_-_copia.jpg "Honduran shrimp industry")
The shrimp sector in Honduras is facing a major challenge after diplomatic ties with Taiwan were severed in March 2023, coupled with unsuccessful trade negotiations with China. The choice made by President Xiomara Castro’s administration to cut relations with Taiwan, a long-standing ally since 1941, has significantly affected the country’s aquaculture industry. This development has resulted in substantial financial losses and the loss of vital shrimp export markets.
Financial and trade effects after cutting ties with Taiwan
The shrimp sector in Honduras has experienced financial setbacks amounting to millions following the dissolution of diplomatic ties with Taiwan, which was previously the leading market for its exports. Before this break, up to 80% of Honduran shrimp exports were destined for Taiwan. The cessation of the Free Trade Agreement with the island introduced a 20% tariff, adversely impacting the revenue from this industry. Data from the National Association of Aquaculture Producers of Honduras (Andah) indicates that in 2024, there were losses totaling around $47.7 million, alongside a decrease of 6.2 million kilos in shrimp exports due to the closure of the Taiwanese market.
The effort by Honduras to form a trade pact with China has not succeeded in compensating for these losses. Even though an initial agreement to ship 250 containers of shrimp was publicized, just two were actually sent. Moreover, the prices proposed by Chinese buyers, approximately $4 per kilogram, fall short of covering the production expenses, which are between $6.30 and $6.50 per kilogram. This circumstance has led to a financial imbalance that impacts the sector’s profitability and hinders its capacity to rebound.
Impacts on society and plans for diversification
The downturn in the shrimp sector has significantly affected society, leading to the shutdown of numerous processing facilities and resulting in job losses for thousands in areas like Choluteca and Valle. In response to this situation, the government of Honduras has initiated measures to expand export destinations, considering renewing trade ties with Taiwan and exploring new opportunities in countries such as South Korea. Taiwan’s Foreign Minister Lin Chia-lung has indicated his nation’s readiness to restore diplomatic relations with Honduras following the presidential elections in November, recognizing the industry’s decline after the 2023 suspension.
The present scenario illustrates the outcomes of diplomatic and trade choices that have impacted the economic steadiness of the aquaculture industry. Reliance on one market and the absence of strong agreements with novel partners have made the industry susceptible, underscoring the necessity for more resilient and varied strategies to secure its sustainability and aid the nation’s economic growth.