Field Notes: Call for government support as lockdown bites into fish processors’ profits in India

Lockdown restrictions in India have hit fish processors at the peak of their season and created economic hardships causing business closures. Small-scale processers are calling for government support to improve the flow of fish to consumers, who rely on the staple as a key source of protein and micronutrients.  

AppalaRaju is one business owner who has been hit by the economic impacts caused by disruptions from the COVID-19 lockdown. With his son, he runs a small fish processing and crab export business operating in Penthakata, Puri along the eastern coastline of Odisha State. Theirs is one of many micro, small, and medium enterprises (MSMEs) that comprise India’s small-scale fishing sector.  

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In a normal year, their business delivers up to 1,000 tons of marine fish and two tons of green mud crab (Scylla serrata) and red mud crab (Scylla olivacea) to urban consumers in Mumbai, Delhi, Bengaluru, and Kolkata. Providing a valuable source of protein and micronutrients to consumers. The business is also a valuable source of employment for locals, employing 4 to 5 full-time workers and hiring another 3 to 4 laborers seasonally and contracting over a dozen more laborers whom are paid based on the amount of fish they bring in. 

India’s COVID-19 lockdown has immediate impact on processors’ profits 

When the nationwide lockdown to quell the spread of Covid-19 was announced on March 23,  Appala Raju had 1,300 kg of marine fish in transit between Kolkata and Chennai. The trucks were unable to reach their destination during this initial period of confusion and the fish spoilt in the process. It was a massive hit to business. He was also processing 600-700 kg of marine fish and 300 kg of green crab in his processing unit at the time, but no longer could source ice to preserve his fish and had to offload this fish at a low price to local consumers.  

Appala Raju was now stuck — unable to pay the fishers and workers who he owed for this load of processed fish and crabs and also unable to collect payment from the traders who were to sell his fish in Chennai. These disruptions and loss of income immediately preceded the annual fishing ban period, which stretches from mid-April to mid-June every year. The business owner faced the prospect of not being able to earn any income for nearly three full months. 

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Many in the fishing community rely on daily income in exchange for fishing and boat operating. To cope, people are borrowing money from relatives and landlords and purchasing food on credit from kirana shops -- small, family-owned stores selling groceries and sundry items. Since gleaned fish is the main animal source food consumed by vulnerable families living in the coastal community, many of these families found themselves without an alternative food source during the fishing ban. In addition, other food items like fresh vegetables are becoming scarce due to transportation disruptions.  

April and May are typically the most productive months for Appala Raju’s business. He normally earns around $30,000 (2-25 million rupees) during this period, but this year he was operating at a loss.  He has had to reduce many of his business expenses, including cutting the wages he pays his workers and closing his processing units whenever possible to save on electricity and water costs. He has been able to salvage some fish in his possession by producing dried fish and selling damaged and decomposed fish to poultry and prawn feed mills. Although these measures have temporarily reduced his losses, they are not enough to bring in a profit. When he talks to other fish processors in his area, he sees them employing the same coping mechanisms as him. It has not been enough to stop many of his competitors from closing their doors however, and he doubts that the situation will change until the free flow of food items is allowed.   

Government support needed to keep fish flowing to consumers 

Appala Raju sees a clear role for government to step in and provide financial assistance to MSMEs such as his. His vision includes an immediate policy response to help his business weather the crisis, as well as a path to grow his sector over the long term. The local government recognized the need for immediate relief for the fishing community and reduced the fishing ban period by two weeks, allowing boats to resuming fishing on June 1. Now that Appala Raju has access to his primary raw materials again — fish and crabs — he sees the need for quick access to capital through a subsidized loan. Lockdown measures have resulted in cash flow issues for many MSMEs. Governments can help MSMEs by freeing up their working capital and facilitating their access to more cash. This could be in the form of providing tax relief or deferring tax payments, waving existing debts, or mandating loan arrangements specialized for MSMEs. 

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To grow his business long term, Appala Raju sees tax deductions and/or subsidizing fishing gear, such as boats, life jackets, and GPS devices, as helpful government assistance for his sector. He also sees that MSMEs such as his cannot afford some of the larger infrastructure and equipment needed to improve fish processing practices. Large cold storage units and industrial dryers to dry fish would allow him to reduce his costs and more effectively produce dried fish products, but he cannot afford the initial investment and maintenance costs with his current volume of sales. Government can invest in the fish processing sector by creating public-private partnerships to build and operate these facilities.   

Lockdown restrictions in India have hit fish processors like Appala Raju at the peak of their season and created economic hardships that have resulted in fish processors ceasing to operate. The fishing ban has stopped the flow of fish to consumers and removed a key source of protein and micronutrients from the diets of fishing communities and fish consumers in urban centers of India. Appala Raju’s business is closed for now, but he has dreams of “building back better.” With targeted policies, local government can help MSMEs survive Covid-19 so that fish and seafood products continue to reach consumers.

Authors: Lauren Pincus, Bikram Keshari Baliarsingh and Mohan Chadag.