India’s feed giants expand capacity amid surge in shrimp aquaculture

ANDHRA PRADESH, India — The skeleton structure of BMR Group’s new 70,000 metric ton-capacity shrimp feed mill reaches up into the sky, like a half-built Meccano set. The setting sun behind it creates a striking silhouette.

It is another sign of the runaway growth in India’s shrimp sector. As shrimp production soars, feed mills are springing up among the lush paddy fields and banana plantations all across Andhra Pradesh, India’s eastern coastal state and shrimp production hub.

Before visiting BMR’s new mill Undercurrent News visited the monster, 175,000t-capacity mill currently being built by Avanti Feeds, India’s largest shrimp feed manufacturer. It sits alongside a twin 175,000t mill tower built in 2015 at Avanti’s Unit-4 site near Rajahmundry, Andhra Pradesh, and is scheduled to start production this month.

Meanwhile, Cargill, the world’s largest agricultural company, inaugurated a new Indian plant, which will triple output to 90,000t, last month. Andhra-Pradesh-based Devi Seafoods, India’s second-largest shrimp exporter, is building a new 50,000t-capacity plant; its third mill in as many years. 

Some wonder whether too much capacity is being built into the system. Despite ploughing ahead with its own development, chairman and managing director of Avanti Feeds, Indra Kumar, said India’s shrimp feed capacity is double actual demand.

“[Shrimp feed] requirement is about 1.1 million [metric] tons. Production capacity is 2.2.-2.3m tons,” he said.

Avanti Feeds chairman and managing director Indra Kumar in front of Avanti’s new shrimp feed mill being built near Rajahmundry. On completion, Avanti’s annual shrimp feed production capacity will increase to 600,000t. Credit: Undercurrent News

“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.

But, with Indian authorities targeting farmed shrimp production of 1 million metric tons by 2020, there is no shortage of confidence among firms expanding capacity now. 

“We wouldn’t build a facility to keep it idle,” Potru Brahmanandam, Devi Seafoods’ managing director told Undercurrent. 

‘Demand is there’

Undercurrent toured BMR’s existing 70,000t-capacity mill, which stands next door to the new one being erected. Vast buckets, mixers, grinders, pressurized cookers and coolers, churning out 200t of feed a day, sit on top of one another inside the 36-meter tower, like a giant Jenga set.

The throughput of ingredients in a feed mill relies on gravity; hence why towers can soar up to 40 meters high, like Avanti’s. Wheat flour, soya meal, fishmeal, premixes, water and a host of other ingredients used in feed, are released from buckets in precise quantities near the tower’s top into mixers, then into heaters, grinders, more mixers, coolers and so on, until at the base of the tower, fresh shrimp feed is fed into 25 kilogram bags. 

BMR Group director K Mahitej stands in front of shrimp feed at BMR’s feed mill near Nellore, Andhra Pradesh. Credit: Undercurrent News

Despite it being the low season for shrimp farming in India, the BMR plant appeared to be running at full pelt. When asked how BMR fared when it entered the market for the first time in 2015, Venugopal Reddy, general manager of operations, said it had “no problems”.

“We sold 50,000t in the first year. Who sells 50,000t in the first year? But in the first year of operation we had consistent supplies, consistent quality, and a good brand.”

“We found there is huge market demand there. That’s why we started building the second factory,” he said.

Ramesh Kumar, general manager at BMR, said his firm’s experience in farming – the firm owns 400 hectares of its own farms – and hatcheries – BMR claims to be India’s largest supplier of post-larvae – helps with marketing the feed.

New warehousing at BMR’s feed plant. Credit: Undercurrent News

“Farmers trust us and so they trust the feed,” he said. He added sustainability organizations, such as Best Aquaculture Practice (BAP), also view positively the firm’s control of the whole chain of production. The firm is rated by BAP four-star, the highest. 

“When the farmer asks for more feed we can send it to him straight from the plant to the farm, which is 30 kilometers away. The shrimp then comes to the factory, which is next door. So, this is happening within a 30-40km radius,” said Kumar.

BMR’s second 70,000t-capacity mill tower (right) sits next to the existing 70,000t-capacity mill tower (left).

“I think demand is there and everybody has their market,” said Devi Seafoods’ Brahmanandam. 

Kumar said while there are big foreign players in the market, Indian firms are also “very strong”. Indeed, Thai Union, the world’s third largest seafood company, has bought into Avanti Feeds. As of Avanti’s most recent annual report, it owned a 25% stake, making it the firm’s second-largest shareholder. 

Fishmeal demand growth

The expansion of shrimp feed capacity and production is causing unprecedented demand for fishmeal, however, straining local supplies.

Fishmeal demand surged by more than 30% in 2017, Mohammed Haris, chief executive officer of Mukka Seafoods — India’s largest fishmeal processor — told Undercurrent. Shortages of local ingredients have led companies such as Mukka to source from African countries to keep up.

“When there’s a shortage in India we import and we get those from Morocco,” Haris said. “But it’s very hard, it’s getting to be a crazy market.”

At both BMR and Avanti feed plants the fishmeal Undercurrent saw was marked as locally produced. 

India until recently was a net exporter of fishmeal, thanks to abundant sardine supplies on its west coast; Karnataka sardine landings have almost doubled in the last ten years to 357,000t per year as local fishing companies invested in a more efficient, mechanized fleet.

Mukka Seafoods is in talks to buy a rival processing company in Mangalore to boost its capacity and may even consider outside investment to further expand. The company is also a major supplier of fishmeal to the Bangladeshi shrimp industry.

Mukka was profiled in the recently published Undercurrent report: Feed Innovation: The Multi-Billion Dollar Effort to Drive Aquaculture Growth.

Fishmeal

It is a member of the Marine Ingredients Organization (IFFO) and has a careful traceability system in place to monitor third-party purchases and by-catch data, he said. However, other companies operating in the Mangalore area may be less scrupulous when it comes to fish procurement, he warned.

India is one of several Asian countries that are omitted from sustainability reports such as the Sustainable Fisheries Partnership, because of a lack of data. 

The country also lacks a quota-based fishing system to preserve stocks, according to the Kochi-based Central Marine Fisheries Research Institute (CMFRI). India needs to adopt further measures to improve its fishing regulations, vice president Shri Venkaiah admitted at a fishing conference last November.

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