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International Sourcing: ‘Promise of plenty’
MPEDA steps up effort to put India on the global seafood map
By Shubhanyu Jain
March 01, 2007
India's vast coastline provides fishermen with ready access
to an array of fish and shellfish species from the Indian
Ocean. Meanwhile, large swaths of flatlands, especially along
the country's east coast, are used for farming shrimp, the
linchpin of India's aquaculture industry.
Now, backed by heightened government efforts to maximize
marine resources, the world's second-most-populous nation
intends to bolster its standing as a global seafood supplier.
The Marine Products Export Development Authority (MPEDA),
established in 1972 to promote and regulate India's seafood
exports, is boosting investment in everything from training and
technology to quality-assurance, processing and marketing.
And the goal is lofty: By 2015, MPEDA wants India to achieve
seafood exports of $6 billion per year, a steep climb from the
record $1.64 billion for 2005-06.
That goal was apparent at Indaqua 2007, a MPEDA-sponsored
trade fair held in mid-January at the Chennai Trade Centre in
Chennai, India, showcasing the nation's processing prowess and
seafood products to attendees from scores of seafood companies
worldwide.
MPEDA currently represents 170 seafood-processing facilities
in India that meet the European Union's strict certification
standards. That's crucial, says Thomas Kuruvilla, MPEDA's
director, because meeting the European Union threshold in
essence guarantees compliance with the certification standards
of other countries.
MPEDA regularly conducts training programs for fishermen and
shrimp farmers to help improve the quality of seafood for
export. Further, the organization has formed a supply-chain
process that ensures wild and farmed seafood products are
handled properly - at the correct temperature - from
post-harvest and processing to storage and export.
MPEDA additionally has opened a seafood-processing hub in
India to assist other nations with seafood processing. That has
allowed them to "process the food right here in India at a
fraction of the cost they would have to incur in their native
countries," says Kuruvilla.
India's bounty
India exports a wide range of seafood, from shrimp and
cuttlefish to squid, octopus and mackerel.
Most of India's aquaculture operations are centered on the
east coast - many of the shrimp farms are converted rice paddy
fields - primarily in the states of Orissa, West Bengal and
Andhra Pradesh, as well as in Tamil Nadu at the nation's
southern tip.
In the Tamil Nadu capital of Chennai, for instance,
Navadhaan Aqua has been exporting seafood since 1993 and is one
of the region's largest shrimp farms. "It is spread over 200
acres and has 80 grow-out ponds," says
T.V. Mani, the
company's managing partner.
In fact, shrimp, especially farmed black tigers, pinks and
browns, comprises more than 60 percent of India's seafood
exports.
Wild seafood species are in the mix as well. Among the
popular species are ribbonfish, cuttlefish, mackerel, pomfret,
squid, octopus and crab (namely the mud, blue swimming and
three-spot varieties).
That's not all. MPEDA plans to export cobia, tilapia and
seabass in the near future, says Kuruvilla, who notes that tuna
is being shipped from India to Japan for the first time.
Seafood from afar
Until 2002, Japan was the major market for Indian seafood
products. In recent years, the focus has shifted toward Europe
and the United States, which have become the first- and
second-largest markets, respectively.
Other countries that regularly import seafood from India are
Canada, Mauritius, Australia, Mexico, South Africa and China,
as well as parts of Southeast Asia and the Middle East. India
now exports seafood to more than 70 nations, MPEDA reports.
Excellensea Marketing Services, a key player in Indian
marine exports, is one of the companies looking West. It
regularly ships black tigers, squid, cuttlefish and kingfish to
the United States, plus lesser quantities of pomfret,
ribbonfish and mackerel.
Choice Canning in Edison, N.J., a leading shrimp processor,
knows all about India's export prowess.
"India has played a major role in tiger shrimp for a long
time in the United States," says Thomas Jacob, Choice Canning's
senior VP, citing Indian-raised tiger shrimp's reputation for
quality.
Destination nation
Indian seafood shipments to the United States dropped
year-over-year in 2006, due in large part to the lingering
effects of the December 2004 tsunami that lashed India's
eastern and southern coasts and destroyed many shrimp farms and
the antidumping duty the United States slapped on shrimp in
2005 from six countries, including India.
U.S. import figures nonetheless reflect India's export
muscle. From January through November 2006, India sent 96.7
million pounds of seafood to the United States, down from 111.3
million pounds the previous year, according to the National
Marine Fisheries Service.
Shrimp was far and away the biggest mover, especially frozen
peeled shrimp. For the first 11 months of 2006, peeled-shrimp
Indian exports to the U.S. market tallied nearly 24.4 million
pounds, falling from 28 million pounds in 2005.
Shell-on shrimp shipments also were significant. Exports to
the United States of 15/20 sizes, for example, totaled 8.7
million pounds, down from 14.9 million pounds in 2005, while
exports of U-15 sizes were 6.4 million pounds, compared with
10.1 million pounds the previous year.
But some Indian seafood products gained ground. From January
through November 2006, U.S. imports of Indian squid (frozen,
dried, salted or brine) surpassed 13.8 million pounds, up from
6.3 million pounds in 2005, while imports of octopus (frozen,
dried, salted or brine) hit 2.3 million pounds, up from 1.1
million pounds.
Shipments of frozen mackerel and Callinectes swimming crab
increased, too, with imports of 1.3 million pounds and 1.6
million pounds, respectively.
Duty calls
The tariffs the U.S. government placed two years ago on
importers from India, Thailand, China, Vietnam, Ecuador and
Brazil have altered the global shrimp trade. The tariffs stem
from an antidumping petition filed at the end of 2003 by the
Southern Shrimp Alliance, a group representing shrimp fishermen
and processors from North Carolina to Texas.
The U.S. Department of Commerce calculates tariffs by
subtracting the export price from the normal value, or the
local price, and dividing the difference by the export price.
For example, if shrimp costs $5 in its home market and $4 in
the U.S. market, the tariff would be 25 percent.
The exact amount of this fee varies by country and exporter.
For Indian shrimp, tariffs average 10.9 percent, says Mahesh
Chavan of Excellensea Marketing Services.
Tariffs, however, are only part of the story. Under a policy
that U.S. Customs and Border Protection began enforcing in
2005, U.S. importers must post continuous bonds to help prevent
tariff evasion. Continuous bonds are calculated by multiplying
the value of a seafood company's imported product from the
previous year by the amount of the tariff. Thus, if a company
imported $30 million of shrimp subject to a 10 percent tariff
in 2005, it would post a $3 million bond in 2006.
The situation remains in flux. In February, a World Trade
Organization panel ruled that U.S. antidumping tariffs on
Ecuadorian shrimp violate international trade law. The panel
said the DOC inflated the tariffs using a controversial
methodology called "zeroing," which involves assigning a value
of zero to export prices that exceed normal values, instead of
a negative number. That effectively increases the difference
between export prices and local prices when averaged out over
time. (The DOC agreed to discontinue the use of zeroing in
early 2006 after the WTO deemed it illegal.)
The WTO is expected to take up the Ecuadorian case. India
and Thailand have also filed petitions with the WTO claiming
the DOC inflated their shrimp tariffs using zeroing, and a
decision is expected soon.
Despite some of the challenges exporters in India face, the
future appears bright. And it never hurts to have government
backing. The country's union minister recently announced that
India will invest more in its seafood export industry - a move
that could strengthen its position as a global source of fish
and shellfish.
Shubhanyu Jain is a writer with Scriba Designare Solutions
in Faridabad, India. SFB Contributing Editor Rick Ramseyer
contributed to this article.