THE DECLINING SEAFOOD EXPORTS
The substantial decline in export orders have also resulted in decrease of seafood in the domestic market
By Syed M. Aslam
Nov 05 - 11, 2001
Pakistani seafood exporters are forced to perform a delicate balancing act — they are increasingly pressurised by the foreign buyers to slash prices due to what they say diminished demand in their respective markets on the one hand and facing stiff resistance from the fishermen to still keep buying the raw material on premium prices as before on the other. The situation, seafood exporters say, greatly undermines the prospects of exports during the current fiscal if trends last month are any indications.
According to Hanif Khan, the chairman of Pakistan Seafood Industries Association whose members collectively contribute major portion to fish and shrimp exports, exports drop between 30-40 per cent in October both in terms of quantity and value. It is all the more serious as, he said, seafood exports registered an increased in September, the first of the last four months of traditional main season due primarily to stocks held by exporters to fetch premium prices, as is the case every year.
He said that foreign buyers are citing two main reasons for their reluctance to place seafood orders with Pakistani exporters — the concerns about 'lack of surety to deliver seafood, a highly perishable item on time' and 'decreased demand in their respective markets.' This in turn has resulted not only in destabilising the prices but also production here, an impression further worsened by situation in the region and the strikes and rallies taking place across the country on any given day. Many of them have already diverted, or are in the process of diverting, their business to such countries as India, Thailand and Vietnam to ensure smooth supply of seafood products, he added.
The substantial decline in export orders have also resulted in decrease of seafood in the domestic market to the chagrin of fishermen who feel that declining prices don't offer them fair return for their work. 'The exporters are facing a strong resistance from the fishermen to cut the prices even a little,' Hanif said.
Hanif said that the average export prices of kiddie, small shrimp the major destination of which is the EU, has fallen from $ 4.50 per kilogram to $ 2.50 per kilogram. Similarly, the export prices of Jaira, or big white shrimp the major market of which is Japan, has fallen from an average $ 12 per kilogram to $ 8 per kilogram. On an average, he said, the export prices of seafood has registered a massive decline of 30-40 per cent to the extreme financial discomfort of the exporters and the fishermen.
Describing why the period comprising the last four months of the year, September to December, is called the 'main season', Hanif said that it is due to landing of bigger catch and availability in the country which in turn allows the foreign buyers to negotiate the shipments at low prices. However, he added, the 'main season' this year is hit by the snags due to the reasons listed above. Hanif felt that the demand by the foreign buyers to cut the export prices due to decreased demand may be a pretext to force the Pakistani exporters to decrease the prices to unprofitable levels for their own good.
As if, the demand for decreased prices by the exporters on the one hand and a strong resistance to lower prices by the local fishermen don't already contribute to the woes of seafood exporters, they are also facing problems from the levy of war risk insurance. Hanif said that a war risk levy of $ 300 per container on seafood exports plus the weakening of dollar resulting in Rs 3 per kilogram adds up to an additional expense of Rs 95,000 per container.
He said that the bulk of seafood exports are carried in 40-foot container which holds an average of 25 tonnes of seafood. The cumulative impact of war risk insurance and weakening rupee inflate the costs of exports to Rs 95,000 — $ 300 war risk insurance means an additional expense of about Rs 20,000 while the weakening of the dollar by an 3 rupees means an additional expense of Rs 75,000 for 25-ton container of seafood. This is indeed an extremely difficult balancing act for the exporters under pressurized to reduce their export costs by the foreign buyers on the one hand and stiff resistance against lower returns by the local fishermen on the other.
Hanif said that despite the varied demands in the EU, Japan and the US — the three major markets of Pakistani seafood in order of value — the situation poses immense challenges for the exporters to retain their markets amidst increased real or otherwise reluctance on the part of buyers, resistance to price decrease by local fishermen and additional export prices of a 40-foot container.
He said that it is imperative that the government should convince the major exporters to slash duties on seafood imports to help bail out the fishing industry just like it has convinced them to reduce restrictions of the import of textiles from Pakistan.