The promise of aquaculture

This piece is from the series of summaries of papers presented at the "Bangladesh in the 21st Century" conference held at Harvard University (June 13-14) The views expressed in the articles are expressly those of the authors.
CULTURED shrimp is promoted as an alternative to the exhaustion of global fisheries. The coastal zones of some tropical countries, including Bangladesh, are dominating the production of commercial shrimp, and export to the US, Europe, Canada, Japan and other wealthy countries.
For many developing countries, including Bangladesh, shrimp has become a major source of foreign exchange and has integrated often previously marginal coastal communities into high value commodity networks. However, the producing countries are facing increasing challenges with international trade, particularly concerning "quality."
Among the recent transformations of the global agro-food system, quality rather than price or quantity has become the basis around which production, commodities, and markets are increasingly organised.
Under increasing pressure from various actors such as environmental and labour activists, multi-lateral organisations, and regulatory agencies in their home countries, multi-national firms are implementing "certification" arrangements that include codes of conduct, production guidelines, and monitoring standards that govern and attest to not only the corporations' behaviour but also to that of their producers and suppliers around the world.
While previous "quality" assurance was confined to only Hazard Analysis Critical Control Point (HACCP) manual, recent movements have extended quality assurance to traceability, environmental sustainability, labour rights, and community-based resource management in production sites.
As major buyers such as Wal-Mart, Darden and Lyons recently committed to buy only the "certified" seafood, including farmed shrimp, it is anticipated that other buyers will also follow the same path and a major portion of shrimp production will soon come under certification umbrella. This conspicuous trend poses both opportunities and challenges.
While it offers an opportunity to move towards a sustainable aquaculture, the producers who fail to meet the shifting private regulations will eventually lose out in the market. It is observed that Bangladesh can easily earn about $2 billion from shrimp industry. While many neighbouring countries such as China, Thailand and India are genuinely working with pragmatic plans and policies to capture the lucrative shrimp markets, Bangladesh -- despite having enormous prospects -- is now grappling to survive with numerous problems and malpractices.
Part of the problem is that about 80% of the economic actors are living in poverty. Poverty is not simply low income or economic inequality, but rather a serious deprivation of certain basic capabilities and rights to improve. For these people, when improvement means food, health, shelter and education for children, making waterproof floors in the depot, having running water on the entrance, as per international regulations, are last of the priorities. As a result, 70% of Bangladesh shrimp industry operates within informal economics.
Furthermore, Bangladeshi fishery exporter association (BFFEA), who are the major lobbying group for this industry, fails to recognise that the major weakness of this industry lies in the feed, chemicals and fry used as inputs. These inputs are mainly imported from China. The use of low quality and often contaminated inputs resulting in low quality shrimps. This low quality shrimp gets low market price, which trickles down to the bottom of the supply chain. The industry needs comprehensive industry-wise strategies which will help to improve the conditions of economic agents at all level socially, economically, and politically.
The following proposals are a starting point to incorporate local socio-political considerations into industrial policy. To do so, the Bangladeshi government and researchers should undertake a household-level economic shock and vulnerability study to build a framework for national policy responses.
First, policies should regulate, reward, and penalise private entities but should not try to compensate for economic shocks. If an unforeseeable crisis creates an economic shock requiring compensation, policy should not discriminate against affected actors in the industry. For example, the entire industry suffered from the 1997 ban, but incentives were given to factory owners/exporters and not other actors. Recipients of government incentives should undergo third party audits verifying fulfillment of social and economic objectives, such as job creation, export growth, or technology improvements.
Second, Bangladesh needs to improve import policies to ensure quality and appropriateness. Policy can support farmers by regulating imports for basic acceptability, such as shrimp fry and feed contamination screening. Instead of government laboratories as the only check point, consumers of these imports should receive training, technology, and basic tools to test on their own.
Third, counter-cyclical policies are needed to protect jobs and incomes and provide adequate social security in times of economic shocks and natural disaster. The finance ministry, industrial ministry, or land reform ministry should be tasked to include a complete cost-benefit analysis of the distributive effects of proposed budgetary, tax, or land reform initiatives that considers every group of the industry.
Fourth, collectiveness should be promoted in the bottom half of the supply chain. This largely informal segment should have greater incentives to collectively contest and resist exploitation and discriminating policies, but the informality of their business, continuous insecurity, and submission to local political power hampers their collective force. Lack of collective force translates to lack of political voice to represent their needs to the government and exporters.
Fifth, Bangladesh should diversify trading partners to find policy maneuvering space. Instead of depending on the US and EU, Bangladesh should focus more on under-exploited markets such as the Middle East and emerging markets in China and African nations. This will provide shrimp producers more space to improve their activities while seeking to venture into new markets.
Sixth, countries like Bangladesh, with weak institutional support, need to thoroughly and carefully consider international insurance proposed for countries facing shocks from price swings and non-tariff barriers to trade. Such insurance is designed to offset monetary shocks, but is not attuned to socio-political crisis that the poor encounter on a daily basis.
Last but not the least, the Bangladesh shrimp sector needs immediate policies and programs in the following areas: Establishing research institutes to increase productivity and to invent cures for viruses, adherence to quality standards as required by the buyers, and negotiation and consultation with NGOs opposing shrimp culture.

Nazia Habib is a Visiting Scholar in Economics, Columbia University.
Md. Saidul Islam is a Consultant, United Nations, New York.