- India's Shrimp Production and Exports seen dropping in 2020
- Covid-19 pandemic takes a toll on shrimp production and demand in India and globally
- Outlook and expectations on demand and supply in latter half of 2020
India’s long coastline panning over 8,000+ Kms across the Southern, Eastern and Western space helps the country to be of the one of the major players in the global aquaculture sector (fish, shrimp and related segment). India is the second largest producer of aquaculture (majorly shrimp production) after China and the largest exporter of shrimp in the world. Total production in the country stood over 800,000 MT during 2019 with the sector managing double digit growth in the last decade. Over the years, the country’s shrimp production sector has become increasingly organized with usage and adoption of new technology, availability of good quality feed to help have decent size of produce, fit for exports, as well as better management of produce wherein it can be processed, stored and shipped for the desired location providing the players as well as the country with large and decently growing forex revenues. Lately, around 80% of the shrimp feed production and exports is managed by the organized sector while balance held with unorganized players.
Data from Indian Ministry of Commerce and Industry shows that shrimp production grew by over by 30% to ~804,000 MT in 2019 as compared to ~616,000 MT in 2018 with shrimp exports rising by nearly 9% to ~667,000 MT to different countries in the world. Exports represented near 83% of the of total shrimp production in the country in 2019. Strong growth in exports was despite the fact that, they recorded a hit during the first half of the year, while second half more than compensated for the weak volumes. Amongst the major nations, US was the largest importer accounting for near 42% of the total exports followed by China which had 24% of the total exports. This was followed by EU ~11%, Japan 6% and Vietnam ~5% and others 12% respectively.
Total production for the year 2020 (Calendar Year) was expected to be around similar levels with moderate growth seen in the year though the emergence of Covid-19 pandemic weighed on the overall demand a well as production of shrimp for the country and other parts of the world. Generally, a number of external factors like weather pattern, disease outbreaks, volatile prices, etc., already contribute to the unpredictability on production, demand and margins of the players in the industry. This is additionally affected by volatility in supply and prices of major ingredients of shrimp feed such as soya and fish meal that add to the risk factor. In the current state, the Covid-19 pandemic impacted both the producers of product as well as consumers to a great extent across the globe. In India, despite fish, shrimp and other related products being treated under essential commodities, output took a hit as complete lockdown in the country during March to May 2020 affected the supply of feed, amidst the logistical hindrances on man and material. This resulted in shortage on availability of feed as well as desired availability of labour affecting production trend. The same was appended with forced reduction by players who anticipated moderate demand reduction due to the coronavirus issue across the different parts of the world. Summer season in the country marks for the largest share of production of shrimp and that was the same period when the country went into lockdown, hence output was bound to go down.
On the consumption space, demand for these products came down as the pandemic reduced consumption from restaurants and hotel industry, inflicting total demand globally. Positively, retail demand has increased due to increased consumption of shrimp in home cooked food wherein the same stands increased in the US, Europe and nearly all parts of Asia, this is unlikely to aid the fall in the total global demand for the year. As per news reports and estimates from various domestic agencies, total shrimp production in India is expected to fall by nearly 20% for 2020. In a news report lately, President of All India Shrimp Hatcheries Association said, fall in output for shrimps is led by a combination of factors including “production issues due to diseases, reduced stocking following the drop in prices and Covid-19 induced labour shortage in several seafood processing plants.”
Numbers further reflect the cause of worry, both on the Indian and Global shrimp demand-supply, if we consider the comments provided by data analysts and corporates, as have been reported on UCN (Undercurrent News). Global consumption for shrimp is expected to fall by over 15% to 3.2 Million MT, taking out as much as 600,000 MT worth of total production from the world. The expectations on supply from India are further weakening with production drop seen anywhere between 20% to as high as 30% amidst slew of problems as also discussed above. The same aspect can be ascertained to an extent by the monthly shrimp export figures which have shown 20-25% drop in months between Apr to Jul from India. On a further negative note, demand destruction is seen even severe all across the globe in the near term, mainly led by reduced consumption from commercial space globally which is also putting pressure on realizations which recovered from the lows seen in May and Jun months of 2020, however still stay lower than averages seen in 2019 further inflicting sales as well as margins of producers and processors in different parts of the world.
On a net-to-net basis, though the strong and firm growth story on the domestic shrimp sector and players is here to stay over the long-run, near-term problems are expected to dent the volume, revenue as well as margins of most players for 2020. Silver lining is attached with the fact that, lockdown has been lifted fully or partially in almost all parts of the country and the globe. Though cases and problems due to the Covid-19 pandemic continue, things are ameliorating on the production-consumption perspective in most sectors and this is likely to aid the demand for the shrimp sector as well. Full year performance would surely remain lower than 2019 (CY basis), however, things seem to improve moderately in the second half as equated to production and consumption in first half of the year.