Overview of Shrimp Sector in Bangladesh

1. Welcome to the Presentation
Group I
Presented By
Sk. Faijan Bin Halim (MSS 151510)
Faria Hossain Nity (MSS 151511)
Saddam Hossain (MSS 151528)
S.M. Yusuf Ali (MSS 151529)
Economics Discipline
Khulna University
Khulna
Special Thanks To
Nishad Nasrin
Assistant Professor
Economics Discipline
Khulna University
Khulna
1

2. Group I
Shrimp Industry Study: Problems, Prospects and
Intervention Agenda
A Paper By ATDP Research Team
September 18, 2005
2

3. Acronyms and Abbreviations
ATDP = Agro-based Industries and Technology Development
DANIDA = Danish International Development Agency
EC = European Commission
EU = European Union
Govt. = Government
ha = Hectare
mt = Metric Ton
PL = Post Larvae
R&D = Research and Development
SPS = Sanitary and Phyto-Sanitary
SSOQ = Shrimp Seal of Quality
USAID = U.S. Agency for International Development
WTO = World Trade Organization
3

4. Terminology
 Antibiotics: Generally used for the treatment of a bacterial infection.
 Bio-security: Bio-security is a set of measures designed to protect a
property from the entry and spread of pests and diseases.
 Brackish Water: Normally known as brack water. It is salt water and
fresh water mixed together. It is saltier than fresh water but not salty
as sea water.
 Brood Mother: Brood mother is a specific pathogen free variety of
shrimp for commercial aquaculture today. This ultimately helps the
marginal farmers and increase export.
 Greater Noakhali Agriculture Extension Project (GNAEP): A
fisheries management model developed and tested for fisheries, giving
genuine fisherman access to fishing rights direct from the government
and aiming at a sustainable utilization of resources. It was first started
in July 1998, with a project duration of 7 years.
 Hatchery: A place where the hatching of fish is artificially controlled
for commercial purposes. 4

5. Terminology (cont…)
 Hazard Analysis Critical Control Point (HACCPP): It is a systematic
preventive approach for food safety from biological, chemical and physical
hazards that can make the finished product to be unsafe, and designs
measurement to reduce these risks to a safe level.
 Land Grabbing: Land grabbing means buying or leasing of large pieces of
land in developing countries by domestic and transnational companies,
government and individual.
 Mortality Rate: The number of deaths in a given area or period, or from a
particular cause.
 Post Larvae: Hatcheries sell two products. One is nauplii (tiny, newly
hatched and first stage larvae) and post larvae means which have passed
through three larval stage.
 Sanitary and Phyto-sanitary (SPS): SPS measurement enteed into force
with the establishment of WTO in 1995. SPS measurement sets out the basis
rule for food safety, and animal and plant health standard. It allows countries
to set their own standard. 5

6. Terminology (cont…)
 Shrimp Seal of Quality (SSOQ): SSOQ prepares certification
standard pertaining to food safety, quality assurance, environmental
sustainability and social responsibility in the Bangladesh shrimp
sector. These standards apply to all operators in the shrimp sector.
 Tax Holiday: It is a temporary reduction and elimination of tax.
Government usually creates tax holidays as incentives for business
investment.
 Value Chain: A value chain is a set of activities that a firm operating
in a specific industry performs in order to deliver a valuable product
or service for the market.
 Wild Fry: Wild fry is also known as wild post larvae. There are
abundant supply of naturally occurring post larvae therefore there is
no need to develop hatchery technology.
6

7. Summary of The Study
 Shrimp is one of the leading export items of Bangladesh and
accounts for roughly 2.5 percent of global exports and fetches a
fair amount of foreign exchange ($250-330) million for last
three years.
 It has ample demand in international market and Bangladesh is
blessed with an environment congenial for shrimp production.
 A primary study was undertaken to detect the problems plaguing
the different levels of the value chain of shrimp in the country.
Motive of the Study
 This study aims to identify obstacles to the growth of the
industry and develop some intervention strategies that would
help eradicate these obstacles and begin to develop a strategic
model to achieve an export target of $1 billion by 2010.
7

