Avanti Feeds

Hi Vivek,
I am from Andhra and in particular from the East Godavari district, one of the coastal districts.

Shrimp farming is picking up in my area but it is still way behind the preferred crop which is paddy. Much of it has been historically due to good availability of water and fertile land leading to two crop yield for paddy.
However, when i last visited my place, around two years back i have seen couple of farmers take up shrimp processing. I have heard that these farmers have had their ups and downs in these two years. So others are still waiting and watching.

So in summary the trend is changing because of poor yields from paddy crops and high labour costs for paddy but shrimp farming is definitely not the first choice in the Godavari districts as of now.
I believe Shrimp farming is dominant in the Nellore region of Andhra.

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Another one.

Tried to summarize the first video.

shrimp and fish farms have been growing in the coastal belt from srikakulam to nellore.
fish farms give stable income compared to shrimp farms but each crop takes 8-12 months where as shrimp farms take 3-4 months. if going is good it shrimp farm gives 3-4 times return on investment.

vannamei is a game changer but since last year diseases have been on raise…

seed is key in shrimp farming. illegal hatcheries which supply seed at low cost are adding pain to farmers…

mother shrimp are imported from florida, usa. Indian Govt quarantines these mother shrimp and gives to these hatcheries. mother shrimp which pass these tests are called SPF prawns…only legal hatcheries have access to these spf shrimp.

ocean water is drawn and treated and used. females and males mate and release eggs. algae is cultivated and fed to these eggs. each mother shrimp will lay 50000 eggs the first time. it will be ready for breeding in just 8-9 days. second time it will lay upto 3 lakh eggs. eggs will mature to post larvae stage in 10 days. they will fee these for 12 more days before giving to farmers… these will be tested for diseases before giving to farmers.

farmers give their farm salinity to hatchery. hatcheries will maintain that salinity for baby shrimp to get used to. After that they supply these babies to farmers.

greedy farmers not giving enough time between crop to crop for the pond to dry etc increases disease risk. spf shrimp need to be used to breed only for 8-9 times only. greedy illegal hatcheries not following this or using non spf shrimp is giving raise to disease outbreaks which is spreading to other farms and ruining them as well.

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Summary of second video:
cost for raising one kg shrimp has grown to 250-320 rupees thanks to raise in feed cost, seed cost.

this organic farmer is able to raise shrimp with per kg cost of 180.

per sqare meter 50-60 baby shrimp can be grown. so in an acre 2.4 lakh shrimp can be grown. but since the yields have been going down farmers are restricting to 1 lakh - 2 lakh per acre. not giving enough time between crop to crop, excessive use of chemicals, using more feed than required has given rise to lower yields despite reducing shrimp density.

this organic farmer is preparing his own organic feed as satyak mentioned above and using it instead of pillets. when pellets are used unconsumed pellets sink to bottom of the farm. these get rotten over time and release gases which are harmful for the shrimp. This guy is using organic feed prepared at his own pond. this has two advantages. one is that shrimp consume the food better without wastage keeping the farm bed better. two is that the wastage does not release gases. it only gets converted to ammonia. his method gives the desired shrimp size 7-10 days later than the raditional method of using pellet food but reduces the cost to 180 per kg from 250-320 per kg. He is also growing 2.4 lakh shrimp per acre. he also claims better immunity to shrimp.

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Headwinds are emerging for Indian Shrimp industry - Export Duty rise, other countries like Argentina and Brazil becoming competitive due to currency devaluation and now disease threat leading to early harvesting which not only leads to lower ROI for shrimp farmers but may lead to India’s loosing its competitive edge of having the ability to provide lower count(bigger size) shrimps at reasonable rates

India – which over the past couple of years has increased its market share to EU markets, and especially to the UK – is likely to increase its farming acreage, though disease worries will have farmers harvesting their shrimp more regularly and at smaller sizes, one European trader told Undercurrent.

The consequences of this were hard to predict, he said, though he suggested that this will bring Indian shrimp – which have traditionally been a little larger – in line with the average sizes produced by other nations.

Hence, more competition and lower prices for those grades, globally

“India’s feed and PL [postlarvae] costs mean their margins are tough – this, combined with a lower price for their shrimp, could make them uncompetitive in the EU,” he warned. “If they can solve these issues, it will be easier for them.”

Early in 2015 farmers were deterred from stocking their ponds due to low prices and troubles breaking even, resulting in a raw material shortage by the end of the year (though this was exacerbated by floods caused by heavy rains).

