Towards a stronger seafood sector

In a setback to seafood exports, big importers like the European Union, South Africa and the US have stepped up testing measures for marine product consignments shipped from India. In the current scenario, these recent trends pose a potential threat to existing customer markets.

However there are certain measures that the Indian marine products industry can take to avoid risks and in turn also benefit their businesses with wider market access.

Today, aquaculture — or seafood farming — is essential to meet the growing demand for seafood globally.

Aquaculture has emerged as one of the fastest growing sectors in India as well, primarily driven by shrimp exports to high value markets such as the US, the EU, Japan and others with only about 10 per cent shrimp production being consumed domestically. Varieties of shrimp account for a majority of the revenue generated from seafood exports, making India the second largest aquaculture producer in the world after China.

However, with increasing adoption of product quality standards, especially with respect to health and safety, the occurrences of Indian shrimp shipments failing to meet these standards are becoming common. Shipments are now more frequently being tested for antibiotic residue, especially for internationally banned antibiotics such as Nitrofuran, and contaminated shipments are rejected and shipped back at significant costs.

According to some estimates, a truck of rejected seafood costs the average exporter around ₹10 lakh. Collectively, these shipment rejections could cost the Indian industry significantly, with business going to competitor countries that are able to offer assurances for the safety and quality of their products.

Apart from the direct financial impact, there are reputational risks due to the nature of the export market, with the likes of countries such as Vietnam and Cambodia vying for a share of lucrative western markets. These issues of quality and safety need to be addressed in order to continue having access to higher value markets in the US as well as the EU, which is critical to the long-term economic sustainability of the industry.

For Indian businesses in the aquaculture sector, it is becoming increasingly essential to adhere to best industry practices that avoid a series of such challenges and create opportunities for growth and differentiation in a highly competitive seafood market.

An approach that is increasingly being used by seafood producers and traders around the globe is the use of sustainability standards and certifications such as MSC (Marine Stewardship Council) or ASC (Aquaculture Stewardship Council) as a way to assure buyers of the safety, quality and environmental responsibility of their products.

Sustainability standards are essentially parameters that ensure that capture or farming of seafood is done in an environmentally, socially and economically responsible manner. Most of these standards have been conceptualised with inputs from key stakeholders in the industry, including producers, processors, environmental and social civil NGOs, academia and other relevant parties.

Producers or processors interested in getting their operations certified can get audited by an accredited certifying body (CB) and achieve compliance with these standards to be certified.

For shrimp exporters, the ASC standard is the leading aquaculture sustainability standard at a global level, with ASC-certified products being preferred by buyers in the EU and North America. ASC enables the traceability of the seafood in question through a concept known as ‘chain of custody’ where every link in the supply chain is certified; this allows end consumers to know where the seafood comes from and assures them that their consumption is not impacting the environment or society in a detrimental manner.

The ASC standard includes clearly defined indicators that restrict the usage of antibiotics, chemicals and fungicides in farming operations. The seafood produced by ASC-certified farms is compliant with most international health and safety regulations and is widely accepted. Indian shrimp producers can makes sure their shipments are not unduly rejected at the point of import due to the presence of harmful traces and residues.

The administrative overheads associated with ASC are minor compared to the potential benefits. Processors can work with the producers to get their supply chains certified and enhance the acceptability as well as marketability of processed shrimp destined for export markets.

These markets will mature further, leading to a steadily increasing demand for responsible, safe and impact-free seafood, thereby presenting an opportunity for producers and exporters to move up the value chain.

Further, Indian exporters who cater to the South-East Asian processing sector and face lower margins compared to their counterparts who export directly to high value markets in Europe and North America, can get more value and returns on their investment by exporting to these countries directly.

ASC along with other standards such as BAP (Best Aquaculture Practices) can help exporters move up the value chain by enabling access to higher value destinations, given the increasing popularity and demand for certified seafood in these markets. This has the potential to benefit shrimp farmers with the increase in revenue and the cooperation of processors.

There are other benefits associated with certification such as a reduction in operating costs for farmers due to more judicious use of inputs along with better health of livestock from following best management practices.

Producers in major Central and South American countries have recognised the benefits of ASC. Over the last decade, shrimp farmers in Belize have been working with WWF to introduce better management practices. Eight producers who account for 90 per cent of the country’s shrimp production, achieved certification from the ASC . Following this, Granjas Marinas became the first company in Honduras to be certified in April 2016 and Sociedad Nacional Galapagos (SONGA), a large Ecuadorian producer, followed suit with the ASC certification of its four cluster farms.

As more and more consumers in developed countries become sensitised to the idea of responsibly produced seafood, the demand for certified seafood is expected to increase further. Additionally, certifying the whole supply chain allows the end product to carry eco-labels or sustainability branding which makes a significant difference in the marketability of the products.

Although the initial costs associated with certification (audits and admin fees) are considered significant for smaller companies, it is a worthwhile investment in the long run. At the very least it will ensure compliance with the health, safety and quality norms of importing countries, and eliminate the chances of shipments being rejected. In the long run, there are clear business benefits to be gained.

The writer works in sustainable business at WWF-India

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