Honduras faces millions in losses in the shrimp sector due to diplomatic break

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.

Financial and trade ramifications after the separation from Taiwan

The Honduran shrimp sector experienced significant financial setbacks after severing diplomatic ties with Taiwan, which previously served as the primary market for its exports. Prior to this disruption, Taiwan received as much as 80% of shrimp exports from Honduras. The halt in the Free Trade Agreement with Taiwan led to a 20% tariff imposition, adversely impacting the foreign currency earnings of this industry. As reported by the National Association of Aquaculture Producers of Honduras (Andah), in 2024, the industry faced losses nearing $47.7 million, along with a reduction of 6.2 million kilograms in shrimp exports, attributable to the closure of access to the Taiwanese market.

Honduras’ efforts to secure a trade deal with China have failed to compensate for these setbacks. Despite a tentative deal to send 250 containers of shrimp, only two consignments were dispatched. Moreover, the price proposed by Chinese traders, about $4 per kilogram, falls short of the production costs, which are between $6.30 and $6.50 per kilogram. This scenario has led to a financial imbalance, impacting the sector’s profits and hindering 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 present scenario demonstrates the outcomes of diplomatic and trade choices that have impacted the economic steadiness of the aquaculture industry. Relying on one market and the absence of successful agreements with new allies have made the industry susceptible, underlining the necessity for stronger and more varied tactics to guarantee its sustainability and support the nation’s economic growth.