2019: How aquaculture fuelled the best year for the aquafeed industry in India

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Higher sales nationwide in 2019. Uncertainties and losses with lockdown measures are already expected to lower 2020 demand by 25-30%. 

By Ajaya Baskar

It was the best year for aquafeed production in India. Its shrimp feed market saw a steady upward growth by 5.4% over that in 2018 – 1.3 million tonnes for a shrimp production of 0.8 million tonnes. Feed conversion ratio (FCR) was better too at 1.6 compared to 1.7 in 2018. The mainly freshwater fish feed market also had a good year with a production of 1.2 million tonnes, an increase of 30% over that in 2018.

The best year for shrimp farming

In 2019, with a longer summer and mild winter, farmers had higher success rates for the whole year. The production was 750,000 tonnes of vannamei shrimp and 50,000 tonnes of monodon shrimp. The peak demand for shrimp feed shifted to April, May, June for the first summer crop and September, October, November for the second crop.

At the same time, new shrimp farming areas such as in Orissa and West Bengal created new markets for feed millers, who usually focussed on Andhra Pradesh. Notwithstanding current shifts in demand, we can produce 1 million tonnes of shrimp, increasing feed demand to 1.6 million tonnes, assuming a FCR of 1.6. This brings us closer to the 2019 installed feed production capacity of 2.8 million tonnes per year.

Expansion in fish farming

New freshwater fish farms in northern India (West Bengal, Uttar Pradesh, Bihar and Uttarakhand) created new feed markets. Demand for commercial fish feeds is ex-farm fish price dependent. Farm-made feeds are the alternative when fish prices drop. In 2019, demand for live fish in the main market increased farm gate prices for live Indian major carps (IMC): rohu at INR150/kg and live pangasius at INR110/kg. Unfortunately, prices for chilled fish were quite poor, with rohu at INR100/kg and pangasius at INR70/ kg. The potential to increase feed demand will come when more farmers shift to either pelleted or extruded feeds rather than from feeding IMCs the traditional way (fertilisation of ponds and feeding raw materials directly in feed bags containing deoiled rice bran, DORB).

Challenges: Prices of raw materials and credits

Feed millers were challenged by perpetual price fluctuations for raw materials, depending on the season and availability. From March to June and September to November, the demand for raw materials is generally high leading to the rise in prices of most raw materials. In 2019, prices for grains and DORB increased marginally, and compared to 2018, prices for fish meal and soybean meal in 2019 were generally good too.

Then we also saw the depreciation of the INR to the US dollar; from INR68 in July to INR72 in December. Of course, the impact was not only on raw material prices but also availability, logistics and other factors. India is a major oil importer. This situation forced some fish feed millers to increase fish feed prices by INR2-3/kg in 2019. In 2020, there was an increase of INR4-5/ kg for shrimp feeds,

although with stiff competition, some feed millers had second thoughts. The increase then came in February 2020 when there was a sudden increase in the prices of some raw materials. Most of the feed companies will give credit based on their capacity, relationship with the farmers and turnover, either directly to corporate farmers or feed dealers and distributors. Some companies are struggling to get back their investments due to various reasons.

Outlook for 2020

The year really did not begin well. Anticipating bad news with the COVID-19 pandemic and a country-wide lockdown, farmers in Andhra Pradesh who stocked ponds in December 2019 panicked and started harvesting. The sudden lockdown imposed on 25 March obstructed logistics for raw materials, aquafeeds and finished products. Although movements were allowed 3-4 days later, there was no staff to run farms, hatcheries, feed mills and processing plants.

Selling was delayed with no buyers for the harvested shrimp. Shrimp prices fell 60% to INR120/kg for size 70/kg in early April. Fortunately, the government quickly announced a realistic INR220/ kg price, ordering processing companies to buy harvested shrimp at this price. But by then, most farmers had faced huge losses. Furthermore, farmers who harvested quickly in March and incurred losses, are unlikely to restock ponds. Poor post larvae demand is expected and farms located far away from hatcheries will have difficulty obtaining post larvae.

However, farmers who stocked in February and March will harvest in May and June. But these farmers may still face problems such as feed availability and transportation. The lockdown has been extended to May 18 which means that the main farming season would have ended. My estimate is 25-30% of both shrimp production and feed business will suffer losses.

In summary, all segments in the seafood supply chain were affected in these last 4 months, in one way or another. I expect all stakeholders to be proactive and revise their business strategies and agreements.

 

 

 

 

 

D. Ajaya Bhaskar, PhD is an aquaculture nutritionist & feed consultant based in Bhimavaram, Andhra Pradesh since 2014.  Email: dasariajay@rediffmail.com

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