Chapter V

ECONOMIC IHORTANCE OF FISH PROCESSING

INDUSTRY IN KERALA

5.1.1 It was in the early 1950s that the fish processingindustry in the modern sense came into being in Kerala. Theacceptance of the first consignment of less than half a tonneof frozen shrimps exported from Cochin to the United Statesof America (1953) by an enterprising entrepreneur fromNeendakara, Quilon ushered the emergence of the fish process­ing industry. Cochin, because of its ideal setting, attracteda large number of entrepreneurs from different parts of thestate. The concentration of the units in and around Cochinenabled the introduction of modern techniques of processingthe highly perishable fish and other marine products.

5.1.2 The emergence and growth of the fish processingindustry has enabled to

i) preserve fish from spoilage

ii) even out price fluctuations

iii) assure supply at all seasons

iv) provide diversity to products for meeting thechanging needs, and

v\ In::n<l- -I-‘ha nngfle AF +1-an nvr\nr+ I-nay-\rn+

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5.1.3 The utilisation pattern of Kera1a's marine fishcatch between 1974 and 1983 (table 5.1) indicates the need

for further improvement in the processing industry. Owingto bad handling and crude processing methods, about 10 lakhtonnes of fish get spoiled annually (NATPAC, 1982). Tominimise the waste, processing methods like fresh fish pre­servation by radiation with radioactive rays and low dosesof gama irradiation may be introduced. So also the intro­duction of a ‘cold chain’ for ensuring equitable and smoothdistribution of fresh fish to the internal consumers is anurgent need. Improvements in processing are required togenerate better demand for those items which have less demandat present.

5.1.4 The advantages and disadvantages of various methodsof processing are discussed below:

5.2 Smoking, drying and salting

5.2.1 Smoking, drying and salting were the oldest and.thecheapest methods of preserving fish. These methods werepractised widely for preserving fish prior to the introductionof modern methods of freezing and canning. These methods areusually adopted by the fishermen or their family close to thefish landing shore. Capital cost of these methods is very lowand ideally suited to the highly disposed and small-scale natureof traditional fisheries. But the drastic decline in the import

Table 5.1 Utilisation pattern of marine fish (1974-83)(Quantity in tonnes)

Fresh fish Dry Dry fish ___ _f*P°ft _ TotalYear consumption Edible meal Fresh Dry landings1974 220543 113323 13409 67210 772 420257(52.43) (26.97) (4.33) (15.99) (0.13)1975 209435 104032 21366 35094 359 420336~ (49.77) (24.73) (5.20) (20.22) (0.09)1976 209133 62153 16933 42439 379 331047(63.17) (13.73) (5.11) (12.33) (0.11)1977 202036 72740 17392 51924 395 345037(53.57) (21.03) (5.19) (15.05) (.011)1973 203933 92472 13460 53210 259 373339(55.96) (24.77) (3.61) (15.59) (0.07)1979 176359 73297 13079 57575 199 330509(53.36) (23.69) (5.47) (17.42) (0.06)1930 157076 60135 10237 51324 335 279543(56.19) (21.53) (3.63) (13.36) (0.12)1931 157197 56750 12009 43616 247 274320(57.20) (20.65) (4.37) (17.69) (0.09)1932 179936 76920 17733 50433 359 325795(55.23) (23.61) (5.46) (15.43) (0.11)1933 210399 94034 20535 59717 539 335275(54.61) (24.42) (5.33) (15.50) (0.14)Average 193100 31101 16726 57254 334 343646(55.33) (23.26) (4.35) (16.42) (0.09)

Source: Compiled from Central Marine Fisheries Research Institute Published Data.Note : Figures in parentheses are percentages U3 total.

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of the cured products by the far Eastern Countries has practicereduced the importance of these methods of preservation of fis)

5.2.2 Research work carried out in the state in recentyears has evolved methods which can turn out high quality, extJhygienrccured fishery products which can satisfy the qualityrequirements of even the most developed countries. Thesemethods of preservation entail treatment of the cured and drie<products with low doses of gamma irradiation. This destroysspoilage micro-organisms that stick to the cured fish duringvarious stages of processing. A recent development in thisflfield is the accelerated freeze drying. This works well withlean fishes and shell fishes, especially in balanced condition.If we modernise our curing techniques on these lines, we canexploit advantageously many a foreign market for cured fisheryproducts, besides catering to the needs of the interior marketsHence modernisation of fish curing industry is an urgent needfor the proper utilisation of our potential marine fisheryresources .

