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Honduras

Honduran shrimp in decline due to diplomatic tensions with Taiwan

Angelica Iriarte
Honduran shrimp industry

The Honduran shrimp industry is undergoing a significant crisis following the breakdown of diplomatic relations with Taiwan in March 2023 and the failure to reach trade agreements with China. The decision by the government of Xiomara Castro to end ties with Taiwan, a historic partner since 1941, has had a profound impact on the national aquaculture sector. This situation has led to considerable economic losses and the closure of key markets for shrimp exports.

Economic and commercial impact following the break 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 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 varied approaches

The downturn in the shrimp sector has led to significant social consequences, resulting in the shutdown of numerous processing facilities and the elimination of several thousand positions in areas like Choluteca and Valle. In response to this situation, the Honduran administration has initiated actions to diversify its export destinations, considering the renewal of trade connections with Taiwan and the exploration of new pathways to nations such as South Korea. Taiwan’s Foreign Minister, Lin Chia-lung, has indicated his country’s readiness to rekindle diplomatic ties with Honduras after the presidential elections in November, recognizing the shrimp sector’s downfall following the 2023 rupture.

The present scenario highlights the outcomes of diplomatic and trade choices that have influenced the economic steadiness of the aquaculture industry. Relying on one market and the absence of effective agreements with new collaborators have made the industry susceptible, underscoring the necessity for stronger and varied strategies to secure its sustainability and advance the nation’s economic progress.

By Angelica Iriarte