In a recent update, Ecuador’s National Chamber of Aquaculture (CNA) has disclosed alarming figures regarding the country’s shrimp sector, indicating a staggering loss of nearly USD 1.5 billion in 2023. This significant economic setback is attributed to a sharp decline in international shrimp prices, plummeting even below the levels witnessed during the challenging times of the COVID-19 pandemic. The repercussions of this downturn are reflected in a 6% reduction in shrimp exports in 2023, resulting in losses exceeding USD 370 million compared to the previous year.

External factors have played a pivotal role in this economic downturn, as the global economy grapples with economic stagnation and escalating inflation. The diminished purchasing power, coupled with a reduced demand for non-essential products, has adversely impacted the shrimp market. Notably, the primary export destinations for Ecuadorian shrimp—China (59%), the United States (17%), Spain (5%), France (3%), and Italy (3%)—have witnessed varying challenges.

China, as the largest consumer, has faced currency devaluation issues with the yuan against the American dollar, restricting the purchasing capacity of Chinese importers. This situation has not only dampened consumption but has also raised costs for maintaining frozen product inventories, further discouraging purchases. Meanwhile, in the United States, a 12% decline in seafood consumption, exacerbated by inflation, increased interest rates, and elevated energy costs, has contributed to the overall decline in the shrimp sector.

Moreover, the rising competition from countries like India and Vietnam, the second and third-largest shrimp producers globally, has added to Ecuador’s woes. These nations possess competitive advantages such as lower salaries, effective promotion policies, and the flexibility to devalue their currencies, creating an increasingly challenging environment for Ecuador’s shrimp industry.

Internally, the shrimp sector grapples with a multitude of challenges, including escalating operating costs. Production, processing, and marketing expenses throughout the shrimp value chain have surged by an additional USD 0.28 per pound compared to 2022 costs. Security costs alone represent a substantial financial burden, with approximately USD 80 million spent annually to safeguard operations. The sector has faced 77 criminal incidents in the year, resulting in 58 injuries and four fatalities, as per figures from the Security Directorate of CNA.

The shrimp industry’s profitability has been severely compromised, with a liquidity loss of USD 0.98 for each pound produced. To address this critical situation, the CNA emphasizes the need for the Ecuadorian government to concentrate its efforts on combating crime and reducing costs. The CNA, representing the shrimp sector, reaffirms its commitment to collaborating with the public sector to explore alternatives that ensure the development of the aquaculture sector. With over 290,000 direct and indirect employment opportunities, the aquaculture sector remains vital for Ecuador’s socioeconomic stability, urging concerted efforts to navigate these challenging times.