**Shrimp Industry Study: Problems, Prospects and Intervention Agenda**

**Submitted To: USAID, Bangladesh**

**Submitted By: ATDP Research Team**

**September 18, 2005**

**[Management Summary]{.underline}**

Shrimp is one of the leading export items of Bangladesh. It accounts for
roughly 2.5 percent of global exports and fetches a fair amount of
foreign exchange (\$250-330 million for last three years). There is
ample demand in the international market for shrimp and Bangladesh is
blessed with an environment congenial for shrimp production. However,
the industry is fraught with many obstacles at present.

A primary study was undertaken to detect the problems plaguing the
different levels of the value chain of shrimp in the country.
Consequently, a study was conducted in which the participants were
representatives of the various stakeholders in this industry. The
discussion that ensued aimed to identify obstacles to the growth of the
industry, 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. The problems that were revealed
through the study are the following:

> ![](media/image1.png){width="0.125in" height="0.125in"} Inefficient
> management
>
> ![](media/image1.png){width="0.125in" height="0.125in"} High mortality
> rate
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Low quality
> shrimp

-   Negative country image abroad

-   Indiscriminate catching of brood mothers

> ![](media/image1.png){width="0.125in" height="0.125in"} Lack of an
> integrated agriculture policy
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Inadequate
> Sanitary and Phyto-Sanitary Measures (SPS)

-   Lack of standards and Lack of traceability

> ![](media/image1.png){width="0.125in" height="0.125in"} Vertical
> competition amongst different actors in the value chain due to
> supply-demand inconsistency
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Lack of
> coordination amongst donor agencies
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Lack of
> monitoring of compliance on the part of the government
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Lack of
> awareness
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Unfair
> practices by agents
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Almost
> non-existent R&D endeavors

Results of the field level survey suggests that by pursuing an
integrated policy, under the current capacity figures, the shrimp
production per unit area of land can be raised manifold provided that
the current bottle necks are eliminated. It is therefore quite possible
to attain the year 2010 export revenue target of \$1 billion if the
above-mentioned obstacles are overcome.

The intervention strategies towards achieving this target generated by
the study are enumerated below:

-   The study strongly recommends an integrated model for both *Golda*
    and *Bagda* projects. It suggests formation of strategic business
    units based on clusters incorporating members of value chain.

-   Strategic business units can be cooperative based, where groups of
    farmers work together under a commercial umbrella, or individual
    based where existing agents are enlisted to disseminate technical
    information and training to their farmer clients.

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-   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. Enforcement of the
    policy must be done with the assistance of industry groups.

> ![](media/image1.png){width="0.125in" height="0.125in"} Instead of
> working in isolation, the donors should address these problems
> collaboratively so that transfer of learning and experience is
> ensured.
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Donors should
> also formulate smooth exit strategies whereby projects are handed over
> to the private sector after completion.
>
> ![](media/image1.png){width="0.125in" height="0.125in"} 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.
>
> ![](media/image1.png){width="0.125in" height="0.125in"} 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.
>
> ![](media/image1.png){width="0.125in" height="0.125in"} 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.
>
> The study suggests that implementation of these strategies is quite
> possible if all the stakeholders in the sector confront them jointly
> in an integrated fashion. Given the various existing interest groups,
> there is a fair amount of negotiation and information dissemination
> that has to be done to ensure implementation success.
>
> Intervention strategies are outlined in more detail within this
> document.

Table of contents

  ------ --------------------------- ------ ---------------- -------------------------------- ------
  *i*    *List of Abbreviations*                                                              *4*

  *1*    *Introduction*                                                                       *5*

  *2*    *Objective*                                                                          *5*

  *3*    *Methodology*                                                                        *6*

  *4*    *Scope*                                                                              *6*

  *5*    *Sector Map*                                                                         *7*

  *6*    *Problems in the value                                                               *10*
         chain*                                                                               

                                     *1*    *General*                                         *10*

                                     *2*    *Brood Parent                                     *11*
                                            Collectors*                                       

                                     *3*    *Agents (brood                                    *12*
                                            mothers)*                                         

                                     *4*    *Hatchery*                                        *12*

                                     *5*    *Agents (Post                                     *13*
                                            Larvae -- PL)*                                    

                                     *6*    *Transport                                        *14*
                                            Agency*                                           

                                     *7*    *Farmer*                                          *14*

                                     *8*    *Agents                                           *16*
                                            (shrimp)*                                         

                                     *9*    *Processor*                                       *16*

  *7*    *Business development                                                                *17*
         system*                                                                              

                                     *1*    *Technology*                                      *17*

                                     *2*    *Feed*                                            *18*

                                     *3*    *Finance*                                         *18*

                                     *4*    *Bio-security*                                    *18*

  *8*    *Target Achievement*                                                                 *18*

  *9*    *Intervention strategies*   *1*                     *Policy: Agriculture*            *19*

                                     *2*                     *Policy Issues: Brood*           *20*

                                     *3*                     *Policy: Bio-security*           *21*

                                     *4*                     *Policy: Financial Monitoring*   *22*

                                     *5*                     *Policy: International*          *23*

                                     *6*                     *Policy: Donor Agencies*         *24*

                                     *7*                     *Operational Strategy: General*  *25*

                                     *8*                     *Operational Strategy:           *26*
                                                             Integration - galda*             

                                     *9*                     *Operational Strategy:           *26*
                                                             Integration - bagda*             

