Today, more than 35 countries export shrimp to America, although the majority of it comes from major producing countries in Asia and Latin America. From January through October 2012, Vietnam, Ecuador and India exported more than 40 million pounds of peeled frozen shrimp to the United States, while Thailand contributed about 89 million pounds and Indonesia more than 65 million pounds. Additionally, these latter two countries also exported to the United States more than 44 million pounds each of shell-on frozen shrimp in a variety of sizes.
Wholesale prices for headless shell-on farmed shrimp in early January ranged from $3.70 per pound for 41/50s from Ecuador to $3.50 for 41/50s from Mexico, Peru and Indonesia.
From 2010 to 2011, Ecuador, Indonesia and India saw shrimp exports to the United States rise, with Ecuador shipping nearly 74,000 metric tons (MT) over the previous year’s 65,000 MT; Indonesia was up nearly 9,000 MT to 70,334; and India reached approximately 48,000 MT versus the previous year’s 30,000 MT.
Both Thailand and Vietnam showed reduced exports to the United States during that period as a result of weather and disease issues. With Thailand’s total dropping to about 185,000 MT from more than 201,000 MT, and Vietnam decreasing slightly to just more than 45,000 MT from 2010’s 48,000 MT.
“Weather and disease can always have some impact on supply conditions, whether it is diseases such as early mortality syndrome (EMS), heavy flooding or abnormal climate temperatures,” explains Bodgan Serbu, marketing manager for Chicken of the Sea Frozen Foods, with headquarters in El Segundo, Calif. Most recently, he says, these issues have been particularly problematic in Thailand and Vietnam.
Vietnam’s Ministry of Agriculture and Rural Development reported in January that shrimp-farming output fell by 3.9 percent for 2012 because of diseases such as white spot, yellow head and liver necrosis syndrome of acute pancreatitis.
Chicken of the Sea, with an annual volume of farmed shrimp that hits about 90 million pounds, is an example of the worldwide scope of the industry. According to Serbu, the company buys white shrimp (Litopenaeus vannamei), black tigers (Penaeus monodon) and freshwater shrimp (Macrobrachium rosenbergii) from Thailand, Indonesia, India, Vietnam, Bangladesh, China and Malaysia, as well as white shrimp from Ecuador, Mexico and Peru.
“In the Latin American countries,” explains Serbu, “the farms we work with are all third-party providers. In Southeast Asia, it depends on the country.” Chicken of the Sea Frozen Foods is a Thai Union Group company, which owns and operates some farms.
Serbu says the volume of shrimp the company sources rises each year as the company grows. Even though overall U.S. demand has flattened in the past couple of years, he says, “our market share during this same time period has continued to expand through strong partnerships throughout all our channels of trade.”
Products and promotions
The majority of Chicken of the Sea Frozen Foods’ shrimp is sold as a frozen commodity product through foodservice, wholesale, retail and club channels, says Serbu, and packaged under brands including Chicken of the Sea, Xcellent, Asian Gold and various private labels. The company also produces and distributes value-added products, including its newest introduction, a bite-sized tempura shrimp that comes in Sriracha and Wasabi flavors, and Tom Yum Soup with shrimp wontons.
Under the private-label program, Chicken of the Sea Frozen Foods has added nearly one dozen value-added products, including various breaded, battered and marinated shrimp items.
Another importer is Tropical Aquaculture Products in Rutland, Vt., which produces white shrimp at its vertically integrated farms in Ecuador to supply U.S. retail fresh shrimp programs. Craig Appleyard, Tropical’s VP-operations and business development, declined to say how much shrimp is produced, except to say “Our fresh shrimp programs have experienced double-digit growth, and we have production to support this level of growth in the future. Shrimp production out of Ecuador has remained steady as a result of low-density farming techniques.”
With its focus on fresh and frozen shrimp, Appleyard says demand at Tropical is being driven “by the quality and consistency for a truly natural product.”
Tropical markets its shrimp at retail through a series of promotions, starting with weekend events. “The weekend promotions then build into the item becoming an everyday offering,” Appleyard explains. “We have found providing a promotion every four or five weeks then becomes essential to building the program further.”
Chicken of the Sea Frozen Foods watches the economic climate to determine the growth potential for the category, says Serbu. And it is continuing to look to its website and e-newsletters as well as advertising opportunities to promote new and existing products, he says.
“We are in the midst of evolving our website so it offers a more comprehensive message from both a business-to-business and business-to-consumer perspective,” he says, “as well as playing a greater role as a source of consumer product information.”
