Marine Shrimp Farming Outlook Rabobank Group Gorjan Nikolik, - PowerPoint PPT Presentation

Marine Shrimp Farming Outlook Rabobank Group Gorjan Nikolik, Rabobank Research: Food and Agribusiness July 2017

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The shrimp aquaculture sector witnessed a huge expansion in the 2000’s, followed by a period with disease issues Global Shrimp aquaculture (marine species) 1980 – 2017E MILLION TONNES OF FARMED SHRIMP 1 2 3 EMS 3,0 Aquaculture starts initially with wild Period of virus diseases Vannamei introduction Era of non-viral • • • • juveniles diseases Monodon culture faces biological Industry 300% growth • • Monodon farming drives growth challenges • • Consumption growth Global prices high Cost rise • • 2,0 1,0 0,0 All other Monodon Vannamei Source: Rabobank, FAO 2017 4 *Chinese production includes freshwater Vannamei farming . M. Rosenbergii is not included. After 2011 we make significant corrections to FAO data based on industry sources

Currently the shrimp sector is in a gradual recovery period but many biological challenges persist Production expectations by country, NFI panel 2017 Overall NFI panel global shrimp production expectations 000’ tonnes 000’ tonnes 3.000 2.800 Other Asia 268 262 2.780 248 255 Other Americas 125 111 2.500 64 132 125 98 50 52 2.760 77 84 Brazil 91 64 50 54 46 66 407 407 Bangladesh 323 2.000 2.740 323 Mexico 2.720 541 596 650 1.500 623 Ecuador 2.700 China 305 209 300 264 1.000 2.680 Thailand 248 268 235 221 268 Vietnam 2.660 282 241 234 500 Indonesia 2.640 508 473 446 467 India 0 2.620 2014 2015 2016 2017E 2014 2015 2016 2017E 5 Source: Rabobank, NFI 2017

In a nutshell: Due to EMS, supply from China and Thailand has been replaced with supply from Ecuador and India Since approximately 2010 India +400k MT China marine shrimp -500k to 400k MT Thailand -200k MT Ecuador +250k MT Total: - 700k to -600MT Total +650k MT 6 Source: Rabobank, 2017

China: Estimates are that domestic supply of marine shrimp is still contracting China: Farmed Shrimp production Thousands tonnes Estimates based on industry expert opinion 1.200 1.000 800 600 400 200 0 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015F 2016F 2017F 7 Source: FAO, NFI, Rabobank 2017

Based on official data China is still a net-exporter of shrimp, but is mostly likely already a net importer if the grey channel is included China shrimp exports 2009-2016 (HK excluded), USD China shrimp imports 2006-2016 (USD) Millions Millions 900 2.500 800 Estimates are that approximately $1.5 billion of 2.000 700 shrimp (wild and farmed), 2x the value of the legal shrimp imports enter China 600 via the grey channel mostly 1.500 via Vietnam 500 400 1.000 300 200 500 100 - - 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Argentina Thailand Canada Ecuador India Others USA Japan Rep. of Korea EU Others 8 Source: Rabobank, Food and Agriculture Organization 2017

Thailand shrimp exports show a $2bln decline as the industry suffered from EMS Importing countries of shrimp from Thailand by Shrimp exports of Thailand declining due to EMS volume in 2015 Millions USD 000’ tonnes 450 4.000 Myanmar 2% 400 3.500 UK 3% South Korea Other 3% 8% 350 Australia 3.000 3% Hong Kong 300 4% USA 2.500 42% Vietnam 4% 250 2.000 China 4% 200 Canada Japan 1.500 5% 22% 150 1.000 100 500 50 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Volume Value 9 Source: Rabobank, UN CONTRADE 2017

Thailand: The once leading producer was hit by the perfect storm, EMS, EHP and “slavery on fish meal boats” Thailand: Farmed Shrimp production, tentative recovery 000’ tonnes 500 472 470 444 438 404 391 400 300 301 299 300 272 212 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 10 Source: Rabobank, based on FAO and other sources 2017

