Finding your niche in shrimp aquaculture
December 12, 2016
By Joe Sabbagh
Americans consume about 4 lbs of shrimp per capita, making it the country’s favorite seafood.
There are over 2,000 species of shrimp around the world, with popular wild species harvested in just about every country with a coastline. Shrimp aquaculture is thriving in dozens of countries where growers have improved farming environment and techniques. Shrimp has always been perceived as a premium product; it is well accepted in a frozen or thawed state, and offers consumers a variety of options. As such, shrimp can be the centerpiece of seafood promotions by retailers and restaurants.
The popularity of shrimp has prompted new interest and investment in land-based and indoor shrimp aquaculture in the US and Canada. I share the enthusiasm for niche operations that are well located and are accessible to the market. Below I offer my perceptions on the market for the sector by species and form.
Prawn and Pacific white shrimp Frozen Headless
There is ample supply of farmed Pacific white shrimp (Litopenaeus vannamei) to meet the current demand from North American consumers seeking every level of price, sustainability and quality. I see no shortage on the horizon, in fact, I expect the supply from imports to improve due to technical innovations and more players from overseas entering the sector. The current and projected volume from imports and price levels must be considered if your plan is to sell large volumes of frozen vannamei.
Frozen Head On
The demand for vannamei, particularly frozen, head on, is especially challenging and price centric. Imports from Central and South America are generally excellent in quality and are well accepted in the market. In the US and Canada, much of the head-on production goes to the Asian and Hispanic trade that hold production from Ecuador in high regard. These quality buyers are often brand-specific. This item from Asian producers is also of good quality. Hispanic markets in the US can vary on their preference for head-on shrimp by region and family history, while the Asian market is more constant.
Black Tiger (Penaeus monodon)
Producers in Asia started a shift away from tigers a few years back, creating a shortage in the world markets. My interaction leads me to believe there is an opportunity for high-quality tiger shrimp farmed indoor directed at specialty retail and high-end restaurants. I see head-on sizes U/10 and larger live, fresh and limited frozen and headless shell on in 16/20 sizes and larger in fresh and limited frozen having acceptable demand.
Freshwater (Macrobrachium rosenbergii)
The quality and purity of freshwater imports have not matched other species and I see opportunity for this species in the sizes and forms suggested for tiger shrimp.
Fresh and Live
Locally sourced food is a trend that will continue to gain in the marketplace. The main advantage all US and Canadian aquaculture companies have over imported product is the ability to offer their production in fresh and live form. This should be the centerpiece of a business plan in this sector. The location of the farm must be well thought out, allowing all fresh and live product to reach the best market.
Live shrimp is well accepted among Asian consumers in North America and having production within a six-hour drive from metro areas with a high number of Asian retailers and restaurants with live tanks would be ideal. There are live fish distributors that will pay and buy your production quickly. Some distributors that have such Asian retailers and restaurants as clients will even offer immediate payments.
Fresh head-on and headless shrimp will have a much larger market, allowing growers in all regions to participate. But fresh shrimp is very perishable so you must invest in a production facility and process to kill, chill, pack and deliver properly to maintain the quality. Objectively analyzing the market in terms of demand, price and competition is crucial.
Farms in rural areas can create a profitable business for all species of shrimp provided they have the customer base that will buy the production. Local retailers, restaurants, farmers markets and direct sales are all promising customers. Each market will vary for volume, size, form and price. Some retail consumers in rural areas may not be familiar with head-on shrimp and require some marketing and education before your product goes to market.
I see an excellent market for fresh locally grown shrimp in large metro areas for quality growers of all species going to the same markets listed above. Larger tigers and whites as the main product line in head on and headless have more potential than small ones.
To conclude, I do not see great opportunity for large-scale US or Canadian farms offering frozen white shrimp to the North American market. I suggest caution to those already invested or planning to invest due to these factors and other considerations I provided in my previous column (see ANA Sept/Oct 2016). I do see opportunity in niche areas now and in the long term.
— Joe Sabbagh
Joe Sabbagh has been involved in the seafood industry since 1979 as the owner and operator of various seafood retain concerns. In 1985 he established consultancy firm Sax Maritime Associates. Joe’s knowledge of, and insight into, the seafood industry enabled the company to provide its clients with solutions that incorporate trends, concept design, merchandising, marketing, operating systems, and training as well as sourcing and distribution efficiencies.