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Sri Lanka seafood exports swimming against Coronavirus tide to keep economy afloat

ECONOMYNEXT – Sri Lanka seafood exports are seeing strong demand and higher prices during a global Coronavirus crisis though air freight rates have sky rocketed, as airlines are grounded worldwide, an official said.

“So, the good news is amongst COVID-19, the seafood industry has been able to operate, and the demand still seems to be decent,” Prabash Subasinghe, Chairman of Sri Lanka’s Export Development Board told an online forum organized by Advocata Institute, a Colombo-based think tank

“You would be surprised when I tell you that even though Italy is in lockdown we still ship to Italy.”

Key seafood exports from Sri Lanka include fresh and frozen yellow fin tuna, shrimp, prawns and crabs. The industry is a valued around 300million dollars. The main markets Sri Lanka are in Europe, US and Japan.

Subasinghe is also Managing Director at Global Sea Foods, a Colombo-based export firm.

“We export tuna in two main categories, one the fresh which is more expensive and is sold at 15-20 dollars a kilo, its a little bit niche, but surprisingly still the demand for fresh has been strong,” he said.

“Even for frozen, which is mass in terms of the amount of people that would be buying, because it is about 6-7 dollars a kilo.”

The government declared seafood as an essential service soon after nation-wide curfews started.

“Being an essential service certainly helped and that also gave us the impetus to bring people to our factories,” Subasinghe said.

“There were mainly two issues with COVID-19, one we needed to get our factories operational, two due to social issues we also needed to get people to come and work in our factories.”

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Subasinghe said the factories have been operational, fishermen have been fishing.

“So,I would say for the last two weeks the industry holistically have been operating maybe about 25 percent compared to what we used to operate at.”

However, Sri Lanka’s seafood industry is heavily dependent on airfreight. The balance goes by reefer containers.

“The rates are almost 300 percent of what we used to pay before plus that’s been passed on the final buyers and they are willing to pay that,” Subasinghe said. “There seems to be strong elasticity.

“Even though the airport is closed, surprisingly there’s been a sufficient amount of cargo planes have been coming to Sri Lanka.

Sri Lanka closed its airport for inbound passenger on the March 19 while emergency diversions, humanitarian flights, freighter operations, technical landings were allowed.

Cathay Pacific had been flying all cargo aircraft and Qatar and Sri Lankan ferry flights to take passengers out.

New opportunities

In seafood there will be a shift from fresh to frozen from Sri Lanka so moving from a 20-dollar product to 6-7-dollar product, he said.

Globally, there was a demand side shock when the second Wave II of the novel coronavirus broke out and consumers scrambled to stock up on goods amidst curfews and lockdowns which resulted in empty shelves across the retail sector.

The food service and retail have become more important now than ever with all the functions of a market (supply, demand and production) coming to a standstill.

“Fortunately, in this dark scenario in front of us, the seafood industry I would say going forward would do well,” said Subasinghe.

“There are several factories in Sri Lanka who are geared for the shift so that’s the shift we will see in the sea food industry.”

Sri Lanka should also look at areas closer to home for markets, he said.

“Historically our markets have been the US, Europe, Japan mainly, but now the markets which are closer to us have been important such as Middle East, Singapore, Malaysia because demand for food has been quite strong from this area,” he said.

“Lulu supermarkets in UAE had been sending their own planes to pick up food from Sri Lanka.”

The other factor the industry has benefitted from is order cancellations and payment delays.

Sri Lanka’s seafood exporters are working with smaller wholesalers who supply to retail chains such as Sainsbury, Tesco and Marks & Spencer who have been in operation.

“Some companies have asked for little bit of grace,” Subasinghe said. “But there hasn’t been any discussions about not paying us or about any cancellations.

“In frozen business, people have said they don’t mind waiting for two weeks due to logistic issues.” (Colombo/Apr17/2020)

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