CHAPTER - V
AGRO-AQUACULTURAL ECONOMIC STUDY

SECTION - 1
INTRODUCTION

1.0 Scope and Objectives

During the last few years, increasing proportions of land in the coastal areas have been devoted to shrimp cultivation. In fact, the phenomenon can be described as the growth of a “shrimp belt”. There is no official or otherwise reliable estimate of how much land has been brought under shrimp cultivation. The growth has been virtually entirely on private efforts; the involvement of the Government so far has been minimal. However, it is felt that the Government has to play a crucial role in promoting and/or regulating shrimp cultivation for directing it towards socially desirable goals of increased income employment, generation, social welfare, etc.

The shrimp cultivators are small entrepreneurs spread over a large area in the coastal belt. Virtually all the output is exported (guesses or estimates put it at above 90%). The shrimp cultivators may be large farmers in the context of the agrarain structure of Bangladesh; but the entreprenenurs engaged in the external sector of the economy and exposed to the risk of international trade in a non-traditional primary commodity may need support of public policy on a wide range of matters pertaining to production and marketing of shrimp. A list of areas, by no means exhaustive, where they need support is (i) technical services/advice on improved cultural practices for optimizing output at a given cost; (ii) marketing facilities including cold storage, appropriate transportation, physical facilities for sale, quality control, shimpment etc., (iii) Credit facilities, export guarntees, etc.

On the other hand, there are apparent conflicts between subsistence agriculture and shrimp cultivation, between shrimp cultivation and salt manufacturing and mangrove forest denudation. BWDB (Bangladesh Water Development Board) put up the coastal embankments in 1950's and 1960's in order to protect these areas from overflooding by salt water from the seas. As a result, rice production in these areas increased which was the justification for the massive coastal embankment projects. Under the existing law, breaches in the embankments, necessary for letting in water for shrimp cultivation, is prohibited; and BWDB has often jealousy invoked its powers under the law impeding shrimp cultivation. Where shrimp cultivation claims land from salt manufacturing a situation prevalent in Cox's Bazar - the salt lobby carries a campaign against shrimp. The opposition from forest and ecological conservationists is more subtle and persuasive; denudation of the mangrove forests would bring about soil erosion and disturb the ecological balance which will have debilitating effects on human and other living population. As these are events predicted to materialize in the future, empirical or direct verification is not possible.

The contentions on behalf of subsistence agriculture, salt, or forestry and ecological conservation have force in their favour. These are situations where the issues should be resolved on the basis of trade-off between alternative choices. The Government as the only authoritative institution with the capability to resolve conflicts between various interest groups and between long term social interests and short-term market determined choices having negative externalities have crucial regulative and directive role to play in the context.

The present project is addressed towards these needs. Its primary objective is to build up technical information on the basis of which technical support services to the shrimp cultivators can be designed. As a part of the project a socio-economic survey also was undertaken, though its scope was much more limited. The technical survey was taken up at three stations (Satkhira in Khulna district; Khepupara in Patuakhali district; and Chakaria in Chittagong district), but socio-economic survey was confined to two stations only Satkhira and Chakaria. While the technical survey was spread over several months to take into account seasonal and tidal variations, field survey for the socio-economic component was completed within six months. So, the seasonal variations were not adequately captured. Finally, marketing and credit were not included in the scope of the socio-economic survey; the resources would not permit a larger canvas, however, desirable or justifiable that might be.

The focus of the socio-economic survey was on the social and economic impact of shrimp cultivation. The following were the underlying hypotheses on the basis of which the survey questionnaire was designed. (i) The price of shrimp is higher than the price of rice/paddy grown on the same unit of land. As long as this relationship continues, it will be more profitable to grow shrimp than paddy. (ii) The pattern of distribution of the higher income resulting from shrimp may diverge from the existing distributional pattern. As it may need more investment and entrepreneurial /managerial ability, a larger proportion of the entire incremental income may accrue to the land owners and entrepreneurs/managers. The workers and primary producers may not receive higher income at all. (iii) The size of the labour force required for existing shrimp cultivation practice may be smaller than for paddy cultivation for a given land area. As a result, the unemployment situation may be further a exacerbated. At the same time, two other related scenaries are possible. First, the smaller labour force employed in shrimp cultivation may receive a higher remuneration as their productivity predicatably will be higher. So, greater unemployment may co-exist with higher labour income for a few a kind of incipient labour aristocracy. Secondly, the disguised unemployment or underemployment situation may become explicit, i.e., work-sharing and work-stretching would be eliminