Ecuadorian white shrimp trade in a viral storm

According to data provided by the commercial Counselor’s office of the Ecuadorian Consulate General in Guangzhou to 21st Century Business Herald, in 2019, the export of White shrimp from Ecuador to China reached 2.083 billion US dollars, up 249 percent year on year.
From January to May 2020, Ecuador’s shrimp exports to China reached $1.038 billion, an increase of 70.5 percent over the same period last year.

Reporter! He Jia

Editor by Li Yanxia

Never before has the Ecuadorian white shrimp stirred public nerves more than it does now.

On July 15, the leading group for COVID-19 prevention and Control in Shapingba District, Chongqing, issued a notification on the positive nucleic acid test of some frozen South American white shrimp imported from a cold storage in the Western Logistics Park.
Following Dalian, Xiamen and Yunnan, novel Coronavirus was detected from the package of Frozen shrimp in Ecuador in China.

Previously, according to China’s General Administration of Customs, July 3, dalian customs and xiamen customs from Ecuador three companies import frozen South America white shrimp container inner and outer packing samples detection will be coronavirus nucleic acid positive, from now on hold three companies registered in China and product import, for withholding the goods return, destroy, such as processing measures.

The 21st Century Business Herald reporter learned in an interview that a large number of terminal retailers across the country removed the shelves of Ecuadorian white shrimp, and some local governments implemented a “one size fits all” policy, requiring a complete halt to the sale of Ecuadorian white shrimp, white shrimp sales stagnated.

For domestic white shrimp importers and distributors, the current situation can be described as “internal and external troubles”, many people are facing the risk of capital chain rupture.
“I can’t get a refund from a foreign manufacturer, and I can’t cash in on my domestic sales. It’s really devastating.”
One importer told 21st Century Business Herald.

In the past two years, the export volume of Ecuadorian white shrimp to China has increased greatly, especially in the first half of this year. It is a domestic “web celebrity” product.
According to data provided to 21st Century Business Herald by the commercial Counselor’s office of the Ecuadorean Consulate general in Guangzhou, exports of White shrimp to China reached $2.083 billion in 2019, up 249 percent year on year.
From January to May 2020, Ecuador’s shrimp exports to China reached $1.038 billion, an increase of 70.5 percent over the same period last year.

But now, the white shrimp industry has suffered a “life and death”.

Pressure on importers

“The seafood business has been terrible this year.”
Mr. Wang, who runs a seafood counter at a Jinan supermarket and convenience market, complained to 21st Century Business Herald that “after the salmon incident, all the fish are no longer available.
Just as there were signs of improvement, there was another incident with the White Ecuadorian shrimp.”
When he saw the news, he took the initiative to remove the white Ecuadorean shrimp from the counter.

Mr Wang told reporters that his seafood sales have dropped by 30 per cent since the outbreak of the epidemic.

Importers surveyed described the crackdown as “catastrophic.”
Since the three producers whose samples tested positive accounted for 27 percent of Ecuadorian shrimp exports to China and were involved in a large number of Chinese importers, return shipments were common.
Although the manufacturer will lodge a claim on the returned goods, the freight shall be borne by the importer.

Liu, who imports White Ecuadorian shrimp through an agency in Tianjin, told the 21st Century Business Herald that thousands of containers are estimated to have been affected.
The Ecuadorian manufacturer does not have a unified solution for the containers that cannot enter the port, so they can only return to the port.
However, after receiving a large number of returns, manufacturers are likely to be limited capital flow, difficult to refund immediately.
“I paid the full amount in advance, and the manufacturer promised to return the 20 per cent deposit and then write a legal statement promising to settle the balance in a month or two, which was good enough.”

The trickier part is the cargo already in.
On July 10, the General Administration of Customs, total bureau of national health committee, market supervision, to all parts of the country issued “on the part of the imported frozen Ecuador South America white shrimp emergency disposal notice, require implementation of emergency disposal include: the customs to inform the importer on the 3 companies on March 12 production, has entered the domestic market in the future the recall of the frozen South America white shrimp;
Local market regulatory authorities are responsible for supervising the dealers to immediately stop selling and seal up the frozen shrimp produced by the three relevant enterprises after March 12.

“Some dealers have already sold their products, and foreign manufacturers will not accept the recall?
If it cannot be recalled and faces destruction, who will compensate for the loss?
In such a situation this year, there will certainly be a number of bankruptcies.”
“Mr. Liu said.

Reporters learned in the interview, in order to avoid risks, the local implementation process also exists “one size fits all” phenomenon, regardless of the brand, date, as long as the White Shrimp Ecuador will be removed from the shelves.
A large Importer of Ecuadorean white shrimp in Beijing told reporters that it usually imports more than 100 containers worth more than 100 million yuan a month and sells them to wholesale markets and supermarkets across the country, with sales plummeting by 90 percent.
He told the 21st Century Business Herald that sales of white shrimp across the country have stalled.
Until the situation becomes clear, imports of Ecuadorian white shrimp will be stopped.

