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April 12, 2015

The World

Shrimp Prices

 

Patrick Wood (patrickjwood@yahoo.com): May the best man/farmer/country win!  These price movements are caused by globalization—the “invisible hand” in action.

 

Of course a cartel could be an option.  OPEC tried it once, but nowadays it’s probably not possible!

 

Dallas Weaver (deweaver@me.com), The shrimp industry doesn’t operate in a vacuum.  It is just one component of the meat industry, which is a component of the food industry.  These components are highly fungible (interchangeable), and that makes cartel action unstable, especially when all the other components can react on reasonably short-time scales. 

 

More directly, it’s shrimp versus fish versus chicken.

 

If you can get the cooperation level required for a cartel (trusting each other and sacrificing for the common good), a strategy that can work is to concentrate on getting the quality and value up and the price down at the final consumer level.  Follow the chicken farmers as an example; they used all the tools of genetics and production technology to reduce the cost to the consumer and succeeded in making chicken a worldwide staple.  They were able to beat out cattle and pigs because they had better feed conversion ratios (FCRs).  Currently, they have FCRs of 2 to 2.5, which are much better than those for pigs and cattle.   

 

If you get shrimp FCRs down to around 1 to 1.2, like the salmon farming industry, shrimp will become the “chicken” of the equatorial belt.  We have an animal that doesn’t have to waste metabolic energy to stand up or keep warm—a bit of an advantage.  With breeding that increases meat yield, we will pick up a little more of an advantage.

 

Our only disadvantage is that we can’t pass on our waste costs to the general environment in an unsustainable manner like the pig and chicken farmers do.  Neighbors of pig farms, however, are questioning some of their practices, and the advantage of pig and chicken farmers may disappear in the near future.

 

I visualize shrimp and fish replacing pigs and chickens as the primary source of meat.  With their inherent FCR advantage, we can produce the amount of meat required to feed the coming three billion more people and the two billion people who want more meat on this planet, without drastically increasing our agricultural land requirements.

 

Conclusion:  Focus on production costs and let the shrimp price clobber chicken farmers and increase our market share in the meat market.  Low prices are a sign of progress.

 

Source: The Shrimp List (a mailing list for shrimp farmers).  Subject: Thailand’s New Challenge...Price.  Patrick Wood and Dallas Weaver.  April 12, 2015.

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