© Delta Marine Group
Delta Marine, which is run by Darmawan’s family, previously operated two farms in Indonesia, with a combined capacity of around 2,500 tonnes. However, once the new farms are at capacity Darmawan expects this to increase up to 5,000 tonnes… and beyond.
“We're building two new farms this year, but it’s not going to stop there: we're going to be busy for at least five more years,” he explains.
The growth means that Delta will employ between 500 and 1,000 people on their farms alone.
“It's not going to be easy because we're expanding quite fast. We’re expecting problems, especially with human resources, and we’ll have to do our own training in-house,” he notes.
Darmawan’s decision to expand has largely been inspired by the performance of his original farms, on Sumbawa, which have bucked the industry’s recent downward trends.
“Thankfully, the farms in our group are doing really, really well. So we're able to produce 20 to 30 counts per kilo [ie 33 to 50 g shrimp] pretty consistently, with a good production per hectare and with efficient FCR, so we are still making some profits,” he reflects.
However, he’s aware that many of his friends and neighbours are struggling.
“We are pretty blessed with our location, our team and our SOPs. But a lot of other farms are getting sold. We have friends who could be bankrupt if they were only involved in shrimp. And, for smallholder farmers, who have one or two ponds, there's often a lack of technology or lack of understanding how to do farming correctly. If they lose one or two crops consecutively, that can wipe out all of their savings. So that's why you can see a lot of farms being neglected or farmers moving to easy-to-grow fish like tilapia or milkfish,” Darmawan explains.
“Even the feed millers are struggling right now because they already have the production capacity, but there are no market to send it to,” he adds.
Despite the growing number of empty farms Darmawan is cautious about buying these, as – often – they have failed for reasons that are hard to control. As a result he has opted to build on new sites.
“We have extensive land banks that we haven't developed yet in prime locations. So we will focus on those first before we decide start buying other farms. In Indonesia we still have a lot of coastline, a lot of undeveloped locations that we can look into,” he explains.
However, such remote sites come with drawbacks too.
“There are a lot of pristine locations, with limited industrial activity, and low populations. But of course there are going to be challenges because these locations are very underdeveloped, so we have to build to a scale that makes sense,” he points out.
© Delta Marine Group
Processing plans
What’s more, such sites can benefit from a degree of vertical integration, which is inspiring Delta Marine to branch out.
“We cannot just build one side of the supply chain – if we have a farm, we also need to have a processing plant ready to take those supplies, so we're planning to be more vertically integrated soon. I think it’s a good thing, but it's also scary because the market right now is not so hot,” he outlines.
Given he’s new to processing, Darmawan plans to take a fairly gradual approach, but one that should give him some flexibility if Indonesia’s traditional market – the US – become even more challenging.
“Next year it's going to be our learning phase. We're going to start doing the quality first and then maybe start working towards the value-added stuff. Maybe it's better to do value-added than commodities since now we're getting hit by the US anti-dumping tariffs [currently at 3.9 percent, having fallen from 6.3 percent] and we don't know what's going to happen in the next year when the new US president is running the country again. So we just want to be ready. We don't want to get caught off guard when the world changes,” Darmawan explains.
“Ideally [next year] we want to export 30 to 40 percent of what we produce and when the market develops that percentage will go up. That way we'll be in a safer place and not too reliant on other processors,” he adds.
However, Darmawan is also aware that moving away from the US market would be a complex business.
“There have been a lot of talks about sending our products to China and of course to Europe, but our production and processing capacity are fine-tuned for the US market, like easy peel, while Europe and China prefer wholeshell which you have to use a different kind of harvesting method and different kinds of diets. But hopefully in China there's going to be a shift to where consumers want convenient products that are quick to cook,” he ventures.
In the mean time he sees many shrimp processors as likely to go out of business if things don’t change.
“I’ve talked to some of the processors: some of them say they will survive, but will be smaller; others are already too big and it's going to be hard for them to reduce their size,” he notes.
The company employs over 500 people on its farms - a figure that's set to expand © Delta Marine Group
Responding to disease challenges
Back on the farming side, it’s not just shrimp prices that have been making life tough in Indonesia, with bacterial diseases to the fore.
“AHPND has been really bad, especially in the old world farming sites like in Java and Lampung, and now they are having problems with EHP too. Nowadays a lot of people are saying it's better to get AHPND than EHP because with AHPND at least you know that you have to stop your operation, but with EHP you have the hope that if you keep feeding them they might grow, which can actually increase the losses,” he reflects.
Given the tight margins, many farmers have been reluctant to invest too heavily in new technology. However, there’s one relatively simple innovation – brought by a Chinese feed company called Haida – that Darmawan sees as very promising.
“It's not a complicated technology: you simply increase the slope of the pond bottom so that it's easier to clean. Previously I think the recommended slope was around 1 percent or 0.75 percent. But now they promote doing 3 to 4 percent – that way sludge and faeces can accumulate more easily in the central drain. We have actually implemented that design in some of our trial ponds and it works quite well, so we will adopt it in our new farms too,” he explains.
“Before you needed to have a slope of 1 percent or less because you didn't want the feed to go into the central drain too fast. But now with auto feeders, it's actually not a problem anymore, because you're feeding just a small amount every time. You can be sure that once the feed drops, it will get caught by some shrimp. We'll see if that can help with the disease problem,” he adds.
