'US cutting duty on shrimp imports to benefit Indian farmers'

US government's decision to roll back the hike in anti-dumping duty on shrimp imports from India will benefit the country's farmers and lead to higher production, rating agency Icra said today.
"... The impact of any hike/decline in duty/tax will be passed on back to the farmers by the processors, and not to the end consumer.
"Hence, while farmers bear the price-risk, they stand to benefit from the current reduction in duty levels. This could lead to increase in sowing and higher shrimp production in the near term," Icra said in a report.
The US Department of Commerce (US DoC) in its 10th annual review had increased the weighted average anti-dumping duty (ADD) on shrimp imports from India to 4.98 per cent up from 2.96 per cent.

"During the final review notified on September 06, 2016 (effective from September 13, 2016), the USDoC rolled back the hike in ADD imposed during the preliminary review of March 10, 2016," it said in the report, observing that while farmers stand to gain from the roll back in duty, it will be revenue/ margin neutral for processors.
India has emerged as the largest exporter of shrimp to US following Thailand's production being hit by the disease Early Mortality Syndrome.

Indian cultivation has over the past five years moved largely from low-volume high-value Penaeus monodon (black tiger) to high-volume Penaeus vannamei.

Consuming 123,114 tonnes of frozen shrimp exports from India in 2015-16, the US is India's largest market for frozen shrimp.
While shrimp exports to US contribute to approximately 34 per cent of sales in volume terms, in value terms it stands at nearly 39 per cent of total shrimp exports.
Shrimp exports to US stood at USD 1.33 billion in FY16.
However, overall seafood exports from India declined by 10 per cent in FY16 to 945,892 tonnes and by 15 per cent (value) to USD 4.7 billion.
Further, average realisation of Indian frozen shrimp (which constitute 66 per cent value of the total exports) in 2015-16 declined by nearly 20 per cent to USD 8.3 per kg from USD 10.4 per kg in 2014-15.

Global supply (especially shrimp) increased during FY16 with the gradual recovery of Thailand and Vietnam from disease outbreaks. India also lost share of global business to these South East Asian countries. Coupled with flat demand, realisations fell.
Depreciation of the Euro, weaker economic condition in China and devaluation of the Yen adversely impacted global demand for seafood.
In value terms, exports to US are followed by exports to EU (approximately 19 per cent), SE Asia (17 per cent) and Japan (11 per cent).