Ecuador’s shrimp industry has become a key driver of the national economy, representing about 4% of the country’s GDP and generating over 260,000 jobs across the supply chain. In 2020, 688,000 tonnes – worth USD 3.8 billion – were exported globally. This makes shrimp Ecuador’s leading non-oil export, with a 25.5% share of the country’s total exports.
A shrimp exporter based in Ecuador explained, “The industry continues to experience exponential growth and Ecuadorian shrimp is widely regarded as the best in the world. Shrimp farms are today incorporating technology that has resulted in operational efficiencies enabling us to export greater quantities and to become more globally competitive.”
“The industry continues to experience exponential growth and Ecuadorian shrimp is widely regarded as the best in the world.”
Shrimp exporter, Ecuador
Last year, Ecuador became the largest shrimp exporter in the world. This year the industry has already experienced a 16-18% growth compared to the same period last year despite the challenges of war in Europe and the pandemic and brief but impactful Chinese import restrictions after shipments were found to be contaminated with Covid traces. Prices have gone up, but projections remain healthy – the sector is nothing if not resilient.
The exporter explained, “China sanctioned eight Ecuadorian companies – the spat was eventually resolved but it had a positive effect on the industry. Our disinfection infrastructure is now much better controlled.” Work remains – last week, China slapped a five month import ban on Omarsa Group citing similar virus-related concerns.
Geopolitically, is Ecuador able to assert control over its valuable territorial waters? A senior consultant at a law firm with clients in the shrimp sector said, “China maintains significant fishing operations near the Galapagos, ostensibly in international waters though the line can sometimes be blurred. Former US Secretary of State Mike Pompeo condemned the activity when it was revealed that much of the Chinese fishing fleet had turned off their radars to avoid detection by Ecuadorian authorities.”
“China maintains significant fishing operations near the Galapagos, ostensibly in international waters though the line can sometimes be blurred.”
Consultant, law firm, Ecuador
Shrimp is expensive to produce and Ecuador’s minimum wage – almost double that of neighbouring Peru – means that businesses can be hesitant to justify hiring more staff during growth periods, preferring instead to invest in automating processes. This is especially the case given increasing competition from India and China. China has traditionally been the main export market for Ecuador, now the US is displacing it.
The consultant explained, “From an investor perspective, now is a good time to enter the shrimp sector. Sustained international demand has given investors greater stability.” Indeed, Ecuador’s fiscal position is healthier than much of the region. Quito recently successfully renegotiated an international debt agreement with lenders, there was no default on the original, and the country’s trade balance is positive by USD 887 million.
Important negotiations are continuing within the industry that could herald major corporate restructuring. Industrial Pesquera Santa Priscila, one of the country’s largest shrimp producers, is to be sold in a transaction worth some USD 400 million. There had been criticism that its current management structure was antiquated. New management should drive the kind of innovation that the sector will need to remain competitive in the face of increasing global competition.