Shrimp exports rebound, but raw material crisis threatens sustained growth

After plummeting to a five-year low in the last fiscal year, Bangladesh's shrimp exports have begun to rebound in the current fiscal year, driven by renewed demand from international markets.

But, industry insiders warn that a worsening raw material shortage – raw shrimp – may hinder sustained growth.

According to data from the Export Promotion Bureau (EPB), exports of frozen and live fish, including shrimp, rose by 14.45% year-on-year to $316.2 million in the first eight months of FY2024-25 (July–February).

Shrimp alone registered a 17.06% increase, reaching $215.9 million, with a sharp 23.25% growth in February alone.

Exports of frozen and live fish have been growing for six consecutive months, from September to February. The sector saw this upward trend despite many shrimp processing factories in the Khulna and Chattogram regions remaining shut, mainly due to shortage of raw shrimp, financial challenges, and high production costs.

Industry insiders said the sector experienced a dip during the student movement in July and August last year. However, according to EPB data, shrimp exports have been on the rise following the fall of the Sheikh Hasina-led government.

"The demand for shrimp is increasing significantly as we are receiving substantial orders from export destinations. However, an acute raw material crisis threatens the sustainability of this growth in the coming days," said Md Tariqul Islam Zaheer, managing director of Achia Sea Foods, a publicly listed firm.

"Shrimp producers are struggling with various challenges to stay afloat, which is why most processing factories remain closed," said Tariqul, who is also the newly elected senior vice president of the Bangladesh Frozen Foods Exporters Association (BFFEA).

According to association sources, out of 200 members engaged in exporting shrimp and fish, only 25% are currently operating, while the rest 75% of processing factories have suspended operations.

Tariqul stated that around 30 factories in Khulna are still operating, with only 10-12 in stable condition. The situation for Chittagong-based factories is also unfavourable, he added.

Meanwhile, though the country's total fish and frozen fish exports, including shrimp, witnessed notable growth in the first eight months, two listed shrimp exporters on Dhaka Stock Exchange's main board – Apex Foods and Gemini Sea Foods – reported mixed performances in the first half of the current  fiscal year.

Apex Foods, one of the largest fish exporters among listed firms, reported a 2% decline in revenue and a 20% drop in profit, according to its unaudited financials for the period.

Gemini Sea Foods incurred significant losses, mainly due to a decline in revenue and a lower gross profit margin compared to the previous period.

Industry insiders said that despite the growing global demand, many exporters are unable to scale up production due to limited access to raw materials. Some local fish cultivators have temporarily halted operations, citing high production costs, inadequate infrastructure, and financial constraints.

"We have orders from international buyers, but fulfilling them is becoming challenging due to a shortage of raw fish," said a Khulna-based exporter who had to close his factory. "Unless local cultivation resumes on a larger scale, meeting export demands will remain difficult."

Exporters and industry stakeholders are urging the government to provide policy support, including financial incentives and infrastructure development, to help fish cultivators resume operations.

They believe that addressing these challenges will not only sustain the current growth trend but also boost the country's overall export earnings.

According to an official from the BFFEA, the demand in European and Middle Eastern markets is strong and with the right support, exports from Bangladesh can be significantly increased. He, however, noted that the shortage of raw materials remains a critical bottleneck.

Shift towards vannamei shrimp

Talking about the threat that the sector faces due to a raw material shortage, Sk Kamrul Alam, managing director of Rupali Sea Foods Ltd and vice president of BFFEA, blamed previous government policies for the closure of the processing factories, but also expressed optimism about the future, noting a rise in shrimp cultivation.

He stated that the production of the vannamei variety is highly profitable for shrimp factories, but they had not been granted permission to cultivate this high-yield variety earlier.

He further highlighted the potential of the Venami shrimp variety, which can yield 8,000–10,000kg per hectare, compared to 1,000kg for the traditional Bagda variety. Although permission to cultivate Venami was granted only two years ago, its farming is gradually expanding.

"If fresh funds are injected into the sector to boost production, we will be able to export more, which will significantly contribute to earning foreign currency in the future," he added.

The vannamei shrimp – commonly known as white legged shrimp or pacific white shrimp or mexican white shrimp – is the native of the Pacific coast of Mexico and Central and South America.

Vannamei shrimp farming in Bangladesh began on an experimental basis in 2021 in Paikgachha, Khulna, under the supervision of the Bangladesh Fisheries Research Institute (BFRI). In the initial phase, two companies successfully cultivated Vannamei shrimp.

Encouraged by this success, the government granted permission to 12 institutions in 2022 to engage in Vannamei shrimp farming. These institutions have since reported positive results, indicating the potential for commercial expansion of this shrimp variety in Bangladesh.

Financial performance of Apex, Gemini

Apex Foods, which owns and operates a modern shrimp processing plant and exports 100% of its products to foreign markets, reported a 2% decline in revenue in the first half of the 2024-25 fiscal year, amounting to Tk109.45 crore, compared to Tk111.93 crore in the same period of the previous fiscal year.

The company attributed this decline to reduced demand in foreign markets.

Its earnings per share (EPS) fell by 20% to Tk1.43, down from Tk1.79 in July-December 2023-24. In the second quarter (October-December 2024), revenue dropped 24% to Tk55.52 crore, compared to Tk73.28 crore in the same period of the previous fiscal year.

Its profit fell by 64%, amounting to Tk18 lakh, compared to Tk51 lakh in October-December 2023.

Gemini Sea Foods, a 100% export-oriented company, suffered losses in the first half of the current fiscal year, as per its financial reports. The company exports 63% of its shrimp to the EU, 21% to Asia, 11% to the USA, and 5% to Canada.

In July-December 2024, the company incurred a loss per share of Tk3.94, compared to an EPS of Tk4.28 in the first half of 2023-24. The company also reported a loss in the second quarter (October-December 2024), with a loss per share of Tk1.71, compared to a profit of Tk3.73 per share in the same period of the previous year.

The company stated that the decline in revenue and lower gross profit margins were the primary reasons for the fall in EPS.