CASE NUMBER: 339
CASE MNEMONIC: INDSHRMP
CASE NAME: Shrimp Aquaculture in India
I. IdentificationAgriculture and fishing in India have traditionally been strong export markets. For instance, roughly 70% of the overall population remains rural, and in certain states, like Andhra Pradesh, farming is a major part of the economy. Roughly twenty years ago, some people in this state began to experiment with small-scale shrimp farms. While some of these people have been fishermen who have been seeing a recent decline in catches in the ocean, most are private businessmen. Fairly recently, over the past five years or so, aquaculture has taken off in India. It is no longer the enterprise of small-scale farmers. Rather, Indian business is investing heavily in this industry. Currently, there are over 80,000 hectares of shrimp farms which are expected to grow rapidly. In 1993, for example, India's marine exports totalled 70,000 tons. This is expected to reach 200,000 tons by the year 2000.
Marine product exports from India have grown from Rs. 4 billion in 1985-6 to Rs. 8.75 billion in 1990-1. Many of India's big ten business conglomerates have gotten into the business of aquaculture. The Tata Group has gone into collaboration with the state government of Gujarat to establish a shrimp farm worth Rs. 80 million. Tata Iron and Steel, a subsidiary of Tata Group, has established a Rs. 200 million aquaculture project in a joint venture with the Orissa state Government. The Thapar Group, another of the big ten, has invested in a 110 hectare farm near Nellore in Andhra Pradesh. Finally, Unilever, a subsidiary of Hindustan Lever Ltd., has been involved in shrimp hatcheries in the states of Tamil Nadu and West Bengal. These projects had been started as far back as 1977. This is because aquaculture provides a quick profit with a quick turnover. Therefore Indian business finds it very lucrative. Much of this excitement over aquaculture comes from the fact that shrimp is a short duration crop that receives high investment returns and enjoys an expanding market. Advocates call it a savior of developing countries. On the other hand, aquaculture also has some downsides.
Aquaculture has provided many benefits to southern India. For instance, in Andhra Pradesh and Tamil Nadu, highly salinized land which is not adequate for traditional forms of agriculture have been put to use. Secondly, much of the land in southern Andhra Pradesh is very dry. Therefore, even if the land was not salinized, it is not commercially viable to bring in fresh water for traditional agriculture.
Another use of aquaculture is that it provides employment. The World Bank, for instance, has lent $96.8 million for the development of Indian aquaculture. The World Bank expects aquaculture to create about 2 million jobs for India. For instance, every hectare of shrimp farming provides direct daily employment to four people annually. Furthermore, each hectare employs four people indirectly in activities such as seed collection in hatcheries and processing plants. In contrast, traditional agriculture provides only seasonal employment. Furthermore, aquaculture employs those fishermen who have been unable to compete with large corporate fishing vessels for the diminishing limited resources of the seas.
Not only has aquaculture been credited with providing employment, it has also been credited with providing high quality employment. According to the Central Marine Fisheries Research Institute, in an October 1994 report, seed collection in hatcheries has employed 25,000 in Andhra Pradesh and significantly raised the standard of living for its employees. Furthermore, the high profits that aquaculture firms enjoy are shared among the villages in which they operate. For instance, according to a Far Eastern Economic Review Report (12 January 1995) Spencer's Aquaculture provides roads, schools, clean drinking water, and televisions to the villages in which they have projects.
Unfortunately, there are also some negative affects of aquaculture. For instance, feed is administered to shrimp by placing dough ball mixtures in clay pots and lowering the clay pots to the bottom of the water. However, due to the low nature of the water used in aquaculture, much of the nutrients are lost in the pond. This reduces the amount of oxygen available to the shrimp. Thus, in order to keep them alive, the pond must continually replace its water supply. This water comes from the ocean, is highly salinized, and affects nearby non-aquaculture farming in a negative way. Those affected most are the rice farmers, who also depend on a steady, continuous flow of water for their crops to exist.
