TED Case Studies

Thailand Shrimp Farming



          CASE NUMBER:        2263
          CASE MNEMONIC:      THAISHMP
          CASE NAME:          Thai Shrimp Farming

A.   IDENTIFICATION 

1.   The Issue

The increased demand for shrimp in world markets has encouraged
many developing countries to enter into the practice of shrimp
farming which has had a significant impact on the world's mangrove
forests because of over production.  Thailand has become the
world's leader in shrimp exports, and in turn, the greatest
violator of mangrove conservation.  The mangroves are essential to
the region's ecosystem.  They are the breeding ground for 80 to 90
percent of commercial seafood species, play an invaluable role in
protecting coastal areas from erosion, storm damage and flooding,
and are vital for coastal fisheries, sustainable wood products
industries, and wildlife habitat.  The largest export markets for
Thai shrimp are the United States and Japan and the demand is
increasing yearly.

2.   Description

Thai shrimp farming started in the early 1980s and really began to
expand in the mid 1980s.  Before 1984, Thailand harvested as much
as 90% of its shrimp from natural resources, mainly the gulf of
Thailand.  By 1987, shrimp culture, focusing on black tiger
prawns, took off in Thailand, spreading quickly along the coast. 
As a result, the structure of shrimp production gradually changed,
with the share of shrimp caught from the open sea to roughly half
the total production.  Meanwhile, the share of cultured shrimp
steadily grew to half of overall production, that is, about on a
par with those from natural resources.  This trend has steadily
increased from that time and cultured shrimp now make up about 70%
total production.

The high demand for shrimp in overseas markets also changed
traditional farming practices along the coastal areas for peasant
farmers.  Thai rice farmers converted their coastal fields, and
often the mangrove forests that bordered them, to shrimp ponds.  As
much as five tons of shrimp a year could be produced from a pond
the size of a football field.  Rice farmers who had been making
$500 a year suddenly saw profits of $20,000 to $40,000.  This has
created a great deal of enthusiasm for continued production of
cultured shrimp.

The area just beyond the mangrove forest offers the ultimate
conditions for the production of pond shrimp and they have been
extensively used for this purpose.  The problem lies in the
environmental damage done to the mangrove forests during the
production of the cultured shrimp.  The high profits have caused
overproduction which has devastated the coastal environment. 
Without proper measures to protect and irrigate the areas, the
average life of the shrimp pond is only two to four years,
destroying not only possibilities of further production but the
mangroves as well.  In this period, the ponds began to choke on
their own wastes.  Shrimp feed and excretement, sometimes combined
with antibiotics and fertilizer, prove too much for the estuaries
in which the ponds had been built.  In some places, an explosion of
plankton (shrimps natural food), use up the oxygen needed by shrimp
and other sea life.  In others, the ponds "enrichment" nurtured
harmful bacteria and other viruses.  It soon became clear that
farmers were trying to raise too many shrimp in farms and that the
farms were too close together.  

Improper production methods have devastated the mangrove forests. 
According to the National Economic and Social Development Board,
640,000 acres of the country's 960,000 acres of mangrove forests
have been destroyed by waste water from shrimp farms and about 24%
of shrimp farms are abandoned after a period of two to four years
because the soil has lost its fertility and cannot be used for
other purposes.  Conservative estimates claim that each 40,000
acres of deserted shrimp farms is translated into a $200,000,000
economic loss each year. The poisoning of the mangrove forests
does not only affect the usage of the land it also has a major
impact on oceanlife as well.  Many species of fish that inhabit
tropical oceans spend some part of their lives in the mangroves and
many depend on it for reproduction.  Commercially, it also has an
impact on seafood products as two-thirds of the fish caught for
human consumption are dependent on coastal mangrove ecosystems. 

Another marked change was that the black tiger shrimp became the
leading variety produced here.  This is mainly because farmers
received handsome profits for black tiger prawns, thanks to a firm
market abroad.  This led to the rapid growth of black tiger prawn
farms.  In fact, Thailand's output has risen so rapidly, it is now
the world's top producer of black tiger prawns, sending abroad
250,000 tons of the product worth $1.7 billion in 1994, this
equates to 25% of the world supply of pond-raised shrimp.  

In the early 1980s, shrimp farms concentrated in the Upper Gulf
provinces, accounted for more than 40% of the country's total
shrimp culture area.  However, during the market boom, prawn
culture expanded very rapidly, and without proper controls, it
severely affected the environment.  Environmental degradation,
particularly water pollution, played havoc with the shrimp, killing
a large number of them.  The situation in three provinces
deteriorated so much that it was very difficult to rehabilitate the
areas.  Aggravating the situation further, shrimp prices weakened
alarmingly in 1989.  The drop in prices and the destruction of the
mangroves forced many shrimp farms in the three Upper Provinces to
terminate operations.  