8. Problems of the Study
 Inefficient Management
 High Mortality Rates
 Low Quality Shrimp
 Negative Country Image Abroad
 Indiscriminate Catching Brood Mothers
 Lack of Integrated Agriculture Policy
 Inadequate Sanitary and Phyto-Sanitary Measures
 Lack of Standard
 Virtual Competition Among Different Actors
 Lack of Coordination among Donor Agencies
 Lack of Awareness
 Unfair Practice by Agents
 Non-existent R&D endeavor 8

9. Intervention Strategies Towards
Achieving Target
 The study strongly recommends an integrated model for both Golda
and Bagda projects.
 Strategic business units can be cooperative based, where groups of
farmers work together under a commercial umbrella and disseminate
technical information and training to their farmer clients
 Dialogues and forums should be held regularly with exporters and
importers to raise and address questionable trade practices and
standards.
 The government must formulate an integrated agricultural policy to
ensure sustainable development in this sector.
 Instead of working in isolation, the donors should address these
problems collaboratively so that transfer of learning and experience is
ensured.
9

10. Intervention Strategies Towards
Achieving Target (cont….)
 Donors should also formulate smooth exit strategies whereby projects
are handed over to the private sector after completion.
 Ecological protection and gender equity issues can be controlled by
working with the aforementioned strategic units to prohibit certain
dangerous practices like land grabbing, indiscriminate catching, child
labor and participation of women across the value chain, etc.
 Mass awareness can be generated on such issues as bio-security by
again working through the established industry channels that will
benefit from them. These again are the business units and association
groups.
 The SSOQ and DANIDA models can be applied in this area. The
positive aspects of both the models may be applied in the value chain.
 It is found that such intervention can be done quite possibly if all the
stakeholders confront them jointly in an integrated fashion. 10

11. Shrimp Industry in
Bangladesh
 Largest export commodity of the country.
 Bangladesh Produces 2.5 percent of the global
production of shrimp generating more than US$ 300
million annually.
 Main cultured species is the tiger shrimp (bagda
shrimp) a marine shrimp and mainly cultivated in
brackish water. Around $250 million contributed
from Bagda alone.
 Next cultured species for export is the fresh water
variety locally called golda.
 Shrimp industry provides direct employment to over
6,00,000 people who in turn support over 3.5
million dependents.
 Suffers from lack of vision and strategic direction. 11

12. Shrimp Sector Contribution
Year Percentage
Contribution to
Total Export
Export to EU
(mt)
Value (million
taka)
2001-2002 4.76 19235 7925.70
2002-2003 5.10 21941 9392.60
2003-2004 5.71 25522 11775.00
2004-2005 5.90 27508 12628.95
2005-2006 4.56 29177 15230.00
2006-2007 4.90 36851 1660.00
Japan, EU and USA are the main importer of Bangladeshi shrimp
12

13. Shrimp Culture
 Follow traditional method and
annual yield is 250-300 kg/ha
 Total Shrimp farming area-2,76,000
ha
 Marine Shrimp-195000 ha and
Freshwater Shrimp-86,000 ha
 District involved-20, Upazila-52
 Bangladesh captured only 2-3
percent of world production of
shrimp.
 Shrimp sector contributes 84%
share of total fishery export in
Bangladesh (2012-13).
 Country-wise Share
USA-26%, Belgium-21%, UK-13%,
Netherland-5%, Germany-8%,
Japan-4%, Russia-3%, Others-20%
Supply Chain of Shrimp
Culture
Supplier
Agent
Depot
Commission
Agent
Factory
Boat, Rickshaw
Boat, Truck
13

14.  Objective of the Study
The objective of this study is to identify the industry-embedded
problems and then to layout intervention strategies at each step of the
value-chain to address the same.
 Ultimate Goal of the Study
The ultimate goal of the research is to assess the possibilities of
developing a strategic business model that can help achieve an export
target worth US$1 billion by 2010.
 Methodology of the Study
 The methodology entailed both secondary and primary qualitative
study. Secondary research included both local and international
studies conducted on the subject. Primary study involving depth
interviews of actors across the value chain.
 The findings of the first phase of the study was validated in a
stakeholders workshop focusing on problems outlined by the members
of the value chain and the intervention strategy developed based on
the outcome of the study
14

