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Chapter 1
Chapter 1
Chapter 1
INTRODUCTION
1.1 Background
Shrimps and prawns sell among the most important internationally traded fishery
products, with a value of $10 billion, or 16 per cent of global fishery exports.
farmed, is about 6 million tonnes, of which about 60 per cent enters the global
market. Globally, about 60 per cent of shrimp/prawn production comes from fishing,
while 40 percent is from farming (Chopin, 2009). In this study, the term
world fishery sector, with special relevance to the structure, character and production
and export capacity of Indian marine shrimps/prawns sector. It also analyzes the
attempts to discuss the health benefits of this product and prospective areas for
research; conceptualizing the research model. The chapterization plan of the thesis
and summaries of the main issues discussed in these chapters, which is provided
can bring out the rationale behind this method of organizing the thesis.
The total world supply of capture fisheries and aquaculture is 142.29 million tones.
Out of that for consumption purpose supplied to the world with about 113 million tons
of food fish in 2007 approximately, providing an apparent per capita supply of 16.7
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kg (live weight equivalent), which is among the highest on record. Of this total,
aquaculture accounted for 52.6 per cent. Overall, fish provided more than 6.6 billion
people with at least 16.7 per cent of their average per capita animal protein intake as
It is observed from the Table 1.1, the fish consumption since a decade is
continuously surging. This indicates, there is a huge market for this product
worldwide.
Table 1.1: Total World Fish Production and Consumption (Million Tonnes)
PRODUCTION 2002 2003 2004 2005 2006 2007 2008
INLAND
Capture 8.41 8.62 8.6 9.38 9.76 9.97 10.22
Aquaculture 21.73 23.07 25.18 26.84 28.7 30.67 32.89
Total inland 30.14 31.69 33.78 36.22 38.46 40.64 43.11
MARINE
Capture 82.58 79.6 83.77 82.68 79.96 79.92 79.52
Aquaculture 15.05 15.84 16.72 14.47 18.65 19.24 19.66
Total marine 97.63 95.44 100.49 97.15 98.61 99.16 99.18
TOTAL CAPTURE 90.99 88.22 92.37 92.06 89.72 89.89 89.74
TOTAL AQUACULTURE 36.78 38.91 41.9 41.31 47.35 49.91 52.55
TOTAL WORLD FISHERIES 127.77 127.13 134.27 133.37 137.07 139.8 142.29
UTILIZATION
Human consumption 100.1 102.2 104.2 108 111 113 -
Non-food uses 28.3 25 30 29 26.1 26.7 -
Population (billions) 6.3 6.4 6.4 6.5 6.6 6.62 6.70
Per capita food fish supply (kg) 16 16.3 16.2 16.4 16.7 16.69 -
(Source: FAO , Aug, 2010)
World catch of shrimps/prawns is about 3.4 million tons per year. Asia is the most
important area for shrimp/prawn fishing. Altogether over 100 countries export
China, together with four other Asian countries, accounts for 55 percent of the world
Global marine capture production was 89.74 million tons in 2008 (FAO,2010). China
was the leading country for marine capture fish production in the year, whereas India
is ranked sixth in terms of same. The top ten major countries and their production
Philippian
Thiland
Russian Federation
India
Chile
Japan
USA
Peru
China
0 2 4 6 8 10 12 14 16 18
Million Tonnes
Table 1.2 indicates that among all Asian countries China has the highest production
India comes under the top five positions respectively. Chinas share is quite high,
and it is almost equal to the sum total of the Thailand, Vietnam, Indonesia and India,
as observed from Table 1.2. The production status of other continents involved in
has been given in Appendix I. Though the few Asian countries have a higher
production capacity of cultured shrimps/prawns, the benefit is not so high due to the
In parallel with the increase in production, international trade has continued to grow,
and at an accelerating rate in recent years. About 38 per cent of world fish
production is traded internationally. In 2007, total exports of fish and fishery products
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Table 1.2: Production of Marine Shrimps/Prawns in Asia
PRODUCTION OF ASIA IN 1,000 TONNES PER YEAR, ROUNDED
Bangladesh
Philippines
Indonesia
Myanmar
Thailand
Vietnam
Taiwan
China
India
Year