5.3 Utilisation by freezing

5.3.1 Freezing as a modern method of preservation of fishwas introduced in the state only in the 19505. This method isapplied to preserve export commodities such as prawn, squid,cuttle fish and some other costly varieties of fishes. Exports

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of frozen fishery products have become the mainstay of theKerala sea food industry. Out of the total 32,514 tonnes ofsea food worth B.140.26 crores exported in the year 1983,93 per cent by quantity and 96.5 per cent by value were consti­tuted by the frozen products. About 26,583 tonnes of frozenshrimp valued at B.134.01 crores were exported from Keraladuring the year 1984-85. This works out to 87.93 per cent byquantity and 96.42 per cent by value of the total sea foodexports and shows the unique position that this single commodityoccupies among our marine products. In recent years we arealso exporting some quantities of frozen frog legs, frozenfish, frozen squid and cuttle fish etc.

5.3.2 Accelerated freeze drying is the most common formof fish processing in Kerala. This is an ideal method ofdrying fish by removing its water content reversibly. Thelatest technological development in the fish processing andpreservation industry is the application of contact platefreezers using freon refrigerant and this has become the mostpopular method in Kerala. Strict quality instructions areimposed by the importing countries, alleging high bacterialloads, including some of the harmful type called 'salmonella'

in some of the consignments imported by them from our state.This explains the need for_the introduction of sophisticatedtype of technologies developed in advanced countries such as

18$

brine-spray freezing, fluidised bed freezing and cryogenicfreezing in our fish processing field. But these are allcostlier methods difficult to introduce at the presentsituation.

5.3.3 Freezing is efficient only when the capacity iskept fairly well. So the capacity is formed with the availa­bility of raw materials. It may not be adequate to handlegluts, and it will be inefficient in scarcity conditions.The unplanned and mistaken calculations regarding the

projected future use of these plants and their capacitiesresulted in gross excess capacity in many plants (StatusReport, 1981). The growth and development of the freezingplants during the various years in Kerala is given intable 5.2.

5.3.4 It is clear from table 5.2 that after 1977 mostof the freezing plants are not utilising the full capacitybecause of the non-availability of raw materials for freezing.As a result of this about 45 units are considered as sickunits and not functioning properly in the state.

5.3.5 Freezing plants require many supporting plantsproducing ice and cold store. They are essential.for improvingthe fish marketing system and also for catering to the need of

‘ 187Table 5.2 Growth of freezing plants in Kerala (1965-81)

No. of Capacity Changes inYear freezing in tonnes/ Number Capacityplants day

1965 26 230.50 -- -­1967 33 256.50 7 +11.31969 52 437.35 19 +70.51971 59 558.35 7 +27.71973 70 604.35 11 +8.21975 85 661.85 15 +9.51977 87 676.85 2 +2.31981 122 563.15 35 -113.7

Source: Government of Kerala, Kerala Fisheries: Facts angFiggres , Directorate of Fisheries, Trivanarum, 1982.

. 188the export market (Srivastava and Dharma Reddy. 1983). Thedistrictwise distribution of ice-plants, cold storage andtheir capacity are given in table 5.3.

5.3.6 Because of the high cost of freezing, it is econo­mical to utilise freezing technology for high value specieslike shrimp, lobster etc. As a result of this the Kerala fishfreezing industry is almost export-oriented and contributesonly very little benefit to the fish eating people of thestate. High cost of freezing process enables that frozenfish is an unsuitable product to distribute to small scatteredinland retail outlets where demand is small and consumers areof low income.

5.4 Utilisation by canning

5.4.1 Canning industry was established in the early sixtieThis reached its climax in the mid-seventies. The record exportof 2,408 tonnes of canned shrimp worth B.3.75 crores occurred in1973. Thereafter the export of canned shrimp suffered severesetback and reached low export level of 28 tonnes valued at3.20.58 lakhs in 1984-85. The districtwise distribution ofcanning plants in Kerala is given in table 5.4.

