Fisheries Economics

PREFACE

Today’s world is changing very rapidly as new business is emerging by placing the old ones. In the new millennium, people feel a growing uneasiness about the future. Many countries suffer from chronic high employment, a persistent deficit and deteriorating purchasing power. Like the other business, agribusiness practices are also changing at an incredible pace. In the fisheries and Aquaculture sector, focused on agribased business has long been the marketing channels through which fishermen, traders can be employed and it can remove the poverty from Bangladesh. It also helps to meet the daily fish demand for human consumption. Now it is not easy to operate the agribuisiness like traditional approaches of 1800 or 1900 A.D. Today’s business need to recognize that they are no longer geographically bound, and that the introduction of community based fisheries management represents a whole new delivery channel for poverty reduction.

“FISHERIES BASED AGRIBUSINESS FOR POVERTY REDUCTION AND ECONOMIC GROWTH IN BANGLADESH”

INTRODUCTION

Today’s word observe the more than1.2 billion people who live in poverty; South Asia alone accounts for about 44% of the world’s poor and nearly 75% of them live in rural areas. Bangladesh is a densely populated country with 140 million people living in a land mass of only 147.5 thousand km2. About 76% of them live in rural areas of whom about one-half lives below the national poverty line. Poverty is one of the staple barriers for the economic growth of the Country. Widespread poverty may also give rise to criminal activities, which in the absence of adequate legal and police protection hinders economic growth. Hence; there is a price to be paid for poverty in terms of reduced economic growth. It is imperative that poverty be reduced on an urgent basis in order to unlock the growth potential of the economy. According to the Bangladesh Bureau of Statistics, the fishery sector accounted for about 5% of the gross domestic product (GDP) and 28% of the value added in agricultural production in 2003-2004. It is one of the fastest growing subsectors of the economy. Fisheries products earned US$390 million in export revenues in 2003-2004, an estimated 1.3 million of the rural population are directly employed in the fishery sector. Many more earn their livelihood from fisheries-related linkage activities. Fish has always been an important part of the diet of the people of this region. But until recently fish has been harvested from nature only–there has not been much attempt to farm fish. Even as late as the early 1970s, only about 1% of the total fish output of the country was farmed. However, since then fish cultivation or aquaculture has spread quite rapidly. By 2003-2004, aquaculture became the major source of fish accounting for 43% of the total fish output of the country has been encouraged by three main factors: (1) the possibility of further expansion of fish output by exploiting open water bodies declined markedly as natural and environmental constraints became acute with more intensive exploitation of the common property; (2) increased nutritional requirement of a rapidly growing population with higher purchasing power expanded the demand for fish very substantially, resulting in large increases in real prices of fish, thus raising the profitability of fish cultivation relative to other food crops. The opening up of an international market, especially for shrimp, gave a further boost to demand and profitability; and (3) technologies that were not overtly expensive or difficult were made available to farmers so that they could make a cost-benefit analysis of various available technologies to assure themselves of the profitability of aquaculture relative to other production opportunities. All these factors combined to make aquaculture an economically attractive production alternative that was adopted on a large scale in the rural areas. The aquaculture sector has now become one of the most dynamic sectors of the economy with its growth rate far in excess of almost all other sectors. Aquaculture has made an important contribution to the income generation and employment of ordinary rural people. However, much of the potential for its growth remains to be harnessed due to various social, economic and policy constraints. If these constraints could be relaxed through appropriate policies and actions, the sector could make a much bigger contribution to national economic development. (www.worldbank.org)

1. DESCRIPTION OF BANGLADESH FISHERIES

A. ECONOMIC PROFILE OF FISHERIES

In Bangladesh, fluctuations in supply and demand of fisheries commodities caused by the changing economic situation, anthropological interference and environmental degradation through natural processes, the animal protein demand of about 63% of the population is met by fish as a prime and important source of protein. According to 2002-2003 fish production statistics (DoF 2003), the sector contributes about 5% to the gross domestic product (GDP), which is about 20% of the value of agricultural production. As an economic activity, the fisheries sector directly supports an estimated 1.2 million people. In addition, there are about 12 million people whose livelihoods depend indirectly on fisheries as subsistence fishers, part-time fishing laborers, aquaculture operators, fisheries traders and business people. Fish and fisheries products contributed about 5% to the country’s total export earnings in 2002-2003, and are considered an important item in the list of export commodities. The annual growth rate since 1991 ranges between 6 and 8% and the sector needs comprehensive and concerted efforts to harness its maximum potential.

