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Argentine shrimp feels impact of coronavirus

Click on the flag for more information about Argentina ARGENTINA
Friday, February 14, 2020, 00:20 (GMT + 9)

Exports of agricultural products to China have fallen due to a decline in consumption and production as a result of the spread of the virus. In the fisheries sector, the shrimp processed on land is the most affected. Hopes are pinned on the revival of the European market for shrimp frozen on board.

Shrimp reached 2020 with the lowest price in its history but the situation is worsening due to the spread of coronavirus. China has begun to suspend orders for products such as shrimp tails intended for reprocessing in its plants. Argentine businessmen warn that Rawson's shrimp is already very affected but they hope to improve the situation of those who have diversified production, with sales to Europe of shrimp frozen on board.

China's link with the world is very important and its isolation affects many countries, some Europeans such as Germany but mainly emerging countries in the region such as Argentina, Chile, Brazil and Ecuador, suppliers of raw materials and uncooked fish in some cases. The situation, according to international analysts, will be much more serious than in 2003 when the Chinese economy suffered losses of USD 40,000 million as a result of SARS (Severe Acute Respiratory Syndrome).

At that time, China's relationship with the world was different; at that time it contributed 3% to the world economy and now it represents 16%. Therefore the sequelae of the spread of coronavirus will be much deeper, according to experts.

For Argentina, China is a very important business partner in constant growth. Last year, exports reached USD 7000 million, with soy being the most exported product; and of the total meat sold abroad in 2019, 73% was destined for the Chinese market. Although the volume and value of fish products is not considered by national media, nobody in the sector is unaware of the importance of that market, especially for shrimp.

China is the second most important market for this Argentine crustacean after Spain but the first in tails processed on land, being the market that absorbed much of the increase in catches that occurred in our country in recent years. For this reason, the suspension of purchases by the Asian giant already hits the shrimp sector hard.

One of the largest exporters of shrimp tails to China confirmed yesterday that three major customers, with whom it had commercial agreements involving 10 containers each, suspended the shipments. The shipments that were already traveling would be respected but in the face of a dreaded reduction in consumption, which is believed to be phenomenal, they have decided to suspend imports until further notice.

In addition, as a result of the spread of coronavirus, the Chinese government has decided to extend the lunar new year holiday and in some provinces work activity was resumed yesterday but with restrictions; and in productive centers with large numbers of staff, it has been decided to keep the activities suspended for an indefinite period.

This has caused the shrimp that is processed in Rawson in the form of tails to be the first to receive the impact, not only because of the decrease in consumption but because reprocessing plants have lowered their level of productivity or have already closed.

"The clearly affected today is the shrimp that is processed in Rawson, whose demand is falling apart," confirmed a major exporter from abroad.

The businessman reports that this situation is not limited exclusively to China, since they have also suspended shipments scheduled to Japan and Singapore, which remain on alert and take precautions against the occurrence of local cases, closing production centers.

The shrimp price had already reached its lowest historical value 15 days ago, with whole shrimp L1 processed on land being sold at USD 4.90 and the tails at USD 8, but these values do not seem to have touched its floor. The epidemic could drag them down even further; its competitor, the vannamei from Ecuador, in recent days has fallen at a rate of 0.20 cents per kilo and that will surely have an impact on our shrimp, even if it is wild and natural.

The strong impact of coronavirus on the sector adds to the low international prices and high retention taxs imposed by the national government. It is said that reduction in consumption could lead producers to work without profit margin or even loss if China fails to control the virus's progress in the short term.

Today hopes are pinned on a revival of the European market that demands shrimp frozen on board. In Argentina the cold storages have been already emptied and in Spain, after the good sales recorded in Christmas, there would not be much stock left. Marketers believe that the little inventories they have will end up being consumed in April on the occasion of Holy Week and a door will open for the importation of our shrimp.

“With regards to the new season, as pale and bad as everything is, there may be a little more consumption in Europe. Already discounting that China will buy little shrimp, at least knowing that we have a chance to sell the product is positive,”concluded our source.

Author: Karina Fernández / Revista Puerto



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