Most vannamei shrimp farms unable to start production over tech, investment issues

Approximately two-thirds of the companies authorized to cultivate vannamei shrimp — sought after in international markets for their lower prices — have been unable to commence production due to a lack of essential technology and insufficient investment.

According to the Department of Fisheries, 25 companies have been permitted to cultivate vannamei shrimp since 2019, and two companies have been approved to cultivate vannamei fry.

Out of the 25, only 7-8 companies have begun experimental cultivation, with just one completing its first production cycle. The vannamei shrimp cultivation cycle takes approximately three months.

Meanwhile, one of the fry production farms claims that it is consistently incurring losses due to low sales.

Stakeholders believe vannamei shrimp is crucial for regaining Bangladesh's shrimp export market particularly as it holds a significant 83% share of the global $32 billion shrimp market. The global demand for vannamei shrimp is rising due to its lower price.

Bangladesh Frozen Foods Exporters Association said that Bangladesh may need to wait until 2025-26 to export vannamei shrimp.

Production challenges and investment issues

Bangladesh's shrimp exports have declined by 24% from July 2023 to May 2024 compared to the previous year. The country primarily exports tiger shrimp, which has faced decreasing global demand.

The government authorised vannamei shrimp cultivation to boost the country's declining export trend.

However, the initiative has faced some obstacles, leading to a delay in the export process. High production cost is one of them.

MA Hassan Panna, managing director of Fahim Sea Food Processing and Farming, told TBS that developing one hectare of land for semi-intensive shrimp farming costs Tk20-22 lakh. Ongoing production costs also pose a significant challenge, preventing many companies from starting production despite having permits.

Seamark BD Limited, however, is one of the approved farms that has successfully completed its first production cycle.

The farm has cultivated vannamei shrimp using a super-intensive method with advanced technology and is ready to market its products. They sourced vannamei fry and technology from Thailand, Germany, the UK, and Singapore.

Seamark BD General Manager Md Shamsul Islam Khan told TBS, "We expect to harvest about 80 tonnes of shrimp per hectare using the super-intensive method. In contrast, tiger shrimp yield 360 to 500 kilograms per hectare."

Seamark BD underscored the scientific approach required for vannamei shrimp production. 

Since vannamei shrimp are raised in saline water, the water is directly collected from the Bay of Bengal, treated, and supplied to designated ponds. This process eliminates bacterial and viral contamination from seawater.

The farms feature multiple ponds with pollution protection and environmental safeguards. Specialised feed is used, and Seamark BD imports feed, fry, and technology from abroad while adhering to strict standards and seeking foreign assistance for technology implementation.

The setup has required an investment of approximately Tk25 crore for Seamark BD in the initial stage.

Shyamal Das, managing director of Seamark BD and director of Bangladesh Frozen Foods Exporters Association, told TBS, "The fry shortage we faced earlier is no longer an issue. A local hatchery is now producing fry, which will accelerate vannamei shrimp production."

However, he noted that Bangladesh may have to wait until 2025-26 to export vannamei shrimp.

Among the companies cultivating vannamei shrimp, two use semi-intensive methods, while the rest use traditional techniques. Investments are significantly lower for semi-intensive and traditional cultivation methods. 

MU Sea Food Limited has two facilities that will produce marketable shrimp using the semi-intensive method within 60-65 days.

Impact on fry producers and market dynamics

The limited production has impacted fry producers like Nirbili Fisheries Limited. Another fry production farm, Desh Bangla SPF Hatchery, is in production but facing challenges.

Nirbili Hatchery invested around Tk3 crore to convert from tiger shrimp to vannamei shrimp production, importing broodstock from Thailand.

The hatchery is currently supplying fry to only 6-7 companies in limited quantities. Each company demands 60-70 lakh fry per season.

Despite this low demand, the hatchery has the capacity to supply a much larger number of fry.

Sujan Barua, general manager of Nirbili Hatchery, told TBS that the government does not allow fry sales outside approved farms. Since only one-third of the approved farms are in production, the hatchery will not be profitable unless it can sell 15-20 crore fry per season. He called for the liberalisation of fry sales.

Department of Fisheries Deputy Director (Fisheries) Alak Kumar Saha acknowledged that many permitted farms have not yet started production.

Industry experts attribute the low production rate to the high technology and investment requirements for vannamei shrimp cultivation, which some companies cannot afford.

Market trends and Bangladesh's export performance

Despite production challenges, the demand for vannamei shrimp is increasing internationally.

The current global economy has reduced the demand for Bangladesh's black tiger shrimp in Europe and America, making the lower-cost vannamei shrimp more appealing. The market share of vannamei shrimp has risen from 75% to 83% in one year.

According to the Bangladesh Export Development Bureau, Bangladesh earned $300.26 million from shrimp exports in the fiscal year 2022-23, a 26.27% decrease from the previous year. Shrimp exports from July 2023 to May 24 were 24% lower than the same period the previous fiscal year.

The global economic downturn has led shrimp buyers in Europe and America to cut costs, making vannamei shrimp, which is $2-3 cheaper per pound than tiger shrimp, a preferred option.

Data from the Bangladesh Frozen Foods Exporters Association (BFFEA) shows that vannamei shrimp holds an 83% share of the $32 billion global shrimp market, while tiger shrimp accounts for 7-8%.

The remaining market share is divided among other shrimp species and some marine fish. Notably, 85% of Bangladesh's tiger shrimp exports go to Europe, 7-8% to America, and the rest to Japan and the Middle East.

Exporters believe vannamei shrimp cultivation is essential to reversing this decline.