Rapid Transformation

of the Aquaculture

Value Chain in

Bangladesh

Workshop on

Evidence-Based Policy Options

For Food And Nutrition Security

in Bangladesh

1 October 2014, Dhaka

Ricardo Hernandez, Ben Belton,

Thomas Reardon, Shahid Rashid,

Kaikaus Ahmed, Xiaobo Zhang and

Akhter Ahmed

Trends in Bangladesh Fish Economy

Fish important to food security (availability):

2/3 of Bangladesh’s animal source food consumption is from fish, 1/3 from meat

Perception : fish sector is underdeveloped, slow growing, traditional

Reality: very rapid growth and transformation in all segments of the fish value chain

Fish consumption growing fast: 1.8 MMT in 2002 3.6 MMT in 2012, 100% in 10 years!

Aquaculture important in fish/shrimp production. From 2000 to 2012:

Inland capture 62%Marine capture 70%Aquaculture 220%!!

Export Market 135%Local Market 100%

The importance of fish for food and nutrition security in Bangladesh

Percentage of Bangladeshi households consuming nutrient rich foods on 0-2, 3-6, 7-10, or 11-14 days during the preceding 2 weeks(Toufique & Belton, 2014)

Aquaculture is important to food security (access via incomes & employment)

Both farm and off-farm employment

The attention of the sector demonstrates “export” bias

Aquaculture has been the answer of the hidden miracle of the domestic market

The Rapid Growth of Aquaculture and the Local Market

Source: Statistical Yearbook of Bangladesh,

Fisheries Statistical Yearbook of Bangladesh

0%

2%

4%

6%

8%

10%

12%

0

500

1,000

1,500

2,000

2,500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Pe

rce

nta

ge

Vo

lum

e (

tho

usa

nd

s M

T)

Capture Marine Culture Export Exports (Q/Share) Exports (V/Share)

VC Transformation: Formation of Clusters

• Cluster formation in particular geographic areas is an important part of sector development

• Several types of clusters:

- New fish areas

- Early fish and shrimp areas

VC Transformation: Structural Change

• Rapid development of the off-farm components- Upstream: hatcheries and feed milling

- Midstream & downstream: transport, wholesaling, retailing and processing

• The upstream and midstream VC development kept pace with the rapid growth in fish production

• Smallholders can specialize in pond operation, enjoy cost savings via economies of scale, scope, and agglomeration

• Farmers have additional sources of funding for operations, investment, and tech change.- Output tied credit market

- Feed, fingerlings and fry sales on credit

• Concentration & increase of enterprise scale in all segments of the VC- Large proliferation of hatcheries

- extensive leasing-in land, converting paddy land to pond

• The VC has “lengthened” geographically- Distance from farmer to consumer

- Distance from input supplier to farmer and feed mill

- Input acquisition stretches internationally, including FDI

VC Transformation: Product Cycle

• Series of stages driven by: competition, tech change, market expansion, and product introduction.- (1) local niche (2) commodity stage (3) product

differentiation (4) commodity stage (5) new niche or differentiated product

• In Bangladesh we discern 3 stages:- In the 80s, shift from fishing to pond farming using native

carp species

- In the 1990s, exotic Pangas (catfish), and widespread hatchery production of monosex Tilapia in early 2000s

- In late 2000s, introduction of native fish species, such as Koi (climbing perch), magur, shing, chitol, pabda. Once common, now scarce in the wild

Fish consumption by species and income

in 2006-07

Quantity of fish consumed in preceding 3 days by income

group and species (2006/7). (Belton et al 2014)

Fish consumption by species and income

in 2011-12

Quantity consumed per capita in the last 7 days. Source:

IFPRI BIHS survey 2011

0

10

20

30

40

50

Pangas SilverCarp

Tilapia Rui Puti Taki Mrigel Dry Fish Koi Shrimp Hilsa

Qu

anti

ty in

g Q1

Q2

Q3

Q4

Q5

VC Transformation: Rapid Technology Change

• Upstream-farm segment TC:

- Fishing/capture pond production

- Backyard ponds commercial ponds

- Intermediate stage intensification

- No feed artisanal feed commercial (sinking to floating)

- Hired labor, use of vitamins, antibiotics, lime

- Pond productivity rose between 3-25 times higher than backyard

• Upstream-input supply TC:- Feed mills: from 7-8 in 1999 to 100 in 2012 (10% large scale)- Hand mixing feed mills differentiation of feed types

extrusion- Hatcheries: wild fry or PL for stocking hatcheries & nurseries- Diffusion scale increase concentration- Hatcheries’ “change agents” are varied: Government, NGOs,

returning workers, large farmers

• Midstream/downstream TC:- Wholesale sector rapidly expanding – rural fish wholesale markets- Expansion of fish seed wholesalers, feed dealers- Ag input stores now have “fish input lines”.

CONCLUSIONS

• The fish VC in Bangladesh is transforming very rapidly, in all segments. Home grown-home experienced market revolution.

• Transformation relied heavily on private sector (formal and informal)

• Government paved the way between explosion of rural supply and the booming urban demand

• The main problems remain cost of fuel, cost and access to electricity, cost of feed, and quality of inputs.