                                     *10*                    *Operational Strategy:           *27*
                                                             Integration -- Processors*       

                                     *11*                    *Operational Strategy:           *28*
                                                             Integration -- R&D*              

                                     *12*                    *Operational Strategy:           *28*
                                                             Integration -- Donors*           

  *10*   *Conclusion*                                                                         *29*

         *Bibliography*                                                                       *30*

         *Annex 1:Geographic map of                                                           *31*
         the industry*                                                                        

         *Annex 2: Details of                                                                 *32*
         participants in the                                                                  
         workshop*                                                                            

         *Annex 3: Case Studies                                                               *33*
         (SSOQ, GNEAP)*                                                                       

         *Annex 4: Present Market                                                             *40*
         Status*                                                                              
  ------ --------------------------- ------ ---------------- -------------------------------- ------

**[List of Abbreviations]{.underline}**

1.  **ATDP-II**: Agro-based Industries and Technology Development
    Project II

2.  **LDC**: Least developed country

3.  **PL**: Post Larvae

4.  **WTO**: World trade organization

5.  **DANIDA**: Danish International Development Agency

6.  **SSOQ**: Shrimp Seal of Quality

7.  **USAID**: U.S. Agency for International Development

8.  **SPS**: Sanitary and Phyto-sanitary measures

9.  **EU**: European Union

10. **EC**: European Commission

**[Introduction]{.underline}**

Secondary studies extensively indicate that the Shrimp industry of
Bangladesh is one of the most important contributors for economic
sustenance at present and is the second largest export commodity of the
country. In addition Bangladesh produces 2.5 percent of the global
production of shrimp generating more than US\$300 million annually. The
main cultured species is the tiger shrimp (locally known as *bagda*
shrimp) of which the technical name is *Penaeus monodon* (around US\$250
million contributed from *bagda* alone). It is a marine shrimp and is
cultivated in brackish water. The next most important cultured species
for export is the fresh water variety, locally called *galda*,
technically known as m*acrobrachium rosenbergii*. The shrimp industry
provides direct employment to over 600,000 people who in turn support
well over 3.5 million dependents. The geographic coverage of the shrimp
industry in Bangladesh is depicted in Annex One.

The industry suffers from significant production inefficiencies and is
exposed to important social and environmental risks. The sector suffers
from a lack of vision and strategic direction. However, the contribution
of the industry both in terms of helping the poor as well as earning
foreign exchange is immense and thus is considered by many as the future
prospect of the country. ***The industry urgently needs an integrated
strategy for sustainable growth*** and to respond to emerging trends in
the competitive global market place.

**[Objective]{.underline}**

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.

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]{.underline}**

The methodology entailed both secondary and primary qualitative study.
The secondary research included both local and international studies
conducted on the subject. This was followed by a 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.

**[Scope of the Study]{.underline}**

The scope of the study included the entire value chain and covered both
*bagda* and *galda*. Geographic coverage was Cox's Bazaar, Chittagong,
Noakhali, Dhaka, Bagerhat, and Khulna. The study also covered in detail
the models under SSOQ-ATDP and GNAEP-DANIDA (Annex 3). Representatives
from the following members of the value chain were interviewed as a part
of the study:

> ![](media/image1.png){width="0.125in" height="0.125in"} Brood Agency
>
> ![](media/image1.png){width="0.125in" height="0.125in"}
> Hatchery/Nursery
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Transport
> Agency
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Trade Agency
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Depot

-   Farm-Shrimp/Nursery

-   Processing Industry

> ![](media/image1.png){width="0.125in" height="0.125in"} Financial
> Agency
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Laboratory
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Wholesale
> Market
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Department of
> Fisheries
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Facilitating
> Agency
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Shrimp
> Technologist
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Association
>
> ![](media/image1.png){width="0.125in" height="0.125in"} Donor Agency

**[The sector map of the Bangladesh shrimp industry]{.underline}**

The existing value chain in the shrimp industry is provided below and
the details on the shrimp industry are presented in annex four.

**[Problems in the Shrimp Industry:]{.underline}**

The problems described below were pointed out by the participants in the
primary study. The workshop also shed light on some additional problems.
The problems prevalent at different levels of the value chain are
enumerated below:

**1. General**

-   An integrated agricultural policy is a prerequisite for the
    development of any primary market. However, the present agricultural
    policy can at best be described as disjointed and non-functional.

-   There also exist serious shortcomings in the government regulation
    and control of the following environmentally important issues:

    -   Wild Fry Collection

    -   Standards maintenance

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-   Land grabbing

-   Inadequate Sanitary and Phyto-sanitary measures (SPS)

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-   Lack of standards at all levels of the value chain.

-   The members in the value chain also seem to be involved in vertical
    competition.

-   There are quite a large number of hatcheries operating within the
    country under capacity. The farms are running at capacity (although
    with high mortality rates) as a result the farms have abundant
    demand for their supply. Thus a captive market results in
    manipulation by the agents.

-   The processors are faced with huge demand from the international
    markets. But they aren't able to meet this demand because of failure
    of the part of the farms to supply them with adequate shrimp.

-   Inconsistency in the supply chain results in substantial and rapidly
    changing price structure. As a result unethical practices are
    prevalent in the value chain. In order to meet the necessary weight
    requirements, farmers sometimes inject the shrimp with illegal
    material.

