What is Coronavirus?
Coronavirus (CoV) is a large family of viruses that cause illness ranging from the regular cold to more severe diseases such as Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV). A novel coronavirus (nCoV) is a new stretch that has not been identified in humans previously.
K.S. Srinivas, Chairman of Marine Products Export Development Authority (MPEDA) of India has predicted some possible impacts of coronavirus on the South Asian nation’s exports of seafood currently spreading in China and other countries. According to him, “The impact of coronavirus on seafood exports is minimal. There is no need for farmers or exporters to panic. The demand for shrimp and other varieties remains unchanged at the global level.”
Impact on Seafood trade between China and India:
The massive business shutdown in China due to coronavirus will lead to a contraction in regional demand for seafood, resulting in an oversupply in the global market, according to Pavethra Ponniah, vice president and sector head, ICRA Ltd.As per ICRA, China mostly imports lower-value added and block frozen shrimp from India. Companies with a high concentration on the Chinese markets, especially smaller ones, would be impacted immediately, as demand falls. Companies already locked into quarterly to annual price contracts would not feel the immediate impact. However, the margins of companies selling on spot prices would be impacted. Given the lead time of 3-4 months for cultivation, the quick-term supply of shrimp is inelastic.With China cracking down on imports via Vietnam, India’s direct exports to China jumped in FY20. China and Vietnam together now account for 25% of shrimp exports from India (in value) while 45% plus of India’s exports are shipped to the USA. Vietnam’s share dropped from 16% to 4% while that of China increased from 9 to 21% in FY20.
Impact of Corona on Indian Shrimp Business:
According to ICRA, the broader impact on India would stem from not only a reduction in Chinese demand but a correction in prices as the global supply-demand dynamics are disturbed. But stocking levels in Indian farms are showing signs of contraction during the seasonal peak month of February. This could reduce supply over the next few months, according to ICRA. However, this is not the case if we look closely as the Chinese market for cold water shrimp has remained surprisingly healthy in recent weeks. Around 500 exporters are shipping seafood from India to China and the exporting community, in general, has not raised any issue about them account of the coronavirus in that country. Although few of them have expressed concern about shipping to China as the shrimp consumption might reduce, there is a strong possibility of the Chinese consumers switching to healthier seafood options leaving behind other items like reptiles of various kinds, as per the Chairman of MPEDA. Also, it looks like the exporters had good sales for New Year, and most of the shipment was sold out, and new requests are coming in again.
Indian e-commerce sales of shrimp:
Although China has seen a sharp decline in the food service business, the country’s demand for Indian seafood through e-commerce channels remains strong. The increase is 46 per cent in terms of quantity and 75 per cent in terms of value. Prices for the shrimp remain stable and unlike many species for which China is an important market, have not fallen. Chinese importers are asking for more products, and even some new customers are cropping up, which is the sign of a healthy market. It can be, therefore seen as a welcome surprise.
World Health Organization, The Economic Times, Seafood Source, The Hindu.