***[Final Report]{.underline}***

**Financial Analysis of Shrimp Seal of Quality**

*Submitted to*

**United States Agency for International Development**

**Dhaka, Bangladesh**

*Submitted by*

**Rezaul Karim Talukder**

**Md. Saifuddin Shah**

***August 2005***

**Table of Contents**

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| **Executive Summary**                                          |     |
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| **1.0 Introduction**                                           | **  |
|                                                                | 1** |
+----------------------------------------------------------------+-----+
| 1.1 Background of the Shrimp Seal of Quality Initiative        | 1   |
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| 1.2 Background of the Evaluation                               | 3   |
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| **2.0 Methodology**                                            | **  |
|                                                                | 4** |
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| 2.1 Data Collection and Related Instruments                    | 4   |
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| 2.2 Data Management                                            | 5   |
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| **3.0 Shrimp Culture Technology and SSOQ Intervention**        | **  |
|                                                                | 6** |
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| 3.1 The Components of the Technology                           | 6   |
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| 3.1.1 Virus Free Post Larvae Supply                            | 6   |
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| 3.1.2 Technical Manpower                                       | 7   |
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| 3.1.3 Seasonality of Culture and Brood Availability            | 7   |
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| 3.1.4 Nursery Technology Development                           | 8   |
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| 3.2 SSOQ's PCR Testing Laboratory                              | 8   |
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| 3.3 Culture Technology                                         | 9   |
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| 3.3.1 Culture Sites                                            | 9   |
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| 3.3.2 Closed System Technology (CST)                           | 9   |
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| 3.3.3 Modified Traditional Technology (MTT)                    | 10  |
+----------------------------------------------------------------+-----+
| **4.0 Financial Analysis of Shrimp Seal of Quality**           | **1 |
|                                                                | 1** |
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| 4.1 Socioeconomic Characteristics of Farmer Groups             | 11  |
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| 4.2 Stocking Density and Survival Rate of Fry and Shrimp       | 12  |
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| 4.3 Pond Productivity of the Farmer Groups                     | 12  |
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| 4.4 Costs and Returns of Shrimp Culture under                  | 14  |
|                                                                |     |
| Alternative Technology                                         |     |
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| 4.5 Adoption of SSOQ Technology                                | 16  |
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| 4.6 Spillover Effect of Technology Adoption                    | 18  |
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| 4.7 Impact of SSOQ Technology on Export Earning                | 20  |
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| 4.8 Financial Sustainability Plan of SSOQ                      | 21  |
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| **5.0 Conclusions and Recommendations**                        | **2 |
|                                                                | 2** |
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| 5.1 Conclusions                                                | 22  |
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| 5.2 Recommendations                                            | 23  |
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| **Appendix**                                                   |     |
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**[ACRONYMS]{.underline}**

**ATDP** : Agro-based Industries and Technology Development Project

**BCR** : Benefit Cost Ratio

**BFFEA** : Bangladesh Frozen Food Exporters' Association

**BFRI** : Bangladesh Fisheries Research Institute

**BSF** : Bangladesh Shrimp Foundation

**CP** : Chareon Pokhand (Name of the feed Company)

**CST** : Closed System Technology

**DOF** : Department of Fisheries

**DNA** : De-Oxyribo Nucleic Acid

**EPB** : Export Promotion Bureau

**EU** : European Union

**FDA** : Food and Drug Administration of the United States

**FGD** : Focus Group Discussion

**HACCP** : Hazard Analysis at Critical Control Points

**Ha** : Hectare

**MTT** : Modified Traditional Technology

**NGO** : Non Government Organization

**PCR** : Polymerase Chain Reaction

**PL** : Post Larvae

**QUAP** : Quality Assurance Program

**SOQ** : Seal of Quality

**SSOQ** : Shrimp Seal of Quality

**Tk**. : Taka (Bangladeshi currency)

**TOR** : Terms of Reference

**TSP** : Triple Super Phosphate

**USAID** : United States Agency for International Development

**WSSV** : White Spot Syndrome Virus

**Executive Summary**

**Introduction**

The shrimp sector of Bangladesh exhibited a phenomenal growth over the
past three decades. With the influx of viral disease from mid nineties,
the production started to have setback. Because of the two prong effects
of disease and bacterial contamination/adulterations, Bangladeshi shrimp
started to lose ground in the international market. Efforts were under
way to resolve the crisis by adopting different measures such as the
Quality Assurance Program of the BFFEA. Another initiative was
conceptualization of the Seal of Quality (SOQ) program through the
Agro-based Industries and Technology Development Project (ATDP). This
initiative was subsequently renamed as the Shrimp Seal of Quality
(SSOQ). Although initially it was perceived as exclusively a
certification program, production improvement through use of disease
free larvae and improved pond management was also included as an agenda
of the SSOQ program.

The pond demonstration program was introduced from 2003 and by early
2005, some impacts of the program started to be visible. The project
people also started claiming some success in terms of improvement in
pond productivity and export earning due to implementation of the
project in the coastal region of Bangladesh. The USAID wanted to have an
evaluation of the project with particular reference to its claim of
productivity and export gains. The purpose of this exercise is to
perform this evaluation and verify the financial contributions the SSOQ
has made to the participant farmers, processors and exporters of shrimp.

**Methodology**

Rapid assessment technique was used in the evaluation exercise. To
assess the impact of SSOQ technology, both 'with and without' and
'before and after' approaches were adopted. Production performance
indicators of the adopter farmers were compared with those of the
non-adopter farmers. Also, performance indicators of the adopter farmers
after adoption were compared with their performance before adoption of
the technology.

For comparing productivity and profitability of the adopter and
non-adopter farmers a small sample survey was conducted in 4 thana
locations of 3 districts namely Khulna, Satkhira and Bagerhat. Data were
collected from a total of 65 farmers, selected through purposive and
random sampling techniques. Structured interview schedules were
developed and used to collect data from the selected categories of
farmers. Semi-structured interviews were also conducted with the SSOQ
personnel, DoF Extension Officers and other knowledgeable persons
including the BFRI scientists. Also, 'focus group discussion' was
organized to identify the management practices followed and the
constraints associated with production and marketing of shrimp. Apart
from the field level investigation, semi-structured interviews were also
conducted with relevant stakeholders such as the representatives of the
Bangladesh Frozen Food Exporters' Association (BFFEA), Bangladesh Shrimp
Foundation (BSF), Department of Fisheries (DoF) and Export Promotion
Bureau (EPB).

The collected data were processed using the Microsoft Excel package.
Statistical measures such as mean, percentage, range and ratios were
derived and interpreted to accomplish the objectives of the evaluation.

**Shrimp Culture Technology and SSOQ Interventions**

The technology package devised and popularized by the SSOQ in the field
were supply of virus free post larvae (PL) and a set of pond management
practices under two broad categories of technology namely Closed System
Technology (CST) and Modified Traditional Technology (MTT).

**Testing for Disease Free PL**

The SSOQ program established a viral DNA identifying protocol laboratory
through Polymerase Chain Reaction (PCR) technology at Cox's Bazar. The
protocols used in the viral DNA testing are in the form of testing kits
and offer a ready hand stock of chemicals and speedy preparation of
samples and detection procedures. The physical facilities available in
the laboratory are enough to carry out the expected number of tests for
certification of virus free supply of seeds in line with the demand.

**Closed System Technology (CST)**

In this technology, the pond is thoroughly cleaned and disinfected by
bleaching powder, at the dose of 600kg/ha. A reservoir tank of upto a
maximum of 30% of the total grow-out pond area is maintained near the
grow-out pond(s). The water of the reservoir pond is also bleached with
the same dose of bleaching powder, and stand-by water is maintained for
making good of the water losses from the culture pond due to seepage and
evaporation. The pond is also applied with organic materials like
mustard oil cake, molasses and rice bran during early stages of growth
and development of the shrimp. The technology necessitates high level of
supervision and monitoring on the part of the SSOQ's field level
extension agents.