“I think we’re going to see a shift in Asian farming, towards harvesting more crops each year, at smaller sizes,” Ian Trahar, executive chairman of Australian black tiger farmer Seafarms, told Undercurrent recently.

“Now that could cause a price spiral, putting vannamei in a lower bracket – larger volumes bring prices down, retailers want to buy more at lower prices, so more are harvested, and so on.”

Regarding India’s competitiveness, other sources noted the country had won market share in the EU in recent years, and that this was unlikely to change a great deal in 2016.

We need to monitor monthly data from the likes of USDA along with keep doing our own scuttlebutt. Meanwhile this may turn out to be blessing in disguise for likes of Avanti who is among the very players in India to have BAP 4 certification .Going forward since it will be involved in all phases in shrimp farming right from hatcheries to processing, it should have much better quality well as size(count) control compared to other players.

Source https://www.undercurrentnews.com/2016/03/29/more-smaller-farmed-shrimp-could-keep-eu-market-prices-low-in-2016/

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http://www.fis.com/fis/worldnews/worldnews.asp?monthyear=&day=5&id=83415&l=e&special=&ndb=1%20target=

cud it be athreat to Avanti?

views invited

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Detailed verision of the above article The New Indian Express: India News Today,Breaking News ... The New Indian Express https://www.newindianexpress.com

CIBA director Dr K K Vijayan told Express that in shrimp aquaculture industry, the feed constitutes 60 percent of cost of production. In the last five years, the cost of shrimp-feed has more than doubled. The current market price is Rs 88 per kg, while the actual input cost is under Rs 50. Companies thus enjoy large margins. Firms offer high commissions along with fluid sops to dealers including lavish foreign trips to secure their market dominance.

In 2015 the companies have again taken a price hike of almost 20-25% In 2014 the price was around Rs 70/kg https://www.zauba.com/export-manamei-hs-code.html which was also confirmed by the skuttlebutt done by the Valuepickr team

“Now, through Vannamei Plus, we want to cut the cost of production by at least 20 percent. To produce one kilo of the commercial feed, it costs Rs 140 per kilogram. With Vannamei Plus, the cost is reduced to Rs 91 per kilo.

They are claiming to reduce cost of feed required to produce 1kg shrimp by 30-35%. If that is the case and they are able to match the FCR and distribution network of bigger players, then the pricing power/oligopoly nature of feed industry will be impacted in a big way. We need to monitor the market price of the products of major feed players.

Regarding threat of organic shrimp feeds I believe that is still not a threat in near to medium term given economic viability of the process. Production output of organic farms is 0.5T per hectare (as per CIBA 2015 annual report which is different from what organic farmer is claiming in the video) compared to 5-10 T per hectare for conventional farms. So even of cost of production is half. The ROI would be much less. The only way organic farming (seeds) can be viable is either than production efficiency improves drastically or when the greed of farmers lead to excessing farming and thus more disease reducing the output from conventional farms from 5MT/hectare to around 1 MT.

One of the most comprehensive document on Indian Shrimp industry is CIBA Annual report http://www.ciba.res.in/Books/CIBA%20Annual%20Report%202014%2015.pdf

Some extracts (Point to note is expected growth rate is similar to what Avanti’s management projected in the DSIJ article)

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U.S. Shrimp Imports (Feb 16)

  • Great going India, keep the momentum going in new season.
  • India shrimp imports in U.S. rises 29% YoY in Feb '16.
  • U.S. consumption up 5% YoY.
  • That said, Indonesia might give tough fight to India in CY16.

Source: http://www.ers.usda.gov/datafiles/Aquaculture/Trade/AquacultureTradeRecent.xls

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Avanti Feeds is being quoted as important investment and one of the key drivers of growth going ahead. However, the scope or the extent of value addition by the expansion in shrimps in not clear.

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https://www.zauba.com/exportanalysis-shrimps-report.html

Good data set on exports of Shrimps which continue to boom inspite of so many set of negative news which continue to come from time to time.US,Vietnam ,Japan are the largest 3 exports mkt followed by large no of countries,

Shrimps are being exported from all nook n corner of India ie Vizag,Kolkata,Cochin,Nhava Sheva,Krishnapatnam,Chennai,Tuticorin,Pipavav ie opp size constantly increasing for Avanti .

