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Sea Food Exporters Hit Following Lower Realization, Higher Cost

Chander Mohan
Chander Mohan

The export prices of shrimps, the key contributor to the country's seafood basket, have plunged by more than 20 percent in past few months, due to increased supply from competing nations Vietnam, Thailand, Ecuador. The plunge in the average exports realizations for shrimps is hitting the bottom-line of the stakeholders across the supply chain associated with the USD five billion Indian seafood export market.

According to a report by CRISIL Research, seafood export will grow 17-18 percent this financial year, 500-700 basis points (bps) slower than the 23 percent and 25 percent rates in FY17 and FY18, respectively. US shrimp export realizations (in dollar terms), that account for 70 per cents of export value, are also expected to fall by 10 percent in fiscal 2019.

Sensing the alarming condition of the aquaculture sector, Chandra Babu Naidu, Chief Minister of Andhra Pradesh, the largest shrimp producing state in the country has urged the intervention of Union government to work out an action plan to deal with the frequent fall in shrimp procurement prices from the shrimp farmers.

Besides, the Andhra Government has also requested the Centre to initiate steps for expanding the market to newer markets like Russia, South Korea and Australia to arrest a further slump in prices.

While the exporters are stating that there has been a sharp drop of two dollar per kg in prices of key verities compared to last year which is over 30 percent.

While the shrimp farmers, mainly in Andhra Pradesh, are forced to go for one crop against the normal practice of doing three crops annually spelling havoc for them, the feed suppliers will also experience the wrath of reduction in the crops. Hatchery owners are also likely to feel the hit.

"The export rates for Indian shrimps have noose dived by more than 20 percent compared to last fiscal. The realization of exporters is likely to be impacted. Going forward it will be a downward base.

It won't be as good as it was in the last two years and will take time for demands to catch up. The vertically integrated player will definitely survive the present scenario", said a large exporter.

Exporters will witness a sharp reduction in the turnover this year, said another of official of another large exporting company.

It is learnt that exports to major markets have declined drastically due to issues related to antibiotic residues. Even if India has emerged as the largest exporter to USA but the prices have dropped sharply.

Naidu, in a letter to Union Minister for commerce and industry Suresh Prabhu recently has urged for dissemination of information of daily price prices through web portal of MPEDA(marine products export development authority), to develop mechanism to eliminate intermediaries between shrimp producers and processors & exporters , declaration of shrimp purchase prices by the exporters , among others.

Rising prices for feeds, lime, bleaching powder, medicine, daily wages and energy costs and the drop in shrimp prices have added to the miseries of shrimp farmers in the state of Odisha. Industry sources said that shrimp farmers have staged protests in Odisha alike to their Andhra Pradesh counterparts and have sought the intervention of Chief Minister Naveen Patnaik. They are demanding the government to establish a minimum support price for shrimp or to provide a subsidy of Rs 40 per kg for verified production of shrimps.

After a meeting with the aqua farmers of Andhra Pradesh, Naidu has reportedly have reduced the power charges to Rs two per unit.

"Exporters in Andhra Pradesh are increasing the shrimp price by 30 per kg after the intervention of the Chief Minister", said Durai Murugan Balasubramanian, Secretary at Shrimp Association Tamil Nadu.

" The shrimp production is expected to drop to 2.5 lakh tonne this year from four lakh tonne", he added.

After a meeting with the aqua farmers of Andhra Pradesh, Naidu has reportedly have reduced the power charges to Rs two per unit.

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