One of the avenues being explored is the use of QR codes on packages, in advertising and on sell sheets and business cards to further integrate marketing programs using new technologies, he adds. “Their use can be beneficial to various types of customer/supplier interactions,” he says, as long as they provide convenience or useful information.
Both Appleyard and Serbu point out that sustainability is another area of interest to retail and consumer customers. At Tropical, the shrimp farms have been certified sustainable by a third party and participate in Aquaculture Stewardship Council (ASC) standards development for farmed shrimp, says Appleyard.
“For some time now, we have been working on a number of specific, auditable initiatives related to social accountability, supply chain safety and welfare and sustainability,” says Serbu, including working with the Thai government on labor issues in the shrimp industry.
The American approach
While the vast majority of farmed shrimp comes from outside the United States, there is a small but active base producing Pacific white shrimp within the country.
Tom Hall, CEO at Kava Farms, an 800-plus-acre shrimp-farming operation in Texas, says the operation produces about 30 percent of the 3 million pounds of shrimp raised each year in the United States.
The farm was recently purchased by the KAAPA Aqua Ventures Alliance — a group of Nebraska farmers and ranchers. Hall says the group, which also is in the ethanol business, “wanted to apply their knowledge of farming down here” and brought in Hall to oversee the transition.
Shrimp, especially farmed American shrimp, is a niche business with a cost structure that is higher than that experienced by international producers or the wild shrimp industry, he says. To make the shrimp stand out, they have focused on producing a chemical- and hormone-free product.
The shrimp are raised in 12- to 33-acre ponds. About 470 acres of the farm are used for shrimp ponds, he says.
“Our strategy is to have really big ponds that are 4 to 6 feet deep,” Hall explains. The shrimp go into the ponds in April for harvesting in the fall.
A local processor handles the shrimp, which are then shipped across the country as IQF product to seafood distributors, restaurants and retailers such as HEB and Whole Foods Market, says Hall. “The wild-caught culture down here keeps us from having a lot of local business,” he adds.
Most of the shrimp falls into the 21/25 size. “One of the reasons we can’t go big is because the water is very salty and that makes the shrimp stay smaller,” says Hall.
The market for U.S. farmed shrimp is the consumer looking for something special, he says. The retail price is around $10 a pound, considerably higher than frozen imported product that sells for $6 for a 1.5-pound bag, he notes.
With the new ownership, Hall says the focus is on expanding operations as well as selling direct to consumers via venues such as farm shows and increasing the retail presence.
From tobacco to prawns
Another U.S.-based group, the American Prawn Cooperative, has turned former tobacco farms into shrimp-farming operations.
Charlene Jacobs, president of the cooperative and owner of Harvest of the Great Spirit Prawn Farm in Clinton, N.C., began prawn farming in 2008, following the lead of three other farmers. Seven North Carolina farmers who were looking to diversify their operations now produce freshwater prawns.
With the help of the local extension agency and some development grants, the cooperative has built a centralized processing facility that includes a blast freezer. They are also promoting the business with funds from a U.S. Department of Agriculture marketing grant. Additional funding helped them purchase $30,000 in steel trailers and hauling tanks to bring the prawns to the processing plant in North Carolina.
The 2-acre ponds are stocked with a density of 800 to 1,000 pounds per acre, says Jacobs, although that doesn’t always translate to the final count. Most of the farmers’ business is with distributors in Chicago and California that can pay more for the product. “People here can’t spend $12 to $14 a pound,” she explains, “so we found markets out of state.”
When the prawns are 15-count per pound or higher, they are sold locally, she says, because that is too small for the out-of-state customers.
The industry can be challenging, says Jacobs, who has seen the cost of feed double in four years from $7 to $14 per bag. Still, she says, “we have a lot of farmers who want to get into the business.”
Joining the cooperative isn’t as simple as that, though. Jacobs says “we’re just picky” about who can join, looking not only at the ability to cover start-up costs of land and equipment, but more importantly their willingness to follow the rules on properly raising and harvesting the prawns.
Like Kava’s shrimp, the prawns are raised seasonally, going into the ponds in May or June and coming out in September or October. To make the most of the processing facility, Jacobs says they would like to handle coastal shrimp or fish in the offseason.
And she’s also working to get the word out on the benefits of eating farmed prawns, which are high in protein and low in sodium, through a book she has written, “Things You Should Know About APC Freshwater Prawn: From Handling & Preparation To Cooking!”. “It’s a healthy food,” says Jacobs.
Looking ahead, Jacobs says APC would like to be harvesting 50,000 pounds in the next couple of years, up from the current 30,000 pounds, which would translate into an approximately $300,000 industry.
