Indian shrimp farmers and processors are seeing profit margins shrink as high feed costs clash with low global shrimp prices. An oversupply from competitors like Ecuador has kept sales realizations stagnant, forcing producers to absorb the rising cost of essential raw materials like fishmeal and soybean meal.
The Indian aquaculture industry is navigating a difficult period as profit margins come under intense pressure. Farmers and processing companies are struggling with a dual challenge: the cost of producing shrimp is rising, while the price at which they can sell their harvest in the global market remains flat.
Feed costs typically account for 50% to 60% of a shrimp farmer’s total operating expenses. Recently, these costs have climbed significantly due to shortages in key raw materials like fishmeal and soybean meal, which have been affected by global weather patterns including El Niño. Because the cost of feed makes up such a large portion of the budget, even small price hikes significantly hurt the bottom line for producers.
On the other side of the equation, Indian producers are battling a global supply glut. Countries like Ecuador have ramped up production to record levels, which has pushed down shrimp prices internationally. Because Indian exporters must compete with these lower prices to maintain market share, they have limited room to raise their own prices. This gap between rising production costs and stagnant selling prices has led to a noticeable decline in profitability for many companies in the sector.
The impact is visible across the supply chain, from small-scale farmers in states like Andhra Pradesh—who have faced financial distress and poor yields due to weather and disease—to large listed processing companies. Several major players in the aquaculture sector have reported significant drops in net profit in recent quarters, directly citing the high cost of raw materials as a primary driver of this trend.
Looking ahead, the sector faces several structural risks. Beyond the financial squeeze, farmers must manage biological risks, such as disease outbreaks and unseasonal weather, which can destroy crops and lower the volume of harvestable shrimp. These factors, combined with the difficulty of passing higher costs on to international buyers, create a challenging environment. Investors will be monitoring whether feed prices stabilize and if global demand eventually improves enough to provide better pricing power for Indian producers.