Asian Disease Forces Jumbo Price Hike for Shrimp in USA

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Shrimp cocktail with sauce
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In August, as the price of shrimp soared to $5.80 a pound, CNN called the new price on headless crustaceans an "all-time high." But do you know what consumers today would call that price? A bargain.

A Big Problem With Shrimp

The sales success of Bubba Gump Shrimp Co. notwithstanding, the United States produces only about 10 percent of the shrimp we consume. The rest comes from Asia, and all across the continent, a disease known as early mortality syndrome is killing farm-raised shrimp. That's hurting shrimp supplies and raising the cost of the shrimp that the U.S. imports.

Complicating matters, last summer the U.S. Department of Commerce issued a ruling penalizing China, Ecuador, India, Malaysia and Vietnam for unfairly subsidizing their shrimp exports -- i.e., selling shrimp too cheaply to the U.S. (The U.S. International Trade Commission ultimately decided not to impose countervailing duties on these countries' exports. But just the threat of doing so in future may act to support prices.)

According to the Beaumont Enterprise newspaper, Gulf of Mexico headless shrimp are fetching $7.50 right off the boat. Restaurants pay about $2 more a pound for these same shrimp -- and by the time it reaches your plate, the price has risen even more to pad the restaurateurs' profit margins.

Shrimp's Shrinking Popularity

Yet even so, last month, the Associated Press reported that the spiking price of shrimp did a real number on shrimp specialists like Darden Restaurants' (DRI) Red Lobster, inflating costs by 30 percent and scaring away sticker-price-shocked customers. Even offers of all-you-can-eat shrimp, at higher prices, weren't enough to prevent an 8.8 percent decline in sales last quarter.

Sales are likely to fall outside the restaurant industry as well. According to analysts at Rabobank, Americans consume an average of four pounds of shrimp per person annually. But with prices rising relentlessly, Rabobank thinks that number fell in 2013. With prices still higher in 2014, consumption is likely to fall even further.

To Every Shrimp, There Is a Season

Given all this bad news for shrimp-lovers, is there any good news to report? There is -- courtesy of Economics 101.

Low supplies beget high prices, which in turn encourage shrimp producers to find ways to boost supply and capture those high prices as profit. Reporting on the shrimp story earlier this week, the Beaumont Enterprise expressed the hope that "farmers will eventually find" a cure for early mortality syndrome, curing the crisis of high shrimp costs soon after.​

Meanwhile, these high shrimp prices will give greater incentive to growers in other countries, where early mortality syndrome hasn't reared its ugly head, to increase their own production and claim those high profits for themselves. When these two trends merge, we could quickly see an influx of new shrimp onto the market, driving prices back down.

How soon could that happen? Sooner than you think. According to research out of Louisiana State University, "the life cycle of a shrimp" is exceedingly short, and your average shrimp only needs about one year to go from egg to trawler to dining table.

Could be, a year from now, CNN will be reporting not on an "acute shrimp shortage," but on the amazing American shrimp glut. Bon appetit!

Correction: This article has been updated to clarify the source of price information for headless shrimp, as well as the expressed expectation for finding a cure for the mortality syndrome.

Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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fox12ga

We don't buy any sea food from Asia and we don't buy Smithfield pork if we can determine it's Smithfield I try not to buy anything from amy Asian country or the middle east for that matter
But a lot of time you can't tell where stuff comes from Because it will only say distributed by So + So USA.

April 26 2014 at 9:42 PM Report abuse +1 rate up rate down Reply
Lynne

If you read more about farm raised fish in Asia you'll never buy it again. Really disgusting. Wild Caught USA for me.

April 26 2014 at 8:15 PM Report abuse +2 rate up rate down Reply
Candace Williams

Don't buy fish from asia. Shop american waters and farm raised fish. So much better and tastier. I am tired of buying my underwear socks and every appliance and other from foreign companies. SHOP AMERICAN as much as possible. (BTW I am NOT a union person)

April 26 2014 at 7:54 PM Report abuse rate up rate down Reply
1 reply to Candace Williams's comment
georgettec28

Because you and so many people have turned your backs on unions and American workers, it has directly resulted in very little in the way of American products to purchase. You have only yourself to blame. You want cheap American labor and products and it's not going to happen. Enjoy your Asian crap.

April 27 2014 at 4:58 AM Report abuse rate up rate down Reply
aromaremedies

Farm raised shrimp is nasty..it is unhealthy and pollutes waters downstream from the "farm" they have no taste and the texture is weird. Human overpopulation has destroyed our food health and supply -you all did it people mindless procreation and and not condemning those people who carelessly have more and more children no thought of a sustainable planet. I used to love real shrimp..hardly ever have it anymore tasteless and just knowing it's farmed in those filthy chemicalized waters is disgusting..boycott it These nasty fast food restaurants destroyed the ocean and seafood which is so naturally healthy greed greed greed and all those sushi restaurants too many destroyed ocean health it's all depressing

April 26 2014 at 6:42 PM Report abuse rate up rate down Reply
mountanben

well the Environmentalists,and the price of Fuel oil is why we dont get good shrimp here .The Environmentalists done ever thing they could by Lieing about facts in the fishing busness to get us out of the sea,now fuel oil is so high and the price of shrimp is down you can't make a liveing any more shrimping. There are pleany of shrimp but almost no boats left to get them. Enjoy your sick shrimp from overseas .

April 26 2014 at 3:09 PM Report abuse +1 rate up rate down Reply
Mark--- Aileen

Not surprised that the fish or shrimp are diseased from Asia. It's scary what they feed fish/shrimp in the Asian countries. Scary enough not to even eat them.

April 26 2014 at 1:29 PM Report abuse +2 rate up rate down Reply
abourge458

It's no longer Politically correct to call them shrimps.
Henceforth, you should refer to them as "Little Crustaceans"

April 26 2014 at 9:30 AM Report abuse +2 rate up rate down Reply
STAN

"Could be, a year from now, CNN will be reporting not on an "acute shrimp shortage," but on the amazing American shrimp glut. Bon appetit!"
Will not happen,shrimp has always been high and always will be just like lobster,the regulations and govt. intervention will make sure of that.There will always be some kind of "shortage" to keep the artificial prices up.

April 26 2014 at 8:35 AM Report abuse rate up rate down Reply
ibeyour1

I just saw a documentary on PBS that showed a poor Vietnamese shrimper saying he could only get 50¢ a pound. That was in the Gulf of Mexico

April 25 2014 at 10:06 PM Report abuse rate up rate down Reply
ibeyour1

I just saw a documentary on PBS that showed a poor Vietnamese shrimper saying he could only get 50¢ a pound.

April 25 2014 at 10:06 PM Report abuse rate up rate down Reply