KOCHI, India -- It's a difficult time for India's marine cephalopod traders, as an influx of North African supply, low prices and high tariffs are holding back many from dealing with their traditional European market, Undercurrent News learned. 

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Speaking to processors at the India seafood show in Kochi this month, it became apparent that packers in the country are seeing reduced demand from European buyers turning to the increasingly consolidated cephalopod fisheries of Mauritania and Morocco for their supply.

Abuthahir Aboobakar, CEO of Mahrashtra-based seafood processor Jeelani Marine Products, told Undercurrent that Mauritania has favorable tariffs with the EU, among other aspects, which make them far more attractive to European traders.

"The Mauritania government and the EU has a lot of connections," said Aboobakar. "I mean they have a lot of trade agreements in place and a lot of different storage areas there, and that helps them to procure and prepare the material. They also have very good control over the fishing in Mauritania, so that has helped them also."

There is currently an effort by Spanish harvesters to consolidate the cephalopod supply off north-west Africa: Union Martin acquired a 49% stake in Mauritanian octopus harvester Societe Mauritanienne pour la Peche Industrielle last December, while Iberconsa, Spain's largest fishing firm, is said to be eyeing a deal for a pair of Mauritanian vessels with clearance to export to the EU.

Despite this, Aboobakar noted that European traders would still come to Jeelani to diversify their supply if the catch is low in Africa.

Elsewhere, Kerala-based Grand Marine Foods has also seen its business dented by North Africa's growing market presence. 

According to managing partner Muhamed Sageer, Grand Marine plans to spend $4.9 million on a four-acre expansion to its 6,000 metric ton capacity value-added factory, as it looks to add a new breaded line as well as additional processing for yellowfin tuna and value-added shrimp.

“I’m focusing on doing more business to China, because last year in Europe the business was a little bit slow,” Sageer told Undercurrent. “The price for cephalopods has gone down, and we are struggling a little because the European market is not good at this moment."

The poor market for his squid and cuttlefish means that Sageer has opted to suspend the building of his expansion until the summer, when he hopes business will pick up again.

"Again, like last year, Morocco's landing is huge again, and it's negatively affecting India," Sageer added. “Maybe it will be better after the summer sales in June and July, so hopefully it will be getting better after August.”

Grand Marine already sells 5% of its exports to China, and Sageer noted that his clients in the country told him they could possibly resume trading -- halted by the coronavirus outbreak -- before the end of February.

Indian exports head to new markets

With trading down in Europe, more of India's top cephalopod packers have begun to divert their stock to new markets.

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Sheraz Anwar, director of major seafood packer Abad Fisheries, said his firm was looking to increase its domestic market presence through sales to the Indian foodservice sector. Currently, Abad trades 5t of squid in Kerala, which Anwar noted was "quite a lot for the region".

"We hope to be growing on that. As we grow, we hope to move north and east to cover the whole of South India, and we should soon be selling more and more squid here," he told Undercurrent.

Over the past 15 years, Abad has grown its European trade to the stage where it now supplies 600t of marine cephalopods to its Spanish partner Grupo Nuevo Pescanova every year.

"Pescanova has a huge presence in all the Spanish supermarkets; if you go to any supermarket in Spain, the biggest seafood shelf belongs to them. So it compliments them to bring all these products from India."

Looking elsewhere, Abad, which started exporting shrimp to Pescanova's offices in Brazil this month, plans to eventually add more squid and cuttlefish to its offerings there.

Jeelani's Aboobakar has also seen his firm -- which only started exporting seafood two years ago -- doing increased trade in east Asia this year as it diverts surplus supply away from the EU.

"Right now, we've started selling more to the Malaysians, the Thais and especially the Chinese markets, because before the Chinese new year, the prices in Asian markets were very good actually," Aboobakar told Undercurrent. "It was much better than shipping into Europe."

Meanwhile, Sageer told Undercurrent that his firm had started to see some good results from increased business in Japan and South Korea. Although Grand Marine has just one factory, its blast freezers, value-added, IQF and cooking facilities have opened doors that may not be there for other firms, he noted.

"We're finding good markets in Korea and Japan, and we want to do more volume," he said. "But some of our value-added products, similar products are not possible to enter the Korean or Japan markets. We need to add some more value-added production for what they want, cutting different kinds of strips up to prescription."

"Right now though, we are limited because the raw material availability is quite low," he added, noting that Grand Marine's suppliers were waiting for the next fishing season to start again in April.

A new European trade deal?

Currently, any Indian exporters looking to sell cephalopods to the EU are faced with a 7% tariff, according to the EU's general system of preferences. 

However, Anwar, Aboobakar and Sageer were each hopeful that there could be a new trade agreement sorted between India and the EU this month, with the next India-EU summit due to start on Mar. 13.

"Now there is fear among all the Indian exporters to trade with Europe, but if that
duty goes away, it's going to be a lucrative business; we know from our experience that European customers are happy to buy from India," Aboobakar told Undercurrent.

As of 2019, India only accounts for 2.3% of all EU trade, and ranks ninth in its list of trading partners. Talks of a bilateral trade agreement between the two parties have been on the back-burners for years, but there are hopes that the next meeting could conclude with an investment protection agreement as a prelude to a full free trade agreement within the next few years.

Meanwhile, India's total exports of squid continue to grow; according to the latest statistics from India's Marine Products Exports Development Authority (MPEDA), India exported just over 100,000t of frozen squid in the 2017/18 period for the first financial year on record, up marginally by 1.51% year-on-year. However, total value fell by 4.79%, as average prices dropped from $3.91/kg to $3.82/kg, reflecting the simultaneous drop in the high-value EU market share.

On the other hand, frozen cuttlefish exports enjoyed a strong financial year -- MPEDA's data shows that export volumes rose by 9.26% to 69,183t in 2017/18, bringing in a total value of INR 23.5 billion ($369m), marginally less than squid's total value of INR 24.5bn.

Between them, frozen squid and cuttlefish exports accounted for approximately 10% of India's total seafood export value in 2017/18, according to MPEDA.

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