**Modified Traditional Technology (MTT)**

This technology is a modification of the Closed System culture
technology. In this system, virus free PLs are nursery-reared at
relatively high density for up to one month. The nursery is cleaned and
disinfected with bleaching powder at the dose of 600 kg/ha and
fertilized with urea and TSP. The PLs are fed with CP starter feed for
one month in the nursery and then released in the untreated pond. The
principal technical interpretation that goes in favour of the technology
is that because the virus free PLs are nursery-reared in the well
prepared disinfected nursery for a month, and since the virus attack
generally starts at the age of 80 to 90 days, the shrimp by that time
become sizeable for harvest and farmers can be saved from the loss in
the event of virus attack in the grow-out pond.

**Financial Analysis of Shrimp Seal of Quality**

**Stocking Density and Survival Rate of Fry and Shrimp**

Stocking density was the highest (62,700/ha) for CST and lowest
(22,969/ha) for MTT farms. Non-SSOQ farms had the second highest
stocking density (31,462/ha). Fry survival rate was the highest for MTT
(84%) and lowest for non-SSOQ farms (44%). Fry survival rate for CST
farms (79%) was closer to that of the MTT farms. Shrimp survival rates
of the CST and MTT farms were much higher (65% and 59% respectively)
than those of the non-SSOQ farms (25% only). Thus overall survival rates
were overwhelmingly higher for the SSOQ than for the non-SSOQ farms.

**Pond Productivity of the Farmer Groups**

Average per hectare yields of farmers practicing Closed System
Technology, Modified Traditional Technology and non-SSOQ technology were
1140 kg, 338 kg and 209 kg respectively in 2004. The average yields of
the CST farms were 293 kg in 2003, 1140 kg in 2004 and 1243 kg
(expected) in 2005. For the MTT farms, the average yields were 155 kg in
2003, 338 kg in 2004 and 435 kg (expected) in 2005. The yield increases
of the CST farmers were 288% from 2003 to 2004, 9% from 2004 to 2005 and
323% from 2003 to 2005. For the MTT farms, yield increases were 118%
from 2003 to 2004, 28% from 2004 to 2005 and 181% from 2003 to 2005.
Thus the adopter farmers in general obtained substantially higher yield
after adoption of the SSOQ technology.

**Costs and Returns of Shrimp Culture under Alternative Technologies**

Per hectare gross returns of the CST, MTT and non-SSOQ farms were Tk.
405,725, Tk. 117,447 and Tk. 75,618 respectively. Net returns per
hectare of the corresponding groups were Tk. 97,089, Tk. 42,788 and Tk.
1,434 respectively. Although net returns of the CST farms were more than
twice the net returns of the MTT farms, return per Taka invested for the
former group was lower than that of the latter group of farms. Six out
of 21 CST farms, 6 out of 16 MTT farms and 14 out of 28 non-SSOQ farms
earned negative net returns in the 2004 production cycle. Break-even
yields were 867 kg, 215 kg and 205 kg per hectare for the CST, MTT and
non-SSOQ farms respectively. From investment point of view, MTT farms
were more profitable than the CST farms.

**Adoption of Technology**

Records obtained from the District Fisheries Offices of Khulna, Satkhira
and Bagerhat showed that there were 44,141 brackish water shrimp farms
in these areas. Data obtained from the SSOQ office showed that there
were only 274 farmers who adopted SSOQ technologies over a three years
period of demonstration in the areas. Thus in percentage term this was
quite a negligible (\<1.0 percent) figure and could not be termed as any
substantial magnitude of adoption. However, the team observed through
field visits that farmers adopting the technologies, particularly the
CST adopters were quite seriously practicing the technologies in terms
of adherence to the recommended practices pertaining to the component
elements of the technologies.

One unique feature observed was maintenance of written records of all
the management practices and financial transactions by the farmers. The
farmers were able to provide all required information in absolute or
parameterized forms from the written records. They reported that they
were taught these record keeping practices by the project personnel.
This could be regarded as a remarkable contribution of the project
initiative.

All the SSOQ adopter farmers expressed their willingness to continue
with the SSOQ technology because they got stimulated by the increased
survival rates of the fries/shrimps, high yield and hence good financial
returns. There were, however, a few instances of crop failures and
farmers, with assistance from the technical experts of the project,
identified that in most cases the failures were due to some lapses in
pond management practices.

**Spillover Effect of Technology Adoption**

Attempt was made to assess the spillover effect from the responses of
the adopter farmers on the question of number or proportion of
neighboring farmers adopting the reference technologies. Responses
obtained from 21 CST farmers revealed that 75 neighboring farmers
adopted the technology and another 810 showed interest in the adoption.
As for the MTT, responses obtained from 16 adopter farmers revealed that
24 neighboring farmers adopted the technology and another 259 showed
interest in the adoption. MTT was introduced only from early 2005 and
just one crop was harvested by mid July 2005. Thus the impact of the
technology was yet to be amply manifested in the areas.

Responses obtained from the non-adopter farmers showed that of the 28
non-adopters, all reported to have heard about the SSOQ technology and
22 of them (78%) were willing to adopt the technology. Thus there was a
reasonably high spillover effect of the SSOQ technology in the shrimp
belt areas of Bangladesh.

**Impact of SSOQ Technology on Export Earning**

There has been an attempt through the SSOQ initiative to estimate the
project's impact on shrimp export on the basis of virus free larvae
released through the PCR laboratory of Cox's Bazar station. The estimate
is based on a number of assumptions, some of which might appear to be
quite fragile. In the first place, certain specified quantity of PL
would have to be tested through the PCR lab owned by the project.
Second, the survival rate has been assumed to be 33 percent. Results
obtained from the survey revealed that survival rate of commonly
available fry in the ordinary pond was only about 12 percent. A
particular survival rate of the disease free PL (question remaining as
to how long the PL would remain disease free under ordinary management)
in the ordinary pond has not yet been established. Also, it has been
assumed that all the shrimp produced would find their way in the export
market. The plausibility of all these assumptions may be questionable.
Thus, derivation of the export earning figure does not appear to stand
on a solid ground. However, since the project is significantly
contributing to productivity of shrimp, its potential impact on export
need not be undermined and potentially, the project can make even bigger
contribution to export in the near future.

**Financial Sustainability Plan of SSOQ**

The SSOQ initiative has recently done an exercise on "hypothetical
revenue generation", based on the assumption of testing a specified
number of larvae. There is nothing wrong in doing such an exercise,
based on a set of assumptions. The critical issue will be execution of
the plan in terms of number of PLs being tested per time period and
collection of charge at a market determined rate. It should be mentioned
that the PCR lab owned by the SSOQ is not likely to be the only lab in
the area. One hatchery (Niribili) has already a PCR testing lab and
other labs may be established in the area. Thus SSOQ would be expected
to run the PCR lab on a commercial basis in a future market scenario.
The plan will therefore need to stand the test of time and circumstances
obtaining round the shrimp industry in Bangladesh.

**Conclusions and Recommendations**

**Conclusions**

The Shrimp Seal of Quality Initiative seems to have been making
substantial positive impact on pond based shrimp culture in the south
western coastal region of Bangladesh. Provision of disease free post
larvae and innovative pond management practices have contributed to
substantial yield increase. Results from farm survey have shown that
farms adopting SSOQ technology obtained much higher yield than those not
adopting the technology. For the adopter farms, yield after adoption was
much higher than that before adoption.

Financial benefits were also much higher for the adopter farms compared
to the non-adopter farms. For the adopter farms, while gross return for
the CST farms was several times higher than that for the MTT farms, net
return for the former was about twice the net return of the latter
category of farms. However, the benefit-cost ratio, which represents
return per Taka of investment, was substantially higher (1.57) for the
MTT than for the CST farms (1.31). Thus from investment point of view,
MTT farms were earning more return from their investment than the CST
farms.

The SSOQ technology seems to be rapidly expanding in the shrimp belt
areas of Bangladesh. Field visits revealed that quite a good number of
neighboring farms already adopted the technologies by following the
management practices being pursued by the SSOQ adopter farms.

