Implications of Disease in Shrimp Aquaculture for Wild-Caught Shrimp

We investigate whether supply shocks in shrimp aquaculture caused by disease increase prices of wild-caught shrimp in the US Gulf of Mexico, using Gulf prices and US shrimp imports from Ecuador, Thailand, and Indonesia. Many studies have shown that shrimp markets are cointegrated, meaning relative prices tend not to diverge substantially or for long periods. We also find cointegration, and we evaluate a vector error correction model for structural breaks to determine whether the most significant changes in the price relationships coincide with the timing of disease crises in aquaculture. Gulf prices fell steadily throughout the early 2000s because of innovations in shrimp aquaculture, however, early mortality syndrome (EMS) caused a major disruption in aquaculture starting around 2011. Our results indicate that EMS may have precipitated a disturbance to the long-run relationship of our prices, suggesting that disease may have offered temporary benefits to the US shrimp fishery.