In addition, ground water resources in nearby villages are being spoiled because they are also becoming highly salinized. Salt water from the ocean is pumped into these shrimp ponds in order to sustain life. The need to continually replenish and replace this water ends up spoiling the underground drinking water for people living nearby. Finally, this salinized water is also detrimental for the traditional forms of agriculutre which may receive waste water from aquaculture. This is not an unsolvable problem. Spencer's Aquaculture is creating a freshwater canal around its farm in order to absorb seepage before it can harm other areas. Furthermore, an NGO known as PREPARE has been formed in order to protect environmental damage from other aquaculture companies that are less willing to voluntarily protect the enivronment.
Salt is not the only problem which comes from seepage. Another problem is that shrimp farmers use many pesticides, some of which are banned in other countries. Not only does this pesticide seep through and affect other farming and drinking water, but it also reaks down the immune systems of the shrimp themselves. Thus, sometimes a single virus can travel and hit all of the shrimp in a single pond. Furthermore, since the water flows from one pond to another, it is easy for a blight to hit and severely damage the shrimp farming industry for a year or two. This this has yet to happen in India, it has happened in Taiwan.
Because of this environmental uncertainty, which is added to an erratic market that aquaculture is normally subjected to, PREPARE projects the average life of a shrimp farm is only about five years. On top of this, the land is not usable for other types of agriculture, once a shrimp farm closes down, for another seven years due to the high saline content.
Another point is that the government is being forced to subsidize these shrimp farmers by helping pay the expense to ship clean drinking water into these villages. Therefore, the net profit that these shrimp farmers make doe snot reflect the total expenses. Furthermore, although shrimp farming is touted as a savior that creates jobs, it does not create as many jobs as it destroys. For instance, a 100-acre rice field employs about 50 workers while a 100-acre shrimp farm employs only five workers. According to Vandana Shiva, an environmental activist in Tamil Nadu, the state's shrimp export revenue of $868 million in 1994 came at the expense of $1.38 billion in job loss and environmental destruction. Therefore, environmentalists aregue that aquaculture is a scheme where the rich get richer while creating a negative impact in the overal national economy. In addition, workers often complain that aquaculture provides only menial work.
Finally, in a country where not all of the people can afford to eat well, aquaculture is replacing locally-produced, traditional forms of agricultural products with an export product that most Indians cannot afford.
One proposed solution, as far as the seepage problem is concerned, is to have the government zone farm land so that there are designated areas for aquaculture and designated areas for traditional farming. By separating the two, the problems created by seepage may be avoidable.
Domain = Asia
Industry = Food
Env. Problem = Habitat Loss
II. Legal
ClustersThere is continuing disagreement over this issue as discussed above. While much of the debate takes place in civil society, government has taken up the issue. The Supreme Court of India has placed a ban on the creation of new aquaculture projects until their impact on the environment can be studied. The government of Tamil Nadu was the first to enact legislation to comply with this ban. Since the government has not completed its studies on aquaculture's affect on the environment, the issue is still in progress. One reason for this is that these debates have just recntly surfaced after many state governments have actively been involved in promoting aquaculture as an important boost to their respective economies.
This is an internal debate going on in India.
Any decision made by the Indian government, or any of its state governments, will only affect aquaculture in there respective jurisdications. It will not affect other countries that are heavily into aquaculture for export, like Vietnam. Neither will it affect the countries heavily importing Indian aquacultureal products, like Japan.
So far, because of the Supreme Court order not to produce any new shrimp farms, and Tamil Nadu's compliance with this order, this discussion if being pursued in the legal realm. Most likely, the Supreme Court will come to a decision and the outcome will be enforced in legal standing.
III. Geographic
Clustersa. Geographic Domain: Asia
b. Geographic Site: South Asia
c. Geographic Impact: India
Shrimp aquaculture mainly takes place in Asia, especially South and Southeast Asia. This is evident by the content of the related cases mentioned above. This particular case deals with South Asia because here, aquaculture takes place in land that was formerly used for traditional agriculture or was deemed unusable. For the mostpart, the destruction of mangroves, as in Southeast Asia, is not necessary for aquaculture land.
