T wenty-five years ago, the World Aquaculture Society held its annual conference in Seattle, Washing...
Supply Chain Bottlenecks and Aquaculture
A shrimp farmer in Central America told me recently that he had five containers of processed shrimp ready for export to Asia but couldn’t find a ship to carry them. Representatives of a feed company fretted about high prices and shortages of commodity grains on the global market. These anecdotes are indicative of ongoing disruptions to global supply chains, most of which have been caused by responses to the covid pandemic, starting in early 2020. Words like tangled, congested, chaos and gridlock have been used to describe the crisis. And now the emergence of the Omicron strain of the covid virus threatens to intensify supply chain disruptions and prevent full re-opening.
When the virus emerged and spread in early 2020, the world responded with lockdowns, border controls and shutdowns of many economic sectors, including aquaculture production and seafood processing. Consumer demand fell off a cliff. Now that vaccines are available and economies have reopened, pent-up demand has soared, placing enormous burdens on the supply chain infrastructure – a problem exacerbated by labor shortages and episodes of severe weather – and increasing inflationary price pressures for food of all kinds, including seafood, fuel, commodity grains and other inputs. Freight rates from China to the US and Europe are 10-15 times higher than those for freight moving in the opposite direction.
For more than 40 years, the global shipping system has operated on a lean “just in time” mode that has kept freight costs low and made efficient use of available capacity. However, the pandemic exposed the fragility of this system and its vulnerability to shocks such as the covid pandemic, as disruptions in one part of the chain extended to other parts of the network. There were no contingencies and no reserve capacity in place to buffer against the shock. Concentration and consolidation of various sectors, including seafood, into a relatively low number of large companies also contributes to this vulnerability. Although the worst of the supply chain crisis appears to be abating, most experts predict that disruptions will continue well into the coming year.
The situation has forced many in the seafood supply chain to reassess their operations. Many are now looking to procure materials and supplies from sources that are local or regional, rather than from sources on the global market. Similarly, aquaculture producers with a previously predominant export focus have sought to tap into national or regional markets. Small-scale aquaculture producers too have been working hard to develop direct-to-consumer market connections, including through e-commerce. Diversification of production and of markets into these so-called alternative seafood networks can enhance food system resilience. Overall, the pandemic has forced a reassessment of the resiliency of global seafood supply chains.
Many market system actors in agriculture and aquaculture have been adopting various digital solutions to build resilience in response to disruptions caused by the covid pandemic. There has been increased use of existing solutions such as digital communication tools like WhatsApp, social media, traditional digital media and digital financial services, including digital payments. Also, there has been increased use of new business-to-business solutions like e-commerce online marketplaces, digital advisory services using SMS text messages, linkage services and asset sharing services. These tools have been used to access inputs like feed and seed, and aggregation and sales of production in local or national markets. Most of these solutions require only a basic mobile phone and are relatively low cost and simple to use. Companies like AquaConnect in India and eFishery in Indonesia are examples of this trend.
It appears that the worst of the pandemic may be now behind us, along with the worst impacts associated with the initial responses. The initial disruptions to trade flows have been relieved, although certainly not to pre-pandemic levels. For example, shrimp imports to China from Ecuador and India have largely recovered this year. Ecuador was proactive in disinfecting containers and outer packaging, vaccinating processing plant workers and implementing other biosecurity measures.
Although the supply chain crisis was mostly caused by responses to the pandemic, future stresses to the food system caused by climate change and natural resource conflicts are likely. To redesign a food system with resilience in mind, it is important to anticipate, prevent, absorb and adapt to evolving risks. Responses to the pandemic have been primarily short-term coping measures, putting longer-term considerations of sustainability aside, at least for the moment. We should view these measures as buying time to allow reconfiguration of supply chains to reduce risks and incorporate considerations of resiliency.
Improving information flows is one key. The high-level Agricultural Market Information System (AMIS) was established by the G20 in 2011 and is used to “assesses global food supplies and provides a platform to coordinate policy action in times of market uncertainty” is one model for seaafood. The EU has established a coordinated European Food Security Crisis preparedness and response Mechanism (EFSCM) that will act to provide foresight, risk assessment and monitoring. Improved information systems in the seafood sector can increase responsiveness, reduce waste and improve traceability. Improving information availability and flows on input and product prices can help small-scale producers identify and decide where to purchase inputs or sell their production, allowing better integration into local and regional markets.
It remains to be seen whether lessons will be learned from the current supply chain crisis. Such crises are always an opportunity for adoption of disruptive technologies. A return to the status quo ante seems unlikely and the most nimble market actors will use the crisis to gain an advantage. The crisis has clearly revealed the vulnerability of the global seafood supply and distribution network. Developing local or regional sources of supply or markets has been one clear positive trend that can benefit producers and consumers. Although the supply chain shocks have exposed vulnerabilities in aquaculture seafood supply networks, some of the responses have indicated resilience, with many changes here to stay.
— John A. Hargreaves, Editor-in-Chief
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- March 15, 2022