The renewed increase in the demand for shrimp caused the prices to
rebound in 1990 which caused commercial interests to shift  to
other locations, particularly the Eastern Seaboard and the South. 
These areas have also been abused with over production and once
again, many areas, particularly along the Eastern Seaboard, have
been destroyed.  With increased production, profits have increased
drastically and shrimp farming was the major factor for Thailand
displacing the United States as the world's top seafood exporter
with total sales of $3.4 billion in 1993.  The government has
continued to promote shrimp farming because of its high export
value, ranking fourth as a source of foreign exchange for Thailand
in 1994.  Thai shrimp exports have increased to the extent that
they have 40% of the international market.

This economic success has come at the cost of  a deteriorating
environment, and many environmental groups, both Thai and
international, have begun to show concern.   Recently, U.S. and
European environmental groups have started to organize a campaign
against shrimp imported from developing countries.  This movement
is led by Alfredo Quarto, director of the U.S. based Mangrove
Action Project (MAP), a worldwide coalition of non-governmental
organizations, scientists, and farmers.  MAP plans to work with
Western environmental groups to lower shrimp consumption and
pressure shrimp traders to stop shrimp exports from nations "which
have taken up commercial cultivation of shrimp on a massive scale
with scant regard for the environment."  

In response to this pressure, the Thai government has taken a
number of steps to improve the situation.  Shrimp and other
aquaculture farms have been listed as a source of pollution in line
with the new environmental act of 1992.  A pollution control
official stated in February that his department is planning to
control waste water from aquaculture farming ponds to curb
pollution.  Also in February, the National Economic and Social
Development Board organized a conference on " Aquaculture and
Resource Management."  The conference concluded that improved
management of coastal aquaculture is essential to counter
environmental damage from activities such as shrimp farming.  The
fishery department has also initiated a water retreat project to
improve the filtering and irrigation of the water in the shrimp
ponds.  

Internationally, the mangroves are considered wetlands that would
fall under the RAMSAR Convention.  The RAMSAR Convention was
conceived in Iran in 1971 with an aim to promote the conservation
of wetlands and waterfowl.  Eighty -three countries have become
signatories and 648 wetlands have already been listed in the
Directory of Wetlands of International Importance.   Thailand is
considering placing three wetland sites under the care of RAMSAR
which would in effect make them a signatory of the treaty.  The
three wetlands under consideration are all national parks which
have been increasingly encroached on by illegal shrimp farmers
seeking out new lands for production.  If designated as RAMSAR
sites, the land would gain international attention and local
recognition, which could possibly promote efficient conservation
measures, particularly from the Forestry and Fishery Departments. 
This would help to focus the destruction on other areas that have
not been designated as protected sites.  Although the government
has started discussing the issue of aquaculture pollution, and a
variety of actions have been considered, it has been a slow process
as there is little initiative and support with the profit potential
of the shrimp market.  

Another major development that has influenced the production of
shrimp is a new product called "Chitin," which is extracted from
the shells of shrimp and crab.  Chitin is a cellulose-like
substance that has a variety of uses.  It can be made into surgical
stitching thread that dissolves harmlessly in the flesh, used to
separate heavy metals in water treatment plants, or sprayed onto
fruit to prevent water treatment loss.  The potential worldwide
demand for chitin products is estimated at more than $1 billion a
year.  The possibilities of this new product have caused
increased investment in shrimp production, not only in Thailand but
in the neighboring countries of Cambodia, Vietnam, and India.

Major shrimp producers have continued to reap short-term profits
and move to new areas when the land loses its vitality.  The latest
venture has been into Cambodia with Thais investing close to $100
million in the Koh Kong Province for shrimp farms.  Cambodia's
Environment Minister argues that "hundreds of hectares of mangrove
forest has been destroyed along Cambodia's southern coast by
commercial shrimp farmers, and unless halted the coastline would be
a sterile area within three years."   The Ministry of Agriculture
has plans to continue to issue licenses for shrimp farms even
though it is widely recognized by Cambodian officials that stricter
procedures are needed.

3.   Related Cases

     SHRIMP case
     TEDS case
     MANGROVE case
     VIETWOOD case
     THAILOG case
     TANTAL case

4.   Draft Author:  Michael P. Lavallee

B.   LEGAL FILTERS

5.   Discourse and Status: DISagree and ALLEGation

6.   Forum and Scope: THNAIland and UNILATeral

7.   Decision Breadth:   1 

8.   Legal Standing:  LAW

In Thailand shrimp farmers are now invading national park's
wetlands for the production of shrimp.  In 1990, 165 shrimp farmers
were illegally operating in the park, not only in the coast area
but in the freshwater marsh.  In 1992 this number of  illegal
shrimp farmers increased to 515.  Thailand is also considering
putting certain areas under the RAMSAR Convention which could have
an impact on the legal structure of the mangrove forests.

In 1991, The U.S. passed legislation against imports of
marine(natural) shrimp from countries that do not implement
measures to provide adequate protection for sea turtles during
shrimp fishing activities.  This type of shrimp fishing caused the
death of thousands of sea turtles a year due to the type of  nets
that were used to extract the shrimp.  Many shrimpers have not been
able to afford the new technology devised to protect the sea
turtles and this has increased the dependence on cultured shrimp
and greater destruction of the mangrove forests..

