Sunday, 04 December 2022 | Shaji Baby John
GUEST COLUMN
Shaji Baby John
The current turmoil in the global shrimp market marked by excess supply and the dwindling price has important lessons for the Indian seafood industry in general and the shrimp farming sector in particular. Ecuador flooding the market with highly competitive pricing, fears of a global recession, China persisting with Covid19-related lockdown practices and uncertainties linked to the Ukraine war are some of the immediate reasons for the slowdown. It is true that these factors have a role in reversing the fortunes of shrimp farmers, processors and exporters in the country. At the same time, we should not be deceived by thinking that the current slump is something that could be tagged with the commodity cycles characterised by boom and bust alone. The over four-decade-old experience in the seafood sector tells me something different.
Lessons from Ecuador
The emergence of Ecuador as the major competitor for Indian shrimp export is not something that happened overnight. The winds of change from Ecuador were felt by all those having their eyes and ears on the ground. In 2022 Ecuador is expected to cross the record volume of 8,41,000 tonnes of exports achieved in 2021 (Jan-Dec). The exports in the first six months of 2022 (Jan-Jun) were up by 35 per cent compared with the same period in the past years. Industry experts feel that exports from Ecuador may cross one million tonnes by the end of this year. The South American country’s tryst with shrimp farming began in the 1970s and registered steady growth till the end of the last century. But the year 2000 turned out to be a nightmare with devastating disease outbreaks leading to a 70 per cent contraction in production. The aquaculture sector making steady recoveries since then went for a major change in 2018 by adopting the sustainable shrimp production (SSP) system. The core principles of SSP comprise 100 per cent traceability, zero use of antibiotics, net neutral impact on the environment and certification from the Aquaculture Stewardship Council, a regulatory agency. The most important highlight of the SSP is its ability to realise the highest value at the lowest cost. The success of Ecuador is mainly due to its willingness to invite global experts to develop SSP practices suiting their requirements and thereby converting a crisis into an opportunity.
The stakeholders in the Indian shrimp sector need to sit down and take a close look at the factors that led to the success of Ecuador. The adoption of SSP has enabled the Ecuadorians to achieve sustainable and high-value output and emerge as one of the leading global shrimp exporters in a short span of four years.
The success of Ecuador holds an important lesson for the Indian shrimp farmers and other stakeholders in the sector. The time has come for the stakeholders in the Indian shrimp farming sector to change their focus from solely increasing the tonnage in terms of output to improving the revenue realisation potential of each farmer. We need to follow the model of Average Revenue Per User or ARPU as used by the telecom services providers. The difference is instead of per user we needed to focus on each farmer. It is high time for the Indian shrimp sector to shift its focus from tonnage to increasing the revenue realisation potential (RRPF) of each farmer. The matter assumes importance because the farmer is the backbone of the entire shrimp value chain. Adverse impact on the farmer will have a cascading effect on the chain comprising seed makers, hatchers, processors and exporters. The increase in RRPF on a sustainable basis is the way forward to overcome the present situation. The art of improving revenue per farmer will automatically lead to the issue of improving the quality of the product. And that would lead to the drawbacks connected with the current aquaculture practices and their possible remedies.
Kings Infra Ventures has been promoting the theme of shifting the focus from tonnage to RRPF as part of its strategy to realise high-value output using sustainable practices. We have successfully deployed the SISTA360 protocols (System for Integrated, Sustainable & Traceable Aquaculture) for achieving the objectives. Along with demonstrating our capabilities with SISTA360 protocols, we also mooted the idea of developing integrated eco-friendly aquaculture tech parks. These initiatives are under various stages of implementation with promising results.
Domestic market
The other important area that needs the immediate attention of the policymakers and other stakeholders is the domestic market. The development of a vibrant domestic market for quality protein at an affordable cost will be a shield for Indian shrimp farmers to guard against the vagaries of the global market. The domestic market for protein-rich seafood in the country remains a highly fragmented and unorganised sector. Everyone agrees that the country has huge potential for developing a market for quality seafood. The supply-chain bottlenecks and lack of institutional support mechanisms are acting as major hurdles in this direction. The disruptions in global trade during the Covid19 pandemic highlighted the importance of having a domestic market. The policymakers realised the importance of a domestic market. The formation of the fisheries ministry has escalated the process further and a slew of schemes are currently available for helping the domestic market. Unfortunately, many of these schemes remain largely unknown to many of the persons in the fisheries sector. The processors and exporters along with the farmers needed to pay greater attention to the various schemes at the institutional level to develop a vibrant domestic market.
It is gratifying to note that the National Fisheries Development Board (NFDB) has mooted several schemes that would help in providing institutional support for developing a domestic market. The Pradhan Mantri Matsya Sampada Yojana (PMMSY) and Fisheries and Aquaculture Infrastructure Development Fund (FIDF) are two flagship projects of the NDFB that could be effectively tapped for developing the necessary infrastructure support for the domestic market network. A supply chain network with a quality cold storage facility is the primary requirement for developing a vibrant market for a highly perishable commodity like fish. The State governments have a greater role in this matter as social, economic and cultural practices differ from State to State.
The current turmoil in the global shrimp market is a wake-up call for everyone involved in the Indian shrimp and seafood sector. The downtrend should be used as an opportunity for a course correction and to scale up higher in the value chain. As I have stated before, a course correction focusing on sustainable aquaculture has tremendous potential to elevate India as the global hub of quality protein food at competitive rates.
(The author is the chairman of Kings Infra Ventures Limited who also writes on the blue economy and sustainable food production system. Views expressed are personal)