The proposition of the project's making any significant contribution to
export earning seems to be premature; the prospect of making such
contribution in the near future seems to be quite high though. The
proposition of financial sustainability of SSOQ as a Private Limited
Company has to stand the test of time and circumstances obtaining round
the shrimp industry in Bangladesh.

The most weak dimension of SSOQ operation is its lack of understanding
and cooperation/collaboration with some vital public and private sector
bodies such as DoF, BFRI and BFFEA. Effective collaboration with the
related institutions and organizations are not only important during
project implementation, but also for sustainable utilization of the
technologies and other positive impacts that the project leaves behind.

**Recommendations**

It has been evident through the Evaluation that a lot of positive
impacts have been generated in the shrimp production sector through the
SSOQ efforts. Since the project has performed only for less than three
years, it is suggested that the efforts be continued for a few more
years (3-5 years) so that the positive impacts can be further propagated
and the results can be consolidated. However, a number of issues need to
be addressed for obtaining sustainable outcomes from the project
initiatives. These are outlined below:

-   There should be separate technology for catching brood shrimp from
    the sea for ensuring sustainable harvest of brood shrimp. Program
    for domestication of broods can also be taken up as a long term
    gesture, especially in view of seasonality and uncertainty of brood
    availability in the off seasons.

-   Synchronization of requirement of virus free seed in the field and
    production or supply of seed the through PCR testing is a critical
    determinant of efficient utilization of the PCR tested seed.
    Measures should be taken to match the demand with supply through
    careful planning and prior scheduling of breeding/spawning and
    stocking.

-   Mortality rate of the PL should be further minimized. Nursery
    management system should be improved at different stages such as at
    the hatchery, at the sales centre and also at farm level.

-   Inter agency collaboration should be improved for deriving better
    outcomes from the technology generation and dissemination efforts.
    The SSOQ authority should take fresh initiative to secure
    collaboration with DOF, BFRI and BFFEA for obtaining sustainable
    improvement in production, processing and export of good quality
    shrimp from Bangladesh.

-   The project should leave behind a set of well trained farmers and
    extension agents for widespread dissemination of the technologies in
    the self propelling manner. The critical issue would be to organize
    the trained farmers into viable groups, so that they would be
    interacting among themselves in matters of trouble shooting and
    sustainable management of the technologies. The research and
    extension support from public, private and NGO sectors would be
    highly desirable and effective in accomplishing the desired
    outcomes.

**Financial Analysis of Shrimp Seal of Quality**

**1.0 Introduction**

1.  **Background of the Shrimp Seal of Quality Initiative**

Shrimp farming and related activities contribute significantly to the
national economy of Bangladesh. The main areas of contribution are
export earning, and employment and income generation through on- and
off-farm activities. It is estimated that about 600,000 people are
employed in the shrimp sector and over 10 million people are directly or
indirectly benefited from the sector. Total shrimp catch in 2003-04 from
coastal shrimp farms was estimated at 75,166 metric tons from about
203,000 hectare area (DOF 2005). Bangladesh exports about 30 thousand
metric tons of frozen shrimp annually, valued at approximately US \$ 300
million. This figure represents about 6 per cent of total annual exports
from Bangladesh.

Shrimp culture in Bangladesh has been characterized lagely by extensive
traditional methods, with low yield and low capital inputs. Upto the mid
nineteen eighty period, most of the shrimp fries used to come from wild
catch. From late eighties there were massive efforts to establish shrimp
hatcheries in the country. Available reports suggest that about 55
*bagda* shrimp hatcheries have been established in the country by the
year 2004. All the hatcheries are located in the Cox's Bazar area.
However, not all the hatcheries are in operating condition, and about
80% are reportedly in operation in the current year. Seventy percent of
the seed requirement is being met by the hatchery-produced PLs and the
rest 30% is still being supplied from the wild catch. Information
gathered from the DOF Officials and other sources suggest that there is
no current evidence on import of shrimp seed from foreign countries.
However, some unconfirmed reports suggest that some nursery owners of
Satkhira area bring nauplii (shrimp seed between spawn and post larvae
stage) from India, rear them upto PL size and then sell to the farmers.

Although productivity of Bangladeshi shrimp was low by international
standard, the quality and size of the shrimp had rather appreciation in
the international market and thus the farmers and exporter used to earn
good profits. The initial success stimulated rapid expansion of shrimp
farms, often with inappropriate farming practices. From early 1990s
semi-intensive farming was introduced. However, with the introduction of
this system, many farms became infected with white spot viral disease.
As a result, the farms started incurring loss.

The sector received another setback in 1997 when the European Union (EU)
imposed a ban on entry of Bangladesh's frozen food for the failure to
comply with EU regulations on quality control. This led to the
realization of the need for better quality control practices using the
Hazard Analysis at Critical Control Point (HACCP) program. However,
problems with quality still remained and in December 2004, the United
States Food and Drug Administration (FDA) rejected some shipment of
shrimp from Bangladesh.

Because of the two prong effects of disease and
adulteration/contamination, the shrimp industry of Bangladesh fell on
the verge of serious crisis. In an effort to solve these problems, the
Bangladesh Frozen Food Exporters Association (BFFEA) took a decision to
launch its Quality Assurance Program (QUAP) to ensure that products are
processed and packed in accordance with international guidelines.
However, the program did not work well and the problem of quality
continued to exist.

In 2002, the concept of Seal of Quality (SOQ) was introduced through the
Agro-based Industries and Technology Development Project (ATDP II). The
BFFEA initially welcomed the initiative. But at some stage the BFFEA
people felt that the program might not serve their interest better and
therefore they started to be alienated from it. The Department of
Fisheries (DOF) also did not lend support to the program. Eventually,
ATDP unilaterally continued to pursue the initiative. After a lot of
brainstorming, it was decided to rename the program as Shrimp Seal of
Quality (SSOQ) as the main focus was on shrimp. It was initially
conceived as a certification program. In order to address the issue in a
more comprehensive way, involving production and processing, a
production demonstration program was undertaken in selected field
locations of Khulna, Satkhira and Bagerhat districts.

2.  **Background of the Evaluation**

The pond demonstration program of the SSOQ was put in the field with a
set of technologies. The prime element of the package of technology was
the use of Polymerase Chain Reaction (PCR) tested White Spot Syndrome
Virus (WSSV) free post larvae (PL). The project established a PCR
laboratory in Cox's Bazar through which disease free PL is released to
the field. Two major technologies are being tried in the field: Closed
System Technology (CST) and Modified Traditional Technology (MTT). The
project has meanwhile claimed some remarkable success in terms of gain
in productivity, dissemination of the technologies and prospective gain
in export earning.

The ATDP is scheduled to end in December 2005. In March 2005, an
evaluation of the whole ATDP including the SSOQ activities was done by
an American consulting firm named Development Associates, Inc. The USAID
wanted to have a separate in-depth analysis of performance of the SSOQ
in terms of pond productivity, adoption rates and export sales. The
present assignment is based on a decision of the USAID to carry out a
financial analysis of the SSOQ covering the above aspects. The
assignment had the following terms of reference (TOR):

-   To verify the degree of increase in pond productivity attributed to
    the introduction of SSOQ technology;

-   To conduct a cost-benefit analysis between farmers who have not
    adopted the SSOQ technology and those who have;

-   To comment on the rate of adoption of SSOQ technology;

-   To comment on 'spillover' effect of technology adoption;

-   To verify the SSOQ's reports that a multi-million dollar increase in
    export sales can be attributed to the project's intervention,
    specifically with the screening and release of disease-free PL;

-   To comment on the financial sustainability plan proposed for SSOQ.

**2.0 Methodology**

Rapid assessment technique was used in the evaluation exercise. To
assess the impact of the SSOQ technology, both "with and without" and
"before and after" approaches were adopted. In the "with and without"
approach, performance indicators of the adopter farmers were compared
with those of the non-adopter farmers. In the "before and after"
approach, performance indicators of the adopter farmers after adoption
were compared with their performance before adoption of the technology.