India exported shrimps worth USD 6,572,646,281 with total quantity of 790,493,927. United States is the largest buyer of shrimps accounting for exports worth USD 2,139,565,220 followed by Vietnam and Japan which imported shrimps worth USD 1,038,851,410 and USD 784,133,930 respectively.

Vizac Sea accounted for 29.6% of exports followed by Kolkata Sea and Cochin Sea which account for 18.3% and 15.6% of exports respectively.

Average price of shrimps per unit is USD 8.31 and average value per shipment is 43,590

Prices also remain firm

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vivekji very good insight…we are sure all this market dynamics will help avanti to give strong q 4 result.

FDA Issues Import Alert on Imported Shrimp and Prawns from Peninsular Malaysia

http://www.fda.gov/Food/NewsEvents/ConstituentUpdates/ucm496475.htm

http://asia.nikkei.com/Politics-Economy/International-Relations/Thai-seafood-industry-face-EU-ban-as-talks-fail?page=2

Bad news for Thailand imply good news for India

BRUSSELS – Talks between Europe and Thailand to address illegal fishing practices and allegations of slave labor have succeeded in staving off a so-called “red card” threat by Brussels to impose a crippling trade ban on the country’s seafood exports. But they have not lifted the “yellow card” warning aimed at keeping pressure on Thailand to radically overhaul its fisheries practices.

Thailand’s fishing industry has been condemned for abuses by the European Union.
The European Commission said on Thursday it could still escalate punitive measures against Thailand by imposing the so-called “red card” sanctions after months of on-site investigations by experts from the European Commission’s Directorate General of Maritime Affairs and Fisheries as well as the European External Action Service, the EU’s foreign service.

 Such punitive measures could be a major setback for the Thai fishing industry, the third largest in the world after China and Norway, with an estimated 4.8 billion euros ($5.4 billion) of exports every year. Of that, 575 million euros of products are exported to the EU.

 "The dialogue is proving difficult and there remain serious concerns about the steps taken by Thailand to fight unreported and unregulated fishing activities," the EC said in its April 21 statement. "This means that further action by the Commission cannot be ruled out."

 In response to the latest EU warning, Thai officials from the government's Command Center to Combat Illegal Fishing, the police department and the labor ministry plan to visit Brussels next week to speak publicly about how the country will comply with international fisheries standards.

 Officials from both the EC and Thailand will then meet in Brussels in May to further evaluate the Thai fishing industry. If the talks fail, the EU could slap a trade ban on Thailand's seafood industry on the basis it has not fulfilled its duties under international law, EU officials say.

LABOR ISSUES

Working conditions on Thailand’s notorious fishing vessels are also being scrutinized by EEAS teams. At the same time, several teams continue to work on the issue of human trafficking and slave labor in Thailand, which is also delaying the EU’s decision on whether to impose “red card” sanctions.

 Brussels first handed Thailand a "yellow card" in 2015, saying the country's legal framework was inadequate for regulating fisheries and criticizing its monitoring and traceability systems. The EU set an action plan and gave Thailand six months to improve practices in its seafood industry.

 While those efforts have so far failed to produce adequate results in the EU's view, European officials have refrained from escalating punitive measures - partly out of concern about the tensions an import ban would create with one of Southeast Asia's largest economies, say some officials.

Adding to the already complicated backdrop, European diplomats in Brussels cite disappointment that Thailand’s military has not conducted national elections since seizing power in a coup two years ago. A new constitution unveiled in March has drawn harsh criticism from rights groups who say it gives a disproportionate amount of power to the junta. A referendum on the constitution is due to take place in August and junta chief and Prime Minister Prayuth Chan-ocha has promised national elections in 2017.

 A spokeperson at the Thai embassy to the EU said work was "ongoing" to draft secondary legislation that would result in more effective implementation of measures designed to reduce over-fishing and human trafficking. Brussels' decision to extend the "yellow card" for Thailand on Thursday comes despite months of diplomatic efforts by Bangkok - which last year appointed its ambassador to the United Nations, Virachai Plasai, as its head negotiator -- to convince the EU it was actively reforming its fishing industry practices.

 However, human rights groups have been in constant contact with Brussels to keep Thailand on its toes. In February, a group of 27 non-profit organizations wrote to Karmenu Vella, the EU's commissioner for fisheries, maritime affairs and environment, arguing in favor of prolonging the "yellow card" against Thailand.

