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Growth pattern and competitiveness of Indian shrimp export trade

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Fishery Technology
2006, Vol. 43(1) pp : 99-106

Growth Pattern and Competitiveness of Indian

Shrimp Export Trade
KB . .
Fathima, R.S. Biradar and S.S. Salim
Central Institute of Fisheries Education, Versova
Mumbai - 400 062, India

Shrimp is the world's most important commodity accounting for about 19 percent of
international seafood trade in value terms. In India's export trade shrimp contributed about
29 percent in quantity and 67 percent in value in the year 2002-2003. The present study was
an attempt to critically examine compound growth rate and competitiveness of Indian shrimp
in international seafood market based on the data collected from FAO fisheries statistics

database, MPEDA statistics and Globe fish commodity update. The results indicated that India
has been quite competitive in the shrimp trade, although there is a decline in the
competitiveness of Indian shrimp in recent years. On the other hand, Thailand has emerged
as a strong contender recording an increased competitiveness over the years. Certain policy
measures are suggested to sustain the competitiveness of Indian shrimp exports in
international market.

Key words : Shrimp, Competitiveness, Compound growth rate. Constant market Share
(CMS)

Marine products form an important volume, rupee realization and in US $ terms

group of primary commodity exported from during 2002-03. The structural changes in
India accounting for about four per cent of international seafood trade in the last decade
the total export earnings. Starting from mere in terms of structures of prodviction, con-
scrapes in the pre- independence period, it sumption, trade flows, stocks and prices
is a saga of steady striking and sustained seemed to have a significant impact on the
growth that the industry had recorded export trade. Being a signatory of WTO and
'

raising India s status and prestige securing having started its liberalization process, there
her a respectable position among the mari- is a real need to evaluate the performance
time nations of the world. Export of marine of Indian shrimp export in the world seafood
products has increased considerably to an all market. This paper seeks to assess and
time high both in volume and value during compare the growth and competitiveness of
2002-03 with actual export of 467297 tonnes Indian shrimp trade with that of its
valued at Rs.6881 crores or US $ 1425 million. competitors in the international market by
Shrimp is the world's most important using the well known constant market share
seafood contributing to about 19 percent of technique.
international trade in value terms and the
leading markets are USA, Japan, Spain, Materials and Methods
France, UK and Italy. Even though the share
of Shrimp export has decreased from 30.09 The present study is based on time-
per cent of the previous year to 28.85per cent series data collected from different published
in quantity and from 69.50 per cent of the government and nongovernmental sources.
previous year (2001-2002) to 66.97 per cent The data pertaining to total shrimp products
in terms of value it recorded a growth of exported from India, competitors and world
5 56, 11.31 and 9.46 per cent in terms of total are collected from the Food and
.
100 FATHIMA, BIRADAR AND SALIM

Agricultural Organization (FAO) Year Book a = eA

of Fishery Statistics. The data on imports of b = eB
shrimp for India, competitors and world
were compiled from shrimp commodity Significance of the regression coefficient
update of Globefish and FAO fishery was tested using t-test.
statistics-commodities. Fishery products ex-
ports for India and competitors were col- The compound growth rate(r) was
lected from Food and Agricultural Organi- computed by using the relationship
zation (FAO) statistics for fishery commodi-
ties. The country-wise shrimp and seafood r = (eB -

1) X 100 (3)
export from India was compiled from
The growth rates were calculated for
'

different volumes of Marine Products Export 1976 to 2001, in terms of volume, value and
Development Authority (MPEDA).All the unit value for India as well as the world.
values of exports and imports are in U. S.
dollars to net out the effect of changes in The competitiveness of Indian shrimp
exchange rates. exports to the major destinations has been
analyzed using the Constant Market Share
The growth in shrimp export of India
(CMS) model for the period 1982 to 2001
and that of the world was analyzed by using
covering 20 years. The data on exports to
the exponential growth function of the form,
major destinations were obtained from
various issues of FAO, fisheries statistics-
Y = ab'e (1)
commodities and MPEDA.
Where,

