Shrimp Market Report - July 2009 - EU

Shrimp markets very slow

The economic crisis continues to influence the European shrimp market. Generally, because of their relatively high price, sales of shrimp products suffer during an economic crisis due to loss of purchase power which leads to less eating out, the main outlets for shrimp in all consuming countries. On the other hand, supply is declining for the first time in history, with less aquaculture shrimp being produced. Price are low at the moment, and there is hardly any hope for price increases later this year.



The EU shrimp market is worsening

During the first quarter of 2009, all major key markets in Europe continued to see their shrimp imports decrease further and total import figures were down 3% compared with the same period last year to 154 500 tonnes. Demand has decreased on the various European markets although prices are steady at a rather low level and therefore more affordable. The new economic outlook released by OECD in June this year shows that the euro area is in a deep recession, “with external demand collapsing and domestic demand being weakened by tight financial conditions, rising unemployment and heightened uncertainty. Activity is expected to contract throughout 2009 and pick up only gradually in 2010, as the tensions in financial markets start to fade and the full effects of policy stimulus are felt. Rapid growth in unemployment and a large negative output gap will continue to dampen inflationary pressures throughout the projection period”. In such a difficult economic context, shrimp consumption, a rather expensive food commodity is not expected to improve this year.

However, shrimp consumption may increase somewhat in the coming months, as usual for the summer season, with tourists influencing demand for seafood. Nevertheless, fewer visitors are expected in European resort areas, and it is likely that demand will be lower than usual. As a result prices should stay below last summer’s levels.

Generally, because of their relatively high price, sales of shrimp products suffer during an economic crisis due to loss of purchase power and consumers tend to be more cautious on the quality of the product. Aware of this, advertisers develop in the retail sector product labels referring to quality and sustainability: “SO organic”, “be good to yourself”, “reduced fat”, “Omega 3”, “best ever prawns”, etc....


Shrimp suppliers to EU-27 suffer from good supply and low demand

Availability is generally very good from shrimp supplying countries but shrinking demand creates a serious problem to the whole sector and to producers, who see their costs increase and their benefit being dramatically reduced.

Notwithstanding the difficult situation on the European market, India, during the first quarter of 2009, increased noticeably its market share in this region at a 24% growth rate compared with last year figures. With 15 200 tonnes of shrimp exported to Europe during the period January-March 2009, India is presently the largest shrimp supplier to EU. However, this top list position may not last, as EU inspectors found unauthorized residues in some products imported from India. At the beginning of May 2009, the EU Standing Committee on the Food Chain and Animal Health met to discuss a draft Commission Decision on emergency measures applicable to crustaceans imported from India and intended for human consumption. Crustaceans of this origin will now enter the European Union only on presentation of negative results for nitrofurans and other unauthorized residues.

Greenland export figures to Europe where also rather good during the period under survey with 14 700 tonnes corresponding to a 23% increase compared with 2008. Greenland is the second major shrimp supplier to Europe and the number one supplier for coldwater shrimp. Almost all the production goes to Denmark through a giant state-controlled group and then is re-exported to other countries. In June, the new Greenland government decided to help the group which is presently facing severe financial difficulties.

The situation is difficult for most shrimp suppliers. Ecuador, after years of constant expansion on the European market, shows signs of weakness. It is the third shrimp exporter to Europe with 11 900 tonnes but lost 11% on last years’ shrimp exports. It remains, however, by far the main supplier to the French and Italian markets thanks to its low-cost products. Argentina suffers from very good landings of Pleoticus muelleri coupled with decreasing demand and strong supply of farmed products. Canada experienced during the first quarter of 2009 an 11% decrease of its exports to the EU-27 zone with only 8 700 tonnes and coldwater shrimp processors are closing up in Newfoundland as a consequence of the decreasing demand and a strong Canadian dollar. Bangladesh registered a very positive result at the beginning of 2009 on the UK market, with a 26% increase of its exports. Unfortunately, the future is not bright for this country after the cyclone Aila destroyed thousands of shrimp enclosures and ponds on 25 May and also as a consequence of the voluntary six-month suspension of exports following the detection by the EU of harmful veterinary drug in shrimp from Bangladesh.


Household spending have collapsed in UK but demand for processed shrimp have increased

OECD reports that the financial crisis in the UK is severely restraining business and household spending.

Latest UK statistics indicate that during the first quarter of 2009, total shrimp imports decreased by 5% in volume compared to the same period in 2008. In terms of value, however imports increased by 20% compared to 2008. The average unit value for shrimp products entering the UK market was GBP 1.00/kg higher than during the first quarter of 2008 (GPB 4.99/kg against GPB 3.94/kg). The devaluation of the British Pound is the main cause and the situation should change somewhat in the coming months since the UK currency is slowly recovering in the second quarter.

However, the decrease in imports did not affect all products. Although frozen shrimp products continued to suffer from the economic crisis and lost 13% compared with last year figures, volumes of prepared and preserved shrimp increased notably (+5% compared with 2008). This is due to increased volumes in processed products coming from Asia (mainly Thailand and Indonesia).