-   The various donor bodies at the field level are working in isolation
    as opposed to creating partnerships. As a result transfer of
    learning and experience is sporadic and uncoordinated. Endeavours by
    BRAC, DANIDA and ATDP-II have yielded positive results in their
    respective fields. However, very little effort has so far been taken
    to share the knowledge gathered which could have resulted in even
    better results.

-   Lack of a proper monitoring mechanism plagues every level of the
    value chain.

-   There also exists no formal exit strategy on the part of the donors.
    Moreover the exit strategy lacks transfer to the private sector. The
    present practice is geared towards either the government or creation
    of NGO based private sector which seriously affects free market
    principles.

-   The extension workers provided by the government have so far
    performed very poorly and failed to facilitate the farmers properly.

**2. Brood Parent Collectors**

-   Indiscriminate catching of brood mothers has emerged as a serious
    threat. In fact, experts forecast that brood mothers may become
    extinct in two to three years from Bangladesh waters if this present
    practice persists.

-   In Bangladesh the male and female shrimp are harvested together.
    There is no mechanism to harvest the brood mother separately. In the
    case of *galda* cultivation however, the mechanism for collecting
    brood mothers only has been developed.

-   Inadequate policy measures regarding the time of catching,
    technology, human resources, etc. also presents a great threat to
    the brood parent collection. There exists no legal mechanism for
    licensing the nets and vessels used for this purpose.

-   Lack of appropriate technology is also a big problem. Fry collection
    from the sea, called *baish dhora* in Cox's Bazaar and *baccha
    dhora* in Satkhira/Khulna, is skilled work that requires hard
    physical labour and local expertise is inadequate which results in
    the death of a large number of fries.

-   A large number of the poor --- men, women and children (child labor)
    --- do such work in these areas. Child labour seems to be more
    rampant in *golda* cultivation. In case of *bagda* farming children
    are mainly employed for catching fry. The sector however, ensures
    gender equality. In fact the majority of the workers involved in
    this sector are female especially in the processors and hatcheries.

-   People involved in this business as well as those who live in the
    shrimp habitats have no knowledge regarding wild life.

-   Lack of monitoring of compliance afflicts this level of the value
    chain as well.

**3. Agents (brood)**

-   These agents are mostly traders with local influence in the society
    and thus have entered the business not due to need in business but
    by force. The traders also force the farmers to buy shrimp of PL in
    stocks. It is often found that only 5% of this stock contains brood
    mothers.

-   Quality and price control measures are compromised due to inadequate
    supply. This level of the chain is also characterized by too much
    dependence on catchers and they eventually dictate prices.

-   Inadequate monitoring and control by law enforcing and monitoring
    agencies is also a troubling issue in this phase of the chain.

**4. Hatchery/Nursery**

-   Unlike the other levels in the value chain, this level is
    characterized by too many players. However, almost all of them are
    engaged in marginal operations. No extensive studies have been
    undertaken so far to ascertain the required number of hatcheries.

-   Most investors are motivated to turn black money white. Production
    and sales figures are often exaggerated to override the law. That is
    why frequent changing of hands (of facilities) is quite a common
    practice in this field.

-   Inadequate bio-security measures such as drainage, bacterial
    control, viral control, use of medication, etc. due to inadequate
    technology base also results in high mortality rate and low quality
    of the product. The disease called White Spot Syndrome Virus (WSSV)
    effects the *bagda* species specifically and is the sole contributor
    behind falling productivity of *bagda*. In the case of *golda* bio
    security related problems mainly involve bacterial infections and
    contaminated medicine and feed. The EU imposed a ban on Bangladesh
    shrimp imports in 1997 because of a failure to comply with EU
    quality regulations. These events have resulted in a bad image of
    Bangladeshi shrimp in foreign markets. As a result Bangladesh cannot
    demand the same price as its competitors in the international
    market.

-   Lack of trained human resources in this field necessitates the
    influx of foreign technicians. In fact 70% of technicians are from
    outside the country. The majority (50%) of them are Indian
    nationals. These foreign experts at times enter the country
    illegally and apply their technology, medication, and at times even
    strains without any pre-testing measures. This quite clearly
    represents a potential threat to bio-security.

-   Weak association among the different hatcheries exist since a large
    number are involved in unethical business practices and are least
    concerned about business development.

-   Although businesses change hand regularly, they do not close
    indicating that unethical practices rather than business itself
    promotes sales. Most of these unethical practices are a direct
    result of government incentive programs directed in favour of the
    hatcheries.

-   The cost of undertaking R&D activities at the hatchery level is
    clearly uneconomical for private industry and other stakeholders to
    undertake at the present capacity utilization rates.

**5. Agents (Post Larvae -- PL)**

-   These agents constitute the major profit making actor in the chain
    with the least risk.

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-   These agents are very influential in the value chain and determine
    prices. Lack of working capital and availability of special interest
    rates are outlined as major constraints faced by the group.

-   High mortality rates during transhipment from hatchery to farms
    especially in the case of *bagda* are also observed.

-   These agents control both farmers as well as hatchery owners. On one
    hand, they purchase on credit from the hatchery owners and on the
    other they derive commission from the farmers.

-   In the case of *galda,* a large amount of the PL is imported from
    neighbouring India. Some PL imported from India contains excess
    amounts of nitrofurine which is a prohibited substance.

