The Ecuadorian shrimp sector is worried about the European Commission's (EC) decision to increase its annual import quota of shrimp from countries with which it has no trade agreements by 20%, and which will benefit from a new set of duty-free tariffs, several sources told Undercurrent News.
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According to Ecuador's national chamber of aquaculture, known by its Spanish abbreviation, CNA, the EC will in 2021 increase the annual shrimp import quota from 40,000 to 48,000 metric tons for processing under its new regulation regarding the autonomous tariff quotas (ATQs).
"This is a new challenge for the industry since these countries will now enter into direct competition with us," a small Ecuadorian shrimp producer, who spoke in condition of anonymity, told Undercurrent.
"The big difference here is that Ecuador does have an agreement with the EU for which we have had to work very hard to achieve, trying to comply with very rigorous health, political, and social requirements, among others," he said.
"Only 8,000t more a year seems like a trifle, but the reality is that this will affect prices. The more supply, the lower the prices, which is what worries us the most. We've been suffering a lot this year."
The latest modification to this policy, which has been in force for several decades in the EU, will enter into force on Jan. 1, 2021, and last until Dec. 31, 2023.
According to the CNA, it is also believed this could mean a loss of around $44.4 million in revenue to Ecuador's shrimp sector each year.
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"There are several countries with lower production costs for this specific product, so it is clearly going to affect the exports of those countries that already have agreements with the EU," an EU-based importer of Ecuadorian shrimp, who also spoke under condition of anonymity, explained to Undercurrent.
"It would also be necessary to see which countries will those be, in order to assess the scope of this problem. It is clear that if they are countries from Latin America, this will surely affect Ecuadorian shrimp exports."
Undercurrent previously reported how the European fishing industry association Europeche and the European Association of Fish Producers Organisations believe the ATQs are being used in many cases with the sole purpose of getting access to cheaper imported seafood, often caught by fleets not held to the same regulatory standards as those in the EU.
"Clearly, this is the indirect way for the EU to lower prices in favor of the European consumer," a second Ecuadorian shrimp producer also told Undercurrent.
"This is terrible news. The country was already under pressure due to the pandemic and reduced exports to the Chinese market. It will be dreadful for us to compete with so many new offers," he said.
From Jan. 1 to Oct. 18, the EU imported some 97,963 metric tons of frozen Ecuadorian shrimp, up 19% year-on-year, according to the data from the European Market Observatory for Fisheries and Aquaculture Products, EUMOFA, available in Undercurrent's trade flows data page.
In week 38, the average EU import value of this product came to €4.27/kg (5.06), its lowest since 2013, according to the EUMOFA data. This drop also made September the month with the lowest import prices since then, as the second chart below shows.
From that moment on, prices steadily increased to €4.85/kg in week 43. A further increase in the average import price should be seen in the next updates, until week 45.
However, on Nov. 1, producers began to see prices falling across all sizes, right after they had reached similar levels to those before the pandemic, a small Ecuadorian shrimp producer previously explained to Undercurrent.
As of Nov. 9, average farmgate prices for head-on, shell-on (HOSO) Ecuadorian shrimp were $4.90 per kilogram for 20/30 count shrimp; $3.90/kg for 30/40 count; $3.80/kg for 40/50; $3.60/kg for 50/60; $3.10/kg for 60/70; $2.80/kg for 70-80; $2.50 for 80-100; and $2.30/kg for 100/120.
Depending on sizes, this equates to a decrease ranging from $0.30/kg and $0.90/kg for HOSO shrimp compared to the levels seen on Nov. 1, data shows.
November 16, 2020 at 04:55PM
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Ecuador shrimp sector worried EU zero-tariff import proposal could lower prices - Undercurrent News
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