CÁMARA CLOSES 2023 IN THE RED

Cámara closes 2023 in the red.  The Ecuadorian shrimp sector has experienced an alarming decline in revenue, losing about $1.5 billion in 2023. This situation is attributed to the worrying drop in international shrimp prices, which have reached values even lower than those recorded during the COVID-19 pandemic.

The representative association, CNA, says:

“This reality has had a direct impact on the performance of exports, generating a decrease of 6% in 2023. According to data provided by the foreign trade department of the National Chamber of Aquaculture CNA, these figures translate into losses exceeding 370 million dollars compared to 2022.

“To counteract this serious situation, the Ecuadorian shrimp industry made a huge effort to maintain its export figures by selling more volume, but for fewer dollars, below, we detail some of the causes. 

“The world economy is going through economic stagnation with global inflation, which leads to a loss of purchasing power and therefore a decrease in demand for certain products, not considered basic necessities.

“The main destinations for Ecuadorian shrimp are China with 59% share, the United States with 17%, Spain with 5%, France with 3% and Italy also with 3%.

“China registers a depreciation of its exchange rate of the Yuan (RMB) against the US Dollar (USD) which causes Chinese importers to have less amount of dollars available for the purchase of the product, which deteriorates their consumption capacity and on the other hand, it becomes more expensive for the Chinese importer to sustain the inventory of frozen imported products. like ours, which also discourages buying as it does not have favourable prospects regarding consumption.

“While in the United States there is a 12% drop in seafood consumption generated by inflation levels, to which is added the increase in interest rates and high energy costs, which complicates the outlook.

“On the other hand, competition is gaining ground: India and Vietnam are the second and third largest shrimp producers in the world, respectively. These countries have several advantages over Ecuador. Lower wages, development policies and their own currency that they can devalue at will.

“Another factor that affects the sector’s losses is that the shrimp industry has faced challenges in terms of competitiveness due to the significant constant increase in operating costs in Ecuador, including the price of fuels and the increase in raw materials used throughout the shrimp value chain.

“Costs related to production, processing, and marketing across the shrimp industry have increased significantly this year by an additional USD 0.28 per pound produced versus 2022 costs.

“This is primarily because the annual expenditure of approximately $80 million on security represents a considerable financial burden on the industry, highlighting the need for significant investments to safeguard operations and assets. The year closes with a total of 77 criminal incidents against the shrimp sector, resulting in 58 people injured and four fatalities, according to figures from the Security Directorate of the National Chamber of Aquaculture.

“Added to this is the constant increase in operating costs, including: the new costs after the elimination of the differentiated price of diesel, the foreign exchange exit tax (ISD) and the value-added tax (VAT) for inputs and capital goods, which constitute additional tax burdens for the sector, and the increase in the price of raw materials used throughout the shrimp value chain.

“Faced with this scenario of falling prices and rising costs, the shrimp sector has experienced a decrease in liquidity of USD 0.98 for each pound produced, which has seriously affected its profitability.

“That is why it is imperative that the Ecuadorian government focus its efforts on fighting crime and reducing costs. The CNA, on behalf of the shrimp sector, reiterates its commitment to continue working with the public sector to seek alternatives that guarantee the development of the aquaculture sector, which has become a vital union for the socio-economic stability of the country, due to its generation of more than 290 thousand direct and indirect jobs.”

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