15. Interviewed Representative Members
of Value Chain
 Scope of the Study
The scope of the study included
the entire value chain and
covered both bagda and galda.
Geographical coverage was
Cox’s Bazaar, Chittagong,
Noakhali, Dhaka, Bagerhat,
and Khulna.
Brood Agency
Hatchery/Nursery
Transport Agency
Trade Agency
Depot
Farm-Shrimp/Nursery
Processing Industry
Financial Agency
Laboratory
Wholesale Market
Department of Fisheries
Facilitating Agency
Shrimp Technologist
Association
Donor Agency
15

16. Sector Map of Bangladesh Shrimp
Industry
16

17. Additional Problems of Shrimp
Industry (General)
 Lack of integrated agricultural policy
 Wild fry collection
 Land grabbing
 Lack of standard at all level of value chain
 Hatcheries operating under capacity
 High demand but inadequate supply due to high
mortality rates and farms are unable to supply to the
processors despite of high international demand
 Change in price due to inconsistency in supply
chain
 Farmers sometimes inject illegal material to shrimp
for necessary weight requirement
 Lack of proper monitoring mechanism
 Government provided extension workers perform
very poorly. Post Larvae of
Shrimp
17

18. Additional Problems of Shrimp Industry
(Brood Parent Collectors)
 According to experts indiscriminate catching
of brood mothers may extinct from our
country within two to three years
 In Bangladesh male and female shrimps are
harvested together. There is no mechanism for
harvesting brood mothers separately
 Inadequate policy measures regarding the
time of catching, technology and human
resource
 Lack of local expertise in the time of fry
collection from the sea
 People involved in this business have no
knowledge regarding wild life
 Lack of monitoring compliance affect the
value chain as well
Brood Parents
18

19. Additional Problems of Shrimp Industry
(Agents and Hatchery)
Agent
 Agents are mostly traders and
most of them entered into
business by force. Traders force
the farmers to buy PL in stocks.
 Quality and price control
mechanisms are compromised
due to inadequate supply.
 Inadequate control and
monitoring by law enforcing
agencies is also a troubling
issue.
Hatchery/Nursery
 This portion complies too many
players and all of them are
engaged in marginal operation.
 Most investors are motivated to
turn black money white.
Production and sales figures are
often exaggerated to override
the low.
 Inadequate bio-security
measures such as drainage,
bacterial and viral control and
use of medication lead to low
quality of product. 19

20. Hatchery/Nursery (cont…)
 In case of golda bio security related problems EU imposed a ban
on Bangladeshi shrimp import due to failure to comply with EU
regulation.
 Lack of trained human resources. Majority 70% are from outside
country and of which 50% are from Indian nationals. Illegal
application of technology and medication represents a potential
threat to bio-security.
 Unethical business practice arises due to the direct result of govt.
programmes directed in favor of the hatcheries.
 Cost of R&D activities at the hatchery level is highly
uneconomical.
20

21. Additional Problems of Shrimp Industry
(Agent-PL, Transport Agency)
Agent-PL
 Lack of working capital and
availability of special interest rate
is the main constraint
 High mortality rate during
transshipment from hatchery to
farm especially in case of bagda
 These agents control both farm and
hatchery. They purchase on credit
from the hatchery owner and
receive commission from farm
 In case of golda, a large number of
PL imported from India which
contains nitrofurine (a prohibited
substance)
Transport Agency
 Poor infrastructure makes
hindrance incase of transporting
bagda from Cox’s bazar to Khulna.
 Lack of landing facility from air
transport in Khulna, it increase
time and transportation cost. Policy
for licensing air transport is
inadequate.
 Due to time heavy time
consumption some hatcheries try to
transport PL by road but the
situation is still unimproved.
 Temperature and oxygen
controlled vans for road transport
are still at the experimental stage.
21

