A PROFITABLE CATCH! March 2018 issue

A PROFITABLE CATCH!

When we talk about the export of frozen [Indian] mackerel from India, the last two financial years in particular, show a boom in export revenue. So, while the business from India has been growing, the question now - is it stable enough to take the plunge? The Dollar Business analyses.

By Anishaa Kumar | March 2018 Issue | The Dollar Business

Indian seafood, despite ongoing challenges of quality and certification have always been abuzz with activity when it comes to contribution to exports. In the past too, The Dollar Business has taken a look at the export potential of many of these seafood products – big and small. The consensus always remaining the same – any seafood export is a product of high potential. But what makes mackerel stand out is its export earnings over the last two financial years.

A popular ingredient in many dishes across south and east India, mackerel also finds large demand in countries like Vietnam which are not only major importers but also contribute their own share to global exports. India exports a variety of mackerel with the Indian mackerel being the main type. The two most common types of mackerel that are exported globally included the Rastrelliger Brachysoma (Indo-Pacific Mackerel) and the Rastrelliger Kanagurta (Indian Mackerel).

But, with the wide range of seafood exports from India, the questions always raised by new entrants into the market is are Indian exports of the particular seafood variety capable and do they have the opportunity for expanding exports in the coming days? And most importantly, is it worth the risks?


MAJOR EXPORTS


India’s export of mackerel has been growing steadily over the years. But the biggest change was seen in FY2017, when the exports of mackerel from India saw an increase by 92.5% till $140.21 million in FY2017. Globally, India continues to be the sixth largest exporter in the world. According to exporters like Sadanand Puranik, Managing Director of Taloja, Maharashtra-based Blue-Fin Frozen Foods, the business has and continues to be booming for those in the export of mackerel from India. The high demand, exporters say has to do with the quality of export products. This proves to be an advantage to Indian exporters over many neighbouring countries like Pakistan, Bangladesh and even Vietnam and Thailand who have a landing of mackerel and export a certain percentage of their own. What makes India stand out is also its advancement in technology when it comes to processing. Kurian A. Abraham, Managing Director of Ratnagiri, Maharashtra-based Karunya Marines concurs, “The west coast of India is blessed with good Indian Mackerel catches. Short-bodied Indian Mackerel found in the Arabian Sea across the west coast is very unique in its taste especially when steamed. Almost 80% of the catch is obtained from the west coast of India using purse seine nets have very short fishing cycles of 1 or 2 days and hence are very fresh and high in quality. Processing of Indian Mackerel has improved over the years and it is processed in a very hygienic manner and the quality of the mackerel delivered by the Indian exporters is much better than fish exported by neighbouring countries.”

India’s largest export market currently is Thailand ($120.79 million in FY2017) followed by a smaller percentage to Malaysia and other countries ($19.42 million in FY2017). Similarly, India is also seeing an increase in imports. In FY2017, the imports of mackerel by India (including the Pacific Mackerel) rose by a smaller percentage, according to the Ministry of Commerce data.

The seafood industry like agricultural products depends a lot on the quantity on the basis of landing. Luckily, for the seafood industry [in India], the increased landing has played a very important role in increasing the exports. Not only has there been an increase in landing but also an increase in processing facilities with new facilities being set up in Goa and Karnataka, Abraham adds.


COMPETITION:


GLOBAL & LOCAL

India is currently the sixth largest exporter of frozen mackerel in the world. Globally, Norway is the leader when it comes to export of frozen mackerel. The mackerel from Norway finds larger demand in Europe and other western countries compared to the Indian mackerel which is in demand in mostly Asian countries. The other major exporters of Mackerel from around the world include China, Netherlands and Japan.

The biggest competition that exporters of mackerel mainly face is domestic competition. “Because as you go north, the consumption of sea food decreases and meat increases. As you go down south, the local markets itself are strong enough. So, when we say that there is a lot more competition from the local market, we have to make sure that the domestic demand is met before looking into exports. Along with exports we need to fulfil the requirements of our domestic market consumption. If the landing is less, meeting the domestic market’s demand is our first requirement,” explains Abrar Nadiadwala of Mumbai-based Seahorse Exports.