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Looks like increased import duty has started its effect on likes of India and Indonesia and giving some advantage to the likes of Vietnam (It may be case of one off/demand-supply gap as well as overall exports to US itself fell 13%)

India’s exports rose by a little over 1%, Vietnam’s exports rose by 39% and Mexico’s exports rose by 20.2%. Indonesia’s exports also fell by 7.4%, from 9,618t to 8,909t, and Thailand also saw exports drop by over 16% from 6,256t to 5,230t.

Overall y-o-y exports to the US fell over 13% from 45,966t to 39,952t.

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Thanks Aman.

Unfortunately some data glitch (for March) at our trusted ers.usda.gov source, thus no post from my end. The March data does not appear on the Aquaculture Trade Statistics file, though created on May 4, 2016; shows stale Jan-Feb 2016 at the time of posting this message. Have dropped an email to Mr. Harvey; no luck yet.
http://www.ers.usda.gov/datafiles/Aquaculture/Trade/AquacultureTradeRecent.xls

13% YoY drop in U.S. shrimp total imports (in March) may look poor. However, this evens out in YTD numbers.

Let’s see April data (historically, India numbers improve from here on). Would be a good month to gauge anti-dumping duty hike impact.

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Guys,

Thanks for updating the data from time to time, its very helpful. Personally, i think one key good thing that is happening is that the price of shrimp is holding out pretty well (usually it falls when the season approaches) but till now it has been at levels which are pretty remunerative for farmer and as the weather condition has been good - the crop should also be good. It would be good if some people can try speaking to industry people and take an update.

Regards,
Ayush

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Whats the trend of consumption of shrimp in India? If India starts growing in terms of shrimp consumption, then part of US demand vagaries will be nullified.

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Its definitely increasing but as of now the percentage of domestic consumption is too low to make an significant impact in overall scheme of things. May be in 5 years it should become meaningful

In recent times the international prices of shrimp has been increasing - its seems the production is expected to fall in some of the key Countries and may benefit India - https://www.undercurrentnews.com/2016/05/17/bleak-outlook-for-shrimp-farming-in-china/ & https://www.undercurrentnews.com/2016/05/17/raw-material-shortage-leaves-vietnamese-shrimp-processing-facilities-running-well-below-capacity/. Though it also brings to notice the risk of disease etc the industry is exposed to.

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http://www.google.org/publicalerts/alert?aid=25430b562ad589a1&hl=en&gl=IN&source=wweather

Tropical Depression Warning
Tamilnadu, Puducherry, Andhra Pradesh
7 hours ago – India Meteorological Department
Squally wind speed reaching 50-60 kmph gusting to 70 kmph would prevail along and off north Tamil Nadu & Puducherry and south Andhra Pradesh coasts during next 48 hours …

Yesterday’s well marked low pressure area over north Sri Lanka and adjoining areas of Gulf of Mannar and southwest Bay of Bengal moved north-northwestwards, concentrated into a Depression and lay centered at 11.0°N and 81.0°E, about 240 kms south-southeast of Chennai at 0830 hours IST of today, the 17th May, 2016. It is likely to move north-northwestwards during next 12 hours and northwards thereafter along north Tamil Nadu & south Andhra Pradesh coasts. It is likely to intensify into a deep depression during next 48 hours.

Warning:
Heavy Rainfall Warning: Rainfall at many places with heavy to very heavy falls at a few places likely over north coastal Tamil Nadu & Puducherry during next 24 hours. Isolated heavy to very heavy falls are likely over north interior Tamil Nadu and isolated heavy falls over south Tamil Nadu during the same period. Rainfall at many places with isolated heavy to very heavy falls over north Tamil Nadu & Puducherry during subsequent 24 hours.

Rainfall at many places with isolated heavy falls over south Andhra Pradesh coast on 17th May 2016. Rainfall at a few places with heavy to very heavy falls on 18th May and isolated heavy falls on 19th over coastal Andhra Pradesh. Rainfall at most places with isolated heavy to very heavy falls likely over Kerala and Lakshadweep during next 48 hours. Rainfall at many places with isolated heavy falls likely over Rayalaseema and coastal Karnataka during the next 48 hours. Isolated heavy rainfall is likely on 17th May, isolated heavy to very heavy falls on 18th and isolated heavy falls on 19th May over south interior Karnataka.

In my opinion, i think it may not be same as December floods. Hopefully it is a short lived one.
Lets keep our fingers crossed.

Disc: Not invested. Had sold off in Feb for personal fund needs.