Indonesia is emerging as a formidable player in the global shrimp market, capitalizing on its natural advantages and steady production growth. However, the international seafood industry is fiercely competitive, dominated by heavyweights like India, Ecuador, Vietnam, and Thailand. Despite its promise, Indonesia faces significant challenges in maintaining a competitive edge on price and scale. Can Indonesia’s shrimp industry rise to the occasion and assert itself among the global titans?

Swimming with the Big Fish

Indonesia’s geography, with its vast archipelago and ideal conditions for aquaculture, gives the country a natural edge in shrimp farming. Its production has grown at an average annual rate of 8.42%, according to the Ministry of Maritime Affairs and Fisheries. However, this pace of growth, while commendable, pales in comparison to the aggressive cost-cutting strategies employed by its rivals.

Ecuador, in particular, has emerged as a dominant force, thanks to government-supported initiatives and partnerships with universities aimed at reducing production costs. By mid-2023, Ecuadorian shrimp had displaced Indonesian shrimp in the US market, despite Indonesia’s third-place ranking in overall shrimp exports to the US, trailing behind India and Ecuador. Price competition remains Indonesia’s Achilles’ heel, with Ecuador’s low-cost shrimp outpacing Indonesian offerings, despite the latter’s superior natural quality.

Untapped Potential in the Archipelago

While price competition presents a significant hurdle, Indonesia’s shrimp sector has clear strengths. The country’s natural environment offers pristine conditions for shrimp farming, yielding a product renowned for its quality and flavor. This positions Indonesian shrimp well in premium markets, where buyers are willing to pay more for high-quality seafood.

In Aceh province, for example, shrimp farms adhering to sustainable practices are gaining ground internationally. Complying with strict global food safety standards and benefiting from government support, these farms are gradually carving out a niche in the high-end market. Efforts to reduce production costs through sustainable practices are proving effective, but scalability remains a challenge.

Opportunities Abroad, Challenges at Home

Japan, the world’s largest shrimp importer, is a prime target for Indonesian exporters. With shrimp imports valued at USD 6.5 billion, Japan offers a lucrative opportunity, as does the United States, which spends USD 4.4 billion on shrimp imports annually.

Indonesian shrimp has already made inroads into these markets, but the country still lags behind its competitors in terms of market share. With its focus on quality, Indonesia could further expand its presence in premium markets, provided it can address key structural issues in its production processes.

Navigating Disease and Efficiency Pitfalls

Despite Indonesia’s natural advantages, inefficiencies in its shrimp farming sector remain a major stumbling block. Many shrimp farms are underutilized, and disease outbreaks are frequent, undermining productivity and driving up costs. Research from Lampung University underscores the importance of better disease management and sustainable farming techniques in improving the competitiveness of Indonesia’s shrimp.

The government has made efforts to tackle these issues by promoting the adoption of new technologies and encouraging more efficient farming practices. Yet, structural challenges persist. Without a coordinated strategy to address these inefficiencies, Indonesia risks falling further behind its more organized and cost-effective competitors.

Government Ambition, Industry Cooperation

The future of Indonesia’s shrimp industry will depend on sustained government support and enhanced collaboration between industry stakeholders. The government has set an ambitious target of increasing shrimp exports by 2024, with the aim of becoming one of the world’s top three shrimp exporters. Achieving this will require a concerted effort to modernize production methods, improve disease control, and lower costs.