Facing Trump tariffs, India’s shrimp farmers consider switching to other businesses

A worker stands near paddle wheel aerators at a shrimp hatchery in Nagulapally village, Uppada, Kakinada district, Andhra Pradesh, India, Saturday, Feb. 10, 2024. (AP Photo/Mahesh Kumar A.)

HYDERABAD, India/GUAYAQUIL, Ecuador — On India’s southern coast, V. Srinivas thrived for two decades by farming shrimp, as the country became the top supplier of the delicacy to the United States. Now, Donald Trump’s 50 per cent tariff threat is forcing many to consider other ways of making money.

Andhra Pradesh state sends the most shrimp from India to the U.S. and farmers there have spent millions of rupees (hundreds of thousands of U.S. dollars) over the years to cultivate high-quality shrimp in saline ponds.

Now they are being hit hard as Indian exporters have slashed rates they offer farmers by almost 20 per cent after the tariff shock, wiping out most of their profits.

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“I am contemplating if I should do fish farming,” said the 46-year-old from Veeravasaram village who has already mortgaged his family property and has US$45,800 in outstanding loans.

“These prices will not help me get any profits and I will not be able to pay off my loan.”

The United States is the biggest market for India’s shrimp farmers and exporters, with clients including U.S. supermarket chains such as Walmart and Kroger. Last year, total seafood exports from India globally stood at US$7.4 billion, with shrimp accounting for 40 per cent.

But the industry is now in troubled waters with President Trump’s 25 per cent tariff on imports from India already in place - the highest among major economies, and another 25 per cent levy to kick in from August 27 to penalize New Delhi for buying Russian oil.

By comparison, Ecuador, India’s main rival for shrimp exports to the U.S., faces a much lower 15 per cent tariff, heightening its competitive edge.

In Andhra, there are around 300,000 farmers engaged in shrimp farming, selling products to dozens of exporters who ship to America.

Pawan Kumar, head of the Seafood Exporters Association of India, said orders from U.S. clients have been paused in recent weeks as buyers aren’t willing to absorb the tariff, and neither can exporters, forcing the latter to cut prices they pay to farmers.

Although India also sells shrimp to other countries such as China, Japan and the UK, and likely will look to expand sales there and diversify into new markets, “that’s not going to happen overnight,” Kumar said.

The impact is yet another example of how Trump’s tariff threats are causing business disruptions across the world, especially in India, given it faces one of the steepest levies that have soured its relations with Washington.

In Andhra, six of 12 farmers Reuters interviewed said they were considering putting shrimp farming on hold and looking at fish farming, vegetable retailing or other local businesses to tide over the crisis. The other six are choosing to wait it out a bit. Each round of shrimp cultivation takes about 2 months or more.

While prices being offered for their shrimp are being slashed, the farmers said they still face loan payments and high operating costs for electricity, raw material and feed, as well as high land rentals.

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“There’s hardly a 20-25 per cent profit for us on good days, and if that’s getting eaten up, what else is left?,” said Gopinath Duggineni, the chief of a local union in Ongole city, adding the farmers plan to seek financial support from the state government.

Ecuador, meanwhile, is closely tracking tariffs on India to seize on business opportunities, but producers there will go slow on new investments amid uncertainty over whether India and the Trump administration could strike a tariff deal, said Jose Antonio Camposano, president of National Chamber of Aquaculture of Ecuador.

“India’s exports are highly concentrated in the United States ... just as China is for us. So that is where we could gain ground if India withdraws,” he said.

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Reporting by Rishika Sadam in Hyderabad and Yury Garcia in Guayaquil; Editing by Aditya Kalra and Kim Coghill