IMPACT OF GLOBALISATION CHALLENGES AND OPPORTUNITIES FOR INDIAN AQUACULTURE

G.MOHAN KUMAR
MARINE PRODUCTS EXPORT DEVELOPMENT AUTHORITY, INDIA

OECD Workshop on Globalization, 16-17 April, 2007, Paris.

Share of Aquaculture in Global Fish Production

120000 100000 35

Quantity (MT)

80000 60000 40000 20000 0

25 20 15 10 5 0

Capture production stagnating at 95 M tons, Culture crossed 45 M.tons, Current share of culture in total is 32 %

19 19 50 5 19 3 19 56 5 19 9 19 62 6 19 5 19 68 7 19 1 19 74 19 77 8 19 0 19 83 8 19 6 19 89 9 19 2 19 95 9 20 8 20 01 04

Capture

Culture

Share of Culture %

Share of culture %

30

Aquaculture and fish trade

Increasing Importance of Aquaculture in trade.
Very important for 26 % of international fish trade For another 21 % aquaculture is starting to gain important.

Share of Shrimps in Int. trade-16.5 % Contribution of Farmed Shrimps-40 %

Cultured shrimp production of selected Asian countries 2004 to 2006

Country China Thailand Vietnam Indonesia India Others Total
(Source: GSOL 2006)

Year 2004 375 000 325 000 290 000 190 000 126 000 90 838 1396838 2005 408 000 374 159 310 420 197 000 143 000 101 204 1533783 2006 405 000 386 742 346 528 206 000 152 000 111 000 1607270

THE INDIAN SCENARIO

India is positioned 19th among Sea food exporting countries (FAO, 2004). During 2005-06, the country exported over 0.51 million metric tonnes, worth US $ 1.64 billion. Shrimp contributes the main share with 58% value and 28% quantity.

1000

1200

1400

1600

1800

200

400

600

800

Progress of Indias Seafood exports

000 MT US $ Million 1644.21

19 8 19 0 -8 81 1 19 -8 8 2 19 2 -8 83 3 19 -8 8 4 19 4 -8 19 85 -85 8 6 19 6 -8 8 7 19 7 -8 . 88 8 19 -8 8 9 19 9 -9 90 0 19 -9 9 1 19 1 -9 92 2 19 -9 9 3 19 3 -9 9 4 19 4 -9 95 5 19 -9 9 6 19 6 -9 9 7 19 7 -9 9 8 19 8 -9 99 9 20 -0 0 0 20 0 -0 0 1 20 1 -0 02 2 20 -0 0 3 20 3 -0 0 4 20 4 -0 05 5 -0 6

Major Markets & Their Share 2005-06

Quantity
E X P O R T S
CHINA 27% OTHERS 8% Japan 12%
CHINA 12% S.E. ASIA 8% OTHERS 8%

Value
Japan 16%

S.E. ASIA 12% MIDDLE EAST 4%

USA 11%

MIDDLE EAST 4%

USA 23% EU 29%

EU 26%

Share of shrimp in Indias total exports

Others
Others 16% Fr. Squid 10% Fr. Cuttlefish 10% Fr. Shrimp 28%

Fr. Squid 8% Fr. Cuttlefish 8% Fr. Fish 14%

12%

Fr. Shrimp 58%

Fr. Fish 36%

Quantity

Value

Market-wise export of Fr. Shrimp

Australia 1.93% Middle East 4.12% S.E. Asia 4.64% China 1.62% Others 7.56% Japan 20.26%

Japan USA EU China S.E. Asia Middle East Australia Others

EU 27.93%

USA 31.94%

Export of Frozen shrimp to OECD Countries

122000 120000 118000 116000 114000 112000 110000 108000 106000 104000 2001-02 2002-03 2003-04
Quanit(MT)

860 840 820 800 780 760 740 720 2004-05 2005-06

Value (USD Million)

