[Economics] How Ecuador became the world's largest shrimp exporter (and what key role China played)

[#Steeven.™]

China has been the main consumer of Ecuadorian shrimp for a decade.

Businessman Jorge Castro extends his arm and points to a succession of ponds the size of soccer fields next to the Taura River, about 15 kilometers southeast of Guayaquil.

“Before all these were rice fields. Now they are shrimp farms ”, he assures BBC Mundo.

Its 200-hectare farm generates more than 1,300 tons of this crustacean per year.

Castro runs one of the 4,000 shrimp companies that operate in Ecuador, the country that last year broke all records in the sector by exporting more than 1,060 million tons.

Since the beginning of the industry in the 1960s, shrimp has become a pillar of the Ecuadorian economy, to which today it contributes some 280,000 direct and indirect jobs, according to the National Chamber of Aquaculture (CNA).

At the same time, it has transformed its coastal and mangrove regions, and has also attracted dangerous pirates and armed criminals.

BBC Mundo traveled to Ecuador to investigate the reality of this multi-million dollar industry.

 

The country of "pink gold"
Although shrimp naturally inhabit the Ecuadorian coast, they are hardly caught in open waters and almost all production is industrial.

The process begins in a laboratory, where breeding males and females selected for their optimal genetic conditions produce millions of larvae.

When they grow, they are raised in nurseries and then deposited in ponds or "pools" in mangrove areas or on dry land, as is the case on the Castro farm.

"Movement is life in the shrimp sector," says the businessman.

He means that, to prevent the shrimp from dying due to lack of oxygen, a system of pumping stations and gates makes the water flow between the pools and the rivers or the sea.

The animals are fed with a compound of soy, fishmeal and other nutrients that they call "balanced".

Aging usually lasts between 3 and 4 months until they reach the desired weight, usually about 20 or 30 grams. Then they are fished with nets.

That is where the work of the shrimp farms ends, which sell them to processing companies for their selection, packaging and distribution in the market.

In 2014, US$3.75 per pound of Ecuadorian shrimp was paid in the international market, the highest to date; the following years it fell and is currently around US$3.10.

The producer receives approximately half, and the rest is paid by the companies that process, pack and distribute the seafood.

For this reason, in Ecuador some consider shrimp as "pink gold" for being almost as lucrative and coveted as "black gold".

Oil was the main asset of the South American country in 2022 with 35.5% of total exports, according to data from the Ministry of Production, Foreign Trade, Investment and Fisheries.

Shrimp ranked second, with 23.6%, and was consolidated as the largest non-oil export.

 

Ecuadorian shrimp exports, 2012-2022

One out of every five shrimp circulating in world markets today comes from Ecuador.

The country was a pioneer in the industry in the 1960s thanks to its favorable conditions: tropical climate with high temperatures and humidity, good quality water thanks to extensive mangrove swamps that act as natural filters, and an abundance of native species such as the white shrimp of the Pacific or vannamei.

Added to this was the ambition and effort of families and corporations, which went from exporting a few containers in the early years to exceeding US$1 billion in 2011 and reaching, in 2022, according to the National Chamber of Aquaculture, the record figure for US $6,653 million, 5.7% of the nation's Gross Domestic Product (GDP).

The role of china
Paradoxically, a country located in the antipodes of Ecuador marked the destiny of its shrimp industry.

"China taught us to produce large shrimp," explains Boris Bohórquez, director of the Ecuadorian Federation of Aquacultors, which brings together small and medium-sized producers, to BBC Mundo.

The Asian giant bought 59 of every 100 shrimp produced in Ecuador last year.

Since the beginning of the industry, most of the Ecuadorian seafood went to the West, but this changed.

"Until 2014, Ecuador exported 60% of its shrimp to Europe and the US, but from then on, China began to demand our shrimp and demanded larger shrimp," says Bohórquez.

 

Ecuadorian shrimp exports in 2022

"What China produced was no longer enough for them, they eat everything and they lack it," says the representative of the businessmen.

Thus, he explains, Ecuadorian fish farmers began to adapt their production techniques to the new demand: among other measures, they lengthened aging from 3 to 4 months to increase the size of the shrimp from an average of 18 grams to about 30 grams.

In this way, Ecuador consolidated itself in the Chinese market over its main competitor, India, whose shrimp are smaller on average.

Of every 100 shrimp China bought last year, 70 came from Ecuador and 18 from India, according to CNA data.

Only with shrimp, Ecuador was the country that sold the most fish and shellfish to China in 2022 with US$3,582 million dollars, above US$2,750 million from Russia, an immensely larger border country.

"We are mutually dependent," acknowledges the president of the National Chamber of Aquaculture, José Antonio Camposano.

 

Smuggling from Vietnam
China has been the main consumer of Ecuadorian shrimp for a decade but, if we analyze the official data from the CNA and the Ministry of Commerce of the South American country, something does not add up.

Between 2014 and 2018 Vietnam, a country specialized in producing and selling this seafood, is the number one importer of Ecuadorian shrimp. Because?

An industry source, on condition of anonymity, explains it to us: during those years, shrimp exports to Vietnam ended up reaching China clandestinely.

“A Chinese representative would come and buy you 50 or 100 containers in white boxes without a brand, without origin, destined for the Vietnamese port of Hai Phong. From there the shrimp was smuggled into China over the land border from Vietnam to avoid paying taxes,” the source revealed.