C.   GEOGRAPHIC FILTERS

9.   Geography

     a.   Geographic Domain:            Asia
     b.   Geographic Conflict Site:     East Asia 
     c.   Geographic Impact Area:       Thailand

10.  Sub-National Factors: NO

11.  Type of Habitat: TROPical

D.   TRADE FILTERS

12.  Type of Measure:  Regulatory Standard [REGSTD]

13.  Direct vs. Indirect impacts: INDirect

14.  Relation of Trade Measure to Resource Impact

     a.   Directly Related:        No
     b.   Indirectly Related:      Yes SHRIMP
     c.   Not Related:             No
     d.   Related to Process:      Yes Habitat Loss

15.  Trade Product Identification: SHRIMP

16.  Economic Data

     Thailand has become the largest black tiger shrimp exporter
with $1.7 billion in exports in 1994.  As a whole, seafood exports
totalled $3.4 billion in 1993.

17.  Degree of Competitive Impact: LOW

18.  Industry Sector:  Food

19.  Exporter and Importer: JAPAN and THAIland

     In 1994, Thailand's major import destinations for shrimp were
Japan (48%) and the United States (40%).  Shrimp is the fifth
largest export for Thailand ($1.7 billion annuallly) in terms of
value and its fourth largest source of foreign exchange.  As
Thailand is a developing country trying to diversify its exports,
it is very hard to move away from such a lucrative market.  Also,
the two largest importers of Thai shrimp, Japan and the USA, carry
a significant trade surplus with Thailand.  The export of shrimp
helps keep this trade surplus in check.

E.   ENVIRONMENT FILTERS

20.  Environmental Problem Type: Habitat Loss

21.  Species Information

   Species name:         Shrimp
   Species type:         Crustacean
   Diversity:            3,442 higher plants per km/sq (Thailand)

     There is a high degree of biodiversity in species type for
this region.  The area is a veritable cornucopia of flora and
fauna.  Some species affected are shorebirds, crab-eating monkeys,
fishing cats, mud-skipper fish, sea turtles, dolphins, manatees,
otters, and a host of fish, mollusks and crustaceans, as well as
sea grasses and corals.  They also provide some of the most
valuable land areas in the world for highly productive agriculture. 

22.  Impact and Effect:  HIGH and PRODuct

23.  Urgency and Lifetime: LOW and about one year

24.  Substitutes:  Like Products

F.   OTHER FACTORS

25.  Culture:  NO

The culture factor is rather minimal for both importers and
exporters.  Culture is probably most significant with Japan because
of the traditional diet which contains a high amount of seafood
consumption.  Seafood is looked upon as being extremely healthy and
is considered a main factor for the Japanese having the longest
life span among nations.  Shrimp is a major part of this diet.
Also, in the United States, seafood has become much more popular
over the past 10 years as more Americans become health conscious
about the food that they eat.  This has definitely increased the
demand for and consumption of shrimp. 

26.  Human Rights: No

27.  Trans-Boundary Issues: YES

With the depletion of Thai mangroves shrimp farming is increasingly
moving across the border into Cambodia and causing significant
damage to its relatively small mangrove forests.  Thai companies
(especially the CP Group), have made significant investments into
Vietnam and India as well.  There is growing resentment and concern
in these countries about the destruction. of the mangroves and the
improper use of the land.     

28.  Relevant Literature

"Asia: Prawns and Profits Kill Mangroves."  Inter Press Service. 
December 15, 1993.

"Enviros Plan Campaign Against Imported Shrimp."  Greenwire. 
February 13, 1995.

Fitzgerald, Tricia.  "Shrimp Farms Threaten Cambodian Coast." 
United Press International.  February 13, 1995.

Hamilton, Joan.  "All You Can Stomach."  Sierra, 79 (Nov/Dec 1994):
36-38.

Kawanich, Supradit.  "Illegal Prawn Farms Destroying Wetlands."
Bangkok Post. May 23, 1994.

Kortbech-Olsen, Rudy.  "The Shrimp Trade-A Big Business for
Developing Countries."

International Trade Forum, 20 (April/June 1984): 4-7, 29-31.

Lavallee, Michael.  "Thai Frozen Seafood Market."  United States
Foreign Commercial Service. August 30, 1994.

Mallet, Victor.  "Seafresh Sees 'Miracle' in Lowly Shrimp Shells."
Bangkok Post. August 15, 1994.

Quarto, Alfredo.  "Rainforests of the Sea: Mangrove Forests
Threatened by Prawn Aquaculture." E, 5 (February 1994) 16.

Pethick, John.  "Marshes, Mangroves, and Sea Level Rise."
Geography. 76 (January 1991): 79-81.

"Seminar Tackles New Aquaculture Issues."  Bangkok Post.  February
20, 1995.

"Success of Prawn Culture reaps Big Rewards for Country."  Bangkok
Post.  May 1, 1991.

"Thai Wetlands May Become RAMSAR Sites." Bangkok Post. September
24, 1994

"Thailand Passes U.S. as Biggest Seafood Exporter."  Bangkok Post. 
August 1, 1994.

"Thailand To List Shrimp Farms as Pollution Sources."  Xinhua News
Agency.  February 10, 1995.





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