1985 40 10 8 25 13 11 29 0 17
1986 83 12 13 29 14 15 30 0 45
1987 153 19 19 42 15 15 35 0 80
1988 199 50 27 62 20 17 44 0 34
1989 186 90 28 82 28 18 47 0 22
1990 185 115 32 84 35 19 48 0 15
1991 220 161 36 116 40 20 47 0 22
1992 207 185 37 120 47 21 77 0 16
1993 88 223 39 117 62 28 86 0 10
1994 64 264 45 107 83 29 91 0 8
1995 78 259 55 121 70 32 89 1 11
1996 89 238 46 125 70 42 77 2 13
1997 103 225 45 127 67 48 41 2 6
1998 143 250 52 97 83 56 38 2 5
1999 170 274 55 121 79 58 39 5 5
2000 218 309 90 118 97 59 41 5 6
2001 304 279 150 129 103 55 42 6 8
2002 384 264 181 137 115 56 37 7 10
2003 789 330 232 168 113 56 37 19 10
2004 935 360 276 218 118 58 37 30 8
2005 1025 401 327 266 131 63 39 49 8
2006 1242 501 349 326 132 65 40 60 7
Entries in italics indicate gross estimates in the FAO databases Bolded numbers indicate some
recognizable disease events. (Source: FIGIS; FAO databases, 2007)
were US$ 93.52 billions in value terms. Developing countries, as a whole, supplied
value terms, accounting for about 16% of the total value of internationally traded
fishery products, as observed from annexure I. In 2007, more than 60 per cent of the
Japan, the USA and in several EU countries. Japan was the major importer
accounting for about 11 per cent of total import value. USA was the second main
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importer with a share of 9 per cent, followed by Spain, France, Italy, Germany and
1.3.1 Structure
India has a long coastline (8118 km) and a vast continental shelf. The brackish water
tidal creeks etc. and out of the estimated potential area of 1.2 million ha, only 0.16
million ha (13%) is utilized for farming. About 60 per cent of the farmed area is under
scientific farming and 40 per cent under traditional farming (Vasudevan, 2002). The
growth of shrimp farming was slow in the decade of eighties when traditional farming
accounted for a production of 30,000MT. The area under scientific farming increased
exponential growth in farming took place from early nineties due to the attractive
monetary gains.
There are more than ten species of saltwater shrimps/prawns which are reared
and White Fasho (P. Orientalis) are the most important species of shrimps/prawns
reared in Asia. According to MPEDA the Indian prawn is a unique product, for the
last 10 years. The Indian seafood industry is one of the most important segments of
generation. Contribution of fisheries to Indian GDP is about 1.3 per cent (2002-03)
which forms about 5.2 per cent of the agricultural GDP (MPEDA, 2008). India has
been the world's leading producer of shrimps/prawns for its physical, chemical and
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biological properties with the bulk of production coming from offshore landings.
the US, Japan and Europe market, as these countries are import maximum (Chopin,
2009).
A fluctuate trend has been found for capture shrimps/prawns from the Indian coasts,
which is illustrated from Figure 1.2. From 2004 to 2006 it seems that, the landing of
shrimps/prawns (HS- 030613) (000 tonnes) is almost flat, whereas from 2006 on
ward the figure of landing is continuously increasing. In the year 2000, the export
trade value as well as the unit value realization (UVR) was significantly high (Table
1.3). Whereas the quantity (million tones) of the shrimps/prawns (HS- 030613)
Similarly, Figure 1.3 illustrates the world export share (%) of frozen shrimps/prawns
(HS- 030613). The per cent share of world export sharply declined from year 2000--
20081. The reason for this fluctuating trend could be due to the product standard,
1
In 2007 India lose the entire USA (14% of the total trade) market due to antidumping.
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Table 1.3 India's Export to World (Marine Shrimps/Prawns)
ha, representing 36.23 per cent of cultivated brackish water area. Farming takes
place mainly in the states of West Bengal (27.18%), Kerala (7.03%), Karnataka
(1.71%) and Goa. Till mid eighties, only mixed varieties of shrimp from traditional
farming contributed for cultured shrimp (<15,000 tons). In the country out of 56
species of shrimp available, only four species, viz. Penaeus monodon, P. indicus, P.
