Vietnam’s shrimp feed market will achieve continued healthy growth to 2023, albeit at a more modest pace. Excess global supply capacity, in the absence of disease, will mean lower protein prices which will drive increasing farm professionalisation and demand for higher quality nutrition.
The global shrimp market has grown 10% since 2015 with new leaders emerging – Vietnam has maintained its share
- Vietnam’s shrimp production has recovered well from a period of disease at the start of the decade, growing at 8% CAGR since 2010 and 10% since 2015, driven by increasing export demand and growing domestic consumption
- Overall shrimp demand in Vietnam’s key export markets has flattened in 2018 with oversupply in key markets such as the US, EU and Japan, although demand in Korea continues to grow
- Vietnam has remained competitive globally, further improving its position with renewed trade agreements the EU and Korea, and benefitting from tougher EU regulations on India’s antibiotics usage and disease in Thailand
- However, Vietnam faces a more intense global competitive landscape with rapidly growing markets such as India and Ecuador and recovering markets such as Thailand and China – each with plenty more capacity to exploit
- Increased supply-side capacity and soft demand has led to weakening prices through 2018 and Q1 2019 and will likely weigh on production growth in 2019 and 2020
Plural expects commercial shrimp feed growth to slow to c. 6% per year to 2023
- The commercial feed market has grown at 11% since 2015, mostly driven by protein production volumes but also by increasing use of third-party feed as the market professionalises.
- Plural expects 6% growth to 2023 slowed by more modest protein production volume but buoyed by a shift to more industrialized farming. Although certain large fish producers are vertically integrating, Plural expects commercial feed suppliers to take a larger share of the market in place of trash / home-grown alternatives.
A more intense global competitive landscape and sustained lower prices will drive professionalisation including increasing demand for higher quality nutrition
- Vietnam has achieved rapid growth in recent years by expanding shrimp farmland rather than improving productivity. The large majority of production comes from small, family-run shrimp farmers.
- Land expansion, which is environmentally damaging, is inevitably unsustainable and, in the absence of strict quality control, puts Vietnam at risk of further disease outbreaks.
- Vietnam’s shrimp farmers will face tougher conditions in the next few years in the absence of disease. A more intense competitive landscape and growing markets such as India will likely keep global prices subdued and will put pressure on Vietnam’s position.
- This will drive farm consolidation, differentiated and higher quality products, and the need for more productive, professional farming methods. This trend will provide value add investment opportunities across the value chain, particularly in technology and nutrition.