US embassy cable - 04CHENNAI1306

UNCLAS SECTION 01 OF 02 CHENNAI 001306 
 
SIPDIS 
 
SENSITIVE 
 
USDOC FOR MAC/ANESA/OSA/LDROKER/ASTERN 
USDOC FOR ITA/TD/ITI/KJENCI/EHOLLOWAY 
USTR FOR SOUTH ASIA - A WILLS/BSTILLMAN/ JROSENBAUM 
 
E.O. 12958: N/A 
TAGS: PGOV, PREL, ETRD, EFIS, SENV, IN, CE, BR, EC, Indo-US 
SUBJECT: DUMPING DUTIES ARE LEAST OF SHRIMP FARMERS' 
WORRIES 
 
REF: CHENNAI 00944 
 
1. (SBU) SUMMARY: Early fears that USDOC anti-dumping 
duties on warm water shrimp from India could become a hot- 
button political issue appear to be groundless.  Shrimp 
farmers do not blame the duties for their problems, but 
rather four years of slumping international demand. 
While politicians initially rallied to the farmers' 
cause, interest has waned, and the current political 
configuration makes future action unlikely.  END SUMMARY. 
 
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SHRIMPING INDUSTRY ON DECLINE FOR PAST FOUR YEARS 
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2. (U) To gauge the effects of the recent USDOC anti- 
dumping duties on shrimp farmers in Andhra Pradesh, Post 
spoke to farmers in the East Godhavari district as well 
as other industry experts.  Located in northeastern 
Andhra Pradesh, the East Godhavari region saw a shrimping 
boom in the 1990s.  However, according to the farmers, 
the good times came to an end four years ago, when a 
series of shocks hit the industry.  First, "white spot" 
disease struck the shrimp farms, forcing farmers to use 
more antibiotics than European Union phyto-sanitary 
regulations allowed.  In 2002, Japanese importers 
complained that Indian shrimp had a "muddy smell." 
Closing this second international market dropped the 
price of 20-count shrimp from USD 9.50 to USD 6.50. 
 
3. (U) The drop in shrimp prices over the past four years 
mirrored an increase in feed supply prices, worsening the 
situation for farmers.  According to Bakshinathan, 
Assistant Director of the Shrimp Authority of India - 
Tamil Nadu, South Indian farmers rely on fishmeal 
imported from Thailand, Chile, and Peru.  Global weather 
patterns have reduced the supply of fishmeal from these 
countries, boosting the price.  Because of this, 
Bakshinathan said, "The industry is going through a 
difficult period.  Farm gate prices have been falling, 
making the activity unprofitable." 
 
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SHRIMP FARMERS DO NOT BLAME WOES ON ANTI-DUMPING DUTIES 
--------------------------------------------- ---------- 
 
4. (U) Following the anti-dumping duties in 2004, the 
price of a kilogram of 20-count shrimp dropped to USD 
5.90.  While farmers noted the effect of the duties on 
their industry, they felt that the penalties were not 
solely responsible for the decline.  According to 
Maniraju, President of the Aquaculture and Shrimp Farmers 
Association of the East Godhavari District, "The duties 
are just one more problem in a long list of 
difficulties." 
 
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AFTER INITIAL ACTIONS, LOCAL GOVERNMENT INDIFFERENT 
--------------------------------------------- ------ 
 
5. (U) Initial reports indicated that the Andhra Pradesh 
state government might take up the farmers' cause at the 
national level.  Shortly after the imposition of the 
duties, Chief Minister Y.S. Rajashekar Reddy sent a 
letter to the prime minister urging action on the matter 
(Reftel).  In addition, former BJP president Venkaiah 
Naidu's personal shrimping interests in Vishakapatnam led 
him to raise the issue.  However, East Godhavari shrimp 
farmers told Post that these efforts soon tailed off. 
According to Maniraju, Reddy was simply paying lip 
service to pre-election promises.  Maniraju added that 
local leadership has been even less responsive.  When 
asked about the needs of shrimp farmers in East 
Godhavari, Arun Kumar, the Member of Parliament 
representing the area, stated that he believed the 
activity was not environmentally friendly. 
 
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EXPORTERS MAD, BUT DUTIES NO LONGER A POLITICAL ISSUE 
--------------------------------------------- -------- 
6. (SBU) COMMENT: It seems unlikely that the anti-dumping 
duties will be as important a political issue as once 
thought.  Early reports that they could hurt bilateral 
relations appear to have been misleading.  After an 
initial flurry of activity, local and state politicians 
seem to have dropped the farmers' cause.  Local Congress 
leadership seems unlikely to assume a cause that would 
indirectly help a prominent former BJP leader.  In 
addition, fear of losing domestic suppliers may have 
prompted shrimp exporters to overstate the farmers' anger 
and political muscle.  END COMMENT. 
 
HAYNES