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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.

 

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