Losses and closures in the Honduran shrimp sector after break with Taiwan

The shrimp sector in Honduras is facing a major challenge due to the disruption of diplomatic ties with Taiwan in March 2023 and an inability to establish trade agreements with China. The move by Xiomara Castro’s administration to sever relations with Taiwan, a longstanding ally since 1941, has significantly affected the nation’s aquaculture industry. This development has resulted in notable financial setbacks and the shutting down of essential markets for shrimp exportation.

Financial and trade ramifications after the separation from Taiwan

The shrimp sector in Honduras has experienced substantial financial setbacks following the cessation of diplomatic relations with Taiwan, which had been its primary export destination. Prior to this severance, up to 80% of the shrimp exported from Honduras was sent to Taiwan. The end of the Free Trade Agreement with Taiwan led to a 20% tariff, adversely impacting the foreign revenue from this industry. Based on figures provided by the National Association of Aquaculture Producers of Honduras (Andah), the year 2024 saw losses nearing $47.7 million and a decrease of 6.2 million kilos in shrimp exports due to the closure of the Taiwanese market.

The effort by Honduras to forge a trading pact with China hasn’t succeeded in compensating for these deficits. Despite the announcement of an initial arrangement to ship 250 containers of shrimp, merely two consignments have been dispatched. Furthermore, the rates proposed by Chinese traders—approximately $4 per kilogram—fall short of the production expenses, which hover between $6.30 and $6.50 per kilogram. This scenario has led to an economic disparity that undermines the sector’s profitability and hampers its recovery potential.

Impacts on society and varied approaches

The downturn in the shrimp sector has resulted in a significant social effect, leading to the shutdown of numerous processing facilities and the loss of thousands of jobs in areas like Choluteca and Valle. In response, the Honduran government has initiated attempts to broaden export markets by considering the revival of trade ties with Taiwan and creating new pathways to nations such as South Korea. Taiwanese Foreign Minister Lin Chia-lung has indicated his country’s readiness to reestablish diplomatic relations with Honduras after the presidential elections in November, acknowledging the collapse of the shrimp sector following the 2023 disruptions.

The current situation reflects the consequences of diplomatic and commercial decisions that have affected the economic stability of the aquaculture sector. Dependence on a single market and the lack of effective agreements with new partners have left the sector vulnerable, highlighting the need for more robust and diversified strategies to ensure its sustainability and contribute to the country’s economic development.