B. AQUATIC ECOSYSTEMS

Aquatic ecosystems in Bangladesh produces a great diversity of fisheries products from capture, culture and culturebased management of semi-closed or open waterbodies. Besides, the nation has altogether 230 rivers, 54 of which are shared with upper riparian countries and thus have extensive floods, especially during the monsoon season. Infact, inland open water habitats are rivers including estuaries, canals, floodplains and beels. They become components of a single integrated production system during the monsoon season, providing suitable ecosystems for the regeneration of capture fisheries. Owing to habitat degradation and man-made interference, the open-water productivity is in decline. Improved aquaculture practices in closed and semi-closed waterbodies including ponds, baors (oxbow lakes), reservoirs minor floodplains and other means of intensification such as rice and fish/ shrimp farming, culture-based production in floodplain ecosystems and pen aquaculture have all contributed to fish production. If the country’s huge open water resources are developed and managed in an integrated way, then substantial production can be achieved. On the basis of topography and nature of habitat, the country’s fisheries are grouped into four categories, namely: inland capture, culture, brackish water and marine. Both the public and private sectors contribute to the management and development of fishery resources. Moreover, the open-water capture fisheries resources, including inland and marine waters, are considered public property and are administratively controlled by different government agencies. (DoF 2003)

2 ROLE OF AGRIBUSINESS IN POVERTY ALLEVIATION

A. POVERTY REDUCTION POTENTIAL

Poverty is the incapacity to earn sufficient income to lead a decent life. Poverty has numerous manifestations, such as malnutrition, ill health, lack of education and skill, lack of sanitation, disempowerment and so forth. However, the most fundamental cause of poverty is the lack of income-earning opportunities. This happens due to a lack of gainful employment opportunities. Hence, at a fundamental level, the only way poverty can be reduced or eliminated is by creating sufficient gainful employment opportunities for the poor. The more remunerative or gainful the employment is, so is the greater the reduction of poverty of the employed people. The reduction of the extent and intensity of poverty would thus depend on the volume and the productivity (quality) of the additional employment. Aquaculture could make a significant contribution to poverty reduction only if it can provide significant additional gainful employment. Available evidence suggests that aquaculture does have this potential (PRPS-2003/2004) Creation of additional employment requires investment in both physical and human capital. Some production activities require much greater investment in human and physical capital than certain other activities. This makes the task of increasing employment through such activities difficult and expensive. A country that lacks sufficient trained human resources and investment resources would find it difficult to increase employment substantially by investing greatly in capital-intensive industries. However, aquaculture requires only modest investment. Neither the physical nor human capital requirement is prohibitive. The principal factor of production required for aquaculture is water bodies or land that could be mobilized by appropriate policies and incentives at modest cost. There is scope for bringing at least an additional 1 million hectares of land under aquaculture in the short term and perhaps 4 million in the long term. If it is assumed that each hectare of the additional land if brought under aquaculture would on an average yield the same output as that of the sample farms engaged in carp polyculture and would employ about the same amount of labor, then it would increase the gross return of aquaculture farmers by about $2 billion and generate additional employment of 247 million person-days, or about 1 million fulltime worker equivalent. Since the gross return is estimated at farm gate prices, the income earned by all downstream activities, such as storage, transport, processing and retailing are not captured in the above figure. The employment figure also does not take into account the employment created in either downstream or upstream activities supporting production at the farm level. If these linkage effects are taken into account, the incremental contribution of aquaculture to GDP and total employment would also be much higher. Very few sectors could make such a large contribution to GDP and employment growth at comparable cost. Another attractive aspect is that most of the additional employment would be created in the rural areas that are the main pockets of poverty. All these considerations make aquaculture particularly suitable as a modest cost instrument of policy of accelerated growth and poverty reduction in Bangladesh. It deserves greater attention from the policymakers. (PRSP 2003/04)

