The country’s main non-mining and non-oil export, shrimp, will end 2023 in the red, the National Chamber of Aquaculture (CNA) warned this Friday, December 29. According to the latest official figures presented by the Ecuadorian Federation of Exporters (Fedexpor), shrimp exports from Ecuador from January to October generated $6.118 million.

Despite these figures, the union says the shrimp sector has seen an alarming drop in revenue, losing almost $1.5 billion this year. The sector attributed the situation to the drop in international shrimp prices, which reached even lower values ​​than those recorded during the pandemic.

The drop in prices hit the shrimp sector, which had a -5% turnover until August, although it produces and exports more

“This reality had a direct impact on export performance, generating a 6% decline in 2023. According to data provided by the CNA Department of Foreign Trade, these figures translate into losses exceeding USD 370 million compared to 2022,” they analyze from union.

CNA assured that in order to counter this serious situation, the Ecuadorian shrimp industry has tried to maintain its export figures by selling more volume but for less dollars.

Through last October, the shrimp sector had a 2% decline in foreign exchange but a 13% increase in exports, according to FedExpor.

What are the main causes of falling prices?

CNA explained that the main destinations for Ecuadorian shrimp are China, with a 59% share; United States, with 17%; Spain with 5%; France, with 3%; and Italy, also with 3%.

In the case of China, it is seeing its yuan (RMB) depreciate against the dollar, which causes Chinese importers to have fewer dollars available to buy products, which worsens their spending capacity and, on the other hand, makes it more expensive for Chinese importers maintain stocks of imported frozen products, such as ours, which also discourages purchase as they do not have favorable prospects for consumption.

The shrimp sector is recording losses of $1,000 million so far in 2023 and blames it on falling prices and rising production costs

While the US is seeing a 12% drop in seafood consumption driven by inflation, compounded by rising interest rates and high energy costs, complicating the picture.

The competition is getting bigger

India and Vietnam are the second and third largest shrimp producers in the world. These countries have several advantages over Ecuador, such as lower wages, promotion policies and their own currency that they can devalue at will, according to CNA.

The union also reveals the internal factors that impacted the sector in 2023. Costs associated with production, processing and marketing across the shrimp industry increased significantly this year by an additional $0.28 for each pound produced compared to 2022 costs.

With an estimate of 2% lower sales, the automotive sector ends a complicated 2023 and predicts an equally difficult 2024.

The reason for this is, first of all, the annual spending of about 80 million dollars on security. Added to this is the steady rise in the cost of doing business, including new costs following the abolition of the differential diesel price, Foreign Exchange Outflow Tax (ISD) and Value Added Tax (VAT) on inputs and goods. capital, which constitute additional fiscal burdens for the sector and an increase in the prices of raw materials used throughout the shrimp value chain, according to CNA.

“Faced with this scenario of falling prices and rising costs, the shrimp sector experienced a liquidity loss of $0.98 for every pound produced, so its profitability was severely affected,” the union calculated.