Seafood industry stares at slump as global market for shrimp shrinks

Seafood industry stares at slump as global market for shrimp shrinks

The Indian seafood industry is not upbeat about the current year’s prospects, despite a record $ 8 billion export in FY23. The fear is based on tepid demand for shrimp, globally falling prices due to excess stock, and a resulting fall in production locally. Shrimp is the principal item in the export basket, and Indian exporters are not optimistic about a recovery in the next few months.

``The prices are down by 15 to 20 percent. All the markets are not doing well. There is a slowdown in the US market and China is not buying much. Besides, there are payment issues with Chinese importers. The indications are not good for the next few months,’’ says Jagdeesh Fofandi, national president of Seafood Exporters Association of India.

Though seafood exports reached a new peak last year, the industry did not do well for most of the year. There was an increase only in the last few months. Global shrimp expert and founder of consultancy Shrimp Insights, Willem van der Pijl says in his report, that large volumes of shrimp harvested in the last three months of 2022 in India helped boost exports in the last quarter of FY23. Although the quantity went up, prices started to fall from last December.

`` In Europe, the increase in tourist arrivals has not been reflected in shrimp consumption as food prices and hotel rentals have gone up by 15 to 20 percent, partly due to the Ukraine war. Though gas and fuel prices have softened, it may take some time for shrimp demand to rebound in the current scenario,’’ says Kenny Thomas, MD of Jinny Marine Traders.

India exported a record 17,35,286 tonnes valued at Rs 63,969.14 crore ($ 8.09 billion) in 2022-23. While the total volumes rose 27 percent, there was a marginal decline in shrimp quantities over the previous year at 7,11,099 tonnes. In terms of value, total seafood showed 11 percent increase in rupee terms and 4.3 percent increase in dollar terms. But for frozen shrimp, while the value showed a marginal increase at Rs 43,135 crore in rupee terms, it dipped 6 percent to $ 5.48 billion in dollar terms.

As a result, the share of shrimp volumes in the total seafood basket fell by 12 percent from the previous year, to 41 percent and in terms of value, by 7 percent to 68 percent in 2022-23.

The global downturn in prices has affected all the major shrimp producers. One research report by the Netherlands-based Rabobank forecasts a 14 percent increase in the shrimp output of Ecuador in 2023, up from 1.35 million tonnes in 2022. Ecuador is the largest shrimp producer in the world, but its National Chamber of Aquaculture has voiced concern at the jump in production costs and decline in international prices.

The report shows that India, the second largest shrimp producer, produced under 9 lakh tonnes in 2022,a decline of 4.7 percent caused by disease, weather, feed costs and falling prices. The report forecasts that total global shrimp production will go up 7 percent in 2023 to 6 million tonnes.

Ecuador is struggling to cover its production costs, with global shrimp prices going down and the falling prices and demand in China, its major market. The situation is no different in India, points out Tara Ranjan Patnaik, MD of Falcon Marine Exports. ``At the current level of prices, it will be difficult for the farmers to produce more shrimp. The US market is overstocked and unless it is brought down, the prices may not improve. All importers are buying just minimum quantities,’’ he says.

Indian shrimp production is expected to decline in the current year. ``From around 9 lakh tonnes, it may drop to 6-7 lakh tonnes in the current circumstances. At present, supply is higher than demand and it may take 6 to 7 months for the situation to correct with a drop in output from the major producers. I expect the prices to improve only by the beginning of 2024,’’ says Ravi Kumar Yellanki, President of the All India Shrimp Hatcheries Association.

According to Willem van der Pijl, India’s export of vannamei shrimp dropped in April compared to the same month in the previous year. ``The drop in exports may finally be the first sign that the output of India’s first crop has dropped, which would be in line with the strongly declined broodstock import numbers.’’ The broodstock import to India of vannamei, an exotic variety, dropped 33 percent from December 2022 to May 2023 from the same period a year earlier, he said.

But India can take relief from the fact that export of the indigenous black tiger prawn is commanding increased demand, particularly from Japan. Its export in FY23 increased year-on-year by 74 percent to 31,213 tonnes. The rise is continuing in the current year too, even as the vannamei shipments decline. More Indian farmers are moving to tiger prawn cultivation than in the previous years.