Ecuador’s shrimp sector, despite posting a record export volume of 111,512 metric tons in April 2024, faces headwinds this year. The primary culprit is a steep decline in international shrimp prices, which has cast a shadow over the industry’s otherwise promising metrics.

Revenue Declines Amid Economic Uncertainty

Data from the National Chamber of Aquaculture (CNA) reveals that revenues from shrimp sales dropped by 6.25% from January to August 2024, translating to a staggering loss of around USD 267 million compared to the same period in 2023. This downturn starkly illustrates how susceptible the shrimp industry is to fluctuations in global economic conditions.

The global economic slowdown poses a formidable challenge to Ecuador’s shrimp exports, particularly in vital markets like China, the United States, Spain, France, and Italy. China, the largest importer of Ecuadorian shrimp, is grappling with its own economic difficulties. Initial growth projections of 5.5% for 2024 have been downgraded to an anticipated 4%, reflecting a concerning trend.

The depreciation of the yuan against the dollar, combined with a domestic real estate crisis, has reduced the purchasing power of Chinese importers, leading to a dramatic decrease of over USD 479 million in shrimp imports from January to August 2024 compared to the previous year.

Regulatory Challenges Complicate Exports

Compounding these economic issues are regulatory hurdles, including a four-month export ban on nine Ecuadorian companies due to alleged violations concerning metabisulfite levels in shrimp products. Such setbacks disrupt the supply chain and further impede recovery efforts.

The troubles are not confined to Asia. Camposano notes that Europe is experiencing parallel difficulties. The ongoing fallout from Russia’s invasion of Ukraine has resulted in diminished restaurant consumption—a key market for shrimp sales. Rising energy costs have also forced supermarkets to trim their inventories of frozen products, exacerbating the demand crunch.

U.S. Economic Policies Squeeze Consumer Spending

In the United States, rising interest rates have curtailed consumer spending. Families, faced with soaring housing finance costs, are prioritizing essential expenditures, often sidelining dining out—an important venue for shrimp consumption. Camposano emphasizes that restaurants, hotels, and leisure events represent the primary consumption channels for shrimp, all of which are now under strain.

The U.S. shrimp industry’s historically protective stance against foreign competition has led to recent trade tensions. The American Shrimp Processors Association launched an investigation alleging dumping practices among Ecuadorian shrimp exporters. Fortunately for Ecuador, findings determined that it did not meet the threshold for punitive tariffs, thereby sidestepping immediate sanctions. However, the undercurrents of protectionism remain a concern for the future.

A Gloomy Forecast for the Future

With the year drawing to a close, Camposano foresees a challenging outlook for Ecuador’s shrimp exports. While production may stabilize, he warns of an anticipated decline in invoiced value by at least 8%. Although some temporary boosts in demand may arise around the Chinese New Year, the overall recovery pattern remains elusive.

Furthermore, the ongoing energy crisis is set to deepen the challenges, with the CNA estimating daily losses of about USD 5 million due to power outages. Such disruptions threaten to cut a third of the shrimp production chain’s output, adding yet another layer of complexity to an already precarious situation.