Ground report and issues in AP districts:
Domestic Prices are falling…Sindicate issues…Lack of GOVT control…Distress in small farmers…Increase in raw material prices…No domestic market…
Read as Count, Present rate, FEB 2018 rate & FEB 2017 Rate
Thanks for posting this info. Can you please translate what the picture says?
Prawns are being prepared for Export…
It depicts a negative picture of small farmers in Aqua sector , says inputs costs like diesel and feed costs has gone up, no government support & price realization has gone down. The table shows falls in prices from previous year to present.
it also mentions that small farmers are losing money due to the big private players becoming a cartel and decreasing the prices. There is a gradual increase in shrimp production [20 % rate in past few years] as more farmers are attracted toward shrimp cultivation. However, a combination of rising input costs [like feed, diesel, baby prawn price -from 25 paise to 50 paise], etc impacted farmers with decreased profits and thus, requesting AP government to take cognizance of the scenario.
Translation of the article:
In the state - Krishna, West and East Godavari districts along with Prakasam and Nellore districts - Shrimp is being cultivated in a total of five lakh acres. This cultivation is widening with 20 percent growth every year. Especially in the three months of cropping the small and marginal farmers are looking forward to experiencing their fortune in shrimp farming. This time they are shocked by the events in the shrimp farming. Shrimp is infected by Whitespot disesase, the counts are low. Exporters have become a syndicate and are controlling the Krishna and West Godavari markets. The Bheemavaram market is less than Rs 30 per Kg compared to Nellore.
State prawn farmers’ condition is deteriorating today. When farmers are pouring in thousands of crores as investment, the end prices are being controlled by the syndicate. Once mass volume of shrimp hit the market, prices will decline immediately without any correlation to the international markets (price manipulation by the syndicate) . Farmers are forced to sell their produce at these depressed prices. Despite achieving double-digit growth rates farmers are making less money. Vannamei shrimp farmers are suffering severely due to whitespot, reduced mortality and severe depreciation of prices of shrimp. Farmers are also hit by rising cost of machinery, drugs, feed, diesel, machinery prices and pond leases. Rising input costs and depreciating shrimp prices are eating into farmers profits.
The reason for lowering prices is: Governement does not buy shrimp directly from the shrimp growers in the country. Shrimp marketing is in the hands of private individuals and companies. The syndicate of purchasing companies has been manipulating to shrimp prices this time. The absence of government control is allowing these syndicates to manipulate the prices. Farmers are seriously damaged by the domestic price depreciation, even if the internation prices are doing good. while the price depreciation in Nellore and Kakinada markets is not significant the price manipulation in the Bheemavaram market is significant. There is huge difference between online prices and price paid to the farmers. Exporters cite reasons like there are no export orders at present and the import duty is increasing in the US and European countries.
Prices of rising raw material …: Prices of raw material are now skyrocketing in shrimp farming. The price of diesel has now risen to Rs 71.50 per ten grams at Rs. Last year, the baby price of 25 paisa was doubled. The price of 25 kg of wheat has increased by more than Rs.100. Prices of medicines used have also increased with GST . The area of cultivation has doubled. The shrinking prices do not increase, but the benefits of a good count do not come.
Government intervention should increase : Thousands of crores of Investments … Good growth rates … The State gets good income from aquaculture. The government has no control over it and the farmers are on the losing side because of this. Government needs to intervene to get justice for the farmers.
There is no correlation with international markets:
less than one percent of shrimp will be for domestic consumption. 99% will be for exports. Given this fact the international prices should dictate the shrimp prices in india. There are two to three prices with in the state (Different discrtict have different prices). Particularly in the Bhimavaram market, the prices are hugely manipulated. Yield has increased significantly compared to last year. But the price depreciation means the farmers are incurring losses instead of profits.
Although the main issue of decrease in prices is true, this paper (EENADU) always publishes leftist views like cartels, middlemen, big corporate exploitation etc. So Please take the reporting of this EENADU paper with a pinch of salt.
P.s: The owner of this paper himself is a big Business man, sold his TV business to Reliance but this paper always publishes leftist news.
IMV, a news is just news. Leftist or rightist is the perception of the
reader. In this case, to me, the news is true.
And , output prices going up and down and input prices going up and down is
quite normal in any industry. Avanti was in the goldilock situation in last
15 months - output prices high and input prices low. Now it may go through
the opposite phase a few quarters. We are already seeing news that US is
going to have a bumper soya crop this year which can reduce the input
prices again by the end of 2018. These things are quite normal. Should
investors jump in and jump out basing their decisions on such normal
business events. Avanti has a tremendous long term potential with excellent
fundamentals. Long term investors will note these news but will still hold
the stock. Positional traders can try and time such news and get in and get
if soybeans rates fall? will it not be good for avanti? i think its the biggest Raw material component right? but i think there is a oversupply of shrimp around the globe…
Good set of numbers continue…
For Jan-Feb 2018 v/s Jan-Feb 2017
- US shrimp consumption up by 18%
- US shrimp import from India up by 36%
- India market share up from 27% to 31%
What is troubling Avanti price-not sure.The scrip is very muted from Nov 17 despite Nifty/Sensex moving up.It is bordering on 200SMA for almost 4 months approx. Is the market bothered about additional duty from USA? Cannot prejudge the market but something is missing.
invested 14% of portfolio
The drop in price at farmer level is true and cartalisation is indeed the one reason, found out from farmers of west Godavary district Of AP State.
There were also news about over supply of feed than the demand. There are several feed suppliers in AP like Avanti, BMR, Devi seafoods etc.
Here is the statement from Avanti “[Shrimp feed] requirement is about 1.1 million [metric] tons. Production capacity is 2.2.-2.3m tons,". link
Important statements by MD (Avanti Feeds) from the link shared by :
“Around 80% of the market is controlled by the large players, like us, also CP [Thailand’s Charoen Pokphand Foods],” he said, during a walk around the football field-sized warehouse at Unit-4. “Smaller companies may exit the market.”
His firm, which is publicly listed, increased feed sales volumes by 35% in the financial year 2016-2017 to 341,660t, according to its annual report, partly by taking market share from others.
Avanti had looked at buying other plants, he said, but decided technology upgrades required would cost about the same as building a new one.
He mean to says that smaller players will not able to survive and ultimately capacity of small players will be of no use. Also, they have not acquired existing plant as cost of upgradation is almost equal to cost of new plant which indirectly means that small players cost of production is very high & they are using obsolete technology.