China's Crayfish Boom

China's crayfish production has skyrocketed as local officials around the country rolled out production plans and subsidies to grow the crustaceans in rice paddies. While consumption is booming too, farmers drive the price to seasonal lows when most harvest their crawdads at the same time in June. The "Voice of Rural China" radio broadcast said 80 percent of new crayfish farmers are losing money and need to think more carefully about the business.

China's crayfish output nearly doubled in two years, according to a Ministry of Agriculture report on crayfish industry development released a few months ago. Production reached nearly 1.64 million metric tons in 2018, up 45 percent from the previous year. This came on top of a 32.5-percent increase in 2017. After some farmers "expanded blindly," the industry is now due for a shakeout, Voice of Rural China said.

Source: China Ministry of Agriculture and Rural Affairs, Crayfish Industry Development Report.

Crayfish are produced in 21 Chinese provinces, according to the Agriculture Ministry report, but five provinces (Hubei, Hunan, Anhui, Jiangsu, and Jiangxi) account for 94 percent of output. Most are rice-growing south-central provinces. Hubei Province alone raised 812,400 metric tons in 2018, about half of China's output. (By comparison, Louisiana--the largest U.S. crayfish-producing state--produced close to 58,000 metric tons in 2017.) Hubei also has 7 of the top 10 crawdad-growing counties in China.

Most of the crayfish are purchased from restaurants, specialty shops, night market vendor stalls, medium- and high-end restaurants, and online vendors. E-commerce giants T-mall and JD.com are engaged in both sales and logistics. Cold chain makes it possible to ship crayfish around the country within 24 hours.

China is a net-exporter of crayfish, but exports are falling. China's exports of crayfish peaked at 23,309 metric tons in 2016 and fell to 10,801 mt in 2018. Last year's exports went mainly to the United States and western Europe. The average export price was $17.48/kg, up 55.5 percent from the previous year. Imports rose 60 percent in 2018 to 2,394 mt--still much less than the export volume--valued at $8 million, according to the Agriculture Ministry's report.

The crayfish are raised mainly in 840,000 hectares of flooded rice paddies and in 200,000 hectares of ponds. In some provinces they are raised in ponds with lotus or water chestnut. They can be raised in ponds with aquatic plants covering 40 percent of the surface, combined with freshwater crabs, and fed pelleted feed. In Shanghai and Hubei, some farmers raise crayfish in enclosed sheds during the off-season.

Hubei expanded its crayfish production area by 32.5 percent in 2018, but others expanded even more aggressively: Anhui was up 67.5 percent and Hunan and Jiangxi increased their area by 75 percent.

The Ministry of Agriculture report reveals extensive efforts by local officials to promote the crayfish industry. In 2018, local governments issued 30 documents that included development plans and support policies.

Hubei Province--already the top producer--issued a 3-year action plan to promote combined rice-crayfish production. More than 30 Hubei cities and counties issued grants for crayfish production projects. Anhui Province and many cities and counties issued similar plans. In Shandong Province, Yutai county made crayfish a focus of economic development and created a county "ecological brand" for crayfish. In Henan Province, Huangchuan county is subsidizing crayfish as an antipoverty program.

Support includes government grants for "demonstration districts," earmarked bank loans, subsidized insurance, and technical training. Grants often finance upgrading of rice paddies and engineering projects. In Hubei, banks are granting loans of 30,000 to 300,000 yuan. A county in Jiangsu Province is experimenting with online loans of up to 300,000 yuan. Three provinces are subsidizing between 30 and 80 percent of insurance premiums for crayfish producers. Other support includes R&D, training classes, and model farms. Officials have set up crayfish markets, festivals, created local brands, and built crayfish "towns" and industrial parks to promote the industry.

Voice of Rural China blamed farmers' problems on the seasonality of marketing and lack of negotiation power. The rice-crayfish model dictates that the critters be harvested in May and June, and prices plummet as large volumes come on the market each June. Voice of Rural China said the big wedge between farm prices and retail prices shows that farmers lack negotiation power. The broadcast advised farmers to look for ways to stagger production over the year and increase processing and storage of crayfish.

An article in a U.S. aquaculture publication last year hyped potential for American exports of crayfish to China, but a wary U.S. farmer recalled how visiting Chinese groups took Louisiana's rice-crayfish production model home and became a competitor. The farmer waved off the export opportunity, commenting that China's crayfish industry "is not welcome here."