Supply crunch pushes up shrimp prices

The crunch is due to drop in production in major exporting countries of east Asia following the spread of Early Mortality Syndrome disease in aquaculture farms

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Global prices of shrimp, which faces a serious supply crunch, have risen by around $1 per kg in just four weeks. The supply crunch is due to a drop in production in major exporting countries of east Asia following the spread of Early Mortality Syndrome (EMS) disease in aquaculture farms. According to market reports, supply constraints caused the price to rise.

However, the good news is it will be a boon to exports from India and Ecuador, which are unaffected by the disease.

The average global price of shrimp has increased to $9 a kg (for 20-30 count), up from $7-8, four weeks ago. The local farm gate price, too, has risen to Rs 400-420 a kg, from Rs 250-300 earlier.

Global prices were on a dropping mode till June as European buyers had been pressurising exporting nations to reduce prices. The European Union (EU) reduced import of high-value items such as shrimp and was ordering shrimp only at a price range of $7-7.5 per kg. According to leading exporters, economic crisis in this region had slowed down demand for costly seafood items. Now the serious drop in production caused a paradigm shift in the pricing of shrimp.

Processing plants in east Asian countries have to depend on import from India in order to meet their commitments to European and US importers. Countries such as Vietnam and Taiwan also importing more shipments from India for export purpose. Rise in local demand in Korea also pushed up demand. According to experts, price might spurt further as production in east Asia will take a few months to be back to normal. Supply from Thailand may fall about 50 per cent this year, compared to the normal production size of 500,000 tonnes a year.

Shrimp exports from Thailand, the world's second largest exporter, may slump 50 per cent this year because of the disease, said Thai Shrimp Association. Supply condition will be stringent in the coming weeks as 90 per cent of the season's harvesting in India is over, said Anwar Hashim, a shrimp exporter and former president of Seafood Exporters Association of India.

He told Business Standard that as exporters had to adhere to their commitments to the US, they have to buy shrimp at any cost. Failure in export contracts attract heavy penalties in the US.

According to data of the Marine Products Export Development Authority (MPEDA), southeast Asia was the largest importer of Indian seafood items in 2012-13. During the period, the region imported 340,944 tonnes, valued at Rs 4,357 crore, which was 37 per cent of India's export and 23 per cent of the total earnings.

In FY13, shrimp export to this region increased 24.87 per cent, compared to the previous financial year. Frozen shrimp continued to be the major export value item from India, accounting for 49.63 per cent of the total dollar earnings. Shrimp exports during 2012-13 increased 24.86 per cent in volume to 189,125 tonnes and 42.97 per cent in value at Rs 8,175 crore.

Hashim forecast a sizable increase in exports to southeast Asia in the current financial year.