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November 17, 2008
 
India Aqua Weekly: Seafood exporters fear 20-30 percent drop in volume (week ended November 12, 2008)
 
An eFeedLink Exclusive
 
 
Price Summary
 
The downward trend continued for this week in fish prices. The most popular fish varieties in India are Hilsa, Rahu (Andhra), Rahu (Local), Prawn Zinga - three varieties as per weight size in category A, B and C.
 
Hilsa, Rahu (Andhra) and Rahu (Local), which were on a gain in the last week, suffered a loss of more than Rs. 200 to Rs. 1, 000 per variety.
 
However, there was stability in all the prawn categories A, B and C.
 
 
Market Analysis
 
Indian seafood exports may fall 20 to 30 percent by volume this period to March 2009 as the global economic slowdown depresses demand, said a top official.
 
Demand for seafood abroad typically spikes in November and early December. This year, however, exporters are seeing orders slackening, said Anwar Hashim, National President of the Seafood Exporters Association of India.
 
The situation is so bad that some buyers are demanding lower prices even when shipments have been made and other are trying to renegotiate contracts, Hashim added.
 
After the dollar rose against the euro and other currencies, the demand for lower prices has increased from European buyers, who account for almost 35 percent of Indian seafood exports.
 
US demand for shrimp, among the most expensive exports, which accounts for at least 50 percent of Indian seafood exports, has slackened and lower-priced fish are taking its place.
 
Hashim feared this tendency could cross the Atlantic as well as to East African countries. India's marine exports totaled Rs. 75, 000 million in the fiscal year to March.
 
To add to woes, freight rates have gone up in rupee terms by almost 20 percent since these are finalized in dollar terms.
 
With a falling rupee, it has not only created hardship for many exporters but also discouraged many others from importing foods that are processed or value-added here and then re-exported, such as cuttlefish and squid.
 
Production costs are also rising, thanks to the climbing dollar and rising prices of chemicals and packing material. The cost of feed for shrimp farmers has also gone up since some feed manufacturers have stopped importing inputs due to the stronger dollar. Most of these imports are from countries such as Thailand and Japan.
 
At the same time, overseas buyers are seeking to extend credit over the usual 120 days at a time when India's banks are reluctant to increase post shipment credit.
 
Top make matter worse, some banks are taking longer to negotiate documents backed by letter of credit from the US and Europe, Hashim claimed.
 
It now can take up to a week before banks release funds, compared with same-day service earlier, he added.
 
Hashim said that while exports till a month ago have not been affected, the months ahead when most orders are booked and shipments made, will likely look bleak.
 
He called for the government to intervene and provide assistance to ensure that the earnings of not just exporters but also the large number of fishermen are cushioned.   
 
Government approves freight assistance for seafood industry
 
The central government of India has approved freight assistance for the import of specified raw marine products and exports to spur growth in the domestic seafood industry.
 
The Expenditure Finance Committee of India approved the scheme with an outlay of Rs. 950 million, the Seafood Exporters Association of India said.
 
An appraisal by the committee revealed that only 20 percent of the processing capacity of the domestic seafood industry is being utilized due to scarcity of raw materials. It was found that the catch has not been increasing in the recent past and that aquaculture was not keeping pace with the increasing requirements of the industry.
 
Hence, there was imperative need to enhance import of raw material to ensure that the processing plants are better utilized, which in turn was expected to generate more jobs and more foreign exchange.  
 
Despite the low cost of labor and high existent processing capacity, the bid to transform the country into a seafood processing hub was thwarted by the freight disadvantages faced by India vis-à-vis other competing countries. The reduction in freight component is expected to increase the quantum of raw material available and ensure better utilization of capacity, much of which continues to remain idle.
 
The committee decided to provide assistance at the rate of 50 percent of the freight differential a container for the past three years and 25 percent for the fourth year to units for importing raw material for processing and export of value-added products. The assistance would be extended only to units, which achieve a minimum value addition of 25 percent.
 
Choice Group's shrimp brand makes a mark in the US
 
It is for the first time that an Indian brand has become the leading category in US international department stores and retail outlets, Jose Thomas, chairman and managing director of Choice Group shares.
 
A survey by the international rating agency, A.C.Nielson, has rated Tastee Choice as the number one brand in the un-breaded shrimp category. The survey is for the 52-week period ending October.
 
The Choice group launched its brand of un-breaded shrimp, Tastee Choice, in the US market in 1999.
 
Earlier, the company had set up a seafood processing facility at Kochi in 1990 and the products were exported to various companies in the US for re-packing and sale under their own brand name.
 
Though the company had been processing and packing products of international standards for many years, it could not make its presence felt in the international retail chain market with an Indian brand name.
 
Strategies for brand positioning, brand visibility, packaging and creation of distribution channels were critical to survival and growth in the fiercely competitive US markets, he added.
 
 
Market Forecast
 
Prices of fish are likely to remain slightly stable or dip in prices in the coming week as compared to the current week.

Weekly transacted prices of major seafood species in India

Varieties

Prices as of Nov 6
(Rs/ 100 kg)

Prices as of Nov 16
(Rs/ 100 kg)

Price change
(Rs/ 100 kg)

Hilsa

Rs,    20, 000

Rs,    19, 000

 -   1, 000

Rahu (Andhra)

Rs.      5, 500

Rs.      5, 300

-200

Rahu (Local)

Rs.      7, 500 

Rs.      7, 000

-500

Prawn zambo a

Rs.    29, 000

Rs.    29, 000

      Stable  

Prawn zambo b

Rs.    21, 500

Rs.    21, 500

      Stable

Prawn zambo c

Rs.    12, 000 

Rs.    12, 000

      Stable 

US $ 1 = Rs. 49.010 (Nov 17, 2008)
 

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