EMS - more technically known as acute hepatopancreatic necrosis syndrome - was first reported in China in 2009 and subsequently spread to Southeast Asia.
With outbreaks typically occurring within the first 30 days after stocking a newly prepared shrimp pond, and mortality typically exceeding 70%, annual losses have been around US1bn.
"After a decade of explosive growth, the global farmed shrimp industry has reached a turning point,” explained Gorjan Nokolik, an aquaculture analyst for Rabobank. “The EMS outbreak in China, Vietnam and Thailand has created double-digit yearly contraction in shrimp supply, leading to prices hitting record levels.”
Having severely hit the three largest producers, as well as Malaysia, EMS has led to the industry's largest ever contraction in supply and, as a result, record market prices.
At the same time, what has been a disaster for the biggest producers has resulted in an opportunity for second-tier shrimp producers, including Indonesia, India, Bangladesh and Myanmar, to step up their own production and capture market share while benefiting from high prices.
However, the discovery of the cause of EMS in May by a research team at Arizona University has led to hopes that the disease will be brought under control in the short- to medium-term.
And the longer view suggests that the newfound strength of the secondary producers will bring greater consolidation to the industry, with more vertically integrated multinational producers leading the next wave of growth.
Among them, India has the potential to significantly increase its production due to its large river systems providing ideal farming conditions. This growth in production is expected to go alongside an increase in exports to the United States estimated at 69%, and reach 11,000 tonnes by the end of this year, while share of the global trade may well continue to rise even further.
Reversal of fortunes
At the same time, the world’s shrimp supply deficit could reverse as scientists continue to better understand the EMS pathogen. Indeed, it is likely that a solution for the disease will be found in short to medium term.
The Arizona team identified it as a unique strain of a relatively common bacterium, Vibrio parahaemolyticus, that is infected by a virus known as a phage, which causes it to release a potent toxin. A similar phenomenon occurs in the human disease cholera, where a phage makes the Vibrio cholerae bacterium capable of producing a toxin that causes cholera’s life-threatening diarrhea.
Research continues on the development of diagnostic tests for rapid detection of the EMS pathogen that will result in improved management of hatcheries and ponds, and help lead to a long-term solution for the disease.
It will also enable a better evaluation of risks associated with importation of frozen shrimp or other products from countries affected by EMS.
Thailand, the world's leading shrimp exporter and most technologically advanced producer, is likely to be the first of the impacted countries to start recovering from the disease.
Shift in prices
At the moment only 20% to 30% of shrimp points in Thailand are still operational, and the chairman of the Thai Shrimp Association, Somsak Paneetatayasai, recently warned that Thai shrimp exports this year may decrease sharply by 50 percent due to the EMS
But the return of Thailand to the top of the shrimp exporters table, combined with a strong expansion in production by the second-tier nations enjoying the current high prices, will create a sudden supply curve shift and a period of low prices.
For Asian exporters, a long-term strategy to mitigate against volatile price swings is to export processed shrimp products that are less commoditised.
However, a lack of knowledge of local markets and links with local retailers and buyers has proven to be key entry barriers for Asian suppliers to EU and US markets, so watch out for an increase of mergers and acquisitions across continents.
"The current environment will accelerate consolidation in the market, both among peers as well as vertically between processors and primary products. Integrated producers that have access to raw material, low labour cost for processing and access to markets are in our view the future model of the shrimp industry," added Nikolik.