The seafood industry which is down by about 25% on an average during the current period will bounce back as soon as the Covid 19 situation gets normal, says Jagdish Fofandi, President, Seafood Exporters Association of India in a special interview to Pravash Pradhan, Chief Editor, SMART AGRIPOST-FISHERIES.
Q:What is the current scenario of the seafood industry in India?
Ans: In the backdrop of the COVID 19, like any other sector, avialiability of labour in the seafood industries is a major concern. The seafood markets across the world have been impacted. In terms of number, there is a dip in sea caught and aquaculture ranging from 15-25%. And, we’ve already seen in the past three- four months that, slow down has started showing its impact both in terms of stockability at the factory level and also at the farm levels. The farmers are not stocking at the moment. More than the production part, the general mood is slow. Because our markets in China, Europe, and USA have shown a very sluggish growth. In fact, there’s a negative growth.
And because of the sluggishness in the market due to the COVID, the scenario is that we are down by 25% on an average across the board. And, this year we, we hope that we don’t fall beyond 25%.
Q. In terms of volume what is your expectation at this moment?
Ans: Volume in terms of production at the farm level and catch at the sea level- that is one part and on the other part is the volume in terms of sales. Because of the lack of stocking, the mood of the farmers is not very good. They’re not getting a better price because exportersare not able to give better price to them. Because of all, there is 25% drop at the farm level.
As far as sea caught material is concerned, I think there should not be a major drop now because the new fishing season has startedacross the country from August. Because of various issues in the Chinese market, what we hear from our buyers is that they are sitting on a lot of stocks. Stocks are not moving. We don’t know the actual fact. And it looks like that whatever they are saying is correct.
Sales are going to be slow, especially for the Chinese market. I think we’ll have to hold our material for a little while before everything starts getting in order. The whole situation because of COVID has been very murky. I think the seafood industry like any other industry is going to suffer.
So we are hopeful that in the next 15 or 20 days, things will improve. And if that improves, then I don’t see a fall beyond 15% in sea caught and 25% in aquaculture sector.
Q. The trade relationship between India and China has deteriorated over the border dispute. What is its impact on shrimp export to China? What is the way forward?
Ans: As far as the seafood industry is concerned, the only problem which we had was that our neighbours had got a duty wave off from China. There was favorable trade agreementwith Bangladesh. And of course, Pakistan also enjoys a favorable trade agreement with China. Barring that, as of now, I can tell you on record that, there is no evident impact of the border dispute as far as the seafood industry is concerned. There is no major ban orno major duty jack up.
The duties are at the level they were previously. As of now, it is not right on my part to say that, yes, we also have been impacted. There has not been a major impact as of now, but in the future, you cannot say what will happen.
Q. So do you mean to say that the trade relations between India and China is normal?
Ans: Yes , as far as seafood trade is concerned.
Q. I was talking to Equadorian shrimp association. They’re saying that some consignments found with Covid 19 are rejected. What do you say?
Ans: That is one apprehension we have. And that is why the exporters are in a very grim mood. No one knows how COVID is behaving. We don’t have very much scientific data also.
Tomorrow If God forbids, some samples are found with Covid 19. If China destroyed the cargo,orif we bring it back into India, it is for sure that Indian government is going to act on it. So the risk on the part of the exporters is very large. The state governments are intervening and trying to get a good price for the farmer.
We would like to work in the interest of the farmers. But one has to also look at the plight of the exporters. If tomorrow there’s a rejection, the cargowill be destroyed. A container of a Vannamei shrimp would be anywhere between 60 lakhs to one crore. So, I don’t know if my exporters are ready to take that kind of risk at this point of time.
Q. What kind of policy support are you expecting from the Government?
Ans: As of now, we have issues with all our markets. It is on account of turtle conservation, there has been an existing ban on Indian shrimp caught from the sea into the US market, which is a very niche market for us.
Then there are banson account of antibiotic residue in the European Union market that has been lingering for the last two and a half years now. The European Union is testing all our shrimp products, at least five times more than they test products from other countries.I have mentioned about the Chinese market issues.
So with all that, most of our markets are impacted. We have been talking to the government all along. When we are trying to reach a target of 1 lakh crore export, we must first safeguard the 47,000 croreexport which we’re already doing now.
And of course, on the exporters site, every day we are upgrading our units and adhereing to new protocols. The European Union indirectly says that they want their products (like dairy and vegetables) to come into India. Because of this, they are slowly taking positive decisions on the sampling side. But they’re not registering new units in the last two- three years. Newstate of art units have come up in India.The exporters are investing a lot of money in upgrading their facilities. Some very beautiful worldclass greenfeld projects have come up. We have a lot of stress on our capital. The exporters are facing the market access issues, which are sometimes beyond our control. It is only the government which can do something about it.
Q. Any specific suggestion regarding import or export duty or any issue?
Ans:No. as of now, we are not impacted by import duty. We don’t have anything to say as far as the import duties are concerned,but the other thing is that now India is sitting on an idle capacity.
Indian exporters operate only about 35 to 40% of the installed capacity. Our production capacities are based on the peak period. So we have other times of the year, when we sit on our capacities idle.
When the Covid impacted Chinafirst, there were a lot of companies across the world who were willing to come to India to do their value addition part here and export it back to their country.
