Argentine vessels ready to head out in record numbers as strike ends
A prolonged strike as ‘red gold fever” grips the fishing industry ended late into the night on Nov. 29 when Argentine fishermen secured an 80% pay increase
The strike, which started earlier this month, delayed the start of the on-shore fishing season by 2 weeks, potentially causing more than ARS 5 billion ($132.5 million) in lost revenue, according to industry newspaper Revista Puerto.
Fishing companies are still attempting to diffuse a stevedores strike that began after industrial fishermen took action, according to an Argentine trader contacted by Undercurrent News. Talks are close to reaching an agreement, he said.
“There should be news by ‘this weekend’ in resuming fishing activity, the source said. ”We cannot produce anything until the agreements are in place.”
A record fleet in size was getting ready to head to the South Atlantic to fish wild shrimp in Argentine territorial waters, with several new players joining the industry. So far, only smaller artisanal vessels have been fishing for shrimp when the weather has allowed.
One such company is Buenos Aires-based Duntower Corporation, which hired two vessels to head out and capitalize on a boom in the shrimp fishing industry dubbed “red gold fever” by some.
Companies like Duntower have appeared because of unprecedented demand for Argentine red shrimp from China. With a preferential trade agreement in place between the two countries, shrimp exports have even surpassed in value one of the most symbolic Argentine commodities — beef.
“There is a huge market, and there is enough for everybody,” Duntower sales manager Carlos Carvallo told Undercurrent on the sidelines of the recent China Fisheries & Seafood Expo
The level of interest in fishing is so high that trawlers designed to catch and hold southern hake have been deployed for shrimp. This causes a problem because the sheer volume of shrimp that can fit in the hold of a hake vessel crushes the harvested shrimp. This forces processors to consider selling their catches in a head-less form because of the damage from the crush. Competition is tougher in the head-less segment.
The frozen on-board season, which tends to run from May/June to October/November, recently ended. A separate season for smaller vessels that catch near-shore stocks for processing on-shore starts in the Southern Hemisphere summer starting November to December and ends in March.
“It becomes a big problem when the product comes in, in such bad quality,” Cristos Trasivulidis, CEO of Charlie Tango, a company with 10 trawlers and a processing plant in southern Argentina, told Undercurrent.
So far, Argentina has been shielded from a price drop seen in Pacific white shrimp because it’s able to able to sell its distinctive red shrimp whole. Argentina
is more likely to compete with exporters of whole black tiger shrimp from Southeast Asia, or wild-caught shrimp from the Indian Ocean.
With profits high, industrial fishermen got a pay rise to ARS 0.38 per kilogram. They also agreed not to carry out any more industrial action until at least October 2019.
Huge pay prices are common in Argentina because of the volatility of the peso. The peso devalued against the dollar by as much as 50% this year. That said, the pay rise was the highest recorded among any industrial sector in Argentina, the source said.
The source recently contacted by Undercurrent said prices for size L1 were trading at $7.70 per kilogram. L2 is trading at $6.70/kg and L3 $6.30/kg. The prices are largely for reference because no trades are taking place, he said.
Prices for size L1 were trading at $8.50/kg (cost and freight) in Qingdao earlier this month, slightly lower than the $8.75/kg price recorded in late September while the frozen on-vessel season was nearing its end. Prices for L2 were at $7.20/kg, compared with $7.40/kg a month a few weeks, said at least three sources who spoke to Undercurrent. L3 is largely absent from the market, the sellers said. The L3 price was trading close to the L2 price in late September.
So far this year, catches have been slightly lower than in 2017. Landings between Jan. 1 and Sept. 20 fell 6% to 176,216 metric tons compared with the year-ago period, according to the Argentine fishing and aquaculture secretariat. That’s one of the first times that catches have dropped in recent years before the Chinese market took off.
Argentine exports to China were only $19.5m in 2012, according to the International Trade Center. Exports to China rose by a compound annual growth rate of 61% during the next five years. Shrimp exports breached the $1bn threshold in 2016, surpassing the country’s iconic beef exports.
In a bid to share in the wealth and amid growing fiscal debt concerns in Argentina, the government of Mauricio Macri introduced a tax on exports which took effect in September, levying exports at about 8%. The tax increase has been partially offset by the devaluation of the Argentine peso, which lowered fishing costs. Shrimp companies earn revenue in dollars.
The relative strength of Argentina’s shrimp industry has spurred a flurry of acquisitions. A number of companies are seeking to buy Spain’s Grupo Iberica de Congelados
, known as Iberconsa, a major player in Argentina.
Newsan recently failed in talks to buy competitor Grupo Valastro
. Conarpesa Continental de Pescadores, known as Conarpesa, also recently revealed
that it has no plans to sell vessels despite several rumors of talks. Many of the potential buyers are Chinese, which have the advantage of not having to pay Chinese import taxes. Some Chinese companies have already invested in Argentine fishing vessels.
Longer-term players such as Lanzal, a Spanish firm that has operated in Argentina for the past two decades, took a cautious view of the current Chinese shrimp craze. Lanzal, which operates four vessels, will continue its strategy of being picky about the shrimp that it buys to process and to sell in export markets. It holds a conservative view about the Chinese market.
“We’ve spent a lot of time thinking about this and we have decided that what we do is best, by doing smaller production and selling to markets like the European Union, South Africa,” said Susana Carracedo, sales manager for Lanzal. “Otherwise, you just get dragged into a price war.”