FISH IN INTERNATIONAL TRADE

Problems, Barriers & Restrictions

By Saswata Maitra

Even after, being a heavy export earner to the tune of 2.60 billion dollars, the fisheries sector of India is facing numerous problems on account of-

economic shortcoming, technical constraints institutional limitation trade restrictions and marketing lacuna Severe competition exist between the different

competitors like Thailand, China and South East Asian countries for sustaining the market share.

However these are too broadly classified, and it would take a closer inspection to correctly identify the problems of Indian seafood export trade industry of modern times.

According to the study conducted by CMFRI from 2009-2011 the following were listed as the major concerning trading Problems faced by the Indian Seafood exporters-

Irregular supply of raw material Cut throat competition for raw material Heavy competition for target market Low capacity utilization Higher cost of production and low margin of profit Uncertainty in Prices Dictatorship of buyers High cost of investment Lack of market and product information

Irregular supply of raw material-Unpredictability of landings and production:- The

major exportable species like shrimps, lobsters and high value fishes registered a downward trend in landings over the years . There has also been a significant reduction in shrimp production due to disease outbreak and huge cost of shrimp farming. In addition, the seasonal variations in marine catches constrain the operations of the firms.

Cut throat competition for raw material -Nominal prices of raw materials much above the

real prices:- The peak landings in the marine capture sector generally coincide with the peak season for exports. More than 60 per cent of the landings occur during the post monsoon period which coincides with the highest export demand. As a result the raw materials are often purchased at exorbitant prices at these times.

Heavy competition for target market –

Too many exporters chasing too few markets:- There exists very huge competition for gaining access to the target markets. Japan, USA and European Union or Western Europe were the major fish importers from India, which accounted for about 60 to 65 per cent of the volume and about 70-75 per cent in value of Indian seafood export.

Low capacity utilization-

More and more capacity generation leading to less and even lesser utilisation:- Realization of the capacity utilization was the major problem faced by them and the average capacity of the processing plan was found to be 32.12 tonnes whereas the utilization was only 12.10 tonnes (37.70) percent. It was found that during the period from October - December months contributed to 30.39 per cent followed by January- March at 28.29 per cent. The processing plants processed minimal quantities during the period during July-August and April-June.

Higher cost of production and low margin of profit-

The cost of production increased exorbitantly on account of high purchase prices of the exportable species and other operating expenses like labour cost, water and electricity charges. The high cost incurred for purchase at distant markets, compliance cost, establishment cost all resulted in higher unit cost of production and lower profit level.

Uncertainty in Prices – Erratic global markets and demand habits:- There

exists uncertainty in prices in the international market with the economic recession spreading to most of the target markets. The price uncertainties lead to delay in payments, loss in revenue and getting delayed in shipment and increased demurrages.

Dictatorship of buyers – Paradox of buyers becoming price makers:- The

export market is necessarily a buyers' market with the prices fixed by the international buyers . The absence of-domestic demand coupled with the premium prices in the international market makes the products disposal at the whims and fancies of the importers. The exporters thus became a price taker than a price maker.

High cost of investment – Break evens are waiting for the long run:- The

establishment cost of a processing plant increased considerably over one years due to stringent quality standards Set by international trade regulations. The compliance cost for EU approval also Increased manifold thus resulting in huge cost of establishment.

Lack of market and product information – Lag in market intelligence and poor market news:-

The lack of market and Product information leads to demand and supply constraints. The taste and preference, of the buyers ever changing, that it becomes difficult to coup up with their demand. The lack of proper market intelligence and poor market news leads to the rag In equipping the seafood traders.

BARRIERS TO SEAFOOD TRADE IN INDIA

Barriers in seafood trade in India can generally be classified under two categories:-

In terms type of trade- Import barriers, & Export barriers

In terms of regulations:- Tariff barriers, & Non tariff barriers

IMPORT BARRIERS Import barriers are not common in India due to the

non requirement of sea food import. It is however quite common in case of ornamental fish import-

Non-Tariff Barriers on Imports- In order import fish , one requires a special import permit (SIP) creating immense amount of hassles for the importer. Also raises the possibility of corruption on the part of the officials in charge. Sometimes when the permits takes considerable time that adds to the cost of storage of fish at the port.

Barrier on Ornamental Fish Imports- . Only limited varieties of fishes are allowed. Rules also appear to be more stringent than most countries across the globe. But due to the increasing demand for ornamental fish from the corporate sector, they are often brought through the illegal routes leading to corruption.

BARRIERS ON EXPORTS Barriers From EU (European Union)- Harmonisation of testing procedures Rejection on account of bacterial inhibitors/

unspecified antibiotics Rapid Alert System Destruction of Consignments

Barriers From US- After the events of September 11, 2001, US

Congress passed the Public Health Security and Bioterrorism and Response Act of 2002. This Act created an indirect barrier for seafood exports from India as inspections increased.

Indian export consignments have also been rejected under country of origin labelling norms.

While catching shrimps it needs to be ensured that sea turtles are not killed. In 1996 USA banned imports from India accusing that Indian fishermen do not use turtle excluder devices.

Tuna exports need to have dolphin safe catching procedure labelling.

Barriers imposed by other countries on Indian exports-

Saudi Arabia have been imposing a ban on India since 1984, as WHO reported India as a country affected by cholera at that time.

Chinese authorities do not have details of their norms.

Revised quarantine measures to be imposed by Australia on prawn imports also creates barriers to Indian exporters.

Environmental restrictions in seafood export-

1. Sanitary and Phytosanitary Measures2. Anti-dumping measures3. Subsidies and countervailing measures-

criticality on the existing management regime and the bio-economic circumstances of the relevant fishery. Pertains to the problem of overfishing.

4. Technical barriers to trade and point of origin- producing or catching of fish following proper environmental procedure or else facing trade conflicts.

5. Non-governmental efforts to promote marine conservation

6. Government sponsored labels and traceability

Previous years questions- What are the problems faced by the seafood

export trade in India? Mention some suggestive measures to overcome such problems. (2006)

What are the barriers to the seafood trade in India? (2009,2010)

REFERENCES CONSTRAINT ANALYSIS ON THE IMPEDIMENTS FACED BY

INDIAN SEAFOOD EXPORTERS, Salim.Shyam.S. and Aswathy. N, Socio- Economic Evaluation and Technology Transfer Division Central Marine Fisheries Research Institute. Cochin, 2011

Fisheries Trade in India: Understanding Potentials and Barriers, Rajeev M. Institute of Social and Economic Change, Bangalore, India in collaboration with Norwegian Institute of International Affairs, 2007

Asche F. & Smith. Martin D., Trade and Fisheries: Key Issues for the World Trade Organization, World Trade Organization- Economic Research and Statistics Division, January 2010

Seafood Export Journal, September 2011 issue. Wikipedia the free encyclopedia,

http//www.wikipedia.com FAO- www.fao.org/fishery trade

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