1.  **Data Collection and Related Instruments**

In order to compare productivity and profitability, a small sample
survey was conducted in 4 Thana locations of 3 districts, namely Khulna,
Satkhira and Bagerhat. Data were collected from a total of 65 sample
farmers, selected through purposive and random sampling techniques.
There were 274 SSOQ technology adopter farmers from which 37 were
selected for interview. The purpose was to put more weight to the old
adopters and hence include higher proportion of farmers from those
groups in the sample. To compare the performance, data were also
collected from 28 non-adopter farmers from the same 4 locations.
Technology wise, samples were selected from 3 categories of farmers
namely the adopters of Closed System Technology, those of Modified
Traditional Technology and non-adopters of SSOQ technology. Distribution
of the sample respondents by location and technology is presented in
Table 2.1.

Table 2.1: Distribution of sample respondents by location and farmer
category

  ---------- ----------- ---------------- ----------------- ---------- -------
  District   Thana       SSOQ                               Non-SSOQ   Total

                         Closed System    Modified                     
                         Technology (CST) Traditional                  
                                          Technology (MTT)             

  Bagerhat   Sadar       9                2                 6          17

             Rampal      5                7                 6          18

  Khulna     Paikgacha   2                3                 10         15

  Satkhira   Debhata     5                4                 6          15

  Total                  21               16                28         65
  ---------- ----------- ---------------- ----------------- ---------- -------

Data were collected from the sample respondents by administering
structured interview schedules. The sample copies of the interview
schedules are provided in the Appendix. Four Field Enumerators were
appointed, each for one weak, to collect data from the 4 locations.
Semi-structured interviews were conducted with the SSOQ project
personnel, local DOF Extension Officers, and other knowledgeable persons
including the BFRI scientists. Semi-structured interviews were also
conducted with personnel of other stakeholder organizations such as
Bangladesh Frozen Food Exporters' Association (BFFEA), Bangladesh Shrimp
Foundation (BSF), and Export Promotion Bureau (EPB). In addition, Focus
Group Discussion (FGD) was conducted for both adopters and non-adopters
of SSOQ technology. The purpose of the FGD was to identify the
management practices followed and the constraints associated with
adoption and management of the technologies.

2.  **Data Management**

The quantitative data were entered into the computer using the Microsoft
Excel package. The qualitative data were also entered into the computer
and the relevant information were obtained using the coding and decoding
procedures. Statistical measures such as mean, percentage, range and
ratio were derived and interpreted to depict the pictures obtained from
the data.

3.  **Shrimp Culture Technology and SSOQ Intervention**

Certain technological aspects, including provision of disease free PL
critically determine the performance of shrimp production at farm level.
If the PLs are obtained in virus free condition, the production and
growth can be maintained through a system of farm management that
ensures protection against contamination. This section gives a brief
description of a number of shrimp culture technologies which have been
innovated and are being popularized through the SSOQ initiative.

**3.1 The Components of the Technology**

**3.1.1 Virus Free Post Larvae Supply**

The issue of a guaranteed and sustained supply of good quality PL starts
right from the hatchery. All the hatcheries are established in the Cox's
Bazar area, for the primary reason that the mother shrimps are caught
from the deep sea by the marine artisanal fishermen and are sold to the
hatcheries. Availability of good quality saline water in the Cox's Bazar
area is an important reason for concentration of hatchery establishment
in the area. The mother shrimps are caught by the artisanal fishermen
mainly as by-catch as there is no separate technology for catching brood
shrimp. However, for sustained availability of good quality brood
shrimp, separate technology should be used for catching brood shrimp
from the sea.

Although a virus positive mother would be expected to produce virus
positive spawn, it is gathered that this might not always be the case.
Similarly, a virus negative mother can give virus positive PL also. Thus
testing of a mother for WSSV virus negative with PCR technology does not
give guarantee of getting virus free PL. The maintenance of hatchery
health, hygiene and sanitation are the critical determinants of getting
healthy and disease free PL. Virus may not be there with the brood
mother, but any chance of contamination in the system can seriously
deteriorate the quality of the PL produced in a hatchery.

2.  **Technical Manpower**

Availability of trained hatchery technician is an important determinant
in the success and sustainability of the hatchery technology. Many of
the bagda shrimp hatcheries are being run by the foreign technicians.
The foreign technicians are not generally willing to teach the local
technicians the technical details of the management. It is even
apprehended by some of the hatchery owners that there may remain the
chance of use of food additives, chemicals and antibiotics in the
process of PL production by the foreign expert technicians, outside the
knowledge of the hatchery owners. It is, therefore, important to ensure
transparency in the use of chemicals in the hatcheries and to transfer
the technologies to the local trained technicians for sustainable use of
the technology.

3.  **Seasonality of Culture and Brood Availability**

With the advent of hatchery technology during the last one-decade or so,
the culture cycle in the farms has been doubled or even tripled. But
there has not been any synchronized and coherent system of supply of
seed from the hatcheries. In Bangladesh, there are two broad seasons
that very much determine the culture regime of shrimp at farm level. The
peak culture season is January to March; there being another short
season in some areas of Satkhira during winter period of November to
December. During the peak season there is high demand for seed and the
hatcheries are capable of meeting the demand.

Brood available during January to March are reported to be of good
quality and a single brood is capable to produce upto 5,00,000 PL having
80% survivality. During this season, upto 50% of the females can be
spawned without eye ablation, a technique by which one of the eye stalks
of the female is cut to quicken maturation for artificial breeding.
Problems arise in the off season during April to August, when the
conditions of the broods deteriorate and only up to 5-6% females caught
are found in breeding conditions. Many of the hatcheries do not run
their operation in this season because of uncertainty of the brood
availability. As a result, there arises a shortfall in the supply in
relation to the demand for stocking for second and/or third crop of the
annual production cycle.

4.  **Nursery Technology Development**

For an ideal culture situation, there can be nursery arrangement of the
larvae in at least three stages in the process of production,
transportation and culture. It was gathered from the visit to the
hatcheries in Cox's Bazar that PLs of 12 day old size are sold to the
local culture farms and those of 15-17 day old size are sold to the
culture farms of Khulna/Satkhira areas. There are nursery arrangements
in each hatchery where 11-12 day old PLs are transferred to another tank
and reared there for upto 25-26 days before being sold to the culture
farms. This is known as green water culture. The demand for PL is higher
in Khulna, Bagerhat and Satkhira areas and in these days PLs are air
transported by cargo planes. Careful estimates suggest that it takes
about 16 hours for the PL to reach the culture site through air
transportation from Cox's Bazar to Jessore. The duration is quite long
and if the PLs are not packed in proper conditions, mortality increases.
For this reason, nursery arrangement is also necessary at the marketing
sites.

1.  **SSOQ's PCR Testing Laboratory**

The SSOQ program has established a viral DNA identifying protocol
laboratory through PCR technology at Cox's Bazar. The laboratory is
managed by two technical personnel and is capable of testing the total
number of PLs required by the culture farms. The protocols used in the
viral DNA testing is in the form of testing kits and offer a ready hand
stock of chemicals and speedy preparation of samples and detection
procedures. The hatcheries have also been interested in the technology
as virus free seed fetch higher price in the market. The number of
manpower, their technical capability and physical facilities in the
laboratory are just enough to carryout the expected number of tests for
certification of virus negative supply of seeds in line with the demand.
However, there is a clear concern in the synchronization between the
demand in the culture farms and production or supply of the seed through
the testing laboratory. During the field visit it was observed in
Bagerhat that a consignment of PCR tested seed brought for the SSOQ
farmers were to be sold to the non-SSOQ farmers because of untimely
arrival of the seed.

2.  **Culture Technology**

    1.  **Culture Sites**

The SSOQ's demonstration farms are all located in the southwest coastal
districts of Satkhira, Khulna and Bagerhat. These are the principal
*bagda* shrimp producing areas of the country. Under the existing
traditional system of culture, the selection of site for construction of
farms has always been a crucial matter. Selection of site has to be
given a very high consideration. During field visit it was observed that
site selection for the Closed System Culture was inappropriate, with the
consequent mortality and death of the whole crop, even though the seed
used was virus free. Availability of water, maintenance of proper depth
in the pond, soil types and topography, and good communication system
are the prime considerations in site selection.

