February 11, 2008

 

Indian shrimp aquaculture slumps as rupee climbs

 

 

India's marine industry is going through its "worst period" as the rising rupee hits exporters and dampen farmers' interest in aquaculture, a senior official in India's aquaculture industry said at a recent event.

 

G. Mohankumar, chairman of the government trade promotion body Marine Products Export Development Authority (MPEDA), said at the India International Seafood Show 2008 that the rupee has risen by 12 percent against the dollar in the last one year and this has brought down the income of exporters in rupee terms.

 

The three-day conference was organized jointly by and the Seafood Exporters Association of India (SEAI) and MPEDA. The conference saw 550 delegates from India and 60 foreign delegates.

 

Mohankumar's concerns was a microcosm of the domestic seafood industry's concerns over disturbing trends like an increase in number of closures of processing units and thinning operating margins in an industry hit by crisis after crisis.

 

AJ Tharakan, industry representative and vice-president of Marine Products Export Development Authority (MPEDA), said companies are facing negative cash flows and several have gone under recently.

 

He urged the ministry of agriculture and the National Fisheries Development Board to co-ordinate with MPEDA to set in motion policy measures to steer the industry out of troubled waters. The DEPB (Duty Entitlement Passbook Scheme) rates, a form of export rebate, should also be raised from 8 percent  to 15 percent, he added.

 

The black tiger shrimp, which is Indian aquaculture's main shrimp species, is facing serious competition from the vannamei, a more prolific and hardy species grown in most other Asian countries.

 

Operating margins are disappearing, cash flows are becoming negative but there are no short-term solutions to these problems, Tharakan said that.

 

He pointed out that the individual companies in the industry would have to consolidate to a critical size to gain a competitive advantage. This consolidation can be facilitated by private equity players and banks, like the example seen in Iceland, he said.

 

Introduction of vannamei and development of aquaculture are the other changes needed at present, he added.

 

Tharakan says the industry has been demanding the government to allow the introduction of vannamei as European tastes have begun to shift towards the cheaper shrimp.

 

There are chances that the agriculture ministry may allow its introduction, Tharakan says. The cost of production of vannamei is around Rs80-90 per kg, half that of the tiger shrimp.

 

Even though marine exports saw an average growth of 12 percent in the last three years, it has been falling last year, with volumes for the first nine months down to 393,000 tonnes, down 19.1 percent from 486,000 tonnes in 2007-08.

 

Some of India's long time customers in Europe said a change in volumes ordered was due to the appreciation of the rupee. These include Scotch Frost of Glasgow Ltd, a supplier to hotels and consumers in Europe, who previously ordered 100 containers worth of Indian shrimp in 2006 and was said to have scaled back purchases to 70 containers in 2007.

 

Seafood industry finds rupee tide hard to beat

 

Yoshio Kojima, chief executive officer of Japanese hotel chain Maruha Restaurant Systems Co. Ltd, is in Kochi for sourcing live Indian crabs. He was joined by Tetsuji Totsune, president of Tokyo-headquartered Maple Foods Ltd, which is into supplying ready-to-eat and ready-to-cook food.

 

They were among the 60-odd foreign delegates at the just-concluded India International Seafood Show, organized jointly by the government trade promotion body Marine Products Export Development Authority (MPEDA) and the Seafood Exporters Association of India (SEAI).

 

But the foreign delegates are still scouting for marine products from here and they appear to have struck some deals though exporters aren't willing to talk about them yet.

 

Kojima, for one, has been in talks with a number of seafood exporters at the fair and appears to have found a few firms that have agreed to supply crabs for his hotel chain.

 

Tetsuji, who has been the main supplier of food products such as frozen parathas and ready-to-cook-and-serve seafood dishes to the hotel chain, says the seafood show is a platform for him to meet several producers and suppliers and that he plans to import more seafood products from India.

 

He says the company has a whole range of value-added items such as easy peel shrimp, fish fillets, breaded items, cut crabs, etc which has left it to some extent insulated from the vagaries of the market. It recently got orders from South Africa for easy peel shrimp and hopes to find new markets.