B. AQUA CULTURE AND RURAL EMPLOYMENT

In Bangladesh, aquaculture is broadly divided into two categories: inland fresh water culture and coastal brackish water culture. In the fresh water culture, fish seed producers and traders, including the nursery people, vendors, fish farmers, fish-farm workers and fish traders stand to benefit. In the coastal brackish water, shrimp culture dominates by providing employment to shrimp hatchery owners, hatchery workers; shrimp fry collectors, fry traders, gher owners, land lessors, gher workers, depot owners, depot workers, shrimp processors and exporters. Apart from these groups, who are directly involved in fish industry, manufacturers and traders of fish feed, food distributors, ice makers and distributors, transporters and related work groups, benefit from business-oriented aquaculture. The cost of creating employment through this approach is by far the least expensive. In fact, it can be accomplished with the available resources and without dependence on external resources. The, shrimpindustry consists of four distinct subsectors; the shrimp farms (ghers), shrimp hatcheries, feed mills and shrimp processing plants. Shrimp farms are the mainstay of the industry and the activities of the other subsectors depend largely on the growth of shrimp farms in the country. The major stakeholders of the industry are shrimp farmers, shrimp farm laborers and workers, owners of related industries (feed mill, processing plant, depot and hatchery), shrimp seed collectors, land lessors and shrimp traders.Women are actively involved in the subactivities. Shrimp depots are the largest source of employment for women. It is estimated that more than 50% of workers in the shrimp depots and processing plants are women. Shrimp fry collection is also an important source of employment for rural women. The scene of women collecting shrimp fry in knee to shoulder deep water in the coastal belt area is a familiar scene. Besides, a large number of rural women are engaged in the collection of shrimp seed and artisanal production of fish trapping and packing materials. Information derived from a sample survey of 100 farmers from Khulna, Satkhira and Cox’s Bazar areas indicate that year-round shrimp farming yields much higher return and employment than year-round rice farming: gross return is 170% higher while employment is 130% greater and labor income is nearly 100% higher. The average productivity is also higher by about 20%. Thus, shrimp farming can make important contributions to employment and income of the ordinary rural laborers who are predominantly poor. (DoF 2005)

C. AQUACULTURE AND HOUSEHOLD ECONOMY/INCOME

In Bangladesh, the average annual income of a fivemember fish-farmer household is Tk126 698. Crop constituted the highest proportion (31%) of household income, followed by fishery which contributed 27%. In some locations, for example, in Iswarganj of Mymensingh, income from fish culture constituted as high as 60% of household income. Thus fish culture, if well planned and integrated into the rural development plan, has the potential to sustain rural income growth. Results from a sample survey of 300 stakeholders are available to show that income from shrimp culture constituted the major proportion of household income for most of the stakeholders. Average incomes of shrimp farmers, depot and hatchery owners were several times higher than those of other categories of households. However, household incomes of shrimp seed collectors were substantially lower compared to the incomes of land lessors and workers of processing plants. For shrimp farmers and farm laborers, shrimp farming contributed more than 80% to their total income, while for other groups of people it contributed 30-50%. (Anik 2003; Rahim 2004; Talukder 2004).

D. ECONOMIC GROWTH

Bangladesh earns a considerable amount of foreign exchange revenue by exporting frozen shrimp and other fisheries products in every year. Currently, fisheries products dominate the list of exportable commodities whose contributions to the country’s total export earnings range from 5 to 6%. Frozen shrimp and other fisheries products in various forms are being exported to the United Kingdom, USA, Japan, France, Hong Kong, Singapore, Saudi Arabia, Sudan and other developed countries. About 97% of the total fish produced in the country is used for domestic consumption and about 2-3% is processed for export to the international market. During the period 2002-2003, Bangladesh exported the highest ever volume of frozen shrimp and fisheries products amounting to 47 000 mt (Bangladesh Export Promotion Bureau 2003). However, the value of the total exports declined due to a fall in the unit price of fisheries commodities in the international market because of the September 11, 2001 incident. Recently, Bangladesh is complying with the HACCP procedure at each level of the production and processing cycle to ensure that product quality meets international standards. To get certification from a legal authority, most processing plants in the country are now equipped with modern facilities to establish their own checking system. The European Union authority is very strict about quality assurance and compliance with various sanitary and phyto-sanitary measures during the processing of exportable 58 fisheries products. To meet international standards of exportable fisheries commodities, a modern laboratory has been established at the DoF to perform tests on antibiotic and pesticide residues. The department is providing necessary support through training, extension, advisory services to farmers, and processing plants to maintain the quality of processed fish products.

