Sweet and sour shrimp
Vietnam's shrimp industry is breeding both profits
and misery. Should the government promote this
risky business to reduce poverty?
HANOI & QUANG NAM - Stories of massive debt and disease don't
scare Dinh Duc Huu. The Vietnamese-American
entrepreneur knows that many shrimp producers across
Asia have been wiped out by sudden epidemics in their
ponds. But Huu believes he will see a healthy return on
his initial $5 million investment in a sprawling, new
shrimp farm on the outskirts of Vietnam's northern city
of Haiphong. At an August launch, local officials
welcomed the prospect of 1,500 new jobs and, more
important, Huu's promise to teach local farmers the
intricacies of breeding black tiger shrimp.
It is a delicate business. "Raising shrimp is more difficult
than raising a baby," says Huu, an engineer who is
drawing on expertise culled from American universities
and a California bio-tech firm. "A shrimp doesn't cry
when it's sick." But plenty of people are crying down in
southern Vietnam, the hub of the nation's shrimp trade.
In southern Ca Mau town, disease struck 63,000
hectares of shrimp from January to March. In central
Quang Nam province, unusually hot July weather put
some shrimp off their food, stunting growth. Even
during seasons that are generally profitable, rewards are
spread unequally among neighbours. "There are winners
and losers," sighs Quang Nam farmer Nguyen Thi Hoa,
who can't repay her debts because she has lost 80% of
her shrimp to disease since 2000.
Despite the risks, Vietnam is determined to emerge as a
big winner in aquaculture. The nation is counting on
shrimp becoming one of its few star exports as more
traditional commodities such as rice, coffee and pepper
remain cursed by low world prices. The seafood sector
has already become Vietnam's third-largest earner of
foreign exchange, with shrimp exports alone reaching
$780 million last year. In 2001 the number of hectares
devoted to shrimp nearly doubled to 446,000. The
Ministry of Fisheries hopes to expand that to half a
million hectares by 2005.
The shrimp industry "has the potential to be an effective
way of leveraging people out of poverty. Rather than
achieve incremental gains, they could leapfrog," says
one Western development specialist in Hanoi. To
reduce financial risk, some local communities are
pooling resources and developing ponds without
abandoning their other crops. Some inland communities
are also being encouraged to raise freshwater shrimp,
which are cheaper to produce.
But some community activists and aquaculture
specialists worry that the shrimp industry could leave
rural folk more disadvantaged than ever. "This
export-led development is really unsustainable. It is
pushing people into this gamble and making them more
addicted to it," warns a Vietnamese development
officer at Oxfam Great Britain.
"If we involve the poor directly in shrimp-farming
activities, it's not good for the poor. It's still high-risk for
them, " says Tran Van Nhuong, who is managing a
United Nations Development Programme shrimp
project based in central Nghe An province. Rather than
advocating that the poor try to "leapfrog" out of
poverty, only to end up staggering under the heavy
loans needed to finance big ponds, they can work as
shrimp-pond labourers, help produce feed, or work as
small traders, he says.
The risks are real. The country's shrimp exports grew
10.7% year on year in the first six months of 2002, but
grew just 4.4% in dollar value. And stable prices in its
major export markets, namely the United States, Japan,
and the European Union, are not guaranteed. Indeed,
the price of Vietnam's favoured species--black tiger
shrimp--has declined by roughly $3 per kilogram over
the last three years. Recent disclosures of
chloramphenicol traces found in select containers of
Vietnamese shrimp add to the uncertainty.
"They've got a false sense of security at the moment,"
says one analyst in Ho Chi Minh City. "There will be an
oversupply. The efficient countries will survive."
Vietnam hopes to enhance efficiency, but it's hampered
by the disorganized sprawl of hundreds of thousands of
household producers and limited government resources
for educating small producers. They must be taught
proper feeding, pond-clearing and pollution-prevention
methods, yet the task is enormous. In Quang Nam
province, for example, there are only four government
outreach workers helping some 10,000 families who
produce shrimp.
For now, such outreach workers lack the technical
equipment to test the quality of the baby shrimp
produced at the country's estimated 6,000 household
hatcheries. Controlling the quality of feed is also a big
problem, since many cash-strapped farmers opt for the
cheaper feeds rather than the more pricey brands. Then
there's the huge investment that will be required to
install wastewater-treatment facilities to preserve the
environment and prevent disease from effluent that now
washes back into many ponds.
Debt trap
In light of these problems, some local industry leaders
argue that Vietnam should scale back its shrimp targets.
"The government better not push production too much,
but conduct better planning and ensure sustainable
development," says Nguyen Huu Dung, general
secretary of the Vietnam Association of Seafood
Exporters and Producers. Rather than encourage
farmers to stock their ponds more densely, Dung
believes it would be preferable to promote low-density,
low-cost organic farming. Such organically-raised
shrimp fetch prices 20% higher than ordinary shrimp on
the world market. Another solution lies in further
diversification into oysters, clams, mussels, and
scallops, which are cheaper and less risky to produce.
Many farmers are caught in a debt trap. "Having
already invested in pond construction, and lacking
alternatives, many shrimp farmers feel compelled to
continue with the gamble," says a new report from the
Environmental Justice Foundation, a London-based
advocacy group. "When unable to get credit from
banks, many resort to private moneylenders' 'hot
loans,'" which reportedly incur monthly interest rates as
high as 10%-20%.
Take Le Van Bay, a 34-year old shrimp farmer from
Cam Chau village in Quang Nam province. A poor rice
farmer with a wife and two children, he supplemented
the family income by working occasionally in
construction for 30,000 dong ($2) a day. In 2000, he
decided to wade into shrimp. He managed to get a
50-million-dong bank loan and borrowed roughly 130
million dong from relatives. But he hasn't made any
profit on his 8,500-square-metre pond, because of
diseased and undersized shrimp. Today, he's keeping
his family afloat with loans from relatives, still hoping
that he'll strike it rich. "I can't switch from shrimp. I
already borrowed from the bank," says Bay.
Quang Nam is a typical example of a poor province
that sees shrimp as the best solution to its own
economic woes. It is a coastal province dominated by
rice farming, with a per-capita GDP of $300 and
virtually no industry other than some tourism.
Authorities remain confident that they can reduce the
20% disease rate among local shrimp and raise family
income to anywhere between 20 million and 100 million
dong per hectare, per crop. So the local government is
targeting an increase from 2,200 hectares to 6,000
hectares of shrimp over the next several years, and
gearing up to invest 23 billion dong in the province's
first frozen-shrimp processing factory.
From afar, analysts are watching to see whether such
expansion throughout the country will truly prove
sustainable. If Vietnam overstocks its shrimp ponds in
the hopes of short-term profits, the country could be
faced with a long-term problem of so-called "shrimp
graveyards" where land is abandoned because of
unsustainable intensive cultivation. And when greed
overtakes need, it may be too late to shift course.
By Margot Cohen - The Far Eastern Economic Review - August 29, 2002.
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