Prawns Could Hit $550/kilo if This Problem Gets Worse

Earlier this year I got married. In the planning process we were tossing up whether to have it in the UK or in Australia. Either way, half of our soon-to-be combined family would have to travel.

We settled on Australia. Australia is a wonderful country to hold a wedding. It was a good excuse for the Brits to make a big trip of it.

We made sure to give everyone plenty of notice. It can also be an expensive trip to make. Firstly, flights aren’t cheap. Once you get to Australia you have to find a place to stay. And then of course you need spending money. Food, drink, shopping, and ‘touristy things’ — it’s all adds up.

Another invasion by the British

As the wedding rolled around there was an ‘invasion’ of Brits. Some made a big trip out of it. Some just came in and out for two weeks.

Two of our friends decided to drive up the East coast in a campervan. Starting in Melbourne they’d meander up to Sydney. Eventually they’d continue on all the way to Brisbane and the Sunshine Coast.

In helping them plan their road trip I gave them a few tips. There was the standard, try Vegemite, go to a wildlife park and drink lots of beer. I also suggested few nice beach spots. This of course had the caveat of ‘swim between the flags’.

Perhaps best of all, I suggested seeing all the ‘big’ things. By ‘big’ I meant the Big Pineapple, the Big Banana and the Big Merino. They actually made it to all those three. And then one more…

Big prawn, expensive prawn…

They sent me messages along the way at every landmark. But the one I wasn’t expecting was the Big Prawn.

The last time I saw the Big Prawn was a couple of decades ago. I thought the council had taken it down. Apparently not. Bunnings bought the rights, gave it an update and plonked it next to their store in Ballina, NSW.

After their visit to the Big Prawn, the boys decided to get some prawns for dinner. They would cook them up at the BBQs at their campsite, and wash it down with some Aussie beers.

They couldn’t believe the price of prawns. They were paying around $25 a kilo. They didn’t get many. Too expensive. I told them yesterday that the price could hit $55/kilo. They were speechless. I was speechless.

2016 has been one heck of a year. But who would’ve thought it’d become known for one thing, the year of the ‘Great Prawn Shortage’?

But worse still, it could be the beginning of the ‘Great Seafood Crisis of the 21st Century’.

There are reports coming out of Australia that the price of prawns could skyrocket to $55/kilo over Christmas.

It’s a basic demand and supply issue. From a demand side, over the Xmas period there’s a natural rise in seafood sales, particularly seafood like prawns. In Australia’s hot southern hemisphere Christmas climate, seafood and prawns are a popular choice for the festive season.

That leads to a rise in demand for the 10-leg crustaceans.

However supply is usually able to meet demand. This year, maybe not. The Sydney Morning Herald reports a number of factors impacting this year’s prawn supply. These include an outbreak of ‘white spot’ disease and ‘poor catches’.

Dimitrios Goulas, owner of Footscray’s Conway Fish Trading, said smaller prawns would be roughly the same price they were last Christmas, but large prawns would come at a premium.

He said consumers should expect to pay between $30 and $40 a kilogram for small prawns, and almost $50 a kilogram for large prawns, due to poor catches.

“The prices are up for larger prawns… because the catches weren’t as firm as what they were last year,” Mr Goulas said.’

Some reports are playing it down. But if you look a little deeper, things aren’t so great. For now there’s talk about the ‘white spot’ disease impacting prawn supply. But what if it gets worse? What if other, foreign diseases start to make their way into our seafood? What if they’re already here?

…diseased prawn

Of course any kind of disease is a risk to agricultural industry. You only need to look back to the foot-and-mouth crisis in the UK in 2007. It led to a nationwide ban on the movement of cattle and pigs.

In Japan last month they had to cull the highest number of poultry since 2011. An outbreak of bird flu has impacted 326,000 poultry and potentially 500,000 in the surrounding area. In 2011 they had to cull more than 1 million poultry for the same reason.

Disease is the largest economic cost to livestock producers in Australia, too. According to Meat & Livestock Australia, ‘internal parasites’ cost the sheep industry more than $400 million annually. Internal parasites also cost the goat industry more than $2.5 million annually.

Disease in the shrimp industry in Asia is even more serious. Based on lost tonnage of shrimp in Thailand, a recent outbreak of ‘acute hepatopancreatic necrosis disease’ (AHPND) has cost around US$5.01 billion since 2012.

However, the treatment of these diseases can also cause problems.

In Asia there’s a growing trend of antibiotic treatment of aquaculture. But this method of tackling disease isn’t necessarily a good thing for humans. It’s leading to ‘superbugs’ resistant to drugs.

And this spells a major problem for Australia.

According to the Australian Government’s Department of Agriculture estimates, ‘around 70 per cent of the edible seafood Australia consumes (by weight) is imported, predominately from Asia.’

That means the chance of ‘superbug’ carrying seafood arriving on Aussie shores is high. Even with strict customs control, it’s simply impossible to stop everything from getting through.

It’s already a problem in the US. And perhaps only a matter of time before it’s a problem in Australia.

Bloomberg recently reported on the use of antibiotic-contaminated seafood. They pointed out disease ridden seafood has been turning up at ports around the world. In particular there’s been a huge spike in the US. Research samples of aquaculture from Shanghai found samples with multidrug-resistant bacteria. They explain,

The introduction of antibiotics into animal feed has transformed ecological efficiency into a threat to global public health.

Over the past year, scientists have tracked the spread of colistin-resistant bacteria throughout Asia, Europe, and the Western Hemisphere. In May the first report of an American infected with a colistin-resistant superbug was announced.’

How long before this hits Australia? If this problem expands and gets worse in Asia, then it’s surely only a matter of time.

And if it does, don’t worry about prawns costing $55/kilo — it’ll be more like $550/kilo.


Sam Volkering
For Money Morning

Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’ opportunities that are often shunned by those in the financial services industry.

If you’d like to learn about the specific investments Sam is recommending in either small-cap stocks or cryptocurrencies, take a 30-day trial of his small-cap investment advisory Australian Small-Cap Investigator here, or a 30-day trial of his industry leading cryptocurrency service, Sam Volkering’s Secret Crypto Network here.

But that’s not where Sam’s talents end. Sam specialises in finding new, cutting edge tech and translating that research into how the future will look — and where the opportunities lie. It’s his job to trawl the world to find, analyse, research and recommend investments in the world’s most revolutionary companies.

He recommends the best ones he finds in his premium investment service, Revolutionary Tech Investor. Sam goes to the lengths of the globe and works 24/7 to get these opportunities to you before the mainstream catches on. Click here to take a 30-day no-obligation trial of Revolutionary Tech Investor today.

Websites and financial e-letters Sam writes for:

Money Morning Australia