22. Additional Problems of Shrimp
Industry (Farmer/Nursery)
 Low awareness level resulting high mortality rate.
 Inadequate banking support and financial ability hinder progress of
daily work.
 Processors of shrimp mostly get the benefit from export and pass
some of benefit to agent from the higher price but other members do
not absorb much of the benefit.
 Higher production cost due to inefficient management bodies and high
mortality. Higher price for the product does not always ensures higher
profit due to higher production cost as like in Bangladesh.
 Sale price is completely independent of cost.
 However due to low production cost, survival of this sector is quite
easy than from the other shrimp producing countries.
 Cost of maintaining nurseries is too risky and expensive. 22

23. Additional Problems of Shrimp Industry
(Agent Shrimp, Processor)
Agent Shrimp
 Huge gap between demand for
shrimp by processors and
supply of the same by the
farmers .
 Processors dictate price based
on international market.
 Shrimps are injected with fluid
and chemical substance to
increase its weight.
 Monitoring of compliance are
alarmingly inadequate.
Processor
 Quality of shrimp supplied to
the processor is not of good
quality due to adulteration.
 Processor engaged in their
business during the tax holiday
extension after that they shift
their profession which rises
financial default.
 Low marketing effort and low
prices reduces the demand in
the international market and it
also creates a negative image in
the outside market. 23

24. Processor (cont…)
 Inadequate technology and knowledge transfer impact market
operation.
 Hazard Analysis Critical Control Point (HACCP) is still inadequate.
 It is sometimes difficult to maintain the international standard of
exported shrimp. For example: EU regulation for using nitrofurans is
very low to maintain health standard which is not highly maintained in
our country and it may ban the export of shrimp to EU.
What We have Learnt ????
Have a Closer Look on the Marked Portion
 This is a perfect example of inappropriate grounds for rejection by the
developed countries. International laws can therefore sometimes be
questionable.
24

25. Business Development System
Co-ordination Related Problems
 No coherent coordination and
hatchery business is mainly set
up for interest.
 Industry needs are not well
communicated with donor
activities.
 Donor activities also not well
communicated among
themselves.
 Non-existent government
activities.
Technological Problems
 Non-existent R&D activity.
 Donor programmes are not well
designed to develop appropriate
technology.
 Inappropriate imported
technology.
 Human resource development is
not long term sustainable.
 Hatcheries seem to be interested
in profit sharing not technology
sharing.
Some General Barriers
25

26. Business Development System
(cont…)
Feed
 Price of feed is beyond the
quality of the poor farmer.
 Most available feed suppliers
are substandard, therefore we
often have poor quality of
shrimp.
 Inefficient monitoring of feed
and drug manufacturing system.
Financial Problems
 Financial agencies found
financial farm non profitable
therefore are reluctant in
extending loan.
 Inadequate knowledge of
financial operator regarding the
demand and supply status.
 Large extent loan is disbursed
towards hatcheries and
processors as they seem to be
larger in the actor of the value
chain.
Some General Barriers
26

27. Business Development
System (cont…)
Bio-Security Problems
 As agents are commercially driven, therefore they tend to oversell
medications such as antibiotics and hormones just to gain more profit.
 Inadequate laboratory facilities result in low R&D advantage.
 Due to low level of knowledge regarding bacterial and fungal
infestation lot of exports turn out to be infected.
Some General Barriers
Bacterial
disease of
shrimp
Antibiotics of Shrimp
27

28. Target Achievement
 It is evident that the target rate of US$ 1 billion target is achievable
provided that certain bottlenecks are removed.
 Here the main bottleneck is production level is unacceptably low.
 With the dissemination of technology through the programmes like
SSOQ production in the farmers level may be increased 4-5 fold
making it possible for the industry to reach its desired target.
 Concentration on increasing management efficiency ultimately reduce
the high mortality rate and manifold the production level.
28

