New demand sends India’s shrimp sector soaring : September 15,2014
The world’s scramble for shrimp has sent India’s production levels leaping, but will the juggernaut stumble?
Published: 15.09.2014 10:13
India’s shrimp sector has been growing “exponentially” over the past couple of years, but some industry members are concerned it is going too fast and could hit a wall. The figures speak for themselves.
Between April 2012 and March 2013, India produced around 228,620 metric tons of shrimp, according to statistics from the country’s Marine Products Export Development Authority (MPEDA).
In the same period this between 2013 and 2014 this had grown to 301,435 metric tons.
According to Sree Atluri, US-based operations manager for Indian company Devi Seafoods, these figures are even higher.
Atluri told IntraFish in 2012-2013 India produced 250,000 metric tons, on a farm weight head-on basis. In 2013-2014 this was 353,000 metric tons and in 2014 to 2015 this is expected to hit around 386 metric tons.
India’s production is growing so rapidly for a number of different reasons.
Thanks to an increase in capacity both in terms of farms and processing, the country has seen yields of white shrimp shoot up, and India’s potential for water resources has resulted in a sudden boom in new areas being used for farming.
“But it has been a perfect storm for India,” said Atluri. “With the growth in white shrimp and the timing of the EMS in Thailand all these factors turned out to be very good for India.”
Additionally the high prices have been tempting a lot of farmers to come back into the game, said Atluri.
“With more areas for new farms, all these things played well for India production. There have been production increases for the last three years, and we will see a big increase this year as well,” he said.
Growing too fast?
But is there a danger it is growing too fast?
Jim Gulkin, managing director of Siam Canadian Group, is slightly pessimistic about this expansion. “India has started to trip over its own shoe laces,” he told IntraFish.
“It has disease problems, problems with quality of broodstock, post larvae, hatchery management, and while there is no evidence of EMS itself, it probably has it to some degree.
“India has had its problems with other diseases as well, such as white spot, and at the moment they are having production problems, “so their great juggernaut may stumble at some point too,” Gulkin said.
There are also issues of product quality coming from India, added Evert Kok, purchasing director with Dutch importer Klaas Puul.
The company used to buy from India, but recently the quality has slipped as global demand has increased, he said.
“They have the guts to supply you with the quality which is not permitted here in Europe, glazing and also plate counts and check ups, they do a lot of things which are not allowed, they also use antibiotics,” he said.
“Because demand is a lot higher and they can also export to the United States at the moment, so they use everything they get.”
Atluri disputed the quality claims, but said the fast expansion and what it can bring is always a concern.
“So far it looks OK, but the fear is always there in the back of your mind that it is growing too fast,” he told IntraFish.
Shrimp farming is not new for India, it has been happening for around 25 years, so Indian farmers have been through the cycle, said Atluri.
“They’ve been through that learning curve, and they are smart enough to manage things. I do not see a problem at this point,” he said.
However, prices could be a big factor if production goes up and the supply becomes more than the demand and the price falls, he added.
There are also “occasional disease issues” related to mostly white spot, and also the odd natural disaster, but “nothing really concerning at this point in time,” said Aturli. A scare about EMS in the country last year, did not turn out to be true, he noted.
Quality over quantity
In terms of any quality issues, Aturli said farmers and processors in India understand the quality part of shrimp processing now. They are packing good product, and the production has been recognized very well in the US market, he said.
“Everyone is accepting Indian quality, it is much better, especially in foodservice,” he said.”I don’t see a quality factor coming into the picture at all because it has been handled.
Three years ago there were issues when they were not ready to process those kind of quantities, but everything is good now.”
Nate Torch, vice president of US shrimp importer Central Seaway, told IntraFish he had also not heard of any problems in the sector, either with quality or with it growing too fast.
“I was just over there and since I was there the previous year the plants have all been making modifications to increase their production which basically relates to freezing capacities,” he said.
“But I don’t know you can say they’re growing too fast.”While it is true the farming areas have been spread out and are spreading into new areas as well, this capacity increase has not had any impact on quality.”We import quite a bit of it and I haven’t noticed a difference in what I saw in the plants,” he said.
“I saw some wonderful product.”In fact production is currently down slightly in India, in particular over the past month or so, said Torch.
“This is a lot less than they were getting a year ago at this time and it is down to poor quality seed,” he said. “There has been a die-off in the recent production and that is why they are harvesting some smaller sizes.
“Aturi said he expects to the the market balance out soon.”We saw a big increase in the first crop, but in the past few weeks the landings came down quite a bit so availability has come down,” he said.
“But I see it as a gentle cycle and I think it will pick up soon.”Torch said he “definitely” sees a raw material shortage, “and it’s forced prices right up.
“According to Torch, in the past week or so prices are as high or higher than what traders are selling for in the US market.”The packers are asking based on their costs. They are not aggressive to sell,” he said.
“They want to finish up their orders and they’re taking some losses in doing so.”As a benchmark product, Torch said he was being offered anywhere from $8.10 (€6.30) to $8.50 (€6.60) per pound, delivered duty paid (DDP) for 16/20 tail-on shrimp from India.
That’s up a dollar from early August, he said.A 21/25 is $7.10 (€5.5) to $7.40 (€5.7) per pound DDP, and the market in the US is around $7.30 (€5.6) to $7.40 (€5.7), said Torch.”So no one is going to support these prices right now,” he said.
According to Gulkin, at the moment sizes 31/40 for cooked, peeled, tail on (CPTO) shrimp is running at $7.25 (€5.60) per pound, which is traditionally quite high. For sizes 51/60 it is about a dollar less at $6.25 (€4.80) to $6.50 (€5) per pound.
Todd Rushing, co-founder of online start-up ShrimpTrader, toldIntraFish at the end of August delivery to the East Coast of the United States for sizes 16/20 cooked product, prices were $9.75 (€7.50) per pound, for 21/35 they were at $8.40 (€6.50) per pound and for 26/30, around $7.75 (€6) per pound.
For raw product the size 26/30 was selling at $5.55 (€4.30) per pound, he said.In the last year, the majority of India’s production — 95,927 metric tons — went to the United States, followed by Europe, with 73,487 metric tons, and Southeast Asia with 52,533 metric tons.