By Balasubramaniam V
The creation of a robust domestic market for shrimp products is essential for the sustainability and profitability of the aquaculture sector in India. Currently, Indian shrimp farmers face significant financial losses due to selling small-sized shrimp (below 12 grams) at prices below their production cost to exporters. Developing a strong domestic market can provide better prices for farmers and reduce their dependency on volatile international markets.
Data Highlights: India exports approximately 900,000 tons of shrimp annually, with small-sized shrimp (below 12 grams) comprising about 30% of this volume. Exporting these smaller shrimp at a loss of USD 1 per kilogram results in an estimated wealth erosion of USD 270 million annually. This significant financial drain highlights the urgent need to develop a robust domestic market.
Economic Structure: The financial losses for shrimp farmers are largely due to the additional costs incurred by exporters. While the cost of production includes expenses such as feed, labor, and other farming activities, exporters must also account for processing, packaging, shipping, insurance, and retailing costs when selling shrimp internationally. These additional costs significantly increase the final consumer price in foreign markets but do not benefit the farmers. Instead, exporters deduct these costs from the price they pay to farmers, resulting in farmers receiving less than their production costs.
If the same shrimp were sold in the domestic market, the associated costs of retailing, packaging, and sales would be much lower than those for exported products. The reduction in these costs means that farmers could receive a fair price closer to their production cost, and Indian consumers would benefit from high-quality shrimp at reasonable prices. This shared benefit would reduce the financial strain on farmers and enhance their profitability. By eliminating the high costs associated with exporting, the domestic market offers a more efficient and financially viable solution for both farmers and consumers.
Domestic Market Potential: The domestic market for shrimp in India is currently underdeveloped, with a consumption rate of only 100,000 tons annually. However, with targeted investment and development, this market has the potential to quadruple over the next five years. Indian consumers will benefit from access to fantastic quality protein at very reasonable prices, a benefit currently enjoyed by international consumers at the expense of Indian farmers.
Benefits of a Robust Domestic Market: By pushing small-sized shrimp into the domestic market, farmers can cut down their losses and maintain financial stability. This financial strength allows them to focus towards producing larger, higher-value shrimp, which can be exported at premium prices. Thus, a robust domestic market serves as a cushion for farmers, enabling them to focus on producing high-value exports. This creates a win-win situation where small-sized shrimp bolster the domestic market, reducing financial stress for farmers, while larger shrimp enhance export volumes and values, bringing in more foreign exchange.
Long-Term Economic Impact: The shrimp farming industry contributes approximately USD 5 billion to the Indian economy annually. By reducing financial losses and increasing profitability, an additional USD 200 million in economic value could be added. This aligns perfectly with the goal of exporting higher-value produce and ensuring the financial viability of the aquaculture sector.
In conclusion, developing the Indian domestic market for shrimp will ultimately lead to a more sustainable and profitable export market. This approach benefits the farmers, the mainstream and the numerous small scale feed millers, the nearly 600 hatchery operators most of whom are struggling to make ends meet, many input supplying companies, Aqua product dealers, the thousands of technical staff, and overall the national economy, ensuring that India continues to thrive as a major player in the global aquaculture industry. By investing in the domestic market, support is provided to farmers and the entire shrimp sector while laying the foundation for a stronger, more resilient export sector.
Call to Action: Government policies and investments should focus on developing the domestic shrimp market. This could include financial incentives for local market development, infrastructure improvements, and promotional campaigns to increase domestic consumption. By doing so, the shrimp farming sector can achieve greater financial stability and contribute more significantly to the national economy.
The author, Balasubramaniam V, is the General Secretary of the Prawn Farmers Federation of India (PFFI) and has over three decades of experience in shrimp farming. He is known for his strategic insights and policy-making in sustainable aquaculture.