Once known as 'white gold' for its export potential amid complaints of serious impacts on the environment, shrimp production and export has fallen on bad times for failure to keep up with international trends and adoption of improved farming techniques.
A lack of farsightedness in the trade bureaucracy and unscrupulous practices by a section of traders turned an once-promising export sector into a shadow of its former self.
The sector had shown great potential from the very beginning. Earning less than $6 million in the post-independence days, shrimp export had boomed to $550m in four decades before starting to decline as farmers failed to adapt to the changing nature of the global shrimp farming practice. While the competing shrimp farmers of the world had switched to producing high-yielding vannamei species of shrimp, Bangladeshi farmers continued to stick to traditional farming of bagda or galda varieties.
Those who wanted to start farming the high-yielding vannamei shrimp were thwarted by policymakers who refused to allow the new variety fearing the spread of virus. Add to that the EU ban on shrimp imports from Bangladesh in 1997 over allegations of exporting prawns with foreign materials inserted in the shrimps to increase weight, and it was the final nail in the coffin of the potential sector, stakeholders explain.
The EU later withdrew its ban and allowed export of shrimps tested in the standard laboratory. But, export earnings from the sector have been on a steady decline over the past several years.
Out of 140 shrimp processing factories, only 48 are now operational, that too on markedly low capacities, as shrimp output has dropped drastically over the years. The rest of the factories are either not running or are being used as cold storage for potatoes.
In the 50th year of independence i.e. FY2020-21, Bangladesh's shrimp exports stood at $329 million.
In the first four months of the current financial year, shrimp exports increased by one-third compared to the same period of the previous year but, in spite of huge export demand, 92 processing plants remain closed because of the shrimp crisis. Running factories are operating with one-fifth of their capacity.
On the other hand, 62 countries are now cultivating Vannamei shrimp commercially and exporting them to Europe and America. Among the 15 shrimp-producing countries in Asia, all except Bangladesh are cultivating vannamei shrimp. China, Vietnam, India, and other countries have become major packers of the shrimp in addition to several South American countries. By 2004, global production of vannamei exceeded one million tonnes and surpassed that of the more common tiger prawn variety.
This year, MU Sea Foods has experimentally cultivated vannamei shrimp at the Saltwater Centre of the Bangladesh Fisheries Research Institute in Paikgacha at Khulna and got a yield of 8.62 tonnes per hectare while local farmers can produce a maximum of 330 kilograms of tiger prawns (bagda) and freshwater prawns (galda).
In an effort to regain the shrimp market, the Business Promotion Council under the Ministry of Commerce has recommended that the government allow commercial farming of vannamei shrimp.
An inter-ministerial meeting was held to discuss this issue in September this year. There will be another meeting soon to work on this issue.
Kazi Belayet Hossain, former president of the Bangladesh Frozen Foods Exporters Association (BFFA), told The Business Standard that in the first year after independence, Prime Minister Sheikh Mujibur Rahman had announced the shrimp as one of the main export products of the country. After that, exporters started investing in shrimp processing industries. Banks also came forward to provide loans for setting up such factories.
He said the then government in the country's second Five-Year Plan had set a target of 1.5 million tonnes of annual shrimp production from domestic sources. As a result, investment in the shrimp processing industry continued to grow. Thus, up to 2008, 140 factories were set up with an investment of around Tk1,400 crore. These factories require 4,00,000 tonnes of shrimp annually to operate in full swing.
However, shrimp farming could not keep pace with the growing number of factories, he said, adding in the 2013-2014 fiscal year, the country saw a record 47,635 tonnes of shrimp production. Export income from the shrimp industry also was the highest, $550 million, that year.
Since then, both shrimp production and export earnings have been declining steadily. In the last financial year, the output came down to 30,615 tonnes, he continued.
According to exporters, Bangladesh's share in the international shrimp market has shrunk to less than 2%. The cost of cultivating bagda and galda in the country is much higher compared to other countries as the output is very low in the traditional method followed here.
They went on to say competing countries are producing 9,000-10,000 kilograms of shrimp per hectare by cultivating vannamei shrimp at lower costs. As a result, they are able to export the product at much lower prices. Importers are not at all dependent on sourcing from Bangladesh due to its low share in the export market.
How factory owners are doing
Entrepreneurs who have invested in this once huge potential sector are now living in dire straits. Of the 105 EU-certified factories in the country, 57 are completely closed and some of those have been sold while some are being used as cold storages. Many of the factory owners have defaulted on bank loans and are facing legal actions.
A processing plant named Satkhira Foods Ltd has remained closed for almost six years due to unavailability of shrimp. The owner of the factory, M Khalilullah, has now started trading in agriculture products.
He told TBS that many shrimp business owners have moved on to other businesses to keep their companies running. Some companies are processing white fish, while others are storing potatoes, ginger, and onions in the cold storages. Many are processing vegetables.