3 BARRIERS OF DEVELOPMENT OF AGRIBUSINESS

A. POOR EMPOWERMENT IN LEASING POLICY

Being largely a rural activity, one would expect aquaculture to play a big role in combating extreme poverty. Studies conducted since the early 1990s indicated that the farmers who incorporated aquaculture into their farming system were an economically better-off segment of the farm population with larger landholdings, higher literacy rate and greater annual income. They were in a better position in terms of influence, capital and expertise to exploit the opportunities opened up by aquaculture.The hard-core poor benefited mainly by way of wage employment in aquaculture farms. An institutional approach that addresses the complex problem of asset distribution will be needed if the resource-poor are to participate in the expansion of aquaculture as entrepreneurs.

B. EXTENSION SERVICES FOR THE POOR

Poor people are unlikely to have the management capacity, technical expertise or marketing know-how to operate an aquaculture farm profitably as an agribusiness. Hence, substantive extension services will have to be made available to bring them up to speed on the various facets of management of an aquaculture farm as an agribusiness, the technical details of fish production, and the best method of marketing a perishable product with multiple intermediaries and fluctuating prices. Designing an extension program to deliver these essential educational and training services is a complex problem.The government will have to devote adequate resources to identify the training needs and a suitable mechanism to implement the training program. Such a program is also essential to raise the productivity of the fish farms.

C. LOW-QUALITY FISH SEED PRODUCTION

A major problem behind low productivity of fish-farms is the unavailability of high-quality inputs at reasonable cost. The poor quality of brood stock, fry and fingerlings that the fish farmers are obliged to use for fish production directly contributes to the poor quality of the output and low yields. It will not serve any useful purpose if the poor people are given the water bodies to engage in aquaculture, but do not have access to good quality fry and fingerlings. Good quality fish feed also would have to be made available. Without adequate backward linkage services that provide these inputs the fish farms may not emerge as viable agribusiness units. Since it is unadvisable for the government to engage in all these backward linkage business activities, many of which are likely to be fairly small operations, it may encourage the growth of private business enterprises to provide the inputs as an agribusiness activity.

D. IMPROPER STOCK MANAGEMENT

An important aspect of hatchery operation is the management of brood stock. The source of the brood stock, size and weight of stock, maintenance of male-female ratio, type of brood pond including quality and depth of water, feeding of brood stock are the important considerations in maintaining good quality stock. Procurement, selection and maintenance of good quality stock have emerged to be matters of serious concern in brood stock management. Improper maintenance of stock has led to inbreeding of fish species which has resulted in excess supply of inferior quality seed that in turn leads to less than expected yield and production of fish species.

E. INADEQUATE EXPERTISE IN SPAWNING METHOD

A related consideration in seed production is proper spawning through which fish larvae are obtained. Two methods are generally followed in fertilizing the ova: natural mating of male and female in the brood tank and stripping of the brood fish. In both cases, injections are to be pushed at the right time and in the right manner. The source, size and age of the brood stock are critical determinants for obtaining good quality seed. All these technical considerations suggest that proper fish breeding requires adequately trained personnel/technicians. Empirical evidence suggests that the hatchery operators and technicians do not have the requisite type and quality of training on technical aspects of hatchery operation. Results of a field survey from two locations (Mymensingh and Jessore) revealed that 44% of hatchery operators did not have any formal training and 56% had training of an average duration of 22 days.

