vietnam shrimp feed forecast – healthy but more modest ......• the commercial feed market has...
TRANSCRIPT
May 2019
Vietnam shrimp feed forecast – healthy but more modest growth to 2023
www.pluralstrategy.com/sectors/agribusiness
2© Plural Strategy Group 2019 | Agribusiness
Agenda
OverviewShrimp
- Production- Aquafeed demand
3
Vietnam’s aquaculture production has significantly increased since 2015
Vietnam aquaculture production, MT (‘000s) (LWE)
Source: MARD, Plural Strategy
1,117 1,128 1,161 1,125 1,119 1,141 1,188 1,2521,420
329 352 328 433 481 440507
552
594125 140154
169
186
156 160 176170 177 182
192199
207
10086
2,407
2010 2013
90
20152011
94
2012 2014 2016 2017 2018
Other
1,729
Tilapia
Shrimp
Pangasius
2,172
1,688 1,759 1,8281,902 1,903
2,041CAGR
+2%
CAGR+8%
CAGR 2015-2018
8%
10%
10%
4%
© Plural Strategy Group 2019 | Agribusiness
4
Commercial shrimp feed is expected to grow at 6% to 2023 – slowing production but increased professionalization and demand for better quality feedShrimp commercial feed outlook, MT (‘000s)
Source: Plural Strategy
2017
399
2015 20182016 20222019
621
2020
546
2021 2023
460507
553589
674
728
CAGR+11%
CAGR+6%
• Vietnam’s shrimp production is expected to grow at c. 6% CAGR to 2022, driven by increased productivity in the form of rising yields, global demand and renewed trade agreements
• Due to ongoing professionalisation, the percentage of shrimp farmers using commercial feed should gradually increase, although there is also a trend towards large shrimp producers to integrate and produce feed in-house
Forecast
© Plural Strategy Group 2019 | Agribusiness
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Agenda
OverviewShrimp
- Production- Aquafeed demand
© Plural Strategy Group 2019 | Agribusiness
6
Vietnam’s production reached historic highs in 2018 but more modest protein demand is expected to 2023• 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 some 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 increasing use of third-
party feed as the market professionalizes• 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 into farming and feed, 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 professionalization including increasing demand for higher quality nutrition• Vietnam has achieved rapid growth in recent years by expanding shrimp farm land rather than improving productivity. The large majority of
production comes from small, family run shrimp farmers• 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 product, and the need for more productive, professional farming
methods. This trend will provide value add investment opportunities across the value chain, particularly technology and nutrition
Summary – focus on shrimp
Vietnam’s shrimp feed sector 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 professionalization and demand for higher quality nutrition.
© Plural Strategy Group 2019 | Agribusiness
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Agenda
OverviewShrimp
- Production- Aquafeed demand
© Plural Strategy Group 2019 | Agribusiness
8
Source: Multiple country sources, Plural Strategy
Global shrimp production by producing country, MT (‘000s)
The global shrimp market has grown 10% since 2015 with new leaders emerging; Vietnam has maintained its share
750 600 500 600 700 650 600 500 650
650550 525 250 250 325 380
400
329352
328433 481 440 507 552
594180
225 300 400 390 400675
700
250 280300 310
400
420500
200 200250
200
250
550510 600 570
600 610580
600
6003,327
2011
100
2012
100
2,962
200
2010
150
China
220
2013
2,628
2016
150
2014
150
2015
150
2017 2018
Other
Indonesia
Ecuador
India
Vietnam
Thailand
2,7292,512
2,6332,881 2,800
3,694
CAGR 2010-2018
1
12
12
21
8
-6
-2
4
CAGR 2015-2018
-1
19
17
22
10
17
0
10
© Plural Strategy Group 2019 | Agribusiness
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Vietnam’s shrimp production grew 10% between 2015-2018, the bulk of demand is driven by exports, although exports declined in 2018Vietnam total shrimp production and proportion officially exported, MT (‘000s) (LWE)
