Asian Disease Forces Massive Price Hike for Shrimp in US

Posted on April 25, 2014 by

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In August, as the price of shrimp soared to $5.80 a pound, CNN called the new price on headless crustaceans an “all-time high.” But do you know what consumers today would call that price? A bargain.

The United States produces only about 10 percent of the shrimp we consume. The rest comes from Asia, and all across the continent, a disease known as early mortality syndrome is killing farm-raised shrimp. That’s hurting shrimp supplies and raising the cost of the shrimp that the U.S. imports.

Complicating matters, last summer the U.S. Department of Commerce issued a ruling penalizing China, Ecuador, India, Malaysia and Vietnam for unfairly subsidizing their shrimp exports — i.e., selling shrimp too cheaply to the U.S. (The U.S. International Trade Commission ultimately decided not to impose countervailing duties on these countries’ exports. But just the threat of doing so in future may act to support prices.)

According to prices quoted by the Texas Shrimp Association, in Brownsville, Texas, Gulf of Mexico headless shrimp are fetching $7.50 right off the boat. Restaurants pay about $2 more a pound for these same shrimp — and by the time it reaches your plate, the price has risen even more to pad the restaurateurs’ profit margins.

Yet even so, last month, the Associated Press reported that the spiking price of shrimp did a real number on shrimp specialists like Darden Restaurants’  Red Lobster, inflating costs by 30 percent and scaring away sticker-price-shocked customers.

Sales are likely to fall outside the restaurant industry as well. According to analysts at Rabobank, Americans consume an average of four pounds of shrimp per person annually. But with prices rising relentlessly, Rabobank thinks that number fell in 2013. With prices still higher in 2014, consumption is likely to fall even further.

 Low supplies beget high prices, which in turn encourage shrimp producers to find ways to boost supply and capture those high prices as profit. At the same time as the Texas Shrimp Association was lamenting the high cost of shrimp this week, executive director Andrea Hance expressed hope that “farmers will eventually find” a cure for early mortality syndrome, curing the crisis of high shrimp costs soon after.

Meanwhile, these high shrimp prices will give greater incentive to growers in other countries to increase their own production and claim those high profits for themselves. When these two trends merge, we could quickly see an influx of new shrimp onto the market, driving prices back down.

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