Training of Trainers - Library - Network of Aquaculture Centres in ...

Owing to its importance in generating foreign exchange and in creating domestic employment, the shrimp industryin Thailand has been actively promoted by both the government and the private sector. Market researchsuggested that the main factors affecting shrimp farming net foreign exchange earnings and the degree ofcomparative advantage are opportunity costs of shrimp operations and export prices received in the internationalshrimp market (Neiland, et. al., 2001). Historically, Thai shrimp producers had comparative advantage in exportingshrimp to US, Japan and EU markets, largely because of the premium shrimp price received in the market.Nevertheless, shrimp prices in the international market are often subject to the fluctuating trend of world shrimpsupply and demand, and have been on decline in recent years.Clearly, shrimp farming is a very competitive business venture. One of the key economic problems facing shrimpfarmers is the decline in the world price. Producers normally are price takers and have to schedule theirproductions directly according to the market demand that they expected to meet. For some producers, the struggleto survive under fluctuating market conditions may in part reflect a lack of good investment appraisal by theindustry. Shang et al. (1998) emphasized that in order to sustain economic growth, the shrimp farming industrymust focus on markets and marketing, in addition to improving production efficiency and minimizing negativeenvironmental impacts. In the current global shrimp trade, private food safety and quality standards, branding,contracts, certification, and agreements are axes around which food retailers are organizing competition based onquality (Busch and Bain, 2004; Hatanaka et al., 2005; Henson and Reardon, 2005). Shrimp supply chains aregoverned by lead firms in importing countries, who by and large have control on what happens in supplier farms indeveloping countries. For the small-scale farmers, adopting better management practices to supply quality shrimpat competitive price is a major challenge, but getting access to the lead firms in importing countries to market theirquality product remains simply illusive.Since shrimp is the major export fishery commodity for Thailand, it has a national initiative to promote the Farm-to-Table approach through a voluntary “Code of Conduct (COC)” and “Good Aquaculture Practice (GAP)” forresponsible shrimp farming. The COC standards provide for a certification process for all operators and address avariety of issues including the use of feed, veterinary drugs and other chemical products. The GAP project targetsthe practices of smaller farmers and is less comprehensive. While the COC deals with both environmentalmanagement and controlling of product safety (and is more easily implemented in larger farms), GAP narrows thescope by focusing only on safety of the products. Despite being successful in bring shrimp producers under setguidelines of the COC/ GAP program the appropriateness of this scheme in improving marketability of the productand shrimp farmer's profit remains illusive. Evident suggests that without creating economic benefits to the farmersany legislative approach to introduce set of practices to produce safe and clean shrimp will not be sustainable.Moreover, recent slump in shrimp prices in the international markets have brought down the profit margin offarmers to the minimum and have put them in a compelling situation. Obviously, the hard hit group is the smallscaleshrimp farmers, who are most vulnerable to the changes in the price structure.Practical information to trainersIntensive shrimp farming has introduced a range of side industries in Thailand involved at different stages ofshrimp production: hatcheries, feed, pharmaceuticals, agro-chemicals, processing plants and exporters and thus,has created huge employment opportunities for the society. However, intensification of shrimp farming increasedproduction and investment costs, transforming the industry from labor-intensive to capital-intensive. Small-scalefarmers that often do not have sufficient capacity for capital investment or who suffer losses in business due tovarious reasons, including low price of shrimp, are being displaced by industrial farms. Large companies run mostof these side industries, and are usually involved in several of these activities and thus, have higher competitiveadvantage over the small-farms. A study in southern Thailand reported that it was the larger farms that proved themost profitable in the longer run, due to scale economies and better management; the small-scale farms going outof business after initial profitability (Tokrisna and Benheam, 1995). Analyzing Thai Government policies on shrimpfarming development Huitric et al. (2002) observed that the development of legislation has not followed the same65