Indian shrimp exports in 2008 2008 map shows 85% 86% of volume of value EU (#1) 65,603 $352 tonnes million Japan (#2) 28,815 $192 tonnes million USA (#3) 21,538 $141 tonnes million UAE (#4) 6,837 $42 tonnes million 11 in order of trade volume

Booming Indian shrimp exports in 2015 2015 map shows 80% 83% of volume of value EU (#2) 82,649 $621 tonnes million Japan (#4) 32,827 $305 tonnes million USA (#1) 129,761 $1,235 tonnes million Vietnam (#3) 65,383 $496 tonnes million 12 in order of trade volume

India shrimp grew by over $2.5bln since 2010, making India the global No. 1 shrimp exporter Importing countries of shrimp from India by volume Shrimp exports of India in 2016 Millions USD 000’ tonnes South Africa 500 4.000 Kuwait 1% 1% China Russia 1% 1% Canada 450 UAE 2% 3.500 Others 4% 5% 400 3.000 Japan 7% 350 USA 36% 2.500 300 EU 250 2.000 19% 200 1.500 150 Viet Nam 23% 1.000 100 500 50 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Volume Value Source: UN CONTRADE 2017 13

India currently has the most rapidly growing shrimp industry in the world, with ample growth capacity Success factors: India: Farmed Shrimp production continuing to grow, very strong first half of 2017 000’ tonnes Low-intensity production model 1 600 (for Asian standards) Implemented vannamei 10 years 2 later (fewer mistakes) 500 3 Most farms are new 400 High level of control by 4 government (MPEDA) 300 Vannamei 5 Cluster farming system farming legalised Low cost land, labor and feed 200 6 commodities 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E Monodon Vannamei 14 Source: Rabobank, based on FAO and other sources 2017

In the US market the decline of Thailand is substituted by India US shrimp imports YTD (Jan-Apr) Million Lb. Indian supply to the US increased by 55% YTD May 2017 350 300 42 48 49 39 31 250 35 40 49 51 66 86 200 66 112 51 24 63 24 83 150 53 22 87 82 60 100 72 47 52 57 110 50 50 77 77 60 52 29 21 0 2011 2012 2013 2014 2015 2016 2017 India Indonesia Ecuador Vietnam Thailand 15 Source: Urner Berry 2017

Ecuador has also greatly expanded exports, with Vietnam (China) as the main destination Importing countries of shrimp from Ecuador by Shrimp exports of Ecuador volume in 2015 Millions USD 000’ tonnes 400 3.000 Chile Japan Guatemala 1% 0,4% 0,4% Russia 1% Others Colombia 1% 350 2% 2.500 South Korea 2% China 3% 300 2.000 250 USA Viet Nam 19% 45% 200 1.500 150 EU 26% 1.000 100 500 50 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Volume Value 16 Source: UN CONTRADE 2017

In less then 6 years Ecuador's industry has shifted over 50% of its exported shrimp towards China Ecuadorian Shrimp exports YTD (Jan-May), in thousand pounds 400 300 205,98 166,34 118,47 200 65,82 36,89 24,12 73,81 65,51 60,46 75,49 65,77 72,2 100 89,73 87,8 86,29 80,49 75,47 76,56 0 YTD '12 YTD '13 YTD '14 YTD '15 YTD '16 YTD '17 Europe USA Asia Americas Africa 17 Source: Rabobank, Urner Barry, 2017

Ecuadorian shrimp exports use to be focused on EU and US 2008 map shows 98% 98% of volume of value EU (#1) 72,836 $390 tonnes million USA (#2) 51,565 $293 Japan (#5) tonnes million 853 $6 tonnes million Colombia (#3) 1,914 $5 tonnes million Chile (#4) 1,581 $9 tonnes million 18 in order of trade volume