He added that frozen prawns are now being sold at a slightly higher price in the international market. In particular, the price of bagda shrimps has risen by 30%. Locally, large-sized galda prawns are being sold at Tk1,200-1,400 per kg, which was lower during the pandemic.
Khalilullah said shrimp production in coastal areas of the country has declined over the last 10 years due to climate change.
The region now has a suitable environment for vannamei shrimp, he said, adding India has succeeded in cultivating vannamei in its coastal areas.
He thinks that commercial farming of vannamei shrimp in Bangladesh should be allowed.
The main export market for shrimp, the European Union, imposed a ban on shrimp imports from Bangladesh in 1997, severely hampering shrimp farming and exports.
The EU imposed the ban over allegations of insertion of gel in addition to metal pieces inside the shrimps to increase their weight.
Later, the government built factories in accordance with the standards set by the EU in order to lift the EU export ban. The government provided low-interest loans of Tk40 lakh to each factory.
So far, 105 registered exporter factories in the country have EU certificates.
Kazi Belayet Hossain of the frozen food exporters association said after getting the EU certificate, Bangladesh had an opportunity to increase its export earnings by several times but the potential couldn't be tapped just because of the supply shortage.
Good yield found in experimental farming
Although late, the government in 2019 approved two companies for cultivating vannamei shrimp on an experimental basis. Both the farms produced the shrimp in Paikgacha and the yield was about eight tonnes per hectare in both cases.
BFFA leaders told TBS that even getting approval for experimental farming was not easy.
"We had to go to many government offices to obtain the go-ahead for the experimental cultivation. Although Sushilan and MU Sea Foods were finally approved, it was said that the government would not bear any cost of the projects and that the BFFA would have to bear the entire cost."
The BFFA agreed to the condition and the two firms that cultivated vannamei shrimp on an experimental basis got a yield around 30 times higher compared to the traditional farming method," said Belayet Hossain.
"We have now applied to the government for approval of commercial farming of vannamei shrimp. Several meetings have been held in this regard and an inter-ministerial meeting is scheduled to be held soon," he added.
Prafulla Kumar Sarkar, project consultant of Sushilan, said that it has been possible to produce eight tonnes of vannamei shrimp per hectare in the experimental stage. The yield could go up to 20-22 tonnes a hectare if an improved method was followed.
He further said that the environment in this country is conducive for vannamei farming. As a high yielding and hardy variety of shrimp, it is more disease resistant. Its food is also available at a lower cost.
Huge export potential
In a report submitted to the Commerce Secretary Tapan Kanti Ghosh, Md Abdur Rahim Khan, joint secretary of the same ministry and coordinator of the Business Promotion Council, said if vannamei shrimp is cultivated commercially on only 16% of the existing shrimp farming land, it will be possible to operate the 105 shrimp processing factories in full swing and another 50 factories have be set up to process the surplus shrimp.
The report, dated 26 October this year, said, "Shrimp is currently being cultivated in 2,58,553 hectares of land in the country. Of this, only 16% or 41,000 hectares can be used to produce 3,00,000 tonnes of shrimp by cultivating the vannamei variety."
The report said that over 150 processing factories will be required to deal with this amount of shrimp and the annual export income from the sector may go up to $3 billion or even more.
Abdur Rahim Khan said Vannamei shrimp has become very popular all over the world and has captured 8% of the international export market. Therefore, in order to boost earnings from export of frozen shrimp and keep the processing factories running, it is necessary to modernise the bagda and galda farming methods as well as to allow immediate opening of commercial farming of vannamei shrimp.
At the same time, the Business Promotion Council in its report stated that the government needs to be sympathetic towards the partially closed or completely closed factories to help them get rehabilitated by repaying their liabilities owed to banks.
The council also recommended that farmers be provided with funds to modernise farming methods to increase shrimp production, saying that like other farmers, shrimp growers should be provided with bank loans and insurance benefits.
Environmental, social impact is of concern
Commercial shrimp farming is globally blamed for its negative impacts on the environment in the coastal areas particularly in the Asia-Pacific, which accounts for 85% of global cultivated shrimp output.
An FAO report cited how commercial shrimp farming caused serious environmental impacts including the destruction of coastal mangroves and pollution of natural waters in Thailand, a leading shrimp exporter. While Thailand is pursuing methods to ensure an environmentally sustainable future for the sector, Bangladesh lags behind in such initiatives, as revealed in studies.
Shrimp cultivating development in Bangladesh is commonly unregulated, uncontrolled and uncoordinated, causing negative impacts on coastal biodiversity, water, soil, mangroves, crop production as well as social clashes, says a 2019 study of environment researchers Shahriar abdullah, Dhrubo Barua and Md Sazzad Hossain.