So that was a very good way by which we could boost our export. But due to certain import restrictions or policies which are not very conducive, we missed. We have given representions to the Ministry of Fisheries. We have a long standing demand. The protocols need to be rationalized. If that happens, then we’ll be able to import raw material and re-export it as finished goods to all those European and North American countries.
Q. What is your view about the export to the European Union and USA markets in the current situation?
Ans: Yes, it is a fact that all markets, food services, restaurants across the worldare closed everywhere. Even if they’re open, they’re open in a very marginal way.
Everyone knows that seafood is eaten in the restaurants more than at home. Howerever, there are parts of USA and Europe where people eat at home. Home consumptions are there. Demand for ready to cook products has increased. Sales in Super Markets have increased. But the food consumption which is 60% of our market has been impacted.
Q.What is your view about the strict compliance guidelines followed by the EU and the USA markets?
Ans:Only for those units, which havebeen banned by the European Union on account of antibiotics. But we have taken corrective measures. The government (MPEDA and EIA ) have intervened. Our exporters have upgraded themselves. We are doing very expensive testing. When we buy we are testing, when we sell we are testing. Our plants are really very good. If you go Andhra Pradesh, you will find some of the plants have invested about 150 crores, which is a big amount for a seafood industry. So with all that, the exportershave already done their bit.It is only that there should be government intervention.
Q. Do you want the regulations to berationalised ?
Ans: We are more or less fine with regulations of the importing country as long as that is uniform for all exporting countries. For example, Bangladesh is exporting fish, India is also exporting fish. But, the same fish has differnential duties. Those kinds of thingsshould be stopped. The European Market are testing Indian shrimps five times more than the Vietnamese or Thai shrimps or any other country. So it gives us more stress.
Q. Several farmers did not go for stocking due to uncertain market condition and low price. Is the seafood association supporting farmers during this hour of crisis?
Ans: As far as aquaculture is concerned, we have large exporters.We are the second largest aquaculture producing country in the world. We need people who can handle large quantities. So when you have large units, they have their own problems.
Now in this Covid situation, the market levels are already 15-20% lower than thatused to be a year ago. How is the exporter expected to give the same price which he has given last year? And another thing has happened that the export incentive which was at 7% has been brought down to five since last year.
There’s a 5% MES which we enjoy now. We of course pass itover to the primary producer i.e. farmer. Now we don’t know whether this 5% is going to come or not. Because there is a lot of ambiguity. The exporter are under a lot of confusion whether they are going to get the MESwhich they have already factored in their cost. If that is not going to happen, then how do you expect the exporters to pay a price equal to last year’s price. Not possible.
We understand that gradually the farmer’s input cost has increased.For example, in some States, the electricityis a major component in the production. The electricity tariff is exorbitantly high in states like Gujurat.Only Andhra Pradesh, Tamilnadu and Odisha are giving discounted electricity to the farmers.I’m talking about exporters in general across the country.The Gujurat farmers are complainingthat they are getting about 30 to 40 rupees less than what Andhra farmers are getting.In the backdrop of all this, the Ministry of Fisheries and the Ministry of Commerce need to sit across and come out with concrete measures about where we can rationalize the cost at the farmer’s leveland how we can keep the export markets intact.
Q. Apart from the Shrimp, do you think that we need to diversify the species. So, we have more sea food products to export?
Ans: I tell you one thing. In the last 10 years of Vannamei which is an exotic species from the South coast of North America , Hawaii. It is native species of south America also. It has done wondersin terms of life, interms ofits biological stability, in terms of the size of growth and acceptability in the market.
The Government is working on certain species. What is happening now at this pointis we need to salvage or save what we have. The introduction of new species is happening. It’s a process.It’ll happen, but the most important part in that whole process is that the market acceptablity should happen. Vannameiis easily accepted by all of the markets. So it is easy to produceand sell.
There can be diseases. We still don’t know how they’re going to behave.It is a slow process. We have an indigenous species, Indicus. MPEDA is working very hard on it.We will be happy to start trading this species in the market.
Q. Have you made any study about the losses seafood industry incurred during the Covid 19 period?
Ans: See the situation is fluid. For example, today we hear from Spain that resturantsare open,tomorrow we will hear that restaurants get closed, because the government reimposed lockdown. I’m giving you an example. Likewise, situation is changing everyday.
We’ve spoken to the government everything I’ve mentioned to you. We need their help regarding financially what issues we are facing, costwise what issues we are facing, market wise what issues we are facing, production-labour wise what issues we are facing. Those issues are there. But, to come out with a concrete report at this time is not possible, or it’s not appropriate. Situation is changing everyday. We can only take stock of the situation. We don’t know where we are heading.
Q. Whenwill this situtation be improved?Any idea?
Ans: Assoos as the situation of COVID across the world gets normal, our industry will be normal. That is what I can say at this moment.It’s a blessing in disguise that we’re not producing more. If weproduce more, we will be under stress to sell them . The markets will not be able to survive that. We have very wide market access. We are there in Europe, USA and in China. We are a bigger player now. If the government takes the right decision, Australia canopen up its market for us, South Koreais a potnetial market and Saudi Arabia which has bannedour products for some reason and does not give us very good incentive can be explored. If all the markets start opening equally, there will be sunshine for seafood industry very soon, as soon as the COVID situation improves.