Many of the aquaculture projects are being funded by private enterprise that is in collaberation with state governments. In addition, there is a lot of other sub-national factors. This is evident by the NGOs, like PREPARE, that are involved in this debate. Secondly, the change in village life is anotehr sub-national factor.
There is a need for river water in aquaculture. Therefore, it is mainly done in areas close to rivers. Such land is usually also good for traditional types of agriculture in addition to aquaculture.
IV. Trade
ClustersThe opposition to aquaculture comes from two sources. Some of the opposition comes from rice farmers, who are upset by the inflow of saline water from the fish farms into their rice fields. This type of opposition would be satisfied with a high set of standards that would prevent any impact on their rice fields. The other opposition comes from farmers who would like to see these farms ended because they compete with other farmers for water. However, much of the opposition by other villagers has been subdued by the sharing of wealth by the aquaculture firms with the villages they invest in.
Because this debate has eventually been taken to the Supreme Court, the solution will be turned into regulatory standards by law.
a. Directly Related to Product: YES, Shrimp
b. Indirectly Related to Product: NO
c. Not Related to Product: NO
d. Related to Process: YES, Land Pollution
The main export is shrimp. Frozen shrimp is heavily in demand in Japan, the main destination of these exports. However, Indian aquaculture is not limited to shrimp. It covers a variety of marine products.
It is difficult to find clear economic data dealing specifically with aquaculture in India.
Any new standards which would prevent runoff into rice fields will cost money that no one is willing to pay. If those who are in aquaculture are required to pay, then many Indians who earn their livelihoods will adversely suffer.
The main importer of Indian marine products is Japan. Other major importers are the United Kingdom, Spain, Italy, France, the Netherlands, Portugal, Belgium, Greece, Germany, Ireland, Norway, Denmark, Switzerland, the United States, Singapore, Hong Kong, the United Arab Emirates, Sri Lanka, Australia, and others respectively.
V. Environment
ClustersThe main environmental problem in this issue deals with the runoff of salinized water and other polluted water, polluted mainly by the clay pots used in feeding. This water runs off into neighboring farms, especially rice fields, where farmers find it difficult to continue raising their crops. However, no species is in danger of extinction from aquaculture.
Although the impact on farmland remains low, the number of aquaculture farms in India is booming due to their lucrative nature. Therefore, in the future, more farmland may be at a loss.
This problem can be solved by either using safety standards or ending aquaculture; the latter is highly unlikely. However, the damage caused by aquaculture is not permanent and therefore is of low urgency.
Bringing about efforts to improve the quality of water in aquaculture will prevent many of the environmental problems of this practice.
VI. Other
FactorsThe culture that is the determining factor in this situation is not that of the exporting country. Rather, it is the culture of the importing country. For instance, in Japanese culture seafood is an important part of the diet. Similarly, in other developed countries, seafood is increasingly seen as a healthy edition to the diet.
From the Indian point of view, culture is not an important factor. If shrimp was not a successful export product, then Indian investors would have chosen another product to produce. From the Indian point of view, aquaculture is purely economical.
BBC World Report "Andhra Pradesh Exports Worth Rs. 10 Billion," All-India Radio (9 June 1993).
Cohen, Gary, "Aquaculture Floods Indian Villages," Multinational Monitor (July/August 1995).
Fish Farming International, "India Project Compares Shrimp Feeds," (October 1991).
Ganapathy, R., "Shrimp Retains Dominant Position in Rising Indian Seafood Exports; Industry Overview," Quick Frozen Foods International (January 1994).
Jayaraman, Nityanand, "Big Fry vs. Small Fry, Booming Shrimp-Farming Business Spawns Protest," Far Eastern Economic Review (12 January 1995).
Quick Frozen Foods International, "Shrimp Farming in Andhra Pradesh," (July 1995).
Ranjani, C.M., "Seafood Promise Attracts India's Big Companies," Fish Farming International (March 1992).
