India seafood industry strives to survive

As Indian marine exports have increased over 30 percent during the last five years, the number of seafood processing units and exporters has shrunk 70 percent. While nearly 1,700 seafood processing and exporting units functioned five years ago, their numbers have fallen to around 500 currently. Even among the 500 registered units, only about 100 are active and account for close to 70 per cent of the processing and export turnover.

These are the sector's dim scenarios that were told by sources in the Seafood Exporters Association of India (SEAI).

This was while the volume of seafood exports rose over 45 percent from 412,017 tonnes in 2003-04 to 602,835 tonnes in 2008-09. According to the sources, "there are hardly any merchant exporters in the marine exports sector today, given the strict regulations and bonds that they have to execute". Also, several of the fly-by-night operators who had no long-term commitment have vanished from the scene, said SEAI sources.

The virtual absence of merchant-exporters has been welcomed by the seafood exporting community, which says that long-term commitment is required for sustained growth of the industry against short-term gains. Huge amounts are required for upgrading quality standards from the raw material stage to processing, packaging and exports for the industry to record consistent growth. Processors and exporters without long-term commitment harmed the industry by sending sub-standard products, which often invited rejections and bad name for the country, they said.

Increasing capital requirement and huge financial clout to stay in the business have also prompted smaller players to back out. With regulations and quality controls imposed by importing countries rising, the number of rejections has gone up in recent years. For exports to destinations such as the US, imposition of anti-dumping duties on shrimp resulted in only players with deep pockets being able to stay in business. Even their finances were stretched with a corpus of US$50 million outstanding as bonds with the US Customs and Border Police.

The need to raise fresh capital for day-to-day operations, while such huge outstanding amounts remained due, forced most of the smaller players out of the once lucrative US market. But there are several positive features to this consolidation in the seafood export industry, sources in SEAI pointed out.

Since most of the merchant exporters have moved out, there is greater accountability over the quality and content from the exporters, who are most often the producers themselves. The entrepreneurs who came seeking short-term profits have also moved out. The remaining players had to scale up their operations, ensure strict quality control guidelines all through the operational chain from processing, packaging and exports. SEAI sources point out that with the enactment of the catch certification, another rung in the operational chain, procurement, will also get into the verification and authentication regime.

These factors have enabled the seafood industry to rise up the value chain as far as global quality and standards are concerned. The active players left today have invested substantial capital and can be considered long-term players, sources said.