Brazil's shrimp industry poised for comeback

 Earlier this month it was revealed that shrimp producers in Rio Grande do Norte in northern Brazil had resumed exports to Europe, after spending the last few years supplying solely the local market.

What’s more, according to the Brazilian Association of Shrimp Breeders (ABCC), Rio Grande do Norte is not only dipping its toes back into the market but is expected to export half of its production over the next 12 months.

In the past the state exported 95 percent of all the shrimp produced in the region, Itamar Rocha, president of the ABCC told IntraFish, but in 2012 all local production was sold on the domestic market.

However, according to Rocha, mainly because of the international price of shrimp and the rising dollar, the export market is becoming more competitive again and more appealing for Brazilian companies to re-enter it.

“Three companies in Brazil have started exporting shrimp back into Europe already,” said Rocha.

The main reason? The astronomical rise in international shrimp prices. "The EMS problem in Asia means the price has gone up, and also in Brazil with the dollar coming back, exports become competitive,” he told IntraFish.

Of course, Rocha says the local market is still extremely important and competitive, but “we now can plan the growth of our production because we have an opportunity to come back to a market that we used to occupy a very good position."

In 2003, before antidumping restrictions were placed on Brazil by the United States, Rocha said the country was the largest exporter of smaller size shrimps to the US. This was followed by China, Thailand and Ecuador he said.

“In 2004, when we almost lost the US market, we put all our shrimp into the European market and Brazil,” Rocha said. As a result the local markets in Brazil soon opened up and now play a very important role.

The big advantage of the local market in Brazil is that there is a market for any size of shrimp, Rocha said, “because most people eat shrimp but of course the international market will always be a big focus we need to think about, because we can grow."

European markets have actually been approaching Brazilian companies rather than visa versa, according to Rocha.

“We have not participated in any trade show but they come looking for us, our shrimp, we are not really depending on the international market but we are proud that we can come back,” he said.

“We have a huge potential for shrimp farming production and is very important to have another option not just one market”.

Despite seeing opportunities arising in the export market, Rocha still wants to “preserve and work on developing” the local market even more.

According to Rocha, the Brazilian people currently consume just 4-5 kilograms of shrimp per person per year, while they consume 56 kilos of red meat per year.

“But they love to eat shrimp, so we can grow locally,” Rocha said.

Europe not US

For the moment at least, the European market will be the main focus for Brazil exports, primarily because they buy good quality head-on shrimp for restaurants, and they pay well for it, according to Rocha.

In particular the French and Spanish markets will be the main focus as well as even the Danish, German and Portuguese markets.

Conversely Rocha said Brazil still has a “big problem with the US market” because of antidumping.

It is not because the anti-dumping duty is particularly high at 7.5 percent, he said, but more because there is an annual review so it “might jump from 7.5 percent to 30 percent which makes buyers afraid to buy shrimp from Brazil.”

“While the anti dumping exists, the US market is out of our interests in Brazil,” Rocha said.

In terms of sizes, Brazil tends to export some of the bigger shrimps to Europe – the 80-100 pieces per kilogram head on products – while Rocha says the prices are currently very competitive price at around $6.60 (€4.90) - $6.80 (€5.10) per kilo.

Testing the waters

Potipora Aquacultura is one of the firms in Rio Grande do Norte that has started experimenting with exporting again to the European market.

“We have already done some sales for the ‘new market of Brazilian shrimp’,” said sales manager Luciano Cezar Rocha Azevedo.

“The market is open once again,” Azevedo said, with prices up between $1.50 (€1.10) to $2 (€1.50) more than last year.

“The Brazilian market keeps on doing very well, but now the European market is offering almost the same price as you get in Brazil and it is important to keep more than one market open."

Potipora Aquacultura will keep focusing on the Brazil market but is also looking to the European market to develop its goods, in particular Italy, Spain, and France, as these markets are its biggest customers, Azevedo said.

“This year we did some trials, more or less one container for two or three different customers to try again, to lift some exports and to learn again and see if we are able to start with good volumes,” Azevedo said.

“There is interest, but this is a new start, and it is not so easy to restart.”

Potipora Aquacultura was originally focused on exporting shrimp from Brazil but stopped in 2009 and since then the company has only served the Brazilian market.

According to Azevedo, depending on a number of factors, such as the size and the client, the current price for

exports is around $6 (€4.50) per kilo.

“I think for this year we will keep in Brazil, but maybe next year we come back with more power to enter the European market,” he said, “but we need some time to make the decision.”

If the trials go well, Potipora Aquacultura will start exporting properly again in January or February Azevedo said. Elsewhere, however, some Brazilian companies are remaining cautious.

CELM Aquicultura, the commercial arm of Brazilian shrimp producer Compescal, is still very much geared towards the Brazilian market, but it has not ruled out returning to exports in the future.

“Actually now we don’t have production to export right now,” said Gleidson Gomes, international sales manager, at CELM Aquicultura.

“We are waiting for the right moment, even though the price has reached the right momentum."

The price is almost at “break-even point," especially with the current exchange rate, said Gomes, but as a large producer current ongoing contracts have to be considered first.

Despite this, starting exports again is part of CELM Aquicultura’s future plans.

“We can’t say when for sure,” he said.

“The Brazil market will see high prices with the high demand that comes with the end of the year, so in some ways it is a strategic decision getting back into the export market,” he said