2.  **Closed System Technology (CST)**

In this technology, the pond is thoroughly cleaned and disinfected by
bleaching powder, at the dose of 600 kg/ha. A reservoir tank of upto a
maximum of 30% of the total grow-out pond area is maintained around the
grow-out pond. The water of the reservoir pond is also bleached with the
same dose of bleaching powder, and stand-by water is maintained for
making good of the water losses from the culture pond due to seepage or
evaporation. The average area of the pond used under the technology
during 2004 was 0.76 ha. Fertilization of the pond is done with Urea and
TSP after 3-5 days of bleaching and when the water color starts turning
greenish, the PLs are stocked in a fine-meshed net enclosure inside the
pond at a density of up to 9-10 PLs/m^2^. Nursery in the net enclosure
is maintained for up to 3 weeks. During this period the PLs are fed with
starter feed of CP Company. After 3 weeks the net enclosure is removed.

The pond is also applied with organic materials like mustard oil cake,
molasses and rice bran during early stages of growth and development of
the shrimp. These applications are reported for both fertilization and
feeding. At the later stages, the shrimps are fed with CP feed of
Thailand, fed at satiation level, 4-5 times a day based on checking the
feeding trays dipped at different locations of the pond. The technology
necessitates high level of supervision and monitoring on the part of the
SSOQ's field level extension agents. Use of bleaching power for pond
water treatment has been said, especially by DOF personnel, to have
detrimental effect on the organic environment. Such claim has not been
substantiated by any published reference. However, the chemical is known
as hazardous for human health, especially at the handling stage. Thus,
there can be extension efforts for training on safe handling of the
chemical by the often-illiterate farmers.

3.  **Modified Traditional Technology (MTT)**

This technology is a modification of the Closed System culture.
Evidently, the Closed System culture is a cost- and management-intensive
technology and a large number of farmers can not actually afford it. To
devise a technology suitable for relatively resource-poor farmers,
modifications have been brought in the type of management. In this
system, virus free PLs are nursery-reared in a nursery pond made within
or beside the traditional gher/pond for upto one month. The principal
technical interpretation that goes in favour of the technology is that
because the virus free PLs are nursery-reared in the well prepared
disinfected nursery for a month, and since the virus attack starts at
the age of say 80 to 90 days, the shrimp by that time become sizable for
harvest and the farmers can be saved from the loss in the event of virus
attack in the grow-out pond. The nursery used in this system is cleaned
and bleached with bleaching powder at the dose of 600 kg/ha and
fertilized with Urea and TSP. The PL is fed with CP starter feed. The
stocking density is maintained at much lower rate of upto 4 PL/m^2^.

4.  **Financial Analysis of Shrimp Seal of Quality**

**4.1 Socioeconomic Characteristics of the Farmers**

Socioeconomic attributes examined were age and education of the farmers,
their levels of training on fish culture, land area owned, pond area
owned and operated, and annual household income. Table 4.1 shows the
socioeconomic attributes of the three categories of farmers.
Irrespective of categories, farmers were at their middle age of around
40 years. On an average, CST farmers had 12 years of formal education.
The non-SSOQ farmers, on an average, had 8 years of formal schooling.
Thus the adopters of SSOQ technology had relatively higher level of
education than the non-adopters. Land ownership was highest for CST
farmers and lowest for non-SSOQ farmers. Average pond area cultured was
the highest for non-SSOQ farmers and lowest for CST farmers. Thus the
intensity of culture was inversely related to size of pond cultured. As
would be expected, gross annual income was the highest for the CST
farmers and lowest for the non-SSOQ farmers. Gross income of the former
group was about seven times higher than that of the latter group.
However, gross income of the MTT farmers was only about 50% higher than
that of the non-SSOQ farmers.

Table 4.1: Socioeconomic characteristics of the sample shrimp farmers

+--------+----+----+-------+-------+-------+--------+-------+-------+
| Farm   | N  | A  | Educ  | Land  | Pond  | Pond   | Days  | Gross |
| ca     | o. | ge | ation | area  | area  | area   | of    | a     |
| tegory | of | (  | (     | owned | owned | cu     | f     | nnual |
|        | f  | ye | years |       |       | ltured | ormal | hous  |
|        | ar | ar | of    | (ha)  | (ha)  | in     | tra   | ehold |
|        | ms | s) | schoo |       |       | 2004   | ining | i     |
|        |    |    | ling) |       |       | under  | rec   | ncome |
|        |    |    |       |       |       | ref    | eived | (Tk)  |
|        |    |    |       |       |       | erence | in    |       |
|        |    |    |       |       |       | tech   | 2004  |       |
|        |    |    |       |       |       | nology |       |       |
|        |    |    |       |       |       |        |       |       |
|        |    |    |       |       |       | (ha)   |       |       |
+--------+----+----+-------+-------+-------+--------+-------+-------+
| SS     | 21 | 42 | 12    | 9.50  | 8.97  | 0.76   | 2     | 14    |
| OQ:CST |    |    |       |       |       |        |       | 84444 |
+--------+----+----+-------+-------+-------+--------+-------+-------+
| SS     | 16 | 38 | 11    | 4.06  | 2.44  | 1.31   | 7     | 3     |
| OQ:MTT |    |    |       |       |       |        |       | 44708 |
+--------+----+----+-------+-------+-------+--------+-------+-------+
| No     | 28 | 41 | 8     | 2.60  | 2.26  | 2.63   | 4     | 2     |
| n-SSOQ |    |    |       |       |       |        |       | 21171 |
+--------+----+----+-------+-------+-------+--------+-------+-------+

Note: CST = Closed System Technology, MTT = Modified Traditional
Technology

Source: Field Survey 2005

2.  **Stocking Density and Survival Rate of Fry and Shrimp**

Adopters of the SSOQ technology generally stocked seeds twice in one
year production cycle. Non-SSOQ farmers, however, stocked several times
in a year. Table 4.2 shows that stocking densities in the 1^st^ stocking
were 62716, 22969 and 31462 for CST, MTT and non-SSOQ farmers. Fry
survival rates of the CST, MTT and non-SSOQ farmers were 79%, 84% and
44% respectively. Shrimp survival rates, counted after harvest, were
65%, 59% and 25% for the CST, MTT and non-SSOQ farmers respectively.
Thus survival rates of the non-SSOQ farmers were much lower than those
of the SSOQ farmers. The non-SSOQ farmers bought shrimp seed from more
than one sources. Of the 28 non-SSOQ farmers, only 8 bought seed
exclusively from hatchery. While 9 farmers used seeds from wild catch
only, 11 farmers used seeds from both hatchery and wild catch.

Table 4.2 shows that there were significant drops in the survival rates
from fry stage to shrimp stage. Discussion with extension personnel and
farmers during field visits revealed that for non-SSOQ farmers, the
major part of the drop was due ton disease. For SSOQ farmers, for whom
the drop was relatively lower, poor pond management by some farmers was
the main cause.

Table 4.2: Stocking density and fry/shrimp survival rate by farmer
category

  ------------ ----------- ------------ ---------------- ------------------
  Farmer       Stocking                 Fry survival     Shrimp survival
  category     density per              rate (%) (2004)  rate (%) (2004)
               hectare                                   
               (2004)                                    

               1^st^       2^nd^                         
               stocking    stocking                      

  SSOQ:CST     62716       54725        78.62            64.89

  SSOQ:MTT     22969       17538        84.31            59.10

  Non-SSOQ     31462       6659         44.00            24.67
  ------------ ----------- ------------ ---------------- ------------------

Source: Field Survey 2005

3.  **Pond Productivity of the Farmer Groups**

Table 4.3 shows per hectare shrimp yield of the farmer groups. The focus
is on the year 2004 which represents yield of all the adopter and
non-adopter categories of farmers during the operation of project. The
average yield in 2004 for the CST, MTT and non-SSOQ farms were 1140 kg,
338 kg and 209 kg per hectare respectively. The maximum yield for the
categories of farms were 2068 kg, 1839 kg and 795 kg, and the minimum
yields were 49 kg, 118 kg and 99 kg respectively. The percentage
difference of yield between CST and non-SSOQ farms was 444 per cent and
that between MTT and non-SSOQ farms was 61 per cent (Table 4.3). Thus
the CST farmers had overwhelmingly (about 5 times) higher yield than the
non-SSOQ farmers. However, the MTT farmers had only moderate yield
increase over the non-SSOQ farmers. The successive higher yields of the
SSOQ farmers would be attributed to increased adherence to the more
refined technologies over time. The marginal increase in yield of
non-SSOQ farmers over time might be attributed to the spillover effects
of the technologies in the respective areas.

