Honduras and China: challenges for the local shrimp industry

The shrimp sector in Honduras is facing a severe downturn after severing diplomatic ties with Taiwan in March 2023 and the inability to establish trade deals with China. Xiomara Castro’s administration’s choice to terminate relations with Taiwan, a longstanding ally since 1941, has deeply affected the country’s aquaculture industry. This development has resulted in substantial financial setbacks and the loss of vital markets for shrimp exports.

Financial and trade effects after cutting ties with Taiwan

The shrimp industry in Honduras has faced significant financial setbacks after diplomatic ties with Taiwan were severed, as Taiwan was the primary market for its exports. Prior to this breakup, Taiwan constituted up to 80% of exports for Honduran shrimp, and ending the Free Trade Agreement with Taiwan led to a 20% tariff, which had a detrimental impact on the foreign currency earnings of this sector. As per the Honduran National Association of Aquaculture Producers (Andah), in 2024, losses amounted to approximately $47.7 million, alongside a decrease of 6.2 million kilos in shrimp exports, due to the Taiwanese market’s closure.

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.

Social impacts and approaches to diversification

The collapse in the shrimp sector has severely affected society, resulting in the shutdown of multiple processing facilities and the elimination of numerous positions in areas like Choluteca and Valle. In response, the Honduran administration has initiated measures to broaden export destinations, investigating the potential to reinstate trade connections with Taiwan and launch new pathways to nations like South Korea. Taiwan’s Foreign Minister, Lin Chia-lung, has shown his country’s readiness to renew diplomatic ties with Honduras after the November presidential elections, recognizing the downturn of the shrimp sector after the rupture in 2023.

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.