Indian shrimp production is set to decline by 15-20% in the current fiscal year as a sharp fall in global prices and sluggish exports have discouraged aquaculture farmers from raising the output.
The anticipated plunge in output and slowdown in exports have happened at a time when the Indian seafood sector is gearing up for accelerated growth with both houses of Parliament passing the Coastal Aquaculture Authority (Amendment) Bill 2023, last month.
India, the second largest aquaculture shrimp producer after Ecuador, had an output of 9 lakh tonnes of shrimp in 2022. Frozen shrimp comprised nearly 70% of a record USD 8.09 billion worth of seafood exports from the country in FY23.
Aquaculture farmers are stocking less in their farms as the drop in prices in the backdrop of increasing production costs has affected their profitability. “The global prices of shrimp of big sizes are down by 25-30% while the rates of smaller sizes have fallen by 15-20%,” said V Balasubramaniam, General Secretary of the Prawn Farmers Federation of India.
Only in Andhra Pradesh the farmers are active. “The situation is bad in other shrimp producing states such as Gujarat, Odisha, Tamil Nadu and West Bengal,” he said.
The stocking of shrimp in the farms was moderate in the first half of the year. But with persisting low prices, the farmers have gone slow on production for the second half of the year. “The wages, cost of power and feed have all gone up and unless the farmers get a remunerative price for their produce, they will incur loss,” pointed out S Muthukaruppan, former President of the Society of Aquaculture Professionals (SAP).
He feels that the shrimp production could range between seven to eight lakh tonnes in 2023. “ In August there has been some improvement in the shrimp prices. They have got INR 20-40 per kg more for shrimps. If the trend continues then the farmers may be encouraged to raise the production,” he said.
As per data from the Ministry of Commerce, seafood exports for the April to June 2023 period was USD 2.37 billion. This is lower by 13% year-on-year.
A glut in the world market along with economic problems have diminished the purchasing power of major buyers such as the US, Europe and China. Ecuador’s shrimp production was around 1.1 million tonnes last year and in 2023, the country is on course to top that output.
Unlike in India, the farms in Ecuador do not face disease problems much as the country uses varieties that are tolerant of local conditions, said Muthukaruppan. Besides, the farms are run by big companies with an average area per farm of 200-250 hectares. Indian aquaculture is dominated by small farmers with farms of 2 hectares or more.
The export trend has not improved in August and September, with importers going for only the required quantity. “The shipments to the US have been flat and there is increasing competition from Ecuador, Vietnam and Indonesia. Usually, shipments for the Christmas and New Year season happen around this time of the year. The farmers are also facing uncertainty because of this,” said M Nagesh, Director of Nekkanti Sea Foods Ltd. The US is the biggest market for Indian seafood with a share of 32% in value terms.
Given the current circumstances, the seafood export target of USD 9.1 billion appears far-fetched. The industry reckons that they will be lucky if they achieve last year’s level.
According to global shrimp expert, Willem van der Pijl, the recovery in shrimp prices will depend not only on demand but also on how supply volumes evolve towards the end of the year. If producers, especially in Ecuador and India do not slow down, it is very well possible that the low prices will not improve much at all, allowing processors and importers to build cheap inventories, but putting the profitability of farming operations at risk, he said.
In the mid-year review in his Shrimp Insights, Pijl said that the drop in imports to the US in the second half of the year will be less than in the first six months while China is likely to clock a record one million tonnes of shrimp import.
Meanwhile, the passing of the Coastal Aquaculture Authority (Amendment) Bill 2023 has come as a huge boost to the seafood sector. The industry has welcomed the provisions, particularly the withdrawal of the 200-metre restriction from the coastline for the operation of hatcheries and the setting up of broodstock multiplication centres and nucleus breeding centres.
It has also welcomed the provision withdrawing imprisonment up to 3 months for civil transgressions like non-registration of farms and the provision dispensing with the need to obtain coastal regulation zone clearances from multiple agencies. It also brings other aquaculture activities such as cage culture, seaweed culture, pearl oyster culture and so on, under the purview of the Act.
Source: Money Control