Table 4.3: Shrimp yield and related statistics of the adopters and
non-adopters of the SSOQ technology

<table>
<colgroup>
<col style="width: 15%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 8%" />
</colgroup>
<tbody>
<tr class="odd">
<td rowspan="3">Farmer category</td>
<td colspan="9">Shrimp yield (kg/ha)</td>
</tr>
<tr class="even">
<td colspan="3">2003</td>
<td colspan="3">2004</td>
<td colspan="3">2005</td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Average</p>
</blockquote></td>
<td><blockquote>
<p>Maximum</p>
</blockquote></td>
<td><blockquote>
<p>Minimum</p>
</blockquote></td>
<td><blockquote>
<p>Average</p>
</blockquote></td>
<td><blockquote>
<p>Maximum</p>
</blockquote></td>
<td><blockquote>
<p>Minimum</p>
</blockquote></td>
<td><blockquote>
<p>Average</p>
</blockquote></td>
<td><blockquote>
<p>Maximum</p>
</blockquote></td>
<td><blockquote>
<p>Minimum</p>
</blockquote></td>
</tr>
<tr class="even">
<td>SSOQ:CST</td>
<td>293.61</td>
<td>1808.61</td>
<td>0.00</td>
<td>1140.10</td>
<td>2067.91</td>
<td>49.40</td>
<td>1243.18</td>
<td>2857.85</td>
<td>0.00</td>
</tr>
<tr class="odd">
<td>SSOQ:MTT</td>
<td>154.73</td>
<td>432.25</td>
<td>0.00</td>
<td>338.12</td>
<td>1839.36</td>
<td>117.50</td>
<td>435.61</td>
<td>869.87</td>
<td>0.00</td>
</tr>
<tr class="even">
<td>Non-SSOQ</td>
<td>166.17</td>
<td>714.30</td>
<td>0.00</td>
<td>209.45</td>
<td>795.27</td>
<td>98.80</td>
<td>184.85</td>
<td>934.59</td>
<td>0.00</td>
</tr>
<tr class="odd">
<td>% difference between CST and non-SSOQ</td>
<td>76</td>
<td>-</td>
<td>-</td>
<td>444</td>
<td>-</td>
<td>-</td>
<td>572</td>
<td>-</td>
<td>-</td>
</tr>
<tr class="even">
<td>% difference between MTT and non-SSOQ</td>
<td>7</td>
<td>-</td>
<td>-</td>
<td>61</td>
<td>-</td>
<td>-</td>
<td>135</td>
<td>-</td>
<td>-</td>
</tr>
</tbody>
</table>

Source: Field Survey 2005

Table 4.4 shows a picture of yield difference of the SSOQ technology
adopters before and after adoption of the technology. It should be
mentioned that most farmers adopted the CST technology in 2004 and no
farmer adopted the MTT technology before 2005. Thus for the CST and MTT
farmers the bench mark years were respectively 2003 and 2003/2004. Table
4.4 shows that yield increases of the CST farmers were 288% from 2003 to
2004, 9% from 2004 to 2005 and 323% from 2003 to 2005. For the MTT
farmers yield increases were 118% from 2003 to 2004, 28% from 2004 to
2005 and 181% from 2003 to 2005. Thus the adopter farmers in general
obtained substantially higher yield after adoption than before adoption
of the SSOQ technology.

Table 4.4: Shrimp yield and related statistics of SSOQ adopters before
and after adoption of the technology

  ---------- ---------- ---------- ---------- ---------- ---------- ----------
  Farmer     Average                          \%         \%         \%
  category   yield                            increase   increase   increase
             (kg/ha)                          in 2004    in 2005    in 2005
                                              over 2003  over 2004  over 2003

             2003       2004       2005                             

  CST        293.61     1140.10    1243.18    288        9          323

  MTT        154.73     338.12     435.61     118        28         181
  ---------- ---------- ---------- ---------- ---------- ---------- ----------

Note: Yield of 2005 represents the actual production of the 1^st^
harvest and expected production of the 2^nd^ /remaining harvest(s).

Source: Field Survey 2005

4.  **Costs and Returns of Shrimp Culture under Alternative
    Technologies**

Costs, returns and profitability of shrimp culture under alternative
technologies for the year 2004 are presented in Table 4.5. Costs have
been shown in two broad categories: fixed and variable costs. Returns
represent value of shrimp produced over one year production cycle for
all categories of farms. Gross costs per hectare of shrimp production
were Tk. 308,636, Tk. 74,659 and Tk. 74,184 for CST, MTT and non-SSOQ
farms respectively. Gross returns per hectare for the above categories
of farms were Tk. 405,725, Tk. 117,447 and Tk. 75,618 respectively.
Gross margin, which represents return over variable cost, were Tk.
134,836, Tk. 64,852 and Tk. 23,403 for CST, MTT and non-SSOQ farms
respectively.

As can be seen from Table 4.5, shrimp prices received were slightly
higher for non-SSOQ than for SSOQ farmers. The SSOQ farmers, had to make
full harvest of their stocks at certain maturity of the crop to make the
pond empty for next stocking. Although the non-SSOQ farmers used to make
more number of stocking, they did not have to make the pond empty and
generally used to harvest only the bigger size shrimps and leave the
smaller ones for harvest at a later stage of more grown-up size.
Therefore, the non-SSOQ farmers used to get relatively higher price for
their shrimp.

Table 4.5: Costs and returns per hectare of shrimp culture by farmer
category (2004)

  ---------------------------------- ----------- ------------ ------------
  Items                              SSOQ:CST    SSOQ:MTT     Non-SSOQ

  A. Fixed cost (Tk)                 37746.45    22063.93     21969.06

  B. Variable cost (Tk)              270889.21   52594.81     52215.11

  C. Gross cost (A+B) (Tk)           308635.66   74658.74     74184.17

  D. Shrimp yield (kg)               1140.10     338.12       209.45

  E. Shrimp price (Tk/kg)            355.87      347.35       361.04

  F. Gross return (DxE) (Tk)         405724.77   117446.87    75618.21

  G. Gross margin (F-B) (Tk)         134835.56   64852.06     23403.10

  H. Net return (F-C) (Tk)           97089.11    42788.13     1434.04

  I. Benefit-cost ratio (BCR) (F/C)  1.31        1.57         1.02

  J. Break-even yield (C/E) (kg)     867.27      214.94       205.47

  K. No. of farms obtaining negative 6           6            14
  net return                                                  
  ---------------------------------- ----------- ------------ ------------

Source: Field Survey 2005

Table 4.5 shows that net return per hectare for CST, MTT and non-SS0Q
farms were Tk. 97,089, Tk. 42,788 and Tk. 1,434 respectively.
Benefit-cost ratio (BCR), measured as the ratio of gross return to gross
cost, were 1.31, 1.57 and 1.02 for the CST, MTT and non-SSOQ farms
respectively. The lower average net return of only Tk. 1,434 for the
non-SSOQ farms may be attributed to the fact that some farms in this
group incurred heavy loss, and 50% of the farms earned negative net
returns.