“But the Chinese government started making raids and dumping the containers in Hai Phong. And in the end, already in 2018, they said: we are going to formalize this”.

Thus, statistics show that in 2019 exports to China tripled compared to the previous year, those to Vietnam fell to less than a third and the Asian giant was consolidated, also on paper, as the main destination for shrimp. Ecuadorians.

BBC Mundo asked the Chinese government and the Chinese embassy in Ecuador to participate in this report, but received no response.

 

The “cancer” of shrimp farms
An industry that moves billions each year in a country with serious security problems is almost inevitably a victim of crime.

"They enter you inside, they assault you, they point guns or rifles at you and they take everything," businessman Víctor Vergara, who owns a small 14-hectare shrimp farm whose production of about 15 tons per year earns him about US$200,000, told BBC Mundo.

Vergara was assaulted two years ago: armed pirates broke into his farm at night, badly wounded the security guard, threw their nets and took a large part of the production, as well as boats and material.

He assures that almost all the shrimp farmers in his area have suffered similar attacks and most of them do not even report them for fear of the consequences.

“We received threats. They send you messages through other people telling you that if you sue or notify the police they will kill you.”

For Danilo Rengifo, President of the Ecuadorian Aquaculture Federation, "the situation is like a cancer" that invades the sector.

“We have to fight the issue of low prices, the pandemic, the earthquake, the rains, the high tides… Having to fight against this other factor is too strong,” he protests.

“They steal shrimp, boats, balanced; we found our workers in the water, who had taken their boats away; and extortions are given, which here are called vaccines”.

The pirates, local sources inform us, are usually young people between the ages of 16 and 25 from the marginal neighborhoods of Guayaquil or other cities, who act independently or are linked to the criminal gangs responsible for the growing wave of violence and insecurity in Ecuador.

And their assaults are becoming more frequent: 18% more in the first quarter of 2023 compared to the same period in 2022, according to Federation statistics.

The industry estimated losses of about $200 million from crime last year alone.

"But we calculate that there is at least 25% more that are not reported," says the representative of the shrimp farmers.

 

The shrimp and the mangrove
The Ecuadorian shrimp industry occupies 233,000 hectares or 2,330 km2, an area equivalent to six times the city of Quito.

More than a quarter operate in marine and fluvial areas, where mangrove forests are erected, considered the lungs of the regional ecosystem.

In Ecuador, mangroves cover some 160,000 hectares, approximately 30% less than six decades ago, when the local fishing industry had not yet taken off, according to data from the Ministry of the Environment.

Shrimp farms cleared part of these forests to establish and expand their ponds to reach the current level of development.

“Of the 233,000 hectares of shrimp farms, almost 60,000 were built on the mangrove swamp; but 20 years ago construction and logging were prohibited, and since then mangroves have not been destroyed again," says Boris Bohórquez.

The director of the Ecuadorian Federation of Aquaculture Farmers explains that, far from devastating marine forests, some small and medium-sized businesses in the Gulf of Guayaquil have even devoted resources to reforesting them.

“They invested US$4 million to build a 1,600-hectare mangrove swamp that is 32 km long,” he says.

“Keeping it is good for all of us, because the more mangroves there are, the better the water quality, the better the oxygen and the better the future of the entire sector will be. Medium and small fish farmers see how the soils rot due to excess production and we know the benefits of the mangrove swamp ”, defends his representative.

The biologist Bruno Yánez, one of the leading experts in the conservation of the marine environment in Ecuador, denounces, however, that the destruction of the mangroves is still ongoing despite the fact that they are classified as natural reserves.

"Although there is a permanent ban, large and small shrimp farmers continue to cut down mangroves to expand their pools," he told BBC Mundo.

The scientist explains that, in addition to purifying the water, the mangrove swamp acts as a protective barrier against flooding in coastal areas. That is why its destruction, combined with the effects of climate change, could lead to serious natural disasters in cities on the seafront such as Guayaquil or Esmeraldas.

On our trip to the southwestern coast of Ecuador we also heard the testimonies of local fishermen about the alleged illegal expansion of shrimp farms in the natural reserves.

“Mangrove felling does not stop. The shrimp farms put the machines in at night and act as if nothing happened. The situation is out of control,” claims Hugo Morán, 49, an artisanal fisherman in Churute.

According to Carlos Villao, a 47-year-old crab fisherman in the Gulf of Guayaquil, "for the shrimp farms there is nothing illegal, because everything is done with money."

“If they file a complaint and the Environment arrives at the reserve, they make a phone call and that's it. They destroy the mangrove ”, he laments.

Ecuador's Minister of the Environment, José Antonio Dávalos, assures that the authorities do not ignore the felling of mangroves, as denounced by scientists, activists and fishermen.

“The numbers say otherwise. In recent years we have had 28 shrimp farms with a firm sanction, whose process has already ended and they received fines," said Dávalos.

He assured that most of the infractions are committed by illegal shrimpers, which are individuals or small organizations without a license that clandestinely build farms or tanks among the aquatic forests.

“They go to remote places, they work with impressive speed and they do it in small quantities. What the informal shrimp farmer does is get in, cut down the mangroves with the machinery and leave a 1 or 2-hectare pool in record time,” he explained.

All this to ensure a fraction of the gigantic business of shrimp production, the "pink gold" of Ecuador.

 

https://www.eluniverso.com/noticias/ecuador/como-ecuador-se-convirtio-en-el-mayor-exportador-mundial-de-camarones-y-que-papel-clave-jugo-china-nota/