Indian shrimp export incentive removal could put pressure on prices : October 10, 2011

Processors hope for cntinuation of 4% incentive.

The Indian government’s plans to remove an 8 percent export incentive for its processors could start to impact from one of the shrimp success stories of 2011, executive said.
India’s government removed the present export incentive — referred as Duty Entitlemnt Passbook Scheme (DEPB)- was removed Oct. 1, industry sources told IntraFish

The incentive means companies have not had to calculate an export profit  on sales, if you are assuming you will get a rebate, said Jim Gulkin, group managing director of Bangkok-based seafood supply group Siam Canadian, which has a sourcing office in India.

“So we are going to see what will happen to raw material prices as a result,” he told IntraFish. “It will clearly put pressure on raw material prices, as the producers won’t have this 8 percent ans so will press down on raw material prices in order to maintain margins.”

“I guess the removal would have an impact to only some exten, on short term,” said Sree Atluri, a U.S.-based executive from Indian exporter Devi Seafoods.

“The processors and exporters would tend to pass on the difference to the farmet, who seems to be happy, at the moment,” he told IntraFish

Low prices for the large size shrimp produced in India are being offset by the increased yields for farmers on Vannamei, he said.

However, the impact on the market could be seen next year.

“The impact of the incentive removal might show up more in 2012 if other countries like Vietnam, Indonesia and Thailand also have a successful crop,” he said.

Source:

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