Thus in absolute term, CST farms generated per hectare gross revenue
about 5 times higher than that of the non-SSOQ farms. Gross revenue of
the MTT farms was about 50% higher than that of the non-SSOQ farms. Net
returns per hectare of the CST and MTT farms were respectively about 68
times and 30 times higher than those of the non-SSOQ farms. Thus both
gross and net returns per hectare of the CST and MTT farms were
overwhelmingly higher than those of the non-SSOQ farms. The higher
yield, gross and net returns of the CST and MTT farms would definitely
contribute to higher income earning from both individual and national
point of view, and Table 4.5 shows that net return per hectare of the
CST farms was more than double the net return of the MTT farms. However,
the picture can be looked at from a different point of view. Table 4.5
also shows that benefit-cost ratios of the CST and MTT farms were 1.31
and 1.57 respectively, implying that return per Taka invested was
substantially higher for MTT than for CST farms. Thus from investment
point of view, the MTT farms were more profitable than the CST farms.

Production under Closed System Technology required huge amount of money
and therefore resource-poor farmers would be unable to adopt the
technology. As can be seen from Table 4.5, the break-even yields for
CST, MTT and non-SSOQ farms were 867 kg, 215 kg and 205 kg respectively,
implying that the minimum yield required to avoid loss was several times
higher for the CST farms than that for the MTT and non-SSOQ farms. To
depict the overall picture, while non-SSOQ farms were marginally
profitable, MTT farms were more profitable than both non-SSOQ and CST
farms. It should also be mentioned here that 14 out of 28 non-SSOQ
farms, 6 out of 16 MTT farms and also 6 out of 21 CST farms earned
negative returns from their investment. Obviously, the proportion of
farms earning negative net return was higher for non-SSOQ than for SSOQ
farms. Disease was the main cause of crop failure and hence lower
returns for the non-SSOQ farmers. Field visits and focus group
discussion revealed that for SSOQ farmers, crop failures were due to a
combination of factors such as improper site selection for pond, poor
management and incidence of disease.

**4.5 Adoption of SSOQ Technology**

Adoption of a technology can be viewed from different dimensions. One is
the acceptance and use of the technology by number or proportion of
persons in a reference population in a geographical area. The other
dimension is the change in the number of persons adopting the technology
over time. Another dimension is the extent of adoption or use of the
essential components of the technology. Sustainability of the adopted
technology can be viewed as another dimension because a technology once
adopted and soon abandoned can not represent adoption in true sense of
the term.

The SSOQ technologies are being popularized in three major shrimp
producing districts namely Khulna, Satkhira and Bagerhat. Records
obtained from the District Fisheries Office of these districts showed
that there were 44,141 brackish water shrimp farms in these areas.
Records obtained from the SSOQ office showed that there were only 274
farmers who adopted SSOQ technologies over a three years period of
demonstration in the areas. Thus in percentage term this was quite a
negligible (less than 1 per cent) figure and could not be termed as a
substantial rate of adoption.

As regards change in the number of persons adopting the technology over
time, records available from the SSOQ office showed that the total
number of farms adopting the technology increased from 3 in 2003 to 36
in 2004 and 274 in 2005. The additional number of farms adopting the
technologies were 33 in 2004 and 238 in 2005. This would be regarded as
a high rate of change in adoption.

The Evaluation Team observed through field visits that most of the
farmers adopting the technologies, particularly the CST adopters, were
quite seriously practicing the technologies in terms of adherence to the
recommended practices pertaining to the component elements of the
technologies. Cross-checking with a number of critical variables such as
stocking density, feeding, fertilizing and other management practices
revealed that most of the adopters were practicing the technologies in
accordance with the guidelines provided by the extension personnel. One
unique feature observed was maintenance of written records of all the
management practices and financial transactions by the farmers. The
farmers were able to provide all the required information in absolute or
parameterized form from the written records. They reported that they
were taught these record keeping practices by the project personnel.
This was a remarkable contribution of the project initiative.

There was a question item in the interview schedule, asking farmers as
to whether they would continue practicing the technologies in the
future. One hundred percent adopters reported that they would continue
with the technology because they got stimulated by the increased
survival rates of the fries/shrimps, high yield and hence good financial
returns. There were, however, a few instances of crop failure and
farmers, with assistance from the technical experts of the project,
identified that in most cases the failures were due to some lapses in
the pond management practices. In one instance, for example, a farmer
got frustrated and decided to discontinue with the technology. But
having observed success of the neighboring adopters in the next crop, he
revised his opinion and resumed practicing the technology. These are
some of the positive indicators of adoption of the SSOQ technology.

**4.6 Spillover Effect of Technology Adoption**

An important indicator of success of a technology is its replication in
the self-propelling manner. An attempt was made in this exercise to
assess the spillover effect of the SSOQ technologies in terms of
adoption of the technologies by the non-intervention farmers. The survey
schedule administered in the field contained some questions for the
respondents as to how many neighboring farmers had adopted or shown
interest in the adoption of the technologies. Responses obtained from 21
CST farmers revealed that 75 neighboring farmers actually adopted the
technology and another 810 showed interest in the adoption of the
technology. As for the MTT, responses obtained from 16 adopter farmers
revealed that 24 neighboring farmers adopted the technology and another
259 showed interest in the adoption of the technology. It may be
mentioned that MTT was introduced only from early 2005 and just one crop
was harvested by mid July 2005. Thus the impact of the technology was
yet to be amply manifested in the area.

Attempt was also made to get the opinion of the non-adopter farmers
about adoption of the SSOQ technology. Of the 28 non-adopters, all
reported to have heard about the technology and 22 of them (78 per cent)
were willing to adopt the technology. Thus the results obtained from the
opinion survey suggest that there was a reasonably high degree of
spillover effect of the SSOQ technology in the shrimp belt areas of
Bangladesh.

**Sustainability Issues**

Having provided the above evidence, some comments on the sustainability
of adoption of the technology seem to be in order:

The mechanism of supervision and monitoring at the stage of technology
trial and demonstration provides some implications for future needs of
supervision when the project activities will not be there. SSOQ has put
vigorous efforts in monitoring and supervision of the demonstration and
extension. The program has 28 extension personnel based at its Khulna
site. Of the 28 personnel, 9 are Extension Officers and 19 are Pond
Technicians. The pond technicians work under the supervision of the
Extension Officers at the field level. By the year 2005, the program has
been extended to 274 farmers covering a total pond area of 923 ha. These
information indicate that the technologies are highly
supervision-intensive. One may therefore wonder as to what would be the
level of performance of the technologies after withdrawal of the
supervision.

The SSOQ did not have a strong built-in formal training program for the
farmers or for the extension agents. The interview with the farmers
during field survey revealed that on an average, the CST and MTT farmers
received formal training for 2 and 7 days respectively. For
sustainability of the technology, there should be provision of training
for building knowledge base among the greater mass of farmers and the
extension personnel. However, the intensive hands-on training being
offered to the farmers in the field are expected to make a significant
impact on sustainability of the technology. The critical issue would be
to organize the trained farmers into viable groups, so that they would
be interacting among themselves in matters of trouble shooting and
sustainable management of the technologies. The research and extension
support from public, private and NGO sectors would be highly warranted
in this regard.

There are different categories of farmers with respect to knowledge,
resource base and enthusiasm about shrimp culture. The CST is a capital
intensive technology and is expected to be adopted by relatively richer
farmers. However, the MTT has been tailored to make suitable for
adoption by the large majority of small and marginal groups with
financial constraints. Availability of credit at lower interest rate is
an important determinant of adoption of technology in a sustainable
manner. During field visits the farmers complained that while the
processing firms were getting loan at only 5% interest, often with
additional subsidy in shipment, they had to borrow money at 8% interest
rate. There should be provision of credit to the small and marginal
farmers at concessional rate of interest.

**4.7 Impact of SSOQ Technology on Export Earning**

Data available from the Export Promotion Bureau (EPB) suggest that
although shrimp export exhibited steady increase, value of export
fluctuated over the past years, mainly because of price changes.
However, both volume and value of shrimp export substantially increased
over the past two years. In 2003-04, Bangladesh exported 43 thousand
tons of frozen shrimp, valued at US\$ 352 million (Taka 21527 million).
Increased production of shrimp definitely contributes to increased
exports, but all incremental gain in production do not necessarily go to
the export channel.