Y= dependent variable for which growth By using the CMS model the total
rate was estimated change in exports can be decomposed into
growth effect, market effect and competitive-
a = Intercept ness effect. The data is divided into four sets
b = Regression co-efficient with a discrete two time period (a base year
t = Time variable and an end year) each covering five-year
e = Error term
(1982-1986, 1987-1992, 1993-1996 and 1997-
2001) data was employed for the Constant
Logarithmic form of the equation (1) Market Share Analysis. (Richardson, 1971;
can be written as, Bishwas, 1982; and Tiwari, 1983)
InY = lna + tlnb +ln e
A q. = S" Q.1 + S" AQ 1
+ AS " Q.° + AS, AQ.
,
'
i e., Y
.
= "

S,0 Q,1
Where,
= S0 AQ + AS Q,1
, ,

Y' = InY

A = In a i = subscript for import market

B = In b o = superscript indicating the base
E = In e
period
1 = super script indicating the end of
Equation (2) is in the linear form. the observation period
Parameters of this equation A and B were
A = change in a variable between two
estimated using the method of least squares.
From A and B, a and b were worked out as,
periods
GROWTH OF INDIAN SHRIMP EXPORT 101

= quantity exported from India to in exports. The competitiveness effect takes

market 3 during the base period the charge in market shares (AS ) explicitly j

Q 0 = total quantity imported in market

.
into consideration. The severity of a market
3 during share loss in an import market (-AS ) is
the base period ;

proportional to the absolute size of the

S°= market share of Indian shrimp in import market (Q.). In short, the competitive-
market 3 during the base period ness effect indicates the extent to which a

S° = I Q° country is able to gain international market

shares despite potentially adverse world
q0= quantity exported from India to all demand movements, in terms of both market
markets during the base period and commodity.
Q0 = quantity imported by all markets
Results and Discussion
during the base period
5° = market share of India in all markets
Shrimp export from India is growing in
terms of both quantity and value; especially
during the base period
from 1990s (Fig. 1). The compound growth
This is the decomposition of the total rate of shrimp export is computed for India,
changes in export value of the commodity competitors and world in terms of volume,
with respect to one import market. Summing value and unit value. The growth rate
the equation over all import markets, registered for shrimp export from India and
world were significant at one percent in
= Import growth effect + Market effect terms of volume, value and unit value.
+ Competitiveness effect. World shrimp export had grown by 7.26 per
cent in quantity and 9.28 per cent in value
The import growth effect is the potential
terms per year for the study period 1976 to
change in the total exports of a country
2001(Tablel). Indian shrimp export regis-
assuming a constant (base period) market
share.
tered less growth rate in quantity (4.77
percent), value (6.68 percent) and unit value
The market effect is the difference (1.83 per cent). This indicates that other
between the overall import growth effect (5° shrimp exporting countries in the world had
AQ) and the sum of the market specific grown in terms of volume and value and
growth effects (X 5° AQ.).The growth effect India is lagging behind. The lower growth
is determined by the magnitude of S.0 or of shrimp exported from India can be due
AQi. Hence, for an equal absolute change to the gradual increase in demand for shrimp
(AQ.), a large (region) effect is necessary. in our domestic market and overdependence
Also, under, the constant market share in the
900.00
base period, the sign and magnitude of the 800.00

absolute change (AQ.), determines the impor- 700.00

tance of a region's contribution to the market 600.00

500.00

effect. Therefore, the market effect is likely 400.00

to be negative under unfavourable import 300.00

200.00

demand conditions in the most important 100.00

regions. 0 00
.