F. POOR WATER MANAGEMENT SYSTEM

One of the critical determinants of proper spawning and survival of spawn is the water management and delivery system in a hatchery.Proper construction and location of an overhead tank is very important. Pumping of water into the overhead tank from reliable sources is another iimportant consideration.Inflow and outflow of water to and from circular tank, breeding tank, hatching jar and spawn house with the requisite speed of water flow are also the critical determinants of spawning and survival of spawn. It is often observed that the technical specifications are not properly followed in the construction and maintenance of hatcheries. As a result, mortality of spawn, fry and fingerlings becomes high. Lack of technical skill of the hatchery operators and financial constraints are often responsible for substandard operation of fish hatcheries.

G. LACK OF LEASE RIGHT

Roadside ditches and canals, including flood control, drainage and irrigation canals, constitute a significant proportion of water bodies in the country and are owned/controlled by several ministries and government departments. These water bodies hold perennial and/or seasonal water and therefore are suitable for fish culture for varying durations. Many of these water bodies are not properly cultured and as a result the society is deprived of the gains that could accrue from increased fish production. The main problem associated with utilization of these water bodies is the tricky matter of user rights and lack of popularization of technologies suitable for these. Efforts need to be taken to make a comprehensive inventory of these water bodies and to work out a formula for interagency cooperation to ensure unambiguous conferment of use rights to genuine aquaculture farmers. Individuals or groups will have to be motivated to participate in the use of the water bodies with appropriate technological interventions.

CONCLUSION

Aquaculture has emerged as a dynamic subsector of the economy with a growth rate far in excess of other activities. The gradual shift of focus from self-consumption to market has led to the proliferation of aquaculture as an agribusiness activity. The size restriction imposed by a self-consumption activity has thus been lifted, and an opportunity to benefit from scale economies and division of labor has presented itself. The recent rapid growth of the subsector owes much to the transformation of aquaculture as a private agribusiness activity. Aquaculture is basically a rural activity. Most of the poor people of the country are located in the rural areas. The expansion of employment, both self and hired, in aquaculture has brought substantial economic benefits for the rural poor. Gainful employment in aquaculture where productivity of labor is higher than in crop cultivation has increased their income. A large number of backward and forward linkage activities have emerged to service aquaculture. Many of these, especially the backward linkage activities, are also concentrated mostly in rural areas. They have also played a role in raising the economic profile of the rural poor. A dynamic aquaculture that has significantly raised income has also had spinoff multiplier effects on the rest of the economy through increased consumer and producer demand. Aquaculture is still a small subsector accounting for only 5% of GDP. Much of the potential of the subsector remains unfulfilled. The water area under aquaculture can be increased two to three-fold with some initiative from the government and a workable lease policy of government khas waters. The yield rate of aquaculture, which is one of the lowest in the world, could be increased several fold through appropriate actions and policies of both the government agencies and the private stakeholders. Development partners can play a supporting role. With an enabling policy environment, the share of fishery in GDP could easily rise to more than 10%. Employment could also increase two or three-fold. Few other sectors can make as large an impact on the national economy at comparable cost. Given the imperative of increasing employment and reducing poverty significantly, such an opportunity should not be ignored. The government should treat aquaculture at par with other thrust industries, some of which have a lesser impact on poverty, to fully harness the growth potential of the economy. Creating such a policy environment will require close collaboration among the relevant government agencies, as well as between them and the private stakeholders.

REFERENCES

Bangladesh Export Promotion Bureau 2003
www.fishbase.org
Ministry of Fisheries and Livestock of Bangladesh
www.worldbank.org
Economic and financial profitability of aromatic and fine rice production in Bangladesh.Department of Agricultural Economics, Bangladesh Agricultural University, Mymensingh, Bangladesh
DOF (Department of Fisheries).2002. Fishery statistical yearbook of Bangladesh 2000-2001. DOF, Dhaka,Bangladesh.
DOF (Department of Fisheries).2004.Fishery statistical yearbook of Bangladesh 2002-2003.DOF, Dhaka, Bangladesh.
DOF (Department of Fisheries). 2005. Fishery statistical yearbook of Bangladesh 2003-2004.DOF,Dhaka, Bangladesh
Anik 2003; Rahim 2004; Talukder 2004