5.4.2 Canning is a capital-intensive operation and theeconomics of production requires careful analysis. The economicviability of canning industry depends on many factors (Lawson, 1

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Table 5.3 Districtwise distribution of ice plants, productioncapacity. ice storage capacity, cold storage andcold storage capacity in Kerala (1981)

Ice Plants Cold StorageDistrict ---------------------------------------------- -­No. Ice produ- Ice No. Capacityction storage (tonnes)capacity capacity(tonnes) (tonnes)

Ernakulam 87 396.75 354.75 70 7067Alleppey 46 464.00 ,805.6O 20 1099Quilon 48 509.00 041.00 25 1940Calicut 30 290.50 583.00 9 461Cannanore 24 216.75 555.00 7 435Trichur 23 146.00 341.50 4 106Kottayam 13 3.25 3.25 2 1.35Malappuram 21 188.75 290.00 1 25.00Trivandrum 10 74.00 115.00 1 15.00Total 304 2289.00 3889.10 139 11149.35Source: Government of Kerala, Kerala Fisheries: Facts and

Piggres , Directorate of Fisheries, Trivandrum, 1982.

' 190Table 5.4 Districtwise distribution of canning plants in

Kerala

District No. of Capacity inunits tonnes

Ernakulam 25 81.124Alleppey 11 54.960Quilon 1 1.500Calicut 2 10.000Trichur 1 5.000Total 40 152.584

Source: Government of Kerala, Directorate of Fisheries,Kerala Fisheries: Facts and Figures , TriVandrum.

1932.

Important among them are:

1) Supply of raw materials at all time at reasonableprices;

2) Supply of cans at reasonable price: the high cost ofimported cans frequently make fish canning uneconomic

3) Adequate labour skills and

4) A ready market.

5.4.3 The canning industry in Kerala is in doldrums dueto causes like high cost of imported tin containers and filling

. 191materials like edible oil and increasing labour cost. The majo:problem is the dependency on one commodity, viz., prawn which

is not available in adequate quantities. Because of the highcost of operation, canning is not frequently used for specieswith low income demand, e.g., oil-sardine, lactarius, eelsetc. As a result of this about 35 out of the 40 plants becamesick units.

5.4.4 Substitution of cheaper containers like aluminiumcans, synthetic film pouches and cheaper filling medium likeedible oil filling with brine, curry, suace etc. are to beintroduced with the intention of reaching these products atthe hands of the low income demand groups of the population

(Status Report, 1981). Technological knouhow is availableat present to can oil sardine in its own juice, brine, curry,tomato suace etc, mackeral in curry brine, tuna, seer, pomfret,lactarius, eels, crab meat, clam, mussel and oyster meat etc.This can ensure full utilisation and better exploitation of thepotential marine fishes.

5.5 Fish meal production

5.5.1 Economic utilisation of the less popular varietiesof marine fishes which are referred to as ‘trash fishes‘ cango a long way in bringing better returns to the fishermen.Cheap miscellaneous fishes and offal from the fish processingindustry can be converted into fish meal either by wet rendering

- 192(drying as such and pulverising) process. Fish meal is richin protein and is used largely as an ingredient of preparedfeeds for poultry and cattle feeds.

5.5.2 At present an average of about 4.8 per cent ofour marine landings is used for reduction of fish meal. Thespecies used largely are the shoaling pelagic fishes likeoil-sardine and others caught in large quantities. Now Keralahas three fish meal plants with a capacity to process 62.5tonnes of raw materials per day in three shifts. But thesethree fish meal plants are almost lying idle for severalreasons. The non-availability of sardine and other cheapfishes at sufficient quantity and at workable rate are themajor reasons for the malfunctioning of these plants. Theeconomics of fish meal production depends on the followingfactors:

5.5.2.1 Cost of raw material: To make production viablethe cost of fish at delivery must not exceed 5.750 per tonne.

5.5.2.2 Transport cost: The distance of the plant fromthe landing point has impact on the transportation cost. Soalso is the distribution cost after converting into fish meal.

5.5.2.3 Animal feed-stuffs: The economics of fish mealproduction depends on the price of alternative components ofanimal feed-stuffs also, especially soyabean meal.

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5.5.3 Fish meal production is predominantly a largescale operation, provided the resources are available in plentyand the catching is carried out by small-scale fishermen. Thedevelopment of this industry will lead to export-led economicgrowth as fish meal has great export potential. The industryhas also some favourable linkage effects in other industries,especially forward linkages into the manufacture of nets, jute,paper bags, fishing vessel and processing equipments (Clucas,1981). This will help to generate income and employment inrural areas. The existence of cheap fish meal industry willalso help to develop the poultry and cattle industry and therebthe nutritional level of the state.