Seenappa, 2002). The tiger prawns are generally found in East coast and South-
west coast of India. Abundance areas are West Bengal and Orissa coasts.
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1.5 State-wise Shrimp/Prawn Production of India
Large varieties (species) of shrimps/prawns are found in the Indian marine water.
Table 1.4 provides the details of the species and the coastal lines where they are
Table 1.5 gives the clear picture of all marine shrimps/prawns producing states
status where Orissa, Tamil Nadu, Maharashtra and Gujarat are the leading states
(MPEDA, 2007).
Table 1.5 State-wise details of shrimp Production during the year 2003-04
Sl. State Potential Area Area Developed Area under Production Productivity
No. available (Ha) (Ha) Culture (Ha) (MT) (Mt/ha/Yr,)
1 West Bengal 405000 50405 49925 29714 0.60
2 Orissa 31600 12880 12116 12390 1.02
3 Andhra 150000 79270 69638 53124 0.76
Pradesh
4 Tamil Nadu 56800 5416 3214 6070 1.89
5 Kerala 65000 16323 14029 6461 0.46
6 Karnataka 8000 3435 3085 1830 0.59
7 Goa 18500 1001 963 700 0.73
8 Maharashtra 80000 1056 615 981 1.60
9 Gujarat 376000 1537 1013 1510 1.49
Total 1190900 171320 154600 112780 0.73
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1.6 Health Benefits
The importance and benefits of a low fat diet have received greater attention only
during two decades. Eating shellfish are beneficial to health since they are very rich
in vitamins and minerals, at the same time as very low in fat. Fish and shellfish also
contain Omega 3 Polyunsaturated acids, which cannot be produced within the body.
There is clear evidence that some Omega 3 fatty acids reduce the risk of heart
disease, blood pressure, blood fats and possibly even cholesterol. Furthermore,
omega 3 has been shown to aid in brain development and intelligence, which is why
expectant mothers are advised to eat omega rich food during the last trimester. It
also helps combat depression and even schizophrenia, aid in nerve and eyesight
Details of the health benefit by having shrimps/prawns are provided in Appendix II.
Composition of nutrients of sea prawns are provided in Table 1.6. The main
processed shrimp species are generally giant tiger prawn, Indian white prawn,
banana prawn, Parapenaeopsis, etc. and the products are whole frozen, frozen
preliminary processed, ready processed (value added and mixed processed) and
canned .
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1.7 Need for Research
sector have in global market is due to a variety of factors including good factor
guarantees that a fixed market share of E.U., Japan, USA, Canada and UAE
markets. This is a quota free market access product for India. This indicates, the
the rate of export growth (and thereby the global market share) provided it is able to
competing countries like China, Thailand, Vietnam and Indonesia. In this context, it
macro) level competitive ability of the production, processing, value addition and
SPS measures of this sector which facilitates or inhibits export growth (marine
cost; ability to maintain a high and consistent quality; ability to add value throughout
the value chain etc.) of individual seafood exporting firms and their export growth.
and sustainable global competitiveness in the quota-free era. Keeping this in view
the research problem and the research objectives are explained in the next section.
depends on the following parameters- (a) the challenges posed by the international
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business environment, (b) the internal capabilities of individual firms to face these
challenges both individual and together, (c) the collective capabilities of a coalition
of international related firms to jointly face these challenges and (d) the ability of the
environment.
countries.
iii. To find out whether these capabilities are present in large Indian firms who
have shown high export turnover in terms of Unit Value Realization (UVR) for
of these capabilities and (a) net exports growth and (b) net profit growth of the
order to achieve higher export growth and UVR in destinated market in the
long-term.