There has been an attempt through the SSOQ initiative to estimate the
project's impact on shrimp export on the basis of virus free larvae
released through the PCR laboratory of Cox's Bazar station. For example,
in 2004 a total of 540 million virus free larvae were released through
the PCR laboratory. Of these, only about 1 million PLs were stocked in
the demonstration ponds. Assuming that the remaining PLs were stocked in
the non-SSOQ ponds, and assuming a survival rate of 33 percent, it was
estimated that a total of 172 million shrimps were produced and
exported, valued at US\$ 26 million.

The estimate is based on a number of assumptions, some of which might
appear to be quite fragile. In the first place, certain specified
quantity of PL would have to be tested through the PCR lab owned by the
project. Second, the survival rate has been assumed to be 33 percent.
Results obtained from the survey revealed that survival rate of commonly
available fry in the ordinary pond was only about 12 percent. A
particular survival rate of the disease free PL (question remaining as
to how long the PLs remain disease free under ordinary management) in
the ordinary pond has not yet been established. Also, it has been
assumed that all the shrimp produced would find their way in the export
market. The plausibility of all these assumptions may be questionable.
Thus, derivation of the export earning figure does not appear to stand
on a solid ground. A great deal of caution would therefore have to be
maintained in attributing a specified export earning to the project
initiative. However, since the project is significantly contributing to
productivity of shrimp, its potential impact on export need not be
undermined and potentially, the project can make even bigger
contribution to export in the near future.

**4.8 Financial Sustainability Plan of SSOQ**

The SSOQ initiative has recently done an exercise on "hypothetical
revenue generation", based on the assumption of testing a specified
number of larvae, 360 crores and 720 crores respectively in 2005 and
2006. Assuming a 'surcharge' for SSOQ at the rate of Tk. 50 per 1000 PL,
the exercise suggests a revenue generation of Tk. 1.80 crores and 3.60
crores for the years 2005 and 2006 respectively. Assuming that the cost
of nationwide SSOQ set up would be around Tk. 1.30 crores, the exercise
derives revenue surplus of Tk. 0.50 crores and Tk. 2.30 crores for years
2005 and 2006 respectively. The implication drawn from the exercise is
that "SSOQ can sustain on its own if left to operate independently as a
Private Limited Company for profit or a Private Company under the
Societies Act".

There is nothing wrong in doing a financial sustainability plan based on
a set of assumptions. The critical issue will be execution of the plan
in terms of number of PLs being tested per time period and collection of
charge at a market determined rate. It should be mentioned that the PCR
lab owned by the SSOQ is not likely to be the only lab in the area. One
hatchery (Niribili) has already a PCR testing lab and other labs may be
established in the area. Thus SSOQ would be expected to run the PCR lab
on a commercial basis in a future market scenario. The plan will
therefore need to stand the test of time and circumstances obtaining
round the shrimp industry in Bangladesh.

**5.0 Conclusions and Recommendations**

**5.1 Conclusions**

The Shrimp Seal of Quality Initiative seems to have been making
substantial positive impact on pond based shrimp culture in the south
western coastal region of Bangladesh. Provision of disease free post
larvae and innovative pond management practices have contributed to
substantial yield increase. Results from farm survey have shown that
farms adopting SSOQ technology obtained much higher yield than those not
adopting the technology. For the adopter farms, yield after adoption was
much higher than that before adoption.

Financial benefits were also much higher for the adopter farms compared
to the non-adopter farms. For the adopter farms, while gross return for
the CST farms was several times higher than that for the MTT farms, net
return for the former group was about twice the net return for the
latter group of farms. However, the benefit-cost ratio, which represents
return per Taka of investment, was substantially higher (1.57) for the
MTT than for the CST farms (1.31). Thus from investment point of view,
MTT farms were earning more return from their investment than the CST
farms. The Closed System technology was highly capital intensive and as
such most of the small and marginal farmers would not be able to afford
the technology without adequate credit support.

The SSOQ technology seems to be rapidly expanding in the shrimp belt
areas of Bangladesh. Although the number of adopters as percent of total
shrimp farms are not yet high, the project activities have created a lot
of enthusiasm among the local farmers and quite a large number of
farmers are expected to adopt the technologies in the coming days. Field
visits revealed that quite a good number of neighboring farmers already
adopted the technologies by following the management practices being
pursued by the SSOQ adopter farmers.

The proposition of the project's making any significant contribution to
export earning seems to be premature, the prospect of making such
contribution in the near future seems to be quite high, though. The
proposition of financial sustainability of SSOQ as a Private Limited
Company has to stand the test of time and circumstances obtaining round
the shrimp industry in Bangladesh.

The most weak dimension of SSOQ operation is its lack of understanding
and cooperation/collaboration with some vital public and private sector
bodies such as the DOF, BFRI and BFFEA. The DOF is the most important
public sector body responsible for dissemination of fishery and
aquaculture technologies in the country. The organization has the
built-in infrastructure for promoting fish culture technologies in the
far flung areas of the country. These facilities need to be utilized for
ensuring cost-effective means of dissemination of technologies. Besides,
many of the research issues in respect of refinement of technologies can
be resolved through effective collaboration with the Saline Water
Station of the BFRI, located at Paikgacha, Khulna. For increasing
export, useful collaboration with BFFEA will have to be ensured
Effective collaboration with the related institutions and organizations
are not only important during project implementation, but also for
sustainable utilization of the technologies and other positive impacts
that the project leaves behind. It has been evident through study of
relevant documents that some desperate attempts to seek collaboration
from the relevant stakeholder bodies miserably failed. This need not be
used as a pretext for not seeking fresh cooperation/collaboration with
these bodies, particularly with changes (if any) of the personality
factors (which often matter much) associated with the stakeholder
organizations and SSOQ itself.

**5.2 Recommendations**

It has been evident through the Evaluation that a lot of positive
impacts have been generated in the shrimp production sector through the
SSOQ efforts. Since the project has performed only for less than three
years, it is suggested that the efforts be continued for a few more
years (3-5 years) so that the positive impacts can be further propagated
and the results can be consolidated. However, a number of issues need to
be addressed for obtaining sustainable outcomes from the project
initiatives. These are outlined below.

-   There should be separate technology for catching brood shrimp from
    the sea for ensuring sustainable harvest of brood shrimp. Program
    for domestication of broods can also be taken up as a long term
    gesture, especially in view of seasonality and uncertainty of brood
    availability in the off seasons.

-   Screening of PL is only one aspect of the use of disease free
    larvae. Hatchery health, hygiene and sanitation should be maintained
    at the highest level to avoid contamination of the PL.

-   Many hatcheries maintain foreign technicians who generally show
    reluctance to train local technicians in the technical aspects of
    hatchery operation. This acts as a hindrance to building up of
    trained manpower in the hatchery technology. Measures should taken
    to train and utilize local technicians for sustainable utilization
    of hatchery technology.

-   Synchronization of requirement of virus free seed in the field and
    production or supply of seed through PCR testing is a critical
    determinant of efficient utilization of the PCR tested seed.
    Measures should be taken to match the demand/requirement with
    production/supply through careful planning and prior scheduling of
    breeding/spawning and stocking.

-   Mortality rate of the PL should be further minimized. Nursery
    management system should be improved at different stages such as at
    the hatchery, at the farm and if necessary, at the major seed
    distribution points.

-   Inter agency collaboration should be improved for deriving better
    outcomes from the technology generation and dissemination efforts.
    The SSOQ authority should take fresh initiative to secure
    collaboration with DoF, BFRI and BFFEA for obtaining sustainable
    improvement in production, processing and export of good quality
    shrimp from Bangladesh.

-   The project should leave behind a set of well trained farmers and
    extension agents for widespread dissemination of the technologies in
    the self propelling manner. The critical issue would be to organize
    the trained farmers into viable groups, so that they would be
    interacting among themselves in matters of trouble shooting and
    sustainable management of the technologies. The research and
    extension support from public, private and NGO sectors would be
    highly desirable and effective in accomplishing the desired
    outcomes.