**6. Transport Agency**

-   The poor transportation infrastructure of the country further
    cripples the industry. This problem is even more acute in the case
    of *bagda* as in this case the shrimp have to be transported from
    Cox's bazaar to Khulna.

-   Lack of landing facility for air transporters in Khulna results in
    high carrying and time costs which ultimately results in the farmers
    paying higher prices.

-   Idle capacity for air transport during off-season makes it difficult
    for them to sustain their operations.

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-   Inadequate aircraft parking facility in Cox's bazaar airport during
    peak season contributes to even more delay in shipment.

-   It takes a total of thirty hours to reach the farms from Cox Bazar
    to Khulna by road. Some hatcheries have taken it upon themselves to
    transport the PL by road; however, this has not yet improved the
    situation.

-   Policy regarding licensing for air transport is inadequate -- the
    status of both leased aircraft and owned aircraft are regarded as
    same.

-   Temperature and oxygen controlled vans for road transport are still
    at the experimental stage.

**7. Farmer/Nursery**

-   Low awareness level regarding proper farming practices results in
    high mortality rates and diseases in the farms.

-   The weak financial capability of the farmers is also a great barrier
    towards development. Inadequate banking support makes it impossible
    for the farmers to obtain the funding they require.

-   High mortality of Post Larvae of both *bagda* and *golda* result
    primarily from the previously mentioned shortcomings.

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-   Although export benefits are extended to this sector, the processors
    are the ones who mostly get to enjoy the same. They pass some of the
    benefit to the agents in the form of higher prices. However, the
    other members of the value chain are not able to absorb much of this
    benefit.

-   The farmers in Bangladesh get higher prices for their products
    compared to farmers in countries like Thailand primarily due to
    higher production cost resulting from low management capability,
    inefficient quantity management and high mortality. This on the
    other hand affects the market share in the international market.
    This aspect can be summarized in the illustration from group
    discussion presented below.

    -   High prices do not necessarily mean high profits as the cost of
        operation are also high in these farms. After covering all the
        overheads a very meagre profit is left. On an average, 20% of
        the overheads fall under labour.

    -   The sales price is completely independent of costs.

    -   The price is dictated by competition alone.

    -   Management inefficiency and lack of technology are considered
        the main contributing forces behind these rising costs of
        production.

    -   Primary production cost is quite low in Bangladesh compared to
        other countries as 90% of the *Bagda* larvae are traditionally
        produced and therefore entail no spending at all. In fact some
        regard this as the sole reason behind the survival of this
        sector in Bangladesh.

    -   The start-up capital and input cost is much lower in Bangladesh.
        However, it is important to properly define sustainability in
        this aspect.

    -   Although some shrimp farms are sustaining, the owners are doing
        so by engaging themselves in side businesses.

    -   A study conducted under the ATDP surveyed about 600 such farmers
        and found that average production was less than 100 kg per
        hectare even though it was required to produce 148kg per hectare
        to break even considering the price of land.

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-   The government has also failed to play a constructive role,
    evidenced by the lack of support from government extension workers.

-   The cost of maintaining nurseries and undertaking experiments is at
    times too risky and expensive.

**8. Agents (shrimp)**

-   No special interest rates for working capital are available.

-   As mentioned before, there exists a huge gap between the demand for
    shrimp by processors and the supply of the same provided by the
    farmers.

-   Processors dictate prices based on international market rates.

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-   Too many depots are engaged in this stage and a large number of
    these depots and sub-depots are either owned or controlled by
    agents. All adulteration is performed in the depots or sub-depots.
    Here shrimp are injected with fluids and other substances or
    immersed in water to increase their weight.

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-   Again, the measures taken by the government in monitoring of
    compliance are alarmingly inadequate.

**9. Processor**

-   The quality of raw material (shrimp/prawn) supplied to the
    processors is not satisfactory because of adulteration, cool chain
    maintenance, size variation etc. *Processors should reject these
    shipments but do not due to their desperate need for raw material to
    fulfil orders.*

-   It has also been observed that, some processors engage in this
    business only for the period for which the tax holiday has been
    extended. After expiry they simply get a new registration. This
    practice results in financial default.

-   Lack of marketing efforts and a negative country image are also
    great obstacles. The negative country image is solely responsible
    for the low prices Bangladeshi shrimp commands in the international
    markets and its failure to increase its market share and acquire new
    markets.

-   Inadequate technology and knowledge transfer also impact operations.

-   Although in recent times, there have been efforts to comply;
    compliance with HACCP (Hazard Analysis Critical Control Point) is
    still not adequate.

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-   Non tariff barriers from the developed world at times are considered
    inappropriate by local producers. For instance, although EU
    regulations prohibit child labour, in Bangladesh complete abolition
    of the practice is impossible as the children are forced to work for
    their very sustenance mostly at the lowest ladder of the value
    chain.

-   EU regulations also necessitate the availability of proper sanitary
    conditions which most of the farms simply cannot afford. In fact
    some requirements of the SPS don't even fall under the standard
    regulations of health and sanitation. For example in case of
    *golda*, the acceptable level for nitrofurans required by the EU is
    substantially and impractically lower than that approved by general
    health and sanitation standards. This is a perfect example of
    inappropriate grounds for rejection by the developed countries.
    International laws can therefore sometimes be questionable.