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1.9 Research Model
Figure 1.4 conceptualizes the model used in this research to understand the national
and international challenges as well as the firm level capability of Indian marine
shrimps/prawns sector. The inner most circle represents the dependent variable, viz.
independent variables in the international business environment that could affect the
export growth and UVR of Indian seafood (marine shrimps/prawns) industries have
been visualized in the outer most circle of the figure. The variables are (a) market
demand trends; (d) non-tariff barriers (NTBs); and (e) intra-regional export growth
within trade blocs. The independent variables in the national business environment
that could affect the export growth of Indian industries include government policy,
can either be a challenge or a capability for the nation depending on whether they
favour the growth of exports for or not. Henceforth, these variables need to be
other net exporting competing countries for same product. Thus, these variables
could affect export growth of Indian seafood (shrimps/ prawns) sector and also the
UVR include, (i) quality consciousness; (ii) cost control; (iii) supply capacity; (iv)
economies of scale; (v) reliance on direct marketing and sub-contracting; (vi) value
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CHALLENGES OF INTERNATIONAL BUSINESS
ENVIRONMENT
Market Access
Changing Demand Condition
Relative Competitiveness in Internal level
Non Tariff Barriers
Trade Blocs
GROWTH OF MARKET
SHARE & UVR OF INDIAN
MARINE FROZEN
SHRIMPS/PRAWNS
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websites); (ix) market diversification; (x) brand development; (xi) market focus; (xii)
strong advertisement and promotion and (xiii) product innovation. The inter-firm
capabilities include (a) strategic alliances and (b) trust and cooperation. A
This model attempts to explain the various challenges faced by Indian seafood
(marine shrimps/prawns) exporters and the capabilities required at the firm, inter-firm
sector is a sellers market , where there are a large number of buyers and relatively
fewer producers. The Indian marine shrimps/prawns are very sophisticated and
costly product. But now-a-days the countries like Vietnam culturing and exporting a
chief variety of prawn called Vannamei prawn, which drags buyers attention. In this
study, the various challenges include: (i) operating in a quota-free environment (ii)
coping with sanitary and phyto sanitary (SPS) and NTB measures, (iii) creating
product identity ( using the country of origin), and (4) keeping pace with the growth
Capability (when country is the unit of reference): The term Capability is used in
this study to mean the competitive ability of marine shrimps/prawns exporting nation
to show higher export performance (in terms of Unit Value Realization) than its
competitors on account of certain macro advantages that the nation may have.
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These include both the natural factor endowments 2 of a country and the capability of
and to a deal with environmental or industry events that occur (Porter, 1990).
integration, all aspects of marketing and customer service and organization design
review and analysis of secondary data) and the findings of primary research (at the
industry level). The study has been organized in the following manner.
Chapter one introduces the background of the subject, viz. challenges and
capabilities of the world marine fisheries sector as well as the Indian shrimps/prawns
export sector and also discusses the research objectives, problems and the research
model.
Chapter two provides an extensive review of literature of the various issues being
considered in the study. It tries to cover the definitions of various terms that are
Chapter three desirable research methodology used in this study. The analysis is
based on secondary data and primary data. Secondary sources accessed include
MPEDA (July 2008), WITS COMTRADE (June 2008), Prowess (July 2008)
2
Natural resources for capture and culture of marine shrimps/prawns .
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database, FAO (May 2010). The primary data has been obtained from the marine
telephonic discussions.
Chapter four discusses the global demand for Indian shrimps/prawns and identifies
Chapter five discusses the enhancement of the Unit Value Realization (UVR)
growth and also market sustainability of Indian marine shrimps/prawns, through the
also analyzed based on both case studies of leading national and international
Chapter seven focuses on idea of value addition by strategic alliance of India with
other competitive countries, based on some national and international case studies.
The variables facilitating the strategic alliance are identified through the opinion
Chapter eight summarizes the findings of the study and discusses its implications
on the future of the marine shrimps/prawns exports from India. The limitations of this
study and the scope for future research are also brought out.
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1.11 Concluding Remarks
This chapter has provided an insight into the general characteristics of the global
marine shrimps/prawns industry and the unique features of the Indian marine
shrimps/prawns export industry. Many of the issues introduced in this chapter have
been analyzed at length in the subsequent chapters of this thesis. This chapter has
also discussed the need for research and has introduced the research objectives
and the conceptual model used in the research. A review of literature covering
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