10

INDIA - Culture Fisheries

India - 5th top most shrimp producer and 2nd largest aquaculture producer in the world Total production from culyure 2.47 m. tonnes 1.2 million ha. of brackish water area spread over 10 maritime States/Union Territories (Only 15% is presently under farming) 8.5 million ha. available for sea farming 5.4 million ha. available for fresh water aquaculture

11

INDIA - CULTURED SHRIMP &SCAMPI PRODUCTION (MT)

200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 95-96 96-97 97-98 98-99 99-00 00-01 '01-02 '02-03 '03-04 '04-05 05_06

12

Production Pattern
India produced 143000 tonnes of shrimp and 43000 MTof scampi in200506 from about 190000hect The average productivity per hactare is nearly one tonne. This shows that the aquaculture practices are mostly extensive with limited stocking density

13

Composition of Shrimp Farmers

(based on farm holdings)
5-10 Ha 2%

2-5 Ha 6%

> 10Ha 2%

0-2 Ha 90%

Shrimp culture is basically an enterprise of Small and marginal farmers

14

Globalization Effects
Increased popularity of fish as health food Greater demand for ready-to-eat & ready to cook products Emergence of the super-market as a major outlet for convenience products Increasing awareness of consumers. Food safety and quality requirements. Non-tariff barrier Growing concern for environmental sustainability Choice of species trade driven Anti-dumping measures

15

Coping with the challenges of Globalization

Increasing demand vs. disease problems in the shrimp aquaculture Introduction of L. vannamei in major Asian countries as an alternative species Unprecedented increase in shrimp aquaculture production Price fall in international markets Imports into USA crossed 500,000 MT(2004)

16

Global cultured shrimp production 1995-2004

2500000

Quantity MT
2000000 1500000 1000000 500000 0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

17

Cultured shrimp production pattern in selected Asian countries

450000 400000 350000 300000 250000 200000 150000 100000 50000 0
V ie tn am ne si a na nd Ch i Th ai la In do
2004 2005 2006

Quantity MT

In di

18

Black Tiger Price In World Shrimp Market

16 14 12 10 8 6 4 2 0 8/12 16/20 21/25 26/30 31/35 2003 2004 2005

19

TREND IN UNIT VALUE OF INDIAN SHRIMP EXPORTS (US $)

7.30 7.20 7.10 7.00 6.90 6.80 6.70 6.60 6.50 2001 2002 2003 2004 2005 6.88 6.83 6.75 6.76 7.19

20

Anti-Dumping Action by USA

In 2003 anti-dumping cases started against India and five other countries AD duties ranging from4% to 10.17 % imposed on India Bonding requirements imposed by US CBP The retrospective system of USA necessitates continuous bonds for three years Increases transaction cost of exporters. Many exporters find it difficult to continue in business

21

Impact of US anti-dumping measures

Anti-dumping duty & the bonding requirement imposed unbearable burden on exporters Number of exporters to US declined 169 77 Exports to US has dropped Fall in farm gate prices
Export of frozen shrimp to US
45000 40000 35000

400 300 250 200 150 100 50 0

2001-02 2002-03 2003-04 2004-05 2005-06

30000 25000 20000 15000 10000 5000 0

Quantity (MT)

Value (USD Million)

V a lu e (U S D M i lli o n )

350

Q u a n ti ty (M T )

22

Farm gate prices offered to shrimp farmers

12 10 USD per Kg 8 6 4 2 0 1999 2000 2001 2002 2003 2004 2005 2006

23

Concerns of Shrimp Farmers

Recurring disease problems & Repeated crop losses. Price fall International markets & farm gate Increasing cost of production High feed cost (fish meal issue) & other inputs Rising quality requirements Lack of insurance and financial support Exploitation by middlemen, moneylenders

24

Major Issues In International Trade In Fish And Fishery Products

1.Market access issues 2.Food safety issues 3.Environmental issues

25

Market Access Issues

1.

Tariff escalation: Value added products attract higher tariff levels.

This perpetuates the dominance of Developed countries in the production and marketing of valueadded products

26

Supermarkets
1.

2.

