India’s shrimp sector struggling with impact of global inflation

India’s shrimp industry is hurting amid rising global inflation, its domestic production flagging and farming income on the decline.

The country earned USD 7.76 billion (EUR 7.4 billion) from its seafood exports in the last fiscal year and had targeted USD 8.8 billion (EUR 8.4 billion) in exports this fiscal year, which ends 31 March, 2023. However, lower demand from the U.S. and the E.U. and obstacles in the Chinese market have made it unlikely that India will reach its goal, according to Seafood Exporters Association of India President Jagdish Fofandi.

“This [the export value target] will not happen this year. We are overstocked like never before. Markets in the U.S., U.K., [the] rest of Europe, and China are stressed,’’ Fofanti told the Deccan Chronicle.

Also harming Indian shrimp exporters is the fierce competition it has faced from Ecuador, particularly in China. In the past, India supplied around 70 percent of China’s shrimp demand. But Ecuador recently became China’s top shrimp supplier, overcoming strict Covid-19-related import rules.

Fofandi, who is also the CEO of Veraval, Gujarat, India-based seafood trading firm DeepMala Group, said global inflation, growing stockpiles, and fallout from the the Russia-Ukraine war, including higher energy prices, were hitting India’s seafood exports hard.

“Demand is down by 30 to 35 percent and if it doesn’t pick up by January, it could be a catastrophe,” Fofandi told Money Control. “Global shrimp prices have fallen by 20 to 25 percent. This would have been OK if there was some movement of cargo. But the lack of demand makes the price drop much worse.”

Avanti Feeds Joint Managing Director C. Ramachandra Rao said in a quarterly earning call on 18 November, 2022 India’s shrimp industry is dealing with a “unprecedented crisis” due to the slowdown in the U.S., Europe, the Covid restrictions in China, and the strong competition from Ecuador.

The difficulties have translated into lower shrimp-purchase prices in India, which has discouraged farmers from seeding their ponds, with many considering leaving their ponds fallow until April 2023. In Andhra Pradesh, India’s top shrimp-producing state, local authorities and the country’s shrimp-export association have had to work to persuade local farmers not to skip the upcoming crop, instead advocating for crop rotation, reducing stocking density, and raising more large-sized shrimp. The association’s members have agreed to buy shrimp at the government’s fixed price, or INR 210 (USD 2.55, EUR 2.43) for one kilogram of 100-count shrimp and INR 380 (USD 4.61, EUR 4.40) for one kilogram of 30-count shrimp.

Due to the obstacles in the farming and exports, India’s shrimp production is expected to fall to between 650,000 and 700,000 metric tons (MT) in this fiscal year, down from 850,000 MT in the year prior.

“It is hoped that all the stakeholders like farmers, exporters, feed manufacturers, hatcheries work harmoniously to get over the present crisis and ensure sustainable growth,” Rao said.

However, shrimp farmers in the Prakasam and Nellore districts of Andhra Pradesh said they will leave their ponds fallow if in the following 15 days, exporters do not purchase their shrimp at the prices fixed by the state government, The Hindu reported 25 November.

2. Venkateswara Rao, a shrimp farmer in Andhra Pradesh, said he was currently receiving INR 200 (USD 2.42, EUR 2.31) per kilogram of 100-count shrimp, forcing him to make the decision to stop farming beginning in February 2023. He said he needs at least INR 300 (USD 3.64, EUR 3.47) per kilogram of 100-count shrimp to break even.

According to Association All-India President I.V.R. Mohan Raju, Indian exporters attributed the lower purchase prices a global oversupply of shrimp due to higher production from Ecuador. However, prices per kilogram of 100-count shrimp were at an average rate equivalent to between INR 290 and INR 300 (USD 3.52 and USD 3.35, EUR 3.35 and EUR 3.47) in Malaysia, Thailand, and Vietnam.

Naeem Banglawala, the owner of MVJ Group, which farms organic shrimp on 100 hectares in Gujarat state, confirmed to SeafoodSource lower exports to important markets like the U.S., the E.U. and China are hitting the local industry hard. Furthermore, local farmers were having to deal with disease outbreaks in vannamei farms, low survival rates of black tiger shrimp, an increase in feed prices and poor quality of seed.

“It is really difficult for farmers to survive in this situation,” he said.

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