The outbreak of the COVID-19 pandemic is having a major effect on global trade, but in India, authorities are playing down its impact on the country’s seafood industry.
K S Srinivas, the chairman of the Marine Products Export Development Authority (MPEDA), India's seafood trade board, said last month the coronavirus was not likely to have any adverse impact on the exports of seafood from India to China, The Economic Times reported 13 February. Srinivas added at the India International Seafood Show (IISS) 2020 in Kochi in early February that shrimp consumption in China would likely remain unaffected because of the small size of the city of Wuhan, the epicenter of the outbreak.
But the Food and Agriculture Organization of the United Nations (FAO) said in a statement on 14 February that the spread of COVID-19 in China resulted in lower-than-normal consumption of shrimp during the Chinese New Year holidays. FAO forecast a “depressed market” in the months to come due to the outbreak.
Publicly, only a few of about 500 Indian seafood exporters to China have raised concern about how their exports might be affected. But privately, several executives of Indian seafood firms said they’re worried about a global slowdown for the seafood trade, and especially the market both in China and elsewhere for shrimp, as India is the world’s biggest supplier.
Naeem Banglawala, a shrimp farmer operating organic shrimp farms on 100 hectares in Gujarat state and also director of a company supplying raw material to processors and exporters, said he had not yet seen a dip in local pricing because of the coronavirus outbreak.
“We do not see any price change in local market and it has remained strong [to] date. However, one of the reasons for this can be [that] Gujarat harvesting season starts from May and currently limited material is available in this region,” he told SeafoodSource.
Banglawala said he’s certain some in the shrimp sector will be financially affected, as some processors are delaying payment to suppliers while waiting for payment from China. But the outlook amongst colleagues in his sector remains positive, Banglawala said.
“Overall, farmers are optimistic about this season as processors are focusing on the U.S.A., E.U., Japan, and other markets and trying to reduce China market dependence for this difficult period,” Banglawala said in an email.
Gujarat can supply vannamei of bigger sizes (under-20 count, 20/30 count per kilogram) to local major processing plants. Currently farmers in the state “are planning for low stocking-density for this year and going a little bit slow and doing step-wise stocking for new season to avoid same time harvesting demand,” Banglawala said.
Less optimistic than Banglawala, an official from another shrimp company in Gujarat – who requested anonymity – told SeafoodSource China is a large market for his company and he is worried the COVID-19 pandemic will affect its business plans.
“We are putting up a new shrimp processing unit and investing a huge sum of money in it. Now due to the sudden breakout of coronavirus we are really having doubts in entering the industry at this stage,” the executive said.
ICRA Limited, an investment information and credit rating agency in India, said on 14 February that it expects a drop in global shrimp prices over the next few months in response to changes in demand in China, one of the largest importers and consumers of farmed shrimp. In addition to lower demand, mounting complications in logistics and port clearance as a result of health and safety measures will negatively affect the supply chain, it said.
“As far as impact on India is concerned, ICRA notes that with China largely importing lower-value added and block frozen shrimp from India, the demand is serviced by several smaller exporters and few large players. Companies with high concentration on the Chinese markets would be impacted immediately, as demand falls,” ICRA said, adding that the most vulnerable Indian firms are those of small scale with limited financial strength.
According to ICRA, Indian exporters who already had their price contracts on quarterly and annual basis will not feel the impact immediately. But those who rely on sales on spot prices will be affected.
“While a confluence of factors like the ability to find alternative markets, reduction in supply over the next three to four months, early harvesting, and delayed stocking will determine how the dynamics play out, the immediate term correction in shrimp prices is a given,” ICRA Vice President and Sector Head Pavethra Ponniah said.
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