Hit consumer confidence

In the opinion of several importers interviewed, the seriousness of the situation is beyond imagination. In particular, the detection of positive packaging for Ecuadorian white shrimp in local circulation will aggravate consumer panic.
Fan Xubing, director of the China Aquatic Products Circulation and Processing Association, told the 21st Century Business Herald that the salmon incident, the White shrimp incident in Ecuador and the cluster outbreak in a number of foreign meat processing plants have impacted consumer confidence and will lead consumers to buy less imported seafood.

Ecuador’s Ambassador to China, Carlos Larrea, told 21st Century Business Herald that the White shrimp product itself had never tested positive for a coronavirus.
The Ecuadorian government is working with relevant Chinese authorities to verify all aspects of the production of white shrimp and further ensure the food safety of all products.
The two governments are in high-level communication to find a solution to the problem as soon as possible.
President Moreno also visited Santa Priscila’s headquarters to personally verify that the company strictly adheres to all biosecurity conditions for the cultivation, processing and transportation of white shrimp.

Carlos Lareia said he hoped that in time, Chinese consumers would return to seafood, and to do so, he said, “we have to be aggressive in our promotion. Ecuador is moving further towards full and mature food safety.”

In the first quarter of 2020, Ecuador exported $5.317 billion, up 1.4% year on year, including a 16.8% increase in prawn exports, local media reported.
Ecuador consulate general in guangzhou commercial counsellor’s office commercial counsellor peng Paul for the 21st century economic report reporter said, considering the special case of the global outbreak, Ecuador’s government of workers and product care more safety protection measures were taken, eritrea’s fisheries department released the minister agreement, aimed at strengthening action, in order to prevent and control will be coronavirus in aquaculture and fishery workers about risk.
The Fisheries Department has established the COVID-19 Technical Oversight Committee (COT), which is responsible for the design, implementation and monitoring of health and food safety policies for aquatic products (white shrimp).

The reporter learned that the risk of novel Coronavirus infection in the white prawn breeding link was low.
Wang Zhiping, chairman of South America Unitoxin, a white shrimp farming company in Ecuador, and President of the China Fujian General Chamber of Commerce in Ecuador, told 21st Century Business Herald that the environment for white shrimp farming is open, airy and sunny, and the workers work independently. The company also has a strict prevention mechanism.

In terms of processing and transportation, Fan xubing analyzed that some white shrimp processing plants in Ecuador are not highly automated and labor-intensive, which poses certain risks.
Considering the seriousness of the epidemic situation in Ecuador, the novel Coronavirus test developed by relevant departments in that country is limited, which makes it difficult to detect and track close contacts. Therefore, it is possible for the product boxes to come into contact with Ecuadorian infection cases during the loading and unloading process.

“But there is no need to panic about the whole import of Ecuadorian white shrimp.
It is recommended that the relevant authorities forcibly recall or destroy all the products in circulation to ease consumers’ concerns.”
“Fan said.

According to the Economic and Trade Office of the Chinese Embassy in Ecuador, a total of 71,365 cases of COVID-19 have been confirmed in Ecuador as of 8 o ‘clock on July 16.

Ecuadorean shrimp industry is driven by Chinese demand

Ecuador is the birthplace of South American white prawn, aquaculture conditions advantaged, has the reputation of “prawn paradise”.
The long Pacific coast is full of shrimp farms, 70% of which are concentrated in Guayaquil Bay.

Wang Zhiping has been engaged in the cultivation of Ecuadorian white shrimp for 22 years. The company has a breeding base of 5000 hectares with a daily output of 60 tons. There are about 1,000 employees, including a large number of professional and technical personnel of aquaculture imported from China.
He told reporters that the Ecuadorian white shrimp for the low density, large water surface extensive ecological farming.
Since its export to China, the company’s output has been growing at a rate of 20% a year.

How did a prawn from Ecuador end up on the table for Chinese consumers?
According to Wang Zhiping, in The local area of Ecuador, from 10 o ‘clock in the evening to 2 o ‘clock in the morning of the next day for the white shrimp fishing period, live shrimp is caught up, need to transport to the processing plant, and then after cleaning, grading, fixed weight, packing, frozen storage, and then export, drift in the sea for 36-45 days finally came to China.

In recent years, white shrimp has overtaken bananas and flowers as Ecuador’s biggest non-oil export.
Paumpaul told 21st Century Business Herald that much of the growth in Ecuador’s shrimp industry is due to the Asian market, particularly China.
In 2019, The Chinese market became the main destination for Ecuadorian white shrimp exports, with a market share of 62 percent, followed by the European Union and the United States, accounting for 17 percent and 14 percent, respectively.

