Gulkin: Shrimp industry fears domino effect from possible EU India ban : Oct 27, 2017
Neil Ramsden : Undercurrentnews
The Indian — and indeed global — shrimp sectors are holding their breath while they await a decision from the European Union on whether it will take measures against perceived health risks of Indian shrimp imports, Siam Canadian Group CEO Jim Gulkin told Undercurrent News.
“If there is an outright ban, or other severe restrictions placed that could drastically curtail India shipments to the EU, there will be a domino effect on the industry,” he said.
Such an event could lead to several different outcomes, he said.
One is that India “totally pivots to the US market”, and increases sales as much as it possibly can to Vietnam and China too.
“As a result, Thailand and Indonesia would be further squeezed from the US market. Thailand does not have the option of increasing their sales to the EU to pick up some of the slack left by an India ban, due to Thailand’s lack of GSP [generalized scheme of preferences] privileges.”
In this scenario Indonesia could potentially pick up some EU business, “but their market in the EU has always been marginal; the factories are mostly not well set up for EU-type production so there would be a limit to what they could gain”, Gulkin said.
The net result for both Thailand and Indonesia would be lower sales to the US, with no obvious alternative markets to make up the loss.
“Vietnam would be the net winner in Asia. It already has substantial market share throughout the EU, and it would be easy for it to ramp this up,” he predicted; admittedly, speaking before the EU issued its “yellow card” warning to Vietnam over a perceived lack of efforts against illegal fishing.
“Vietnam already struggles in the US market, so new opportunities in the EU would be a net gain, despite increased competition in the US.” The potential danger for Vietnam is that the EU restricts imports from there, over concerns that reprocessed Indian raw material could find its way to Europe via Vietnam, he noted.
Some Vietnamese companies fear yellow card could make shipments to the EU more expensive, as border inspections could become more intensive.
A second potential scenario for the EU banning Indian shrimp shipments, Gulkin suggested, would be that the US — “under pressure from the Southern Shrimp Alliance” and other domestic shrimp lobbying groups” — followed the EU’s lead and placed severe import restrictions on India shrimp.
To this hypothetical, Gulkin commented simply, “oh f**k”.
At the recent Global Aquaculture Alliance annual Global Outlook for Aquaculture Leadership (GOAL) conference in Dublin, Ireland, Bob Yudovin of Harvest Meat Company said the US would have a “serious problem” if the US Food and Drug Administration (FDA) aligned itself with the EU.
He noted the FDA has “threatened” to align itself with EU decisions in the past.
“We’ve seen these kinds of knee-jerk reactions on other species before,” he said.
Meanwhile, Gulkin anticipates Indian shrimp production remaining tight through into the new year, as disease problems have reduced landings, he said.
This tallies with Undercurrent’s recent reporting on Indian shrimp, in which sources expected to see prices remain firm into 2018 — though as much down to strong demand as low supply.
“New ponds, new hatcheries, new factories, and expanded existing factories; new players abound,” said Gulkin of India in 2017. “It’s now the world’s largest exporter of shrimp, and continues to increase its share of the US market, eating away at Thailand, Indonesia and Vietnam’s US business.”
As Indian production increases, so do production problems, especially disease, he said. These are slowing growth, but this is nevertheless still significant and expected to continue, he said.
World’s shrimp production forecast presented at the GOAL conference 2017
Looking ahead to 2018-2019, Indian industry forecasts production to rise to around 540,000 metric tons in 2018, then about 575,000t in 2019, according to data presented at GOAL.
This represents only a slight easing in India’s rate of growth.
All eyes on EU
Rumors that the EU were unhappy with the levels of antibiotic traces in shrimp shipments from India had circled for a few months, but in September 2017 Rahul Kulkarni, director with India’s Westcoast Group, confirmed the seriousness of the situation.
The Indian industry and government were “in the thick of meetings and discussions” around the topic of a potential ban, he said early in September. “We are really worried over the eventuality of the EU banning Indian seafood imports. It’s more geo-political than actual quality issues, but the sector is suffering and now staring at the ban,” he said.
Jose Antonio Camposano, executive president of the Ecuadorian aquaculture chamber, told Undercurrent Ecuador was watching the situation, and would be ready to increase its exports to the EU, if India were faced with some kind of limits.
Camposano pointed out that Ecuador already has a 24% market share in the EU, and has a “clean record” on antibiotics.
In the UK, importer and processor The Big Prawn Co has noted customers are already leaning on it to start sourcing from elsewhere, for fear the perception of traceability issues could come to mean more than that.
“One thing we can agree on is that this debate is not good for the sector,” said managing director Will Rash. “I trust my Indian suppliers, we test their produce and find it’s perfectly fine. But I have customers telling me to get out of India now.”
The market is beginning to fall into the trap of believing a blanket scenario across all suppliers in the country, he said.