India with a long coastline developed a rich seafood economy. Though it was the largest exporter, and the second-largest producer, of shrimp in the world. But India has lost export leadership to Ecuador since 2019-20. What makes it worse is that the South American country has since been increasing its lead over India every year.
Ecuador has traditionally been the largest producer of shrimp in the world and was in fierce competition with India in the export market. In 2021, India’s shrimp exports contracted due to supply chain issues caused by the pandemic. Ecuador, meanwhile, started to push more value-added products such as headless shrimps and took advantage of its proximity to the US, one of India’s biggest shrimp export destinations.
The South American country is about 12 times smaller than India. It has a coastline of 2,237 km, against India’s 7,000 km.
Experts say comparing the numbers of both countries has one challenge: India’s Marine Products Export Development Authority (MPEDA) has data for financial years (in million tonnes) while Ecuador’s National Chamber of Aquaculture (CNA) shares data for calendar years (in pounds). But CNA shares a monthly break-up of shrimp exports. Using these numbers to calculate the exports in million tonnes for a financial year shows the South American country has been steadily increasing its gain over India.
A study by 97 Crisil-rated exporters also showed that in the calendar year 2020, India’s shrimp exports declined to USD 3.6 billion from USD 4.7 billion in 2019.
The Food and Agriculture Organisation said in a report that Ecuador overtook India as the top shrimp exporter in 2020. “The country (Ecuador) had a 6.8% rise in annual exports. Moreover, its farmed production increased by a hefty 100,000 tonnes, resulting in the cheapest export prices to the world market,” it added.
The South American country stole a lead over India because Covid-19 disruptions made it difficult for many Indian exporters to send products overseas. “The freight to the US (India’s biggest shrimp buyer) was almost five times higher,” says Yogesh Gupta, MD of Kolkata-based Megaa Moda, which processes and exports shrimps and prawns.
Rahul Guha, Director, CRISIL Ratings Ltd. said that the loss of market share for the Indian shrimp exporters is largely in the lower value add segment (mainly headless shrimp) where Ecuador is a major player. “Increase in Ecuador’s exports to the USA market last year was largely driven by China’s zero Covid policy which resulted in lower offtake from China,” he said.
The pandemic spoiled India’s shrimp party in other ways, too. Shipments that took 35-45 days to reach the US were reaching 3-4 months because of pandemic disruptions. “The journey time from Ecuador to the US was 15 days at the most,” says Gupta.
In the meantime, India suffered a setback from China. In 2021, it was reported that about 12,000 containers with 16 tonnes of shrimp in each (roughly worth INR 1200 crore) from India were stranded at Chinese ports. During 2021-22, India had 475 establishments that exported seafood, according to the MPEDA.
In 2021-22, 47% of Indian shrimps were exported to the US and 17% to China. A media report in November quoted Jagdish Fofandi, President of the Seafood Exporters Association of India, as saying Indian exporters were overstocked like never before. China was to import 70% of its stock from India but it has turned to Ecuador now, which has tripled its production, he added.
“Also, supply-side issues on account of loss of summer crop impacted the shrimp production in India adversely last year,” CRISIL’s Guha said.
Shrimp farming needs a relook
The Indian government helped shrimp cultivators during the pandemic. Shrimp brooders used to be flown in from Hawaii on charter flights, says Raj Somasundaram, founder and CEO of aquaculture technology platform Aquaconnect. The government had pitched in to make this possible despite thousands of logistics regulations then.
However, experts say, India is likely to continue losing out to Ecuador because of the unfavorable conditions here.
Even the value chain is highly fragmented in India. There is a fundamental structural problem. There is no own reading programme and so standardisation becomes difficult. “We have close to about 100,000 shrimp farmers in India and the typical land-holding pattern is about five acres. In Ecuador, it is a highly consolidated market and they have one general manager to take care of huge swathes of farms,” says Suryo Group’s Dash.
To combat this, India should focus on exporting value-added shrimps such as headless shrimps, marinated shrimps, and cooked shrimps, say experts. Somasundaram says Vietnam is a big market for value-added shrimp. He points to how minced shrimp meat is exported for momos and other such foods.
The Minister of Commerce and Industry, Piyush Goyal, had talked about doubling food exports to USD 14 billion by 2025. A lot of policy intervention is needed for this to happen, says Somasundaram. “Trade bodies should come together and identify new market opportunities, and add infrastructure for newer value-added products. Otherwise, it will be very difficult to reach that target,” he says.
How tech can help
The Aquaconnect CEO explains how technology adoption is one of the biggest impediments in India. There is not enough investment in infrastructure and technology, and efforts to implement farm-level automation. While the market traceability of shrimp gives another edge to Ecuador.
Use of IoT devices, satellite remote sensing and artificial intelligence can help assess the input requirement in a region. “These technologies can also help in predicting demand and growth and can help farmers connect with markets and other stakeholders efficiently,” says Somasundaram.
Suryo Group’s Dash says viral diseases are very common in the country and cost fish and shrimp cultivators almost INR 5000 crore per year. This lowers productivity. The FAO report also referred to the occurrence of diseases in shrimps in India. Dash lauds the government’s National Surveillance Programme for Aquatic Animal Diseases which has helped scientists create a disease monitoring app.
The budget has set aside INR 6000 crore as part of the Pradhan Mantri Matsya Sampada Yojana to enhance aquaculture productivity and exports. The Finance Minister has reduced the basic customs duty on fish meal from 15% to 5%, on krill meal from 15% to 5%, on algal prime (flour) from 30% to 15%, and on fish lipid oil from 30% to 15%.
Source: The Economic Times