Since 2017, exports of Ecuadorian white shrimp to China have surged, driven by China’s tariff reduction and consumption upgrading.
According to Fan’s analysis, in 2017, there was an outbreak of large-scale shrimp disease in domestically farmed prawns, and the yield was reduced by about 30 percent.
In recent years, domestic consumption has been upgraded significantly, and the purchase quantity and frequency of prawns are constantly increasing. Prawns, including Arctic shrimps, Argentine red shrimps and South American white shrimps, have become the category with the fastest growth rate among all import industries.
Due to the expansion of production capacity in Ecuador and India and the reduction of costs, the price of South American white shrimp has been continuously lowered with a higher cost performance, which is welcomed by Chinese consumers.

Fan believes that in the long run, the Ecuadorian white shrimp incident will not change the “shrimp eating” habits of Chinese consumers, and the import of white shrimp will continue to increase.
“The scale of prawn cultivation in China is already very large, and there is little room for further improvement of the yield due to restrictions on breeding waters in China.
So if consumers refuse to import white shrimp, it will be very difficult for domestic prawns to fill the gap in the short term.”

He also pointed out that compared with Vietnam, Thailand and other Southeast Asian countries, The price of South American white shrimp from Ecuador and India is more competitive, while Indian white shrimp is mainly exported to Europe and The United States, which has a low domestic recognition and is difficult to replace Ecuador’s exports to China.

“The Chinese market has huge growth potential for all sectors.
In terms of shrimp exports, maintaining the highest quality standards has been a major challenge and goal for Ecuador.”
Carlos Larrea says the coVID-19 outbreak has affected the white shrimp industry in Ecuador.
Since the outbreak of the epidemic, the Ecuadorian government and enterprises have attached great importance to it and taken strong measures to ensure the quality of products.

Carlos lareya told reporters that before the outbreak, the two governments had established a very effective communication mechanism under the framework of the comprehensive strategic partnership agreement and the One Belt And One Road memorandum of understanding.
This allows the two countries to respond quickly to any problems that may arise.
Ecuador is willing to improve and adopt new ways to provide the best quality products for “our Friends in China”.

The white shrimp market is expected to recover

For traders of white shrimp, the price of shrimp has plummeted this year.

“This is my fourth order since the start of the epidemic. Before the goods arrive at the port, the domestic price has already fallen below the purchase price, and I will lose if I buy the goods.
Even if we can sell the 40-50 size white shrimp in our stock, we have to pay 80 yuan for each case compared to the purchase price.”
“Mr. Liu said.

Ecuador, head of the white shrimp importers sankai Ma Xinyang reporter said to the 21st century economy, march and April this year, in an emergency in Europe and the United States because of the outbreak is no longer white shrimp to Ecuador order, while China has effective control of epidemic, Ecuador in order to alleviate the pressure of the inventory and expand the market, by cutting prices to stimulate Chinese importer after single, large amounts of white shrimp exports to China.

“In April, there were a lot of trading companies pursuing orders from abroad, and the goods basically arrived at the port in May and early June. Many companies could not keep up with the capital chain, so they had to sell the goods cheaply first to obtain funds, and then receive the goods at the port. The market was rather abnormal, and shrimp farmers, manufacturers and importers were all losing money.
“The lower prices are more the result of a ‘price war’ among importers than a serious imbalance between supply and demand, as many people say,” Mr. Ma said.

Across the Pacific, Ecuadorian shrimp farmers are also suffering.
White shrimp aquaculture practitioners are mostly small and medium retail investors, white shrimp export for local farmers to create employment and income.
Wang Zhiping told reporters that due to the recent decline in the price of Ecuadorian shrimp, the farm is now losing 0.3 US dollars per kilogram. Small enterprises have higher costs and are losing more money.
Farmers do not have enough money to support the operation of farms, can only reduce the breeding density.
Farmers’ output is now down by about 30-40% and could fall further to 50% if prices do not recover.
Some enterprises are directly closed, shrimp farms idle.
“The current market, shrimp farmers can not make a profit, can only say to try to survive.”

In Ma xinyang’s view, in the future under the gradual recovery of demand, domestic Supply of Ecuadorian white shrimp is expected to lead to the white shrimp price increase.
Most importers are taking no chances when it comes to the epidemic. It is expected that the volume of Ecuadorian white shrimp arriving in Hong Kong will be significantly reduced in August.
Under the local “one-size-fits-all” policy, some dealers and retail terminals will “seal up”, unable to circulate in the short term.

“At present, the domestic white shrimp inventory pressure has eased, the market is slowly warming.”
“Right now it’s not that there’s too much supply,” he said. “It’s also that the outbreak is causing prices to fall and keeping downstream customers from buying.
As the epidemic gradually improves, the market will return to normal.”

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