**[Business Development System (BDS)]{.underline}**

The general barriers prohibiting the establishment of a healthy Business
Development System (BDS) in this sector are listed below:

1.  **Coordination among industry participants**

-   There is virtually no coherent coordination among participants in
    the value-chain; hatchery operations are set up for reasons other
    than the interest of the industry. Export incentives accrue directly
    to processors leaving out the rest of the chain.

-   Industry needs are not well communicated and coordinated with donor
    activities and programs.

-   Donor activities are not well coordinated amongst themselves.

-   Government activities are largely non-existent.

    1.  **Technology**

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-   R&D activity is almost non-existent in this industry.

-   Donor programs are not designed to take the long term planning
    needed to help develop appropriate technologies.

-   Imported technology has proven to be not appropriate for our
    environment or else too expensive.

-   Human resource development for long-term sustainability is not
    satisfactory, especially in the hatcheries.

-   The hatcheries seem to be interested only in profit sharing but not
    technology sharing.

**2. Feed**

-   Price of quality feed is beyond the reach of the poor farmers under
    their current farming methods.

-   The only reliable source of quality feed in the country is the
    multi-national CP.

-   Most available feed suppliers/manufacturers are substandard which
    result in low quality shrimp and prawn.

-   Monitoring of feed and drug manufacturing system and products is
    inefficient.

**3. Finance**

-   Financial agencies consider financing farms non profitable and high
    risk and therefore are reluctant in extending loans.

-   The knowledge base of financial operators regarding the industry is
    not adequate. Although they are willing to grant loans to
    hatcheries, they have very little idea of the demand supply status
    in the industry.

-   Loan disbursement to a large extent is either directed towards
    hatcheries or processors as they seem to be the larger compared to
    the rest of the actors in the value chain.

**4. Bio-security**

-   Agents are commercially driven and therefore engage in overselling
    certain medications such as antibiotics and hormones just to gain
    profits.

-   Inadequate laboratory facilities result in low R&D endeavours.

-   Low level of knowledge base regarding bacterial and fungal
    infestation prohibit them from taking proper measures in preventing
    and curing such diseases which is why a lot of exports turn out to
    be infected.

**[Target Achievement]{.underline}**

Based on the figures associated with production of PL, shrimps/prawn
capacity utilization and processing capacity utilization it is evident
that US\$1 billion target is achievable provided certain bottlenecks are
removed. The main bottleneck therefore remains with the farmers where
the production is unacceptably low. With the dissemination of technology
through programs like SSOQ production in the farmer's level may be
increased 4-5 fold making it possible for the industry to reach the
desired target.

The intervention strategy therefore needs to be concentrated on these
bottlenecks without putting too much emphasis on increasing capacity
across the chain. The strategy need only concentrate on increasing
operating and management efficiency and decreasing the high mortality
rate.

**[Intervention Strategy]{.underline}**

The intervention strategies that were uncovered by the primary study in
addition to the workshop are illustrated below. Order of illustration
does not reflect importance:

**1. Policy: Agriculture**

-   Both agricultural policy and land policy are important in this
    regard. An integrated agricultural policy should be the objective.
    This policy can be applied when calculating land productivity and
    allocations for various sub-sectors such as shrimp, grains,
    horticulture, jute, etc. The ministry of agriculture and the
    ministry of land should work jointly to come up with such policies.

-   Separate policies should be developed for *bagda* and *golda* as the
    requirements for these two species are completely different and it
    is also important that the fisheries department and other relevant
    ministries such as land, commerce, and environment acknowledge these
    differences.

-   Some integration in policies has already been done especially in the
    case of *golda* cultivation and some of these principles can be
    applied to *bagda*. However, as 70% of the foreign exchequer from
    shrimp is contributed by *bagda*, emphasis should be placed there.

-   In addition, the shrimp industry policy should also be integrated
    rather than kept it in isolation. Hatcheries, Farmers and Processors
    should be considered as a single unit rather than competitors when
    such policy is developed.

-   Policies should also be formulated to address the issue of the lack
    of transparency on the part of the foreign technicians.

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-   Policy assessment and updating should be done on an annual basis
    based on international market scenario.

**2. Policy Issues: Brood & Hatcheries**

-   Brood parent catching for both *bagda* and *golda* should be closely
    monitored. The local producers suggest that for *bagda* ban should
    be imposed during certain months of the year to enable a consistent
    flow of brood mothers. However, some experts suggest that instead of
    imposing bans on some ascertained period, bans should be put to
    effect on certain areas which are essential for the larvae to grow.
    This is more applicable in the case of *golda* as bans on some
    strategically important areas in the Sundarbans and Shatkhira can
    produce effective results.

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-   Brood mother collecting methods in Bangladesh must be changed
    immediately to prevent the extinction of brood mothers with learning
    from other countries.

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-   A 100% ban should be imposed on natural PL catching for *bagda.* In
    the case of *golda* however, only 10% of the PL requirement is met
    through hatcheries and therefore natural PL collection cannot be
    prohibited. Banning natural fry collection in this area will
    therefore render the industry non-existent. However, these bans
    should not go into effect before alternative sources of livelihood
    have been ensured for those who will be affected by the
    restrictions.

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-   In the 1990s the government took steps and allowed establishment of
    *bagda* hatcheries in Cox's Bazaar under tax holiday environment.
    Similar steps should also be taken for *golda*.

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-   Restrictions should also be imposed on the type of nets used, boats
    in operation and the technology used. Individuals without proper
    trade license should not be allowed in this trade. The coast guard,
    with help from environment and fisheries division, must be given the
    responsibility to monitor the activity.

