The economic impact of China on the Honduran 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 repercussions 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.

Honduras’ attempt to establish a trade agreement with China has not managed to offset these losses. Although a preliminary agreement was announced to export 250 containers of shrimp, only two shipments were made. In addition, the prices offered by Chinese businessmen, around $4 per kilogram, are insufficient to cover production costs, which range between $6.30 and $6.50 per kilogram. This situation has created an economic imbalance that affects the sector’s profitability and limits its ability to recover.

Social consequences and diversification strategies

The crisis in the shrimp industry has had a considerable social impact, with the closure of several processing plants and the loss of thousands of jobs in regions such as Choluteca and Valle. Against this backdrop, the Honduran government has begun efforts to diversify export markets, exploring the possibility of reestablishing trade relations with Taiwan and opening new routes to countries such as South Korea. Taiwanese Foreign Minister Lin Chia-lung has expressed his country’s willingness to resume diplomatic relations with Honduras after the November presidential elections, acknowledging the collapse of the shrimp industry following the break in 2023.

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.