5.6 Diversified products from marine fishes

5.6.1 Several of the less popular varieties of marinefishes which command poor demand from the fresh fish markets

are yet to find better utilisation. The present use for fishmeal is due to lack of suitable handling and processing methodsto suit human consumer needs. Technology is now available forthis by utilising them as raw materials for many diversifiedproducts.

Fish kheema

5.6.1.1 Fish kheema is prepared with the help of a fish bonseparator. Heat picked from trash fishes is frozen in smallblocks. The product called 'Kheema' finds good acceptability

. 194as a base for several products such as fish cutlets, ediblefish flour and fish soup powder. If it is kept in properfrozen conditions the kheema was in edible condition upto10 months to one year without any spoilage. The averageprotein content of such fish kheema is observed to be about17 per cent.

Fish Protein Concentrate (FPC)

5.6.1.2 Edible fish protein concentrate is prepared asa colourless and odourless dry powder from picked meat aftercooking and extraction with solvents to remove fatty andodouriferous compounds. The shelf life of fish proteinconcentrate in an air-tight packet of 400 ghague polythenebag was between six and eight months. FPC can be incorP°¥atedwith meat flour to the extent of 10 per cent for preparingpopular dishes like 'chapathi' and 'puri' and baked productslike bread and biscuit, increasing their nutritive value with­out imparting any fishy odour or flavour to the products. Aprotein concentrate, fit for human consumption, and glucose­mine, a pharmaceutical compound, also have been successfullyisolated from the same material. FPC is also considered as apanacea for solving malnutrition.

Fish silage5.6.1.3 Fish silage is produced from waste fish and fishoffal to which some bacteria fermenting agent in the form of

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molasses is added. Fish silage has immense scope in smallscale fisheries as it is too cheap to prepare. It is labourintensive. It neither requires high capital outlay norregular supplies of fish. Its production can be organisedif the quantity of raw material or its transport cost isuneconomic for fish meal production.

other uses of fish

5.6.1.4 other uses of fish include the manufacture of fishlever oils, fertilisers, leather and pharmaceutical products.The oil-sardines which are landed in huge amounts duringcertain seasons sometimes exceed the limits of utilisation byordinary methods. They are then used for the extraction ofoil. Several value added industrial products such as factice(artificial rubber), printing ink, lubricating oil, andinsecticidal soaps have been developed out of the oil, besidesthe conventional use for fat liquoring in leather industry andapplication in wooden boats as a protective. Technical know­how has now been developed for extraction of rays from sharkfins, which are actually used in the preparation of shark finsoup fetching better returns from foreign markets. Similarly,fish maws which are the air bladders found in some of our.marine

fishes used for the clarification of wine, beer etc. also havegot export value in recent years.

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5.7 Idle capacity utilisation

5.7.1 Though in the beginning the processing industrywas centred around Cochin, the availability of export varietiesof prawns in other parts of Kerala (especially in Quilon)resulted in the starting of more and more new plants. Todaythere are 122 fish processing (freezing plants) in the stateengaged in freezing of prawns, lobster tails, frog legs,cuttle fish and squid for export with an annual installedcapacity of about 1,50,789 tonnes based on 250 working dayswith three shifts. The flourishing trend set by the marineproduct export industry over the last two decades attractedmany new entrepreneurs into this field of valuable foreignexchange earnings. with the increase in the number of fishprocessing plants, the total installed capacity has alsoincreased considerably, but the quantity of raw materials(prawn and fish) required for processing had not increased

to the installed capacity (Krishna Iyer et.al., 1982b). Theseasonal nature of shrimp coupled with gradual depletion ofresources in the sea has caused the present underutilisationof the existing capacity and many plants had gone as sickunits as given in table 5.5.

5.7.2 To identify the causes for the idle capacityutilisation of the processing plants in Kerala the studyconducted by Krishna Iyer et.al., 1982b for the years 1978 to1981 is of much importance to suggest measures for reducing

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Table 5.5 Details of registered processing units and thenumber of units not functioning/gone sick inKerala

No.of No.of No.of unitsunits units not now function­registered functioning/ ing

gone sick

1. Canning plants 40 35 52. Freezing plants 122 45 77

Source: "Status Paper on the Marine Products Processing Industryin Kerala , Marine Products Export Development Authority1§81, p.84.

the idle capacity in the fish processing industry. The idlecapacity of each of the 15 per cent sampled plants was workedout by taking the difference between the installed capacity andthe actual production during the year for one, two and threeshifts and by taking 200 and 250 working days. By fixing thesampling error at 20 per cent on the total installed capacity16 plants were sampled for the study. The percentage of idlecapacity in Kerala (1978-81) is given in table 5.6.