Increased dominance of supermarkets in retail trade in fish and value-added products Entry barriers create difficulty in accessing supermarkets
a) b) c) d)

Supply logistics difficult for a new entrant. Shelf space expensive High costs of market promotion Brand barrier.Acquisition of brands prohibitively expensive

3.

The above constraints force exporters to pack in the name of private labels and forego margins heavily.

27

Non-Tariff Barriers
Sanitary and Phyto-sanitary Standards
EU directives pertaining to the residue levels - the most challenging The detection levels for chloramphenicol and Nitrofurans necessitate heavy investment in analytical equipment. Japanese market also becoming more sensitive to residues Rejection of shrimp consignments lead to financial crisis for the export industry

28

Measures to Meet the Challenges

Short term measures:
Notification banning the use of anti biotics in hatcheries ,farms etc Village level campaigns against use of anti-biotics and other pharmacologically active substances in shrimp farms

29

National Residue control programme

National Residue Control Programme (NRCP) put in place. Establishment of state-of-the -art laboratories for residue analyses Training and recruitment of staff for residue analysis

30

Medium and long term measures

Legislation and Regulation of Aquaculture through Coastal Aquaculture Authority Act (2005) Probiotic mode of operation of shrimp hatcheries Code of practices for shrimp hatcheries and farms and their registration Domestication and selection for SPF shrimp Regulation on import of exotics

31

Traceability:
Since farming is highly fragmented, traceability becomes difficult. Certification becomes unaffordable Comprehensive database on shrimp farms in the country under preparation Assigning identification code to individual farms GIS mapping of farms in association with National Remote Sensing Agency

32

Environmental sustainability and economic viabilty

Adoption of FAO Code of Conduct for sustainable aquaculture practices MPEDA-NACA programme for sector-wide adoption of BMPs. Introduction of Participatory farming through formation of Aqua Clubs

33

MPEDA-NACA Experiment
BMPs based on FAO CCRF Emphasis on pond bottom/water quality,screening of seeds ,optimisation of feeding ,low stocking densityand minimisation of water exchange Co-ordination of farm activities by group formation(self-help groups) Empowerment and self reliance.

34

Outcomes of MPEDA-NACA Project

Successful crops and improved profits Reduced disease prevalence Aquaculture without use of antibiotics Group traceability through aqua clubs Increased cooperation among farmers More interaction of farmers and stakeholders Increased awareness on environment Better Price for BMPshrimp

35

MPEDA-NACA Programme

36

The Cluster Concept in India

Institutionalisation of cluster farming by formation of Aqua farmers Societies Registration of societies by MPEDA based on adoption of code of practices Financial support to the societies. Bottom-up appraoach country-wide Financial assistance for societies for promoting sustainability New outreach Agency National Centre for Sustainable Aquaculture (NACSA) established for promotion of sustainable aquaculture though capacity building

37

Regulatory system
Coastal Aquaculture Authority set up in Dec 2005 Regulation within 2kms of high tide lines of seas ,rivers , creeks and backwaters Guidelines for farming and allied activities.

38

Guideline for Farming

Ecologically sensitive areas not to be used No farming within 200 metres of the HTL Maintain 100 m distance from the nearest drinking water source.Farms not to be located across natural drainage canals and flood drains. Control on stocking density Farms to maintain a distance of 50-100 m from the nearest agricultural land Prohibition of use of banned anti- biotics

39

Diversification Challenges
Pressure on diversification Short term solutions difficult because of lack of hatchery technology. MPEDA has embarked on several R&D projects Indian seabass, mud crab,Grouper, Cobia Enormous potential for cage farming

40

Value Addition
Value addition key to betterment of farmers Investment needed in processing Technology up-gradation Access to retail chains difficult for small& medium exporters Better brand equity needed.

41

The Way Forward

Value addition of seafood products More FDI inflow in Seafood sector Promotion of Brand equity Promotion of organic shrimp MPEDA-SIPPO technical collaboration

42

Opportunities
Increased demand for products Diversification opportunities Benchmarking practices with the most advanced in the world . Capacity building Emergence of sustainability as an integral part of Aquaculture practices

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