ECGC cover likely for shrimp consignments

Kochi, Jan 1 | Updated: Jan 2 2006, 05:30am hrs
The ever-growing and ever-changing stringent residue norms for seafood consignments to the EU and Japan, which could result in rejections has made the Export Credit Guarantee Corporation (ECGC) consider introducing a rejection risk insurance cover for shrimp consignments.

ECGC general manager V Vishwanathan told FE that the proposal for designing a cover for rejections against the antibiotic residues was in the final stages and would be presented for Irda approval. A meeting in this regard with seafood exporters and Marine Products Export Development Authority (MPEDA) was held here in the presence of the corporation chairman recently.

Strict and new norms to screen the shrimp consignments for presence of residues of banned anti-biotics like chloramphenicol and nitrofuran metabolies had resulted in a few consignments being rejected in Japan. While processors were insisting on antibiotic-free raw materials from the farmers, there was difficulty in procuring it, exporters said. In case of rejection, there was difficulty in bringing back the material so that it could be reprocessed.

In the wake of MPEDAs attempt to retrieve the Japanese market after the US imposed anti-dumping duty on Indian shrimp and the corollary customs bond, which had nearly closed the US market, it was felt that such a cover would prove beneficial.

It was in this backdrop that ECGC had designed a new cover, which would be an add-on one to the risk cover already being given to exporters, said Mr Vishwanathan. Exporters had demanded that in case of rejection, they could explore the option of bringing back the goods, and expenses for which could be reimbursed.

The option of abandonment could be considered only in very extreme situations and the compensation could be based on merits, they said.

On the demand for a competitive premium rate, ECGC proposed considering providing it as an add-on mandatory cover. Exporters said that as per the proposal, the premium for mandatory cover could be at the rate of 12 paise per Rs 100 of the gross invoice value (GIV) for EU and the US and 24 paise for Japan.

The maximum amount of loss in such cases of rejection risks would be restricted to 25% of the GIV of the shipment covered making it easy for the exporter to bring back the material. The loss would be restricted to the extent of freight, incidentals and storage.

The add-on cover for rejection risks would be reviewed after a few years, Mr Vishwanathan said.