Source: MARD, VASEP, FAO, Plural Strategy
440
2011
350
2010
Domestic
47
82
282
352
46
2016
248305
2012 2013
50
431
2014
80
Exported367
2015
111
328
396
116
433
435
552
2017
193
401
2018
329
507481
594
73
Change % 2017-18
8
-8
66
CAGR % 2015-18
10
3
38
Disease significantly reduces export demand / supply
Disease + drop in prices + increasing competition from India and Indonesia
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Vietnam’s relies on four key export markets. Export value rebounded strongly since 2015 driven by demand from EU, China and Korea, although slowed in 2018Vietnam shrimp exports by destination, $m
CAGR 2015-2018
343 413 312 409683 549 600
863 838581 607 618
709
743584 600
704 639224 256381
414
350 436
683 638
551559 455
831
1,064
657709
659638225
318
251285
382386
360435
427
559
731
561521
564415
2010
2,396 US
2011 2012
2,107
China
Other
Korea
2,239
2013 2014 2015 2016
3,114
2017
3,953
Japan
158
EU
3,151
144
128 171
2,952
3,855
2018
3,554
15
3
22
-1
15
-10
Source: VASEP, Plural Strategy
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EU and US shrimp import volume, MT (‘000s)
Shrimp demand in developed markets is at historic highs; significant dips have been a result of supply shortages, caused by periods of disease
Disease significantly reduces demand / supply
Further disease issues and short-term oversupply from 2014 jump
1,2031,294
1,468 1,5021,582
1,720 1,745 1,697 1,7001,764 1,785
1,638 1,5951,686 1,686 1,734
1,8291,897
20082003 20182001 20042002 2005 2006 2007 2009 2010 2011 2012 20162013 2014 20172015
CAGR+6%
CAGR+1% CAGR
-5%
CAGR+4%
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2019 production is up 6% in first three months of 2019 vs the previous year. Export value is down 7%Month-by-month shrimp production and exports, 2017-2019
Source: MARD, VESEP, Plural model
JunFebJan Mar Apr JulMay Aug Sept DecOct Nov
2017 2018 2019
Production (MT ‘000s) Exports ($m)
Jan Apr JulMarFeb May Jun Aug Sept Oct Nov Dec*2017 Jan-June data unavailable
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Source: NOAA, EUMOFA, Plural Strategy
EU shrimp imports
European shrimp imports, a key market for Vietnam, are significantly down in the first two months of 2019. Prices have been dropping since 2017
Europe imports - volume % change over previous year
34
17
47 46
29
-5-10
-5
-15 -17-8
1014 13
6 6 8
-1
-5
-2
4
-6 -4
-22AugJan Sep OctMarFeb JulApr
0
MayJun NovDec Jan
-13
Feb
74
99
Europe import prices - Euros
2018 2019 2018 2019
2
3
4
5
6
7
8
9
20072001 2013200920052003 2011 2015 2017 2019
Ø 6
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Agenda
OverviewShrimp
- Production- Aquafeed demand
© Plural Strategy Group 2019 | Agribusiness
Commercial feed demand has grown at 11% CAGR 2015-2018
15
Vietnam feed demand by type, MT (‘000s)
Source: Plural Strategy
294 314 293387 430 399
460507 546
105113
105
139154
135
156163
17534
3740
2011
707
2010
22
760
2012 2013 2014
554
2015 2016 20182017
29564
422
Commercial
450420
616
29
649Trash
Integrated
2223
32
CAGR % 2015-18
10
9
11
© Plural Strategy Group 2019 | Agribusiness
16
Commercial shrimp feed is expected to grow at 6% to 2023 – slowing production but increased professionalisation and demand for better quality feedShrimp commercial feed outlook, MT(‘000s)
Source: Plural Strategy
20222015 2016 2017 202120192018 2020
553
2023
399
460507
728
546589
621674
CAGR+11%
CAGR+6%
• Vietnam’s shrimp production is expected to grow at c. 6% CAGR to 2023, driven by global protein demand, renewed trade agreements and some productivity improvements
• Weaker protein prices will force farms to consolidate and professionalise farming methods – this should drive higher demand for commercial feed
Forecast
© Plural Strategy Group 2019 | Agribusiness
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