Indian shrimp industry sails in troubled waters after Trump tariffs

Turbulence unleashed by President Donald Trump's tariffs could rock global shipments of shrimp to the US, with exporters in biggest supplier India saying they endanger 2,000 containers packed with the frozen delicacy.

However, Ecuador, thousands of kilometres nearer to the US, faces a lower tariff rate and stands to benefit, the exporters said, as shrimp is its most important export after oil.

India's shrimp industry is staring at a tariff of 26% under Trump's July plan, which threatens a thriving $7bn (R133.4bn) seafood export market heavily reliant on US supermarket chains such as Walmart and Kroger as buyers look to renegotiate rates.

Farmers are seeing demand dry up amid the uncertainty as exporters have cut offer prices by a tenth since the tariffs.

“We are suffering huge losses,” said SVL Pathi Raju, 63, standing at the aquaculture pond where he feeds and grows shrimp in India's southern coastal state of Andhra Pradesh.

“We don’t know who can resolve our price issues,” said Raju, one of several families in the state's remote village of Ganapavaram grappling with dwindling sales to exporters.

Many also face high payments for shrimp feed and rentals for the land where the saline ponds have been set up.

“I am not sure how I will sustain prices,” said another farmer, 60-year-old Uppalapati Nagaraju, adding he had been entirely unaware of the concept of tariffs.

“Had I known, I would not have started my cultivation.”

In the face of erratic demand from exporters, he regrets having begun shrimp cultivation 15 days before the tariff news. Although Trump has delayed the 26% rate until July, even the current rate of 10% has made exporters skittish.

The US and China are among India's major markets for seafood exports that touched $7.3bn (R139.1bn) last year, on a volume of 1.8-million metric tons that was an all-time high.

Shrimp formed the major component, with the 300,000 farmers of Andhra Pradesh contributing the most to industry supplies, accounting for 92% of India's seafood exports of $2.5bn (R47.6bn) last year to its biggest market, the US.

Industry representatives have joined a state government panel weighing the impact of tariffs and looking for ways to boost exports to other countries, such as China.

However, the exporters fear Ecuador's competitive edge from Trump's planned lower tariff rate of 10% for the South American nation, particularly since it is much closer to the US, its second biggest market for shrimp.

Ecuadorean producers, with $1.55bn in shipments in 2024, are less optimistic.

Although US consumers have fuelled growth in the area of processed shrimp, Ecuador has yet to attain the capacity to replace India's production, said Jose Antonio Camposano, president of its National Chamber of Aquaculture.

India “will be obliged to look for other markets where Ecuador is selling, such as China and the EU, so we'll have more pressure in other markets,” said Camposano.

Reuters visited one Indian factory where shrimp was washed and machine sorted automatically by size before a manual quality check by workers in masks and gloves. Then a conveyor belt whisked the seafood away to be quick frozen.

Thousands of tonnes of frozen shrimp leave Andhra Pradesh each year on a voyage that usually takes 40 days to arrive at ports in New York, Houston and Miami, en route to restaurants and the shelves of retailers such as Safeway and Costco.

The chief of India's seafood exporters group, G Pawan Kumar, said he was worried about shipping containers packed with frozen produce at previously agreed rates  set to be renegotiated by US buyers after the tariffs.

“Ten percent is high, we exporters operate on a 3% to 4% margin,” said Kumar, president of the Seafood Exporters Association of India, which is pushing the government to win the industry exemptions in trade talks with the US.

“It's game over” for the Indian industry if the tariff rate of 26% takes effect in July, said one shrimp exporter, who spoke on condition of anonymity.

He was in talks with US clients who did not want to fully absorb the 10% tariff, he said, pointing to the risk of earning no profit if he had to sell 130 shipping containers that have been packed.

In Texas, the seafood section at a Walmart supermarket was piled high with packs of frozen shrimp, among them a “jumbo” variant labelled a product of India and priced at $7.92 (R150.96) under Walmart's own “Great Value” brand.

“We have built long-lasting and deep relations with suppliers over the years,” said Latriece Watkins, chief merchandising officer for Walmart in the US.

“We expect that to continue going forward.”

Reuters