Swimming Against the Tide
IT WAS SOMETIME inthelate-1980sandearly-1990swhen Anand Kumar's father first made his move into shipping seafood to foreign destinations. Today, the firm Sandhya Marines, run by Kumar, exports a range of frozen seafood products, most of which are what in the frozen seafood export in- dustry are referred to as value-added products (like ready-to-cook and ready-to-eat varieties) from their base in Andhra Pradesh to around 25 countries. Last year, Kumar estimates, the firm export- ed between 1,000 to 1,100 containers of seafood globally. Most of these contained shrimp and they were headed to the US. "I would say any where between 80 to 85 percent go to the US," Kumar says, and then adds hastily, "maybe, even 90 per cent."
This isn't unusual. India's seafood exports, especially in the shrimp category, have risen rapidly over the last decade on the back of the US' vast appetite for this crustacean. Last year, out of the 1.78 million metric tonnes of seafood worth about $7.38 bil- lion that the country's exporters shipped, shrimp is believed to have accounted for about 92 per cent of them, much of it heading to the US. About 40 per cent of all of India's shrimp exports heads to the US. This has brought prosperity and jobs to India's coastal regions, especially in Andhra Pradesh which contributes the most to the country's exported shrimps, and a thriving industry with a vast network of exporters, traders, aquaculture farmers and in- dividuals who peel and clean shrimps have come up around this business of exporting shrimps.
This success story is now quickly devolving into a nightmare. India's shrimp exporters were already facing duties in the US (a 5.76 per cent countervailing duty, and a 3.96 per cent anti-dump- ing duty), when the new set of 50 per cent tariffs hit, taking the cumulative tariff on Indian shrimp to almost 60 percent."It'sbeen such a difficult and confusing period," Kumar says. "We are all waiting and watching how things will go. But at this level of tariff, it will just be impossible to do business."
The impact of the tariffs has already made its presence felt. Shrimp farms remain unharvested, processing facilities run by large exporters are now running at a fraction of their capacity, and people at the bottom of the chain, those who earn daily wages working in the sheds, peeling and cleaning shrimps, find them- selves out of jobs or with reduced work. Most American buyers paused purchases or pulled out of orders placed earlier about a month before the tariffs become operational. "So the whole month has actually been affected," Kumar says. "Right now, all the big exporters are sitting on a stock of one month or more."
This will have a cascading impact, exporters say, pinching not just the exporters, but everyone down the chain. Kumar, who also leads the seafood export association's Andhra Pradesh chap- ter, estimates there are between 15 lakh and 20 lakh individuals who are involved in the shrimp exporting industry in India. "This industry is very labour-intensive, with many small farmers and workers all connected to it. So everyone is going to get affected."
Shajy Mathew, the director of a Tamil Nadu-based seafood ex- porting firm Jude Foods, points out that the increase in tariffs is already leading to a knock on impact on other markets. "To me, the US market isn't very big. About 10 per cent of my exports go there. But because the tariff has led to ahuge supply, other markets are now demanding reduced prices," says Mathew. "So even if you don't directly export to the US, it's still hurting you."
When the new tariffs came into effect, many consignments filled with shrimps and other types of seafood from India were in transit. Several of these, according to reports, are lying at the port or are in transit, with American buyers who had placed these orders earlier now pulling out of these deals. According to one report, there are over 1,000 tonnes of sea food consignments worth nearly ₹100 crore currently in transit. Mathew has one such con- tainer at a port, which he says will not attract the new tariffs since it landed earlier, but for some unexplained reason, despite several days having passed by, the US authorities haven't cleared it. "It's quite strange. The container reached a few days back and they still haven't cleared it. It's like they are sending a message," he says.
With tariffs on Indian shrimp effectively at nearly 60 per cent now, many believe other countries like Ecuador, which is closer and which has been charged a tariff of only about 15 percent, will take over the market once dominated by Indians exporters. "And once you lose out on the American market, and the longer this drags on, it will be very hard to gain it back," Mathew says.
Pivoting to new markets so quickly will be equally difficult.
"It won't be easy to get into new markets which have their own well-entrenched networks. And each such market comes with its own set of challenges," says Tarun Chalamalasetti, who runs SVR Sea Foods.
The boom in shrimp farming in the last few decades has trans- formed coastal landscapes, with mangroves and marshes being turnedtoshrimpfarms,andcausing,accordingtoenvironmental activists, much ecological damage. "This whole boom has come at the expense of the environment," says Kovada Varalakshmi, the president of the Andhra Pradesh Traditional Fishworkers' Union. "The government has given subsidies and helped this sector boom, while neglecting traditional farming." According to her, work for people who were employed at sheds and process- ing plants of exporters, has now dried up. "People get work every alternate week now. And in these jobs, you earn daily wages, like ₹300 to ₹400. So it is very tough. And many of these people are now looking for work elsewhere, like labourers at construction sites in nearby cities," she says.
Kumar is still keeping his hopes up. "I'm hoping this will be resolved soon, and thet ariffs will be taken back. At least, the 25 per cent that was levied later will be taken back," he says. "We are just watching for now. I don't know what else we can do."