Puranik is of a different opinion when it comes to competition from the local market. The local market, he says, has more demand for the fresh fish unlike the demand for frozen fish in the global market. Abraham of Karunya Marines concurs, “Mackerel is a favourite dish in South and Western India. Tapioca and Mackerel Curry in Kerala or Mackerel (Bangda) Fry in Maharashtra and Goa are local delicacies and hence Mackerel has always had a steady domestic demand. Unfortunately, domestic demand is always high for fresh fish and very less for frozen products. Also, other kinds of fishes like Pomfret, King fish have a greater demand as compared to Indian Mackerel domestically.”

The demand for frozen products is more in the export market due to their higher shelf life compared to fresh or chilled products. “Frozen products are stored in frozen stores by importers and sold over a period of time. It is thawed and then steamed and sold in bamboo baskets across South east Asia, particularly Thailand and Malaysia. Hence demand in export market is high as compared to fresh sales of Indian Mackerel done domestically,” Abraham adds.

According to the Central Marine Fisheries Institute, the landing of mackerel in India has grown over the last few years. In FY2015, the total mackerel caught was around 238276 tonne (237801 tonne (Indian mackerel) and 475 tonne (other mackerel)). This saw an increase by 4.77% in FY2016 to 249642 tonne (249241(Indian mackerel) and 401 tonne (other mackerel)).

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NEED FOR ASSISTANCE

But like any industry pertaining to perishable goods, the high prices of electricity and packaging and following freezing protocols adds to their cost and impacts their profits. Many exporters that The Dollar Business spoke too said that is the absence of a decent incentive scheme for exports of fish. Exporters say that even if not export incentives, incentives at the production level would go a long way in incentivising the sector. “There are not many challenges as we have quite a sound infrastructure for exports as well as policies as well as positioning for our ports. We have quite an efficient export system where we do face an issue is the export benefits. We would have appreciated a little more on that side because of the competition and the electricity charges varying from state to state,” adds Nadiadwala.

Exporters of frozen mackerel currently receive a duty drawback of 1.5%. Exporters say that if not support at the export level, at the production and manufacturing level, government support would be appreciated as it would reduce overhead costs for both fishermen and the manufacturer-exporters.

CONTINUED PROFITS?

Exporters are confident that in the coming days, Indian exports of mackerel will continue to grow. The main challenge remains the landing, but exporters are hopeful that in the coming days the landing will continue to be able to fulfil both domestic and export requirements.

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The profitability, Nadiadwala says, is like any other business. “Sometimes we run in losses. But it is a high -volume sale and it balances out. Sometimes in order to support buyers in their markets we tend to give them some kind of price benefit,” he adds. Abraham adds that the profitability of frozen mackerel will continue as long as the brands and companies exporting mackerel continue to export the product of good quality the exports will continue and so will its profitability. “The industry is seeing newer players entering the market. But like any business, equal number of companies are coming into the industry and exiting the industry – hence balancing it out,” Nadiadwala adds.

The future for Indian exporters is bright and exporters believe that even though the fishing industry is smaller than many of the other manufacturing industries, will continue to be an important source of foreign income revenue in the coming days.

 

“Thailand and Malaysia are our main markets”

Abrar Nadiadwala
MD, Seahorse International


TDB: The export of mackerel has seen a major increase in FY2017. What factors impact the export? What are the export challenges you face?


Abrar Nadiadwala (AN): Yes, if you look at 2017, from India itself there has been the export of around 830 containers of mackerel. That is 80, 40 feet reefers of mackerel. There are many reasons for fluctuations. For example, China has been slow because of the escalation of the import duties. China has been operating under an economic pact with Pakistan where it has not been charging high import duties for import from Pakistan. That makes it difficult for us to compete, so people turn towards products that are doing well and in turn the fishermen also tend to fish more of that product only. There are not many challenges as we have quite a sound infrastructure for exports as well as sound policies. We have quite an efficient export system. But, where we do face an issue is the export benefits. We would have appreciated a little more on that side because of the competition and the electricity charges varying from state to state.

TDB: Could you tell us about your export of mackerel?