5.7.3 The estimates show that there is a decreasing trendin the idle capacity over the four years. There is also a veryhigh reduction in the idle capacity for the years 1978 and 1981

Table 5.6 Percentage idle capacity in Kerala (1978-81)

Days 200 Days 250 DaysShifts —————————————————————————————————————————————————————————————————————— -­Years 1978 1979 1980 1981 1978 1979 1980 1981

one shift 38.8 35.1 22.4 18.4 50.9 48.0 37.9 34.7Two shift 69.4 67.6 61.2 59.2 74.9 74.0 69.0 67.4Three shift 79.6 78.4 74.1 72.8 82.9 82.7 79.3 78.2

Source: Krishna Iyer et.§;. (19B2b), ‘Idle capacity utilisation in Kerala' gzgg.Harvest and P3§t Harvest Technology of Fish, CIFT, Cochin.

96'!

799

for both 200 and 250 working days in an year for all the threeshift cases. This was mainly due to freezing of large quanti­ties of cuttle fish, squid, pomfrets, seer fish etc. by a fewproducers. In the three different shift cases, when the work­ing days of the plants increased from 200 to 250 days, thereis an increase in the percentage of idle capacity for all theyears. There is also a positive relationship between thenumber of shifts and the idle capacity. As the number of shiftincreases, the idle capacity also increases. But when wecompare the idle capacity figures, the Kerala state's figuresare almost close to all India figures: because more than one­third of the total freezing and canning plants are located inKerala.

5.7.4 The estimation of idle capacity of the differentcapacity groups--less than 5 tonnes, between 5 and 10 tonnes

and greater than 10 tonnes--shows that idle capacity is lessin the case of 5 to 10 tonnes capacity groups for 250 workingdays as shown in table 5.7.

5.7.5 The highest idle capacity is worked out for greaterthan 10 tonnes capacity groups for all the years. In the casesof units less than 5 tonnes and greater than 10 tonnes the idlecapacity is reduced from 1978 to 1981 for the three differentshift groups. But in the case of 5-10 tonnes groups the idlecapacity is increased considerably from 1978 to 1981.

ShiftsYears

1978

1979

1980

1981

Source:

e 5.7 yercentage idle capacity utilisation of different size plantsin Kerala for 250 working days (1978-81)

Between 5 and10 tonnes

One Two Three one Two Three One Two Threeshift shift shift shift shift shift shift shift shift

50.9 74.1 81.8 9.5 54.7 69.8 80.4 43.5 -­37.0 68.6 79.1 20.9 60.4 73.6 80.8 93.6 -­35.0 66.5 77.7 35.9 68.0 78.7 45.9 82.0 -­26.4 63.2 75.5 32.5 66.2 77.5 47.7 82.6 -­

Krishna Iyer et.§1. (1982b), "Idle Capacity Utilisation in Kerala', §1EE."Harvest and 53st Harvest Technology of Fish", CIFT, Cochin.

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5.7.6 The major causes for the idle capacity of thefish processing plants in Kerala are:

1) Non-availability of raw materials

2) High cost of production

3) Frequent power failures/shortages

4) Labour troubles

5) Unsteady foreign markets

6) Competition for procuring the raw material

7) Lack of proper transport facilities

8) Investment in holding the material upto shipment, an:

9) Delay in getting the purchase order.

5.7.7 The non-availability of raw materials (prawn)for processing was the major factor (85 per cent) responsiblefor the underutilisation of plants. other factors were foundto affect the industry during the peak seasons.

5.7.8 The only way to reduce idle capacity of fish process­ing plants in Kerala is to increase the supply of raw material(Krishna Iyer gE.§l.. 1982b). But this is possible only ifwe increase the total fish production in the state. So stepshave to be taken to deep-sea fishing and aquaculture facilities,as there is saturation in the near shore capture fisheries.Another way to solve this is to diversify the products with

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new processing techniques by developing cheapter and durablecontainers and packing materials for the export to competesuccessfully in the international market.