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-   Training programs on proper brood mother rearing techniques could
    also be launched. BRAC has attained huge success in this field.

-   As *golda* requires less investment and does not need a marine
    environment, establishment of cottage industries throughout the
    country can be encouraged. These are also easily manageable.
    However, the position of these ventures should be ecologically
    justifiable. Since it is much easier to transport brine than PL of
    fries, these can be very profitable undertakings.

-   The government machinery is well aware of the fact and thus it is
    believed that a little push from the private sector operators and
    support from the donors should be initiated.

**3. Policy: Bio-security**

-   Bio-security measures must be undertaken across the chain, rather
    than being introduced at different stages of the value chain. If a
    proper free market mechanism can be established, the demand for
    biologically safe food will automatically force the farmers to adopt
    bio-security measures.

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-   At present the industry relies heavily on foreign technicians.
    Locals should be extensively trained in this field so that proper
    testing measures can be undertaken.

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-   A policy for transparency on the part of the foreign technicians
    should also be devised. Certification programs like the SSOQ can
    also play a major role in this respect as it helps create value
    addition in the form of higher quality and better product image in
    the minds of the consumers. SSOQ has a laboratory in Cox's Bazaar,
    which tests fries for any sign of infection; the larvae are then
    supplied to SSOQ farmers. This also increases productivity
    substantially as the mortality rate is reduced greatly.

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-   Bio-security policy should include viral, bacterial and fungal
    issues. Policies concerning use of feed, antibiotic or any other
    form of chemical should be outlined in detail and strict adherence
    must be enforced. The type of activity across the chain will vary
    and thus awareness drive through leaflets can be a good method. The
    environment activists along with the mass media can use this
    proactive approach. In order to create mass awareness, education
    programs can be undertaken where the participants are imparted
    knowledge pertaining to importance of bio-security measures.

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-   Traceability is another important issue. In order to ensure the same
    farmers need to form organizations. They should be given the
    necessary training on record keeping and certification procedures.
    Cooperatives can play a vital role in that respect. The SSOQ-GNAEP
    model can be considered as the standard and implementation as such
    can ensure traceability. Traceability has to be guaranteed at each
    and every stage in the value chain including the importer. However,
    traceability needs to be formally defined at first and it should be
    ascertained as to which level traceability should be pursued.
    Bangladesh should enter dialogues with the importing countries to
    jointly come up with a specific definition for traceability and
    enlighten them on the problems involved in maintaining traceability
    in case of small farms. This proactive approach can lead to larger
    exports.

**4. Policy: Financial Monitoring**

-   Restriction on number of hatcheries to control financial corruption
    may be considered. These restrictions can put an end to the
    unethical practices currently rampant in the sector.

-   A managed market approach rather than a free for all strategy should
    be followed. The government should undertake investigation before
    granting new hatcheries/processors permission to operate.

-   Tax holiday benefits may be directed to the farmers in the form of
    low interest loans to ensure that traders do not take all the
    advantage. Most experts agree that subsidies are not advisable in
    this regard as it fails to render the farmers any real financial
    assistance. Furthermore, importing countries like the US has imposed
    antidumping measures towards subsidized goods. On the other hand tax
    holidays on imports is encouraged.

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-   Incentives can be made more effective if farmers are required to
    meet certain bio-security measures to be eligible for the incentive.

-   The overall financial infrastructure of the country needs to be
    improved for these incentives to function properly and yield the
    desired results.

**5. Policy: International**

-   In the last few years the international market has experienced quite
    a revolution. The consumers have grown much more aware about food
    safety and environmental and human rights issues. They want to know
    whether the imported shrimp is produced maintaining international
    codes of conduct for food safety, whether it is produced in an
    environmental friendly way, whether the human rights and labour
    rights requirements are followed while producing shrimp. The
    inclusion of international market scenario while formulating
    international standards therefore should be ensured.

-   In order for all WTO members to benefit equally from the Agreement
    on SPS, and to ensure that such measures are not used as a market
    access barrier, and in order to assist LDCs build the capacities
    necessary to guarantee compliance, it is important to undertake
    concerted effort, on a global scale, to address some of the relevant
    issues.

-   The SPS provisions should be formulated in a transparent and
    accountable manner where LDCs also have equal opportunities to
    participate in a fair standard setting process; although EC was
    sending signals for sometime before the ban was actually imposed,
    there was considerable lack of awareness about the HACCP regulations
    both at GOB, as well as plant, levels.

-   If standards are to be harmonised, these should take into
    consideration regional conditions; interestingly, at the time of the
    EU ban, exporters were able to divert a part of the consignments to
    USA and Japan, markets which are not particularly known for any lack
    of vigilance in terms of quality and hygiene standards.

-   Full implementation of SPS measures should be sensitive to trade
    disruptive and trade restrictive nature of such measures for exports
    from the LDCs; adequate preparatory measures must be ensured in the
    exporting countries prior to imposition of any penalty on their
    exports.

-   Adequate financial and technical assistance should be given to the
    LDCs to facilitate conformity with SPS requirements; the nexus
    between trade and aid should be strengthened; programmes under the
    Integrated Framework Initiative, which envisages technical
    assistance for trade related capacity building in the LDCs, should
    be adequately funded and supported.

-   Mutual recognition of conformity assessment and certification
    procedures should be pursued to avoid conflicting interpretations
    with respect to standards.

