ecuadorian Shrimp Industry Confronts Price Pressures in 2023 and Forecasts Strategies for 2024

Ecuadorian Shrimp Industry Overview

The Ecuadorian shrimp industry is one of the most significant sectors within the country's economy and plays a crucial role in its export profile. In 2023, Ecuador’s gross domestic product (GDP) reached USD 201 billion, out of which shrimp represented 3.13%. Ecuador stands as one of the leading global exporters of shrimp, particularly of the vannamei species, also known as whiteleg shrimp. The industry has experienced substantial growth over the past decade, driven by factors such as favorable climate conditions, technological advancements, and increasing global demand for seafood products.

Ecuadorian shrimp exports have demonstrated exceptional growth over the past decade, with export volumes increasing by 63% from 474 million pounds (lbs) in 2013 to 2,677 million lbs in 2023. Similarly, export revenues surged by 288%, rising from USD 1,621 million in 2013 to USD 6,289 million in 2023. In 2022, the industry experienced a substantial increase, reaching 2,339 million lbs in export volume and USD 6,653 million in export value. However, from 2022 to 2023, while there was a notable 14% increase in export volumes, there was a slight 5% decrease in export revenues, reflecting evolving market dynamics and demand fluctuations.

Figure 1. Historical Ecuadorian Shrimp Export Value and Volume From 2013 to 2023

The Ecuadorian shrimp sector experienced an intriguing year in 2023, witnessing an increase in export volume but a decrease in value. This decline in value can be attributed to a significant drop in the average price per pound of shrimp, which fell from USD 2.84/lb in 2022 to USD 2.35/lb in 2023. Nonetheless, the rise in volume suggests ongoing demand for Ecuadorian shrimp in global markets.

In 2023, Ecuador's shrimp exports continued to thrive, driven by strong demand in key markets. China retained its position as the largest importer, accounting for 58.9% of Ecuador's shrimp exports, amounting to 1,576.26 million lbs. The United States (US) followed, importing 454.09 million lbs, constituting 17% of Ecuador's total shrimp exports. Together, these two nations comprised 75.9% of the total exports. The European Union (EU) comprised 17.5% of Ecuador's total shrimp exports reaching 469.23 million lbs, with Asia (excluding China), America (excluding the US), Africa, and Oceania contributing 3.9%, 2.1%, 0.5%, and 0.1% respectively to Ecuador's shrimp export portfolio. This diversified market distribution highlights Ecuador's position as a prominent supplier of high-quality shrimp worldwide.

Figure 2. Shrimp Export Distribution from Ecuador in 2023

China as the Leading Export Destination for Ecuadorian Shrimp

Despite efforts to diversify export markets, China remains the leading destination for Ecuadorian shrimp exports. China similarly relies on Ecuador for the bulk of its shrimp imports, with Ecuador accounting for a substantial 70% of China's shrimp imports. In 2023, Ecuador exported 1,576.26 million lbs of shrimp to China, valued at around USD 3.5 billion.

In 2023, despite a over 20% increase in shrimp exports volume to China, the value declined by 2% due to lower prices amid reduced consumer demand and increased global supply. However, Ecuador's recent trade agreement with China, ratified on February 7, 2024, offers a promising outlook for the shrimp industry. Over a ten-year period, the agreement entails tariff reductions on shrimp and other exports, aiming to cut export costs and stimulate growth in the Chinese market. While the current import tax for shrimp remains at 5%, the gradual reduction outlined in the trade agreement is anticipated to have a positive impact. This agreement is poised to streamline trade processes, potentially amplifying export volumes and revenues for Ecuador's shrimp industry.

As per forecasts from the Economic Commission for Latin America and the Caribbean (ECLAC), Ecuador may witness a potential uptick of up to 7% in its shrimp exports to China in the near future. Moreover, with additional decreases in non-tariff measures, this figure could surge to as high as 30%.

2024 Ecuadorian Shrimp Industry Forecast

In Jan-24, Ecuador's exports amounted to 196.68 million lbs, marking a 5.98% decline compared to the same period in 2023. The export value also experienced a notable decrease, falling by 16.7% year-on-year to USD 431.63 million.

Figure 3. Ecuadorian Shrimp Export Value and Volume Jan-24 vs. Jan-23

Regarding export volumes to specific destinations, shipments to China experienced a decline of 13.87%, totaling 111.96 million lbs. In contrast, exports to the US and the EU saw increases of 4.21% and 4.27%, amounting to 36.76 million lbs and 33.66 million lbs, respectively. Notably, smaller destinations showed significant growth, with Asia leading at 21.19%, followed by America at 27.56%, and Africa at 23.66%. However, Oceania experienced a decline of 35.21%.

Figure 4. Ecuadorian Shrimp Export Volume Jan-24 vs. Jan-23

Export values to China plummeted by 27.31%, totaling USD 309.53 million, while shipments to the US and the EU declined by 1.06% and 6.77%, reaching USD 101.14 million and USD 49.37 million, respectively. Conversely, smaller destinations experienced notable growth, with Asia (excluding China) and America (excluding the US) increasing by 15.79% and 21.45% respectively. Africa's export value remained relatively stable with a marginal decline of 0.06%, whereas Oceania faced a significant drop of 34.32%.

Figure 5. Ecuadorian Shrimp Export Value Jan-24 vs. Jan-23

In the remainder of 2024, Ecuador's shrimp industry is primed to address challenges while emphasizing value-added production. Anticipating a 15% uptick in shrimp production, Ecuador is strategically blending whole and processed shrimp to add value to export volumes. Ecuador will be looking at opportunities for creating value-added products like peeled shrimp, giving priority to processing facilities with enhanced value propositions. While the overall export volume may experience a decline in 2024, the evolving market dynamics suggest a shift towards higher exports of tails and peeled products, ensuring a relatively stable export weight and reaffirming Ecuador's shrimp production stability.

José Antonio Camposano, who serves as the executive president of the CNA, advises against being overly optimistic about the prospects of recovery in 2024. He foresees continuing low prices and a possible decline in exports exceeding that of 2023. Additionally, the implementation of self-retention of Income Tax on total monthly income for major taxpayers under the new tax reform is anticipated to worsen the outlook for the export sector. Nonetheless, Ecuador remains committed to adapting its strategies to uphold its significant position in the global shrimp market despite these obstacles.

In conclusion, the Ecuadorian shrimp industry remains a cornerstone of the nation's economy, boasting significant growth in both volume and value of exports over the past decade. Despite encountering challenges, Ecuador has solidified its position as a leading global exporter of shrimp. While 2023 witnessed a surge in export volumes, a slight reduction in export revenues was observed due to a decline in average prices. Looking ahead, Ecuador's shrimp industry is poised to navigate challenges in 2024 while emphasizing value-added production, aiming to sustain its pivotal role in the global shrimp market through adaptation and resilience.