Marine exports body bets big on South American markets

The prospects for seafood exports are looking bright this fiscal after a dip last year, and the Marine Products Export Development Authority (Mpeda) is looking to focus on South American markets such as Argentina, Brazil and Chile to secure more orders. At the request of seafood exporters, the trade body is planning to lead a delegation to these emerging areas. Mpeda Chairman A Jayathilak maintains that the sector will recover well enough from the business dip in 2015-16, which was triggered by currency fluctuations and a decline in sea catch. Seafood exports dwindled to $4.7 billion in 2015-16 from the record level of $5.5 billion in 2014-15. In an interaction, Jayathilak said Mpeda has taken all efforts to increase the utilisation of fishery resources by asking State governments to crack down on indiscriminate fishing and prevention of juvenile catch. Excerpts:

What accounts for the revival in exports in FY16?

Things are looking bright now, with the 9 per cent increase in unit value realisation in 2016-17 to $5.42 this year, against $4.99 last year. Export of high-valued shrimp and the value-added products contributed to the increase in unit value. There has been increased demand for shrimps, squid and cuttlefish from major markets.

We have seen an increase of almost 13 per cent in the export value up to November 2016 compared to the same period last year. In dollar terms, the increase is nearly 9 per cent. However, the volume growth is not very significant, indicating a higher unit value realisation. The US is the largest market for Indian seafood, followed by the South-East Asian countries and the EU.

Why did exports fall last year?

The improvement in world shrimp supply, especially in Thailand and Vietnam, brought down the average unit value of frozen shrimp to $8.28 per kg from $10.38 in 2014-15. The depreciation of the euro, weaker economic conditions in China, devaluation of the Japanese yen were some of the other contributing factors.

Moreover, the decline in capture fishery in India has brought 10.5 per cent less wild caught shrimps in 2015.

What is the share of value-added products in seafood exports?

The capacity of value addition in the sector is just 14 per cent of the total installed processing capacity, which is 23,375 tonnes. Value-added product exports account for only $850 million of total seafood exports: that’s just 17 per cent of the export value.

The way forward is to increase the unit value realisation through high-end value-addition — for instance, sashimi-grade shrimp/tuna/freeze dried shrimp, breaded and battered shrimp, canned and retort pouch products.

In 2015-16, India supplied about 35 per cent of the total exported quantity to South-East Asia alone, which was mostly utilised for value-addition.

What are the hurdles in value-addition?

The labour-intensive sector faces several impediments in value addition: it requires a huge amount of capital to improve the skill of the workforce. It requires high-quality standards across the supply chain. The sector lacks adequate incentives to move forward with value-addition. High-end value-addition is seen to offer good returns, but is a risky venture. Besides, the lack of self-belief and role models inhibits exporters from going for value addition.

There is an urgent need to appropriately incentivise capital-intensive projects for high-end value-addition.

Mpeda is preparing a project for availing of funds from the Ministry of Skill Development Entrepreneurship for skill development of labourers in peeling, filleting, cutting, grading, personal hygiene, ingredient mixing, and so on. There should be higher export incentives for high-end value-added products.

Mpeda’s schemes should be made at par with the proposal of other government departments like the Ministry of Food Processing and Industry.

How do you propose to overcome the tougher testing norms for seafood exports set by European Union?

The entire industry is flummoxed by the EU’s stance on the sampling of marine food products, particularly its increasing the sampling norms to 50 per cent of the consignments at a time when the rejection of consignments to the EU are in decline. Earlier, the sampling norm was about 10 per cent of the consignments.

Over the last five years, rejections have been consistently lower. Since the cost of testing will have to be borne by the exporters, seafood exports from the country will be affected. The matter is being taken up by the government.

The EU is the third-largest market for Indian shrimp exporters, with a share of 20.71 per cent in dollar terms, after the US (28.46 per cent) and South-East Asia (24.59 per cent). Quantity-wise, the EU is the second-largest destination, with a share of 19.70 per cent of the 945,892 tonnes of seafood exported from India in 2015-16.

Have you chalked out an export strategy for coastal States?

Shrimps contribute to nearly 70 per cent of the total export value and it will remain so in the future. Of the total shrimp exports, 75 per cent (worth $2.1 billion) came from aquaculture in 2015-16. However, currently only 11 per cent of the potential area of 1.2 million hectares in coastal States is utilised for aquaculture.

To augment exports, the area under shrimp farming has to be increased, with land allotment in a time-bound manner by the State governments.

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