Blackouts could hurt Ecuadorian shrimp exports: trade group

Ecuador's shrimp production and exports could take a hit from unexpected electricity cuts as a result of the country's energy crisis, the Ecuadorian aquaculture association warned.

The Ecuadorian government intensified its power rationing plan on Sept. 25, including nationwide electricity cuts for several hours per day. The government made similar energy cuts April.

While most shrimp producers own backup generators, the trade group known as CNA has urged the government to stick to the scheduled cuts and avoid unannounced power outages. The government publishes a schedule but makes frequent changes and sometimes cut power without early notice, according to local media reports.

"Unexpected power cuts in key sectors of the [shrimp] industry could generate economic losses of more than $5 million per day," the association said Sept. 25.

The country is facing its worst draught in 61 years, which affects the country's energy grid. Around 72% of the Ecuadorian electricity generation relies on hydropower, according to the ministry of energy and mining.

Shrimp prices have been on the rise due to limited availability, as output in Ecuador is currently going through a season of cooler water temperature. Ecuador is the largest exporter of shrimp globally, supplying 1.22 million metric tons in 2023, followed by India, with 717,610 metric tons, according to S&P Global Commodity Insights.

Platts' Ecuador Shrimp Marker (ESM) was $5,500/mt FCA Guayaquil on Sept 25, up from $4,800/mt on Sept. 2. The assessment considers head-on, shell-on (HOSO) shrimp with 30-40 counts per kg, as it is the most traded presentation.

Most hatcheries and packing companies are prepared to maintain operations during electricity shortages, running their own diesel-fueled generators, according to local sources.

"The [Ecuadorian] shrimp industry has good risk management practices in place," a source close to farmers said.

But shrimp food producers are more sensitive to the issue, as their equipment takes longer to restart if operations stop unexpectedly.

"Feed producers are the most exposed to blackouts," the source added.

Besides hampering food production, blackouts could also cause higher shrimp mortality in ponds, thus intensifying an already tight supply situation.

According to CNA, unplanned blackouts could "hamper not only exports, but [Ecuadorian] internal raw materials production, and affect survival rates of shrimp in ponds, which rely on electrical systems."

Platts is a part of S&P Global Commodity Insights.