**6. Policy: Donor Agencies**

-   The donor agencies should develop a joint country strategy to ensure
    smooth and effective functioning. Implementation maybe divided on a
    functional basis.

-   Regional divide may cause political insatiability. The donor
    agencies need to hold regular dialogues in order to ensure greater
    transfer of knowledge and expertise. This will increase the
    effectiveness of the respective projects as they can learn from the
    other's mistakes and implement the other's success stories.

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-   The donor agencies should develop a plan based on a long term exit
    strategy rather than on a time elapsed basis. The transfer of
    ownership should follow a smooth and efficient process with focus on
    sustainability.

-   The intervention by the donor agencies should be light-touched.
    Instead of acting as a source of financing only, donors can also
    function as brokers and thus ensure local coordination in
    agriculture. They can also aid the government in formulating an
    integrated agricultural policy and an action plan.

-   Focus should however be put on the private sector as it has been
    substantially more successful than the government in this sector.
    From the period of 1986 to 1996, the government was able to
    establish only a couple of hatcheries. In the same period, the
    private sector was able to set up 55 and with much less funds.

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-   The donors can also aid in export diversification and country image
    promotion design.

**7. Operational Strategy: General**

-   The operational strategy must be designed as an integrated unit. A
    national shrimp/prawn association should be formed with
    representatives from all actors across the value chain. It can take
    the form of a cluster based Strategic Business Unit with
    representation from rural producer groups, farmers and
    community-based organizations. In Bangladesh two hatchery
    associations and one processor association already exist. They
    currently work mainly in isolation of each other. They should all be
    encouraged to work under an umbrella organization.

-   There are a few existing agents who control a significant number of
    farmers and hatchery supply. These agents can be enlisted to help in
    the information gathering from and dissemination to as well as
    monitoring of farm activities.

-   The SSOQ model could be used in ensuring increase in production. The
    model can also help in documentation and traceability. It has
    already yielded in positive response from the buyers.

-   The inputs from the buyers must be taken into consideration in
    developing the quality seal. Such organizing efforts can also
    generate creative ideas.

-   National target on exports (for a certain period) may be directed at
    the national association with performance targets for all levels of
    the value chain. To ensure efficiency integration and mergers should
    be encouraged at the association level.

-   *Bagda* and *Golda* are two different generic brands with different
    target markets. Thus they should have separate promotional
    strategies to ensure larger international market shares.

-   The government should not sanction any new hatcheries or processors
    prior to achieving satisfactory capacity utilization data.
    Furthermore, restrictions on further expansion of shrimp/prawn farms
    should also be imposed and stress be given on low mortality and
    higher productivity.

-   Government (fisheries department) should strengthen the shrimp
    liaison cell to ensure smooth functioning of the industry.

-   In developing an operational strategy, the grass root problems have
    to be addressed at the organization level. It has been often
    observed that, as the organization expands, inefficiencies creep in
    as the focus strays away from the micro-level issues. It seems that
    the relevant issues often get ignored.

**8. Operational Strategy: Integration - golda**

-   For *golda* projects regional integration models can work very
    effectively where all the actors (including local government
    representative as advisor) in the value chain can operate regionally
    as part of the same association. Once they are matured they may
    attempt to form a limited company.

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-   The GNAEP model can be a very good starting point with technical
    support from ATDP-SSOQ model. In this field the GNAEP model has so
    far yielded the best results.

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-   The model should have an ultimate goal of transition from project
    phase to private sector phase.

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-   The regional association maybe considered for financial support and
    a single unit for receiving export incentives.

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-   All movement of goods from hatcheries to the processor can easily be
    recorded since a single entity concept is in operation. Again, the
    GNAEP model can be explored for necessary guidelines.

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-   In addition, *golda* can also be cultivated in a poly-culture system
    with other species, such as Carp, to boost production.

**9. Operational Strategy: Integration -- bagda**

-   Unlike *golda*, hatcheries cannot be stationed across the country in
    this case as the hatcheries need to be located near the coastal
    areas. Therefore, for *bagda* the strategy needs to be different due
    to geographical proximity of hatcheries and the rest of the actors
    in the value chain. Hatcheries can also operate as separate units
    and look for export options.

-   Hatcheries can jointly run the transport of PL and may start working
    on technology using road as a means of transport. Transportation
    should be based on batch numbers against each farm. Batches shipped
    must be catalogued during shipment and transferred to the farmers on
    delivery. Code numbers for hatcheries and farms can help efficiency
    in transport, distribution, and traceability. Catalogue should be
    maintained and the data should be transferred to the processors on
    delivery. In this way, they can set up a certification system and
    then link themselves with the next stages of the value chain.

-   To support the hatcheries a standard testing unit with recognized
    international standardization should be in operation (strengthening
    of SSOQ model).

-   The farmers should be helped to form groups (strategic business
    units) based on minimum order quantity from the processors end. In
    addition, the bargaining power of the farmers has to be boosted so
    that equitable distribution of benefits is guaranteed. The farmer
    group representatives will act as agents to ensure both traceability
    as well as ensuring higher profit margins and lower costs. Farmers
    of a specific geographical region should be tagged with regional
    processors to ensure easy accessibility, supervision, and
    traceability.

-   Government agencies with international certification should enforce
    quality and monitor bio security measures through sample testing
    procedure at the farm gate point. Farmers should be provided
    financial support on group basis and should also be considered as
    export oriented industry.