AN: We have been in this business for almost 14 years. The season for sea catch is August to June. Our cycle is not based on the calendar year but more on the basis of the landing of our sea catch. For mackerel, Thailand and Malaysia are our main markets. It is the main market for all as it is where it is consumed the most. The mackerel that we export from India is for local consumption in these markets. Those areas are preferred by Indian exporters as there is more demand for those products there.

TDB: How open is the market for new exporters and how does this impact the existing exporters?

AN: There are a large number of people who have a lot of money and are always looking for a new business to enter into the market and they are always welcome. At the same time, there are a large number of people who are also leaving the market. So, the market size balances itself out.

TDB: Many of India’s neighbouring countries are into the export of Indian Mackerel. Does the competition impact the business?

AN: If you look at it that way then most of the export countries like Thailand, Vietnam and Malaysia have landing of their own. But what makes India stand out is its advancement in technology – packaging and manufacturing. In reality, where we do have an issue is competing with the local markets. Because as you go to the north of India, the consumption of sea food decreases and meat increases. As you go down south, the local markets itself are strong enough and provides enough demand. So, when we say that there is a lot more competition from the local market, we have to make sure that the domestic demand is met before looking into exports. Along with exports we need to fulfil the requirements of our domestic market.

TDB: Do you see the export of mackerel to continue to increase?

AN: The exports are going to get more difficult because of the increase in local demand. The markets here are growing. This increase is driven by the increase in awareness about the benefits of eating seafood, the increase in spending power of people. There was an earlier misconception that seafood is expensive but now that is not true.

 

 

 

“THE EXPORT HAS RISEN OVER THE YEARS”



Kurian A. Abraham

MD, Karunya Marine


TDB: Since how many years have you been in the business of exporting frozen mackerel? Which is your main export market and how has the export business changed over the years?


Kurian A. Abraham (KA): We have been exporting frozen mackerel for the last 10 years. Our brand is known for its quality in Thailand and since Indian Mackerel has been our most important product, Thailand has been our main export market. The export business for mackerel has had a steady rise over the years. Mackerel was not considered a very important product by the Indian Exporters over a decade ago, but with the increase in demand many exporters across the west particularly in Ratnagiri, Goa and Karnataka have focussed on mackerel exports and stressed the need for packing it in good quality using their brands thereby increasing its demand over the years.

TDB: What are the main challenges that exporters of mackerel face. How difficult is the process of export, QC etc?

KA: It is very important that mackerel is processed and packed with the highest quality standards. Processing of Mackerel should be immediate to maintain its proper shine and texture. All the organoleptic parameters need to be thoroughly checked also. It is also important that fast freezing is done to maintain its quality. Since most exporters now pack using their brands in the market if proper quality fish is not packed or delivered in the export market, the brand takes an immediate hit and would affect future sales.

TDB: Mackerel as a product has both domestic and export demand. How is the domestic demand compared to the export demand?

KA: Mackerel is a favourite dish in south and western India. Tapioca and Mackerel Curry in Kerala or Mackerel (Bangda) Fry in Maharashtra and Goa are local delicacies and hence Mackerel has always had a steady domestic demand. Unfortunately, domestic demand is always high for fresh fish and very less for frozen products. Also, other kinds of fishes like pomfret, king fish have a greater demand as compared to Indian Mackerel domestically. When Mackerel is exported it is exported in Frozen form and not fresh or chilled. Frozen products have a higher shelf life and hence all mackerel that is exported is stored in frozen stores by importers and sold over time. It is thawed and then steamed and sold in bamboo baskets across South east Asia, particularly Thailand and Malaysia. Hence demand in export market is high as compared to fresh sales of Indian Mackerel done domestically.

TDB: What future prospects do you see for the export of mackerel?

KA: As Indian Mackerel is considered as a dear fish to the people of South east Asia it has very good prospects. But it is very necessary that the fishing is done in very short cycles and only proper quality fish is processed and packed to the highest standards.

In the days to come for mackerel fishing to continue it is important that juvenile fishing is stopped, spawning period of the fishes are properly protected and wrong method of fish catching techniques are not encouraged - In short if sustainable fishing is implemented we can surely expect this industry to grow in the days to come.

  

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