The proportion of coldwater shrimp imported by the UK market continues to shrink and represented only 35% of total imports in the first quarter of 2009 with 5 297 tonnes (5 675 tonnes in 2008, 5 442 tonnes in 2007 and 7 115 tonnes in 2006). On the contrary, imports of warmwater shrimp have been stable for the past four year, including 2009 notwithstanding present difficulties.

Asian shrimp exporting countries are gaining more and more ground on the UK market. Indonesia and Thailand (tropical shrimp) share the lead with Denmark (coldwater shrimp) on this market. Although their exports of whole frozen shrimp decreased slightly, both countries increased their market share in the prepared and preserved sector.

As far as coldwater shrimp is concerned, all main suppliers recorded a slight decrease of their exports to the UK (with the exception of Canada which substantially intensified its exports from 204 tonnes in 2008 to 329 tonnes this year). Despite a 3% decrease, Denmark keeps its leading position among top suppliers to UK. The situation is more difficult for Iceland with a further 9% decrease of its exports to the British market during the first quarter of 2009 as compared with the same period last year. The volume of Icelandic shrimp reached a new record low with 1 767 tonnes.


Danish coldwater shrimp imports continue to drop

Total Danish shrimp imports continue to follow the downward trend of previous years. Imports during the first quarter of 2009 amounted to 22 800 tonnes corresponding to a total of DKK 608 million. Figures for the period under survey registered a 10% decrease in volume and a 22% decrease in value compared to the same period of 2008.

Denmark imports essentially coldwater shrimp (95% in the first quarter of 2009). This does not come as a surprise, as Denmark is mainly a re-exporter and processor of coldwater shrimp.

Greenland, by far the number one supplier to Denmark, saw its exports to this country increase by 23% in volume and by 20% in value compared to the first quarter of 2008. The average unit value of products of Greenlandic origin on the Danish market was DKK 0.30/kg higher for frozen products compared to 2008 and was DKK 1.07/kg lower for prepared and preserved products. On the opposite, during the first quarter of 2009, Canada suffered a 41% decrease in volume and a 49% decrease in value compared to the same period last year.


Spain registered the major drop on the EU market

Spain registered the most dramatic drop in shrimp imports during the first quarter of 2009. With 22 000 tonnes imported for a value of EUR 104 million, Spain imports decreased by 15% in volume and 14% in value compared to the previous year.

Although Argentina supplied big quantities of Pleoticus muelleri (almost double the volume of last year) to the Spanish market as a consequence of very good landings, total imported volumes were the lowest in the past five years.

Chinese and Ecuadorian shrimp imports, which together represent 35% of total imports, dropped drastically.


India gained ground on the French market

Shrimp volumes imported by France during the first quarter of 2009 was 11% lower in volume and 3% lower in value compared with the same period last year. Demand continues to be mainly for frozen whole tropical shrimp and coldwater imports represent only about 15%.

Among top shrimp exports to France, almost all countries have seen their volumes to France decrease substantially. Only Asian countries (India, Thailand and Viet Nam) are gaining market shares on the French market. India, in particular, registered a constant expansion on the French market in the past five years and, notwithstanding the economic crisis, increased its volumes to France, at the beginning of this year, by more than 40% compared with last year figures.

OECD indicates that “in France the recovery in 2010 is likely to be slow, with output growing below potential rates throughout the year. Still resilient private consumption and large automatic stabilizers are moderating the contraction in domestic demand, and France is less exposed to the collapse in world trade than some other countries.”


The recession badly hits the Italian shrimp sector

In Italy, total shrimp imports for the first quarter of 2008 decreased by 10% in volume and by 3% in value compared to the same period last year. Consequently the average unit value increased by 40 cents/kilo compared to 2008, making shrimp less affordable on a market where revenues are badly hit by recession. OECD indicates that the Italian economy is in a sharp recession, mainly because of external developments linked to the global financial crisis. Unemployment and deficit are expected to increase further with strong consequences on household consumption and subsequently on more expensive food commodities such as shrimp.

Germany is an exception among EU shrimp markets

Germany is the only country in Europe to register a positive shrimp import figure in 2009 (both in volume and value). The increase is particularly visible for frozen whole products of Asian origin.

Shrimp demand in Germany has not ceased to expand during the past 10 years. The majority of imports are in whole frozen form but the proportion of processed products is also significant and is also growing (more for warmwater shrimp than for coldwater shrimp).

Product of Asian origin dominate the German market and imports from Thailand, Viet Nam, India and Bangladesh (top four suppliers) represent 60% of total imports.

Outlook bleak

However, shrimp consumption in Europe may increase somewhat in the coming months, as usual for the summer season, with tourists influencing demand for seafood. Nevertheless, fewer visitors are expected in European resort areas, and it is likely that demand will be lower than usual. As a result prices should stay below last summer’s levels.

By Karine Boisset (GLOBEFISH)
© FAO GLOBEFISH 2009