29. Intervention Strategy
Strategies that were previously uncovered in the primary study illustrated
below:
1. Agricultural Policy
 Ministry of agriculture and land should initiate an integrated policy to
enhance land productivity while considering different sub-sectors
like shrimp, jute, horticulture etc.
 Fisheries department should prepare different policies for bagda and
golda as requirement for these two species are completely different.
 As 70% of the foreign exchequer from shrimp is contributed by
bagda, therefore; emphasis should be placed there.
 Hatcheries, farmers and processors should be considered as single
unit rather than competitors while formulating any policies.
 Policy assessment and updating should be done on annual basis
based on foreign technician and international market scenario. 29

30. Intervention Strategy (cont…)
2. Policy on Brood and Hatcheries
 Brood parents catching for bagda and golda should be strongly monitored
during some specific seasons whereas experts suggest that it should be
banned in some specific areas specially in Sundarbans and Satkhira to
enable a consistent flow of brood mothers.
 Brood mothers collecting method should be changed in our country
observing from others developed countries. Training facilities will be
helpful in this case.
 A 100% ban should be imposed on collecting PL for Bagda which makes
industries non-existent. However such ban should not be imposed before
making any alternative livelihood for the individuals whose main
occupation rely on it.
 In Cox’s Bazar govt. initiate tax holiday for bagda hatcheries, similar steps
should be taken for golda.
 Restrictions should be imposed on using net and individuals without trade
license should not be allowed in this trade.
 Private sector operation and support from the donor should be introduces.30

31. Intervention Strategy (cont…)
3. Policy on Bio-Security
 A free market mechanism across the value chain with biologically safe food
force the farmers to adopt bio-security measures.
 Rather than depending on foreign technicians local manpower should be
trained on testing measurement.
 Certification program like SSOQ plays a major role for creating value
addition in the form of better quality and enhance image. SSOQ has
laboratory in Cox’s bazar which test the post larvae and then send it to the
farmers.
 Bio-security policy should include viral, bacterial and fungal diseases.
Policies must be adopted in the use of harmful chemical substances.
 Traceability is important which helps farmer to receive training on record
keeping and certification procedure. It should be adopted at each and every
stage of the value chain including importer. This proactive measurement
helps to achieve larger export also. 31

32. Intervention Strategy (cont…)
4. Financial Policy
 Restriction on number of hatcheries to control financial corruption
which may eradicate unethical practices rampant in this sector.
 Government should undertake investigation before granting any
hatcheries/processors to operate.
 Tax holiday should be directed towards the farmer in the form of low
interest rate to ensure that traders do not take all the advantage.
 Incentives can be more effective that helps farmer to meet certain bio-
security measures.
5. International Policy
 In the last few years consumers are more conscious about whether
imported shrimp is produced maintaining international codes for food
safety, produced in an environment friendly way. Therefore,
international standard should be ensured.
32

33. International Policy (cont…)
 Concerted effort on a global scale is necessary to assist LDCs in order
to build capacity necessary to guarantee compliance.
 The SPS (Sanitary and Phyto-sanitary) provisions should be
formulated in a transparent and accountable manner.
 If standards are to be harmonized, these should be take into
consideration of regional condition. For example, though EU ban
import shrimp but exporters are able to divert some a part of
consignment to USA and Japan.
 Adequate preparatory measures should be ensured for exporting
countries (SPS measure) prior to imposition of any penalty.
 Adequate financial and technical assistance should be provided to the
LDCs to facilitate conformity with SPS requirement.
 Certification procedure should be clearly addressed to avoid any
conflicting interpretation with respect to standard. 33

34. Intervention Strategy (cont…)
6. Policy of Donor Agency
 Donor agencies should develop a joint country strategy to ensure
smooth and effective functioning.
 Ensure greater transfer of knowledge which increases the
effectiveness of the project by learning from other mistakes and
implementing other success stories.
 Donor agencies should develop a plan based on long term exist
strategy rather and transfer of ownership should follow a smooth and
efficient process.
 Instead of acting only a financing source only donor agencies can also
function as a broker and aid govt. to formulate an integrated
agricultural policy.
 Emphasis should focus on the private sector as from 1986 to 1996
govt. established only a few hatcheries whereas private sectors
established total of 55 hatcheries with less fund.
 Donors can aid in country image promotion and export diversification.
34

