Agri Business

India’s shrimp output set to drop by 20% this year on reduced stocking

V Sajeev Kumar Kochi | Updated on September 14, 2020 Published on September 14, 2020

Stocking of shrimp has reduced by about 25 per cent (file photo) KK Mustafah   -  The Hindu

Drop attributed to several factors, including production issues and labour shortage

After robust growth in a decade, India’s shrimp output is set to drop by 20 per cent this year, according to shrimp hatcheries.

D Ramraj, president, All India Shrimp Hatcheries Association, attributes the fall to a combination of factors that include production issues due to diseases, reduced stocking following the drop in prices and Covid-induced labour shortage in several seafood processing plants. The production is to fall from 7.8 lakh tonnes registered in the previous year, he said.

Besides, the withdrawal of export benefits to the sector has led to the fall of farm gate prices to ₹30 per kg. The stocking has also reduced by about 25 per cent. Farmers’ woes have been compounded by low survival in farms, leading to losses for many, Ramraj told BusinessLine, adding, that “a lot of hope was pinned on the second crop but due to the pandemic the sector is getting badly affected”.

 

Equirus Securities, in its aquaculture sector update, pointed out that the first quarter of FY21 was challenging but the industry has started recovering. Because of the lockdown in April and May, there was panic harvesting and delay in stocking of the next crop. This has hurt the volumes of feed manufacturing companies. The processing segment faced labour availability and transportation issues.

The report also endorsed that the withdrawal of export benefits with effect from January 1 would have a significant impact on the profitability of shrimp processors. However, it pointed out that the initial disruptions caused by Covid outbreak on shrimp culture have started normalising in many farms in Andhra Pradesh.

Covid impact: Sluggish demand hits India’s seafood exports in 2019-20

Appeal to govt

According to the report, most shrimp processors are operating at low EBITDAM of 9-10 per cent, of which 5 per cent is generated from Merchandise Export Incentive Scheme. In FY20, the MEIS incentives, as a percentage of EBITDA, were very low and negative for seafood processing companies. Many processors are already trying to lower procurement costs to pass on the impact to farmers. MEIS incentives will be discontinued from January 1, 2021, and replaced by a WTO-compliant Remission of Duties and Taxes on Export Products (RoDTEP scheme).

A seafood exporter in Kochi said that the Association has urged the government to retain the MEIS benefits to remain competitive, as Covid has battered the sector with declining product value and dwindling sales in the overseas market.

India exported 6.5 lakh tonnes of shrimps worth $4.5 billion in FY20. The government has also set a target of doubling shrimp exports over the next few years and has announced ₹200 billion as funds for the development of the fisheries sector.

The report went on to add that there was a 30-35 per cent drop in global demand due to shutdown of malls, restaurants, etc initially but it is now improving. The retail segment, to some extent, is compensating for the loss of food service sector demand. But the demand is expected to come down in FY21 by 20-25 per cent.

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Published on September 14, 2020
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