The Hindu Business Line : Shrimp exporters turn innovative; revamp biz

BUFFETED by the US anti-dumping duty, Indian shrimp export is in a major revamp mode. The bigger companies have started value addition in their factories, branding the product and packaging it in smaller consumer pouches for the US consumer.

Over half-a-dozen top and middle-level companies have set up their own fully-owned subsidiaries in the US and have commenced to act as importers on record for their Indian counterparts. Others have set up warehousing facilities to wait for the right market opportunities. And a few have even commenced export of value-added products packed and branded for major international consumer product brands.

"From a predominantly frozen and cooked shrimp exporter with little value addition, Hindustan Lever Ltd has geared up to meet the fresh challenges and is concentrating on the breaded and other value-added segments in shrimp exports," said Mr Salim David, General Manager of HLL.

HLL was a predominantly frozen shrimp exporter to the US. But in the last year, it has moved on to breaded shrimps, marinated shrimp and surimi analogous products such as imitation crab-sticks to strengthen its position in the international markets.

The company has also begun to pack and brand some of their value- added marine products for major international brand names based in the US, the UK and Italy.

And it is not that the industry was waiting for the final ruling on the Changed Circumstances Review report conducted by the US-based International Trade Commission on the impact of the December 26 tsunami of last year, to undertake these far-reaching changes.

The trend to move on from frozen shrimp exports to other value-added items is evident from a survey of the Fisheries Statistics provided by the US-based National Marine Fisheries Service. Several new items such as fish balls and fish cakes have taken a place in the country's export basket in September, which were not present in the earlier year. And most frozen varieties of shrimp exports have fallen sharply over the previous year.

In order to facilitate and sustain their traditional frozen bulk shrimp exports, over half-a-dozen domestic companies undertook the subsidiary route to become importers on record in the US market, sources in the Seafood Exporters Association of India (SEAI) said. They have also begun to re-pack their products in smaller pouches suitable for the US super market chains. There is a possibility that they might move up the value chain and add value for their products sold in the US markets.

But the biggest stumbling block to sustaining frozen shrimp exports in bulk stems from the customs bond, which has to be paid for upfront, even before the US subsidiary can undertake the import, sources in SEAI said. This is proving to be the biggest impediment to shrimp exports to the US.

The solution lies in value addition, packaging and branding the products, said Mr David. And India is a low-cost destination, which can compete with major producers and processors in Europe and the US on value addition. While it is feasible to employ people at Rs 150 per person per day in India, similar workforce in Europe would require 20 euros (Rs 1,080) per person per day.

Major international brands can still outsource the product, packaging and branding to India and still make a handsome profit. And this need not be left to shrimp and seafood alone, but can soon extend to any meal packet, where the Indian producer and company can be the outsource partner for the US and European companies, Mr David said.

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