35. Intervention Strategy (cont…)
7. Operational Strategy: General
 A shrimp association should be formed taking one representative from
each value chain group. There exist two hatcheries and one processor
association but they work in isolation with each other but they should
work under an umbrella organization.
 There are few agents who have control over farmers and hatchery
supply. However they need to be enlisted to collect information from
them and disseminated it to monitor of farm activities.
 SSOQ model could be used in ensuring increase in production.
 National target on exports as well as performance target should be
directed towards the value chain to ensure efficient integration.
 Bagda and Golda are two different generic brand therefore, their
promotional strategies also need to be different.
 In developing an operational strategy, grass root problems should be
solved in the organization level.
35

36. Intervention Strategy (cont…)
8. Operational Strategy: Golda
 For Golda project regional integration model may be helpful where all
the value chain actor performed regionally and whey it matured then
attempt to form a limited company.
 GNAEP model is very much effective and have a goal of transition
from project phase to private sector phase.
 Regional association may be considered fro financial support.
 All movement of good from hatcheries to processor recorded properly
since a single entity is in operation.
 Golda can also be cultivated in a poly-culture system with Carp to
boost production.
36

37. Intervention Strategy (cont…)
9. Operational Strategy: Bagda
 For the hatcheries to be stationed across the country, they have to
consider the production of bagda as they are located near coastal belts
and the strategies need to be different due to geological proximity.
 Hatcheries can jointly run the PL and use technology using road as a
means of transport. Code number for hatcheries, certification system
improved efficiency in transport, distribution and traceability.
 Farmers should be helped to form a group. Bargaining power of
famers should be boosted for equitable distribution of benefit. Farmers
of a specific geo-graphical region should be tagged for easy
accessibility, supervision and traceability.
 Govt. agencies should monitor bio-security measures and provide
financial support to the farmer to develop export oriented industry.
 Cooperatives have to be allowed freedom.
37

38. Intervention Strategy (cont…)
10. Processor
 Support can be sought from the
govt. and the donor agencies to
enhance country image.
 Strategies should also be
generic for bagda and golda.
 Strategies should be directed
towards brand which increase
industry competition within the
country.
 Maintain data banks of
products.
 Maintain liaison with the
market and transmit information
down the chain.
11. R&D
 R&D facilities can be mobilized
through linkage with the various
universities of the country.
 Research activities can be
initiated by the regional
integrated units or join effort by
the hatcheries of bagda.
 Strong linkage with the SSOQ
is needed at the initial stage.
 Internship program of the
students in various universities
can be developed at all level of
value chain to ensure human
resource development. 38

39. Intervention Strategy (cont…)
12. Operational Strategy: Donor
 Donor should continue with SSOQ model to ensure smooth transition
and placement of technology transfer.
 Donor should develop a plan on milestone basis rather than time
bound basis in the areas of technology, standardized operation and
marketing strategies.
 An integrated model should be developed by taking representative of
the private bodies for smooth transition from the very beginning of the
project.
 A typical NGO driven model should be avoided since it lacks
transition and partnership with public sector need also to be avoided
because this may lead to ownership issue.
39

40. Conclusion
 Integration of activities both in terms of value chain and region may
help to achieve US $1 billion theoretically described in the above
discussion.
 Working with existing PL supply agents who control a significant
number of farmers and also ensure quick dissemination of information
and provide technical training.
 Presence of donor in the absence of government guidance is very
much essential for a planned time period as a facilitators only.
 Private sector participation is essential and project should be handed
over only after the sustainable profitability has been ascertained.
 Fisheries department and donor should outline policy framework
according to the need of the buyer and ask the govt. for
implementation.
 If all of the strategies are met only then Bangladesh can increase its
market share and become one of the leader in the global shrimp
market. 40

41. Thank You All
From
Any Questions????
41