-   The technology and production efficient support model of ATDP-SSOQ
    has been excellent (environmental and social friendly) and they may
    learn from the group model used by GNAEP and BRAC. An integration of
    these three models can ensure the benefits arising from both the
    integrated system (GNAEP), the quality control and production
    efficiency measures (SSOQ), and group formation mechanism (BRAC).

-   The cooperative (strategic business unit) approach discussed so far
    holds excellent prospects. However, the cooperatives have to be
    allowed freedom. They are business entities and not charities and
    the role of donor agencies should be that of facilitators and
    sponsors.

**10. Operational Strategy: Integration -- Processors**

-   The following three promotional strategies are suggested.

    -   The strategy should be focused on country image in which support
        can be sought from the government and the donor agencies.

    -   The strategy should also be generic -- *Bagda* or *Golda* and
        thus may be undertaken by the two different integrated forums
        representing all the actors. This will ensure enhancement of
        market share through two different positioning strategies.

    -   The strategy should also be unit based directed towards brands.
        This will ensure industrial competition within the country.

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-   The processors should also

    -   Maintain data bank of products purchased based on the catalogue
        supplied by the farmers.

    -   Maintain liaison with the market and transmit information down
        the chain for changes modification or complaint handling.

    -   Act as the spokesperson for the *Bagda* and *Golda* integrated
        units.

**11. Operational Strategy: Integration -- R & D**

-   Research and development facility can be mobilized through linkages
    with the various universities of the country.

-   R&D should not be undertaken at the expense of the farmers or
    hatcheries as the case may be. The universities can be helped to
    develop field based R&D centres.

-   Research activities can be initiated either by the regional
    integrated units or joint effort by the hatcheries of *bagda*.

-   Strong linkage with the SSOQ units will be required during the
    initial stages to transmit field experience.

-   Internship programs for the students of universities can be
    developed at all levels of value chain to ensure adequate human
    resources development in the future.

**12. Operational Strategy: Integration -- Donors**

-   The donor agencies should develop an integrated intervention
    strategy.

-   The donors should continue with the SSOQ model to ensure smooth
    transition and placement of technology transfer.

-   The donors should play a role for a period based on a plan developed
    on a mile stone basis rather than a time bound basis in the areas of
    technology, standardized operations, and developing marketing
    strategies.

-   On the completion of a project, it should designed to ensure smooth
    transition to the private sector. An integrated model should be
    developed where the private sector representatives will work from
    the very beginning of the project as members of the group.

-   A typical NGO driven model should be avoided since it lacks
    transition. Partnership with public sector may lead to ownership
    issues and thus should be avoided.

**[Conclusion:]{.underline}**

As the above findings suggest it is theoretically possible to achieve
the target of US\$1 billion. Integration of activities both in terms of
value chain and region is considered an answer to success. Formation of
sustainable strategic business units based on cluster and cooperative
mix is an option. Another option is to work through existing PL supply
agents who control a significant number of farmers. These existing agent
networks can ensure quick dissemination of information and technical
training. The right incentives can also ensure compliance with codes of
conduct.

Donor presence, in the absence of strong government guidance, is
required for a logical and planned time period as facilitators only.
Their conduct should be milestone oriented and they should function as
catalysts. The model should ensure smooth transition to the private
sector that is actually an integral part of the value chain. The project
should be handed over only after sustainable profitability has been
ascertained. The government must change the present policy and ensure
strict monitoring and updating of standards to ensure success. The
donors should outline policy framework based on standards required by
the buyers and ask the government to ensure implementation. The role of
the fisheries department should be clearly outlined and updated to
ensure that the industry can operate smoothly.

If all these strategies are implemented properly, Bangladesh can
increase its market share and ultimately become one of the leaders in
the global shrimp market.

**[Bibliography]{.underline}**

1.  Shrimp Aqua Culture in Bangladesh: A vision for the future.
    Government of the peoples' Republic of Bangladesh, Office of the
    Director General, Department of Fisheries, Matshya Bhaban, Ramna,
    Dhaka. 02 October 2002.

2.  Challenges facing the Shrimp Industry in Bangladesh. Claire Fleming.
    American International School/Dhaka. Senior Project 2004.

3.  Not Small Fry: Children's Work in Bangladesh's Shrimp Industry,
    Prepared by Emily Delap and Rosemary Lugg, For Save the Children
    Fund (UK) and Uttaran.

4.  Brackish and marine water aquaculture (37), by R. Banks, 2002,
    Dhaka, Bangladesh:

5.  The coastal shrimp sector in Bangladesh (23), by Bangladesh Centre
    for Advanced Studies (BCAS), 2001, Dhaka, Bangladesh: Author.

6.  Bangladesh Shrimp Exports Poised To Soar with U.S. Assistance

7.  USAID-funded project aiding production of quality shrimp \-- By
    Afzal Khan ,Washington File Special Correspondent

8.  http://www.ais.dhaka.net/School_Library/Senior%20Projects/04_Fleming_shrimp.pdf

9.  http://www.ifpri.org/2020/focus/focus10/focus10_09.pdf

10. http://www.globefish.org/files/SHRIMPMadrid_171.pdf

11. <http://www.foodmarketexchange.com/datacenter/product/seafood/shrimp/detail/dc_pi_sf_shrimp0301_02.htm>.

12. http://www.shrimpnews.com/index.html