1976 1960 1984 1988 1992 1996 2000 2001

Year

The competitiveness effect is the re- VALUE

sidual after subtracting the import growth Fig. 1. Shrimp export from India during 1976 to 2001
effect and the market effect from total change (Quantity in '000 MT and Value in US $ Million)
102 FATHIMA, BIRADAR AND SALIM

on capture shrimp by Indian processors. 19.78 percent, followed by Vietnam (17.14

There is lack of market research in seafood percent), Ecuador (13.79 per cent) and
export sector which in turn might have Indonesia (9.84 per cent). Countries like
resulted into poor brand image for Indian China, Mexico and Greenland showed growth
shrimp in foreign markets. Major part of rate in value which is less than that of India.
shrimp exported from India was in peeled Growth in unit value realization for the
and deveined (PD) or peeled and undeveined shrimp export from countries like China
(PUD) form which serve as raw material for (-2 65 percent), and Greenland (-0.03 percent)
.

foreign importers. This is not the case with and Ecuador (0.39 percent) were negative.
other countries like Thailand. This indicates that unit value realized from
these countries has been on the down swing
China,Thailand,Vietnam,Indonesia,Mexico, over the years. The growth in unit value
Greenland and Ecuador are the major realization is highest for Vietnam (5.01
competitors to India in shrimp export percent), followed by Thailand (4.16 per-
markets namely, Japan, USA and European cent). But the unit value realized for Indian
Union. Compound growth rate of shrimp shrimp export has shown only a growth rate
exported from these competing countries of 1.83 percent, which is almost similar to
were also found out in order to have a
that of world (1.88 percent).
comparative look with that from India. In
terms of volume of shrimp exported to the Thailand now processes imported
world shrimp market, Thailand had grown shrimp, as well as its own domestically
highest with a growth rate of 15.00 percent produced shrimp, mainly for re-exports. Its
per annum during 1976 to 2001 (Table 1). geographical location, skilled human re-
Ecuador is next to Thailand with a com- sources and well-developed infrastructure
pound growth rate of 14.23 percent for the also provide the ideal climate for investment
same time period studied. All the countries in the shrimp trade sector. Even though black
studied except Mexico (0.50 percent) are tiger shrimp can be farmed anywhere in the
showing higher growth rate than that of tropics, the long stretching western and
India in terms of volume of shrimp exported. eastern coastlines of Thailand is the ideal
In terms of value of shrimp exported also, location. Compared to other South-East
Thailand is the leader with a growth rate of Asian countries like Thailand, Vietnam,

Table la. Comparison of Compound Growth Rate (CGR) Table lb. Comparison of Compound Growth Rate (CGR)
'

of Shrimp export (Quantity in 000 MT) from of Shrimp export from major competitors of
'

major competitors of India During 1976 to 2001 India During 1976 to 2001 (Value US $ Million)

Country Regression Compound Growth Country Regression Compound Growth

Coefficient rate (CGR) Coefficient rate (CGR)

India 0 0466*
.
4 77
.
India 0 0647
.
6 68
.

China 0 0827*
.
8 62
.
China 0 0558
.
5 74
.

Indonesia 0 0681*
.
7 04
.
Indonesia 0 0939
.
9 84
.

Thailand 0 1397
.
15.00 Thailand 0 1805
.
19.78

Mexico 0 0050*
.
0 50
.
Mexico 0 0144
.
1 46
.

Greenland 0 0496*
.
5 08
.
Greenland 0 0493
.
5 05
.

Vietnam 0 1094
.
11.56 Vietnam 0 1582
.
17.14

Ecuador 0 1331
.
14.23 Ecuador 0 1292
.
13.79

World 0 0701*
.
7 26
.
World 0 0887
.
9 28
.
GROWTH OF INDIAN SHRIMP EXPORT 103

16 25
15
14 14.23
~ 20 19.78
12 11.56 .
14
10
62 13.79
8 .

7 04 7 26 10
.
.

9 84 9 28
.

4 77
.
5 08
.

5 05
.

f 4? <//////
COUNTRY
| Ouantiiy| COUNTRY Value I

6 10
9 13
.

5 01
. 8 44
.

4 16 68
.

6 12
.

.
6
2 61 4 76
4 53 .

4 51
1 83
.
1 88
.
. .

1 0 95
.

69
39 1 95

COUNTRY COUNTRY Production I

Unit Value I

Fig. 2. Comparison of Component Growth Rate (CGR) of shrimp export and shrimp production from India, World
and major competitors of India during 1976 to 2001
(Quantity in 000 MT, Value in US $ Million and Unit Value in US $ per Kg)

Indonesia, etc, Indian aquaculture is not production (4.53 per cent) (Fig. 2). In order
much modernized with advanced tech- to diversify our export basket Indian
niques. Thai processors are able to constantly Government has been giving importance to
'

match importing countries hygiene and the export of other items like fish and there
sanitary standards, ensuring that shrimp by a gradual reduction in the export share
products from Thailand are accepted world- of Indian shrimp in our export basket.
wide. They have adopted the very latest Gowda and Jalajakshi, (1994) opined the
technology for shrimp processing, particu- annual compound growth rate of Indian
larly in the development of value-added shrimp export is 5.9 percent (quantity) and
products.
15.85 percent (value) based on the data from
1966 to 1991. In this study the growth rate
Indian shrimp production had shown
4.
53 per cent growth rate during 1979 to was 4.77 percent and 6.68 percent for
2001, which is almost the same as that of the quantity and value, respectively. Since only
world (4.51 percent) during the same period. the growth rate in terms of value is showing
Shrimp production in almost all the shrimp huge variation, it may be due to the different
currency base which had been used in both
exporting, countries like Argentina and
the studies. Further, Gowda and Jalajakshi,
Greenland shown better growth than India.
(1994) used the data of Indian foreign trade
China is showing intensification in shrimp
production with the highest growth rate of and MPEDA (which is in Indian rupees), but
9 13 per cent per annum for the period
.
the present study is based on the FAO data
(which is in dollar terms). The difference in
studied, followed by Ecuador (8.44 per cent),
Vietnam (7.68 per cent), Thailand (6.12 per exchange rate can be the reason for this
variation.
cent) and Indonesia (5.70 per cent). Indian
shrimp export in terms of quantity (4.77 per Barrows (1999) reported that Indian
cent) had almost kept the pace with seafood export had grown by 18 percent for
104 FATHIMA, BIRADAR AND SALIM

Table Ic. Comparison of Compound Growth Rate (CGR) India's major destinations namely. Hong
of Shrimp export from major competitors of
India During 1976 to 2001 (Unit value US $ Kong (-5453.07 per cent), Japan (-288.29 per
cent) and USA (-110.95 per cent) reveals that
Country Regression Compound Growth even though Indian shrimp is competitive in
Coefficient rate (CGR)
these markets, India's export share is coming
India 0 0181
.
1 83
.
down in Japan and USA for the study period
China -
0 0269
.
2 65
-

.
(1982 to 2001).
Indonesia 0 0258
.
2 61 .

Thailand 0 0407
.
4 16 . The market effect was positive for Hong
Mexico 0 0095
.
0 95
.
Kong (5358.93 per cent), UK (32.08 per cent)
Greenland -
0 0003
.
-
0 03
.
and USA (7.64 per cent), but it was negative
Vietnam 0 0489
.
5 01
.
in the case of Italy (-783.08 per cent), Spain
Ecuador -
0 0039
.
0 39
-

.
(-700 35 per cent) and Japan (-358.95 per
.

World .
0 0186
.
1 88
.

cent). This negative market effect may be

attributed to the uneven imports during the
study period in these markets.
a period of six years (1988 to 1994).This
growth rate has been slightly higher than .

Gowda and Jalajakshi, (1994) studied

Thailand and Indonesia which achieved
the competitiveness of Indian shrimp export
compounded annual growth rates of around
using constant market share (CMS) method
16 percent during the same period. But as
for a period of 1976-77 to 1986-87. Their
per the present study, both these countries
results revealed that Indian exports to Japan
shown a higher growth rate of shrimp
market are increasing mainly due to the
exported than India for the period of 1976
increasing imports in to this market and the
to 2001. India, Thailand and Indonesia have
other two effects were negative. But the
been the most successful countries in terms
present study gives a different picture. In
of growth rate in seafood exports during
Japan market the import effect and market
1988-1994.
effect are negative and the competitiveness
The results reveal that Indian shrimp is effect is positive (in terms of volume of
very much competitive in all the markets, shrimp exported). This may be due to the
particularly in Japan market with a maxi- fact that the present study is for a period
mum value of 747.24 percent, followed by of twenty years (1982 to 2001) and the
Italy (266.13 percent), USA (203.31 per cent) market situations might have changed
and Hong Kong (194.14 per cent). This totally after 1986-87. But in USA market,
positive competitive effect makes clear that Indian shrimp has been found to be
Indian shrimp export to world market is competitive by both these studies. The
highly competitive. present study shows that the growth of
Indian shrimp export in USA market is not
Import growth effect was positive for due to the increasing imports of shrimp in
Spain (771.32 per cent) Italy (616.95 per cent) this market as the value of import growth
and UK (50.43 per cent), indicating that effect for Indian shrimp in USA market is
Indian shrimp exports to these three markets negative. Gowda and Jalajakshi, (1994)
have been increasing over the recent past opined that the increase in imports of
(Table2). Negative import growth effect in shrimps in this country play a favourable
GROWTH OF INDIAN SHRIMP EXPORT 105

role in Indian shrimp exports. Among and effective dialogue between the two.
European markets our major destination is Strategic policies related to the production ,
.

UK. As per the present study all the effects processing (including handling) and export
are showing positive values for Indian are the needs of the day. Some of the
shrimp in this market while Gowda and pertinent policies which are important in-
Jalajakshi, (1994) opined that except market clude the following:
effect, the other two effects are positive for
Indian shrimp in UK market. . In order to keep pace with the South
East Asian countries more emphasis
Amidst fisheries playing an important needs to be given for increasing shrimp
role in agricultural diversification, employ- production by bringing more area
ment generation, export promotion and food under culture and increasing produc-
security, the present study reveals even tivity through better management. It
though the export grew in terms of quantity may be further mentioned that fresh-
the rate of growth was marginal when water prawn farming, Macrobrachiurn
compared to the major competitors from the rosenbergii, which has better growth
South East Asian countries The attainment of and less susceptibility to disease as
increasing competitive advantage both in compared to tiger prawn, Penaens
marine products and in shrimp is attributed monodon, needs to be popularized.
to foreign investment, deregulation and high
profile marketing approach which is basi-
. The processing sector needs to be
diversified with more of value added
cally reflected in good relationship with
buyers, knowledge of market needs, assur- products.. For this exporters should be
ance of quality and delivery on schedule. aware about quality requirements of
importers and the value added prod-
Under the new trade policy initiated in ucts preferred by them. In order to
1991, the major changes have been effected encourage value added exports, gov-
in agricultural trade, with respect to the ernmental interventions are required
canalization of agricultural trade has been including subsidies.
almost abandoned and the government does
not determine now the value or nature of the . Export marketing research must be
exports or imports, except for a few items. promoted in order to find out the
In addition the Quantitative restrictions on consumer preference in foreign markets
agricultural trade flows had been dismantled and also the availability of new mar-
kets for our seafood. Diversification of
completely with effect from 1st April, 2001
with the announcement of the tariff reduc- fishing area, market destinations and
tions. products should be done in order to
sustain shrimp export trade.
In this situation, there is a great need
for more pragmatic interpretation of the References
export - import policies as well as the tariff
policy towards boosting the seafood trade of Barrows, O. J., (1999). Marine Products indus-
the country. Competitiveness involves pri- try in India. In: Export Competitiveness in
vate sector initiative, government initiative South-East Asia -Policy Initiatives and
106 FATHIMA, BIRADAR AND SALIM

Corporate Actions in Marine Products competitiveness of Indian shrimp ex-

Industry, (ed. Barrows, O.J.)- Wheeler ports. Export Potential of Indian Agricul-
Publishing, New Delhi, pp 123-176. ture. pp 371-381.

Bishwas, B. (1982). Constant Market Share Richardson, J.D. (1971). Constant Market
Analysis of Export Performance: The Shares Analysis of Export Growth. Jour-
Case of India. The Indian Economic nal International Economics., 1: 227-239.

Journal, 29(3): 41-50.

Tiwari, R. S., (1983). Constant- Market- Share
Gowda, S.M.V. and Jalajakshi, C.K., (1994). of Export Growth: The Indian Case.
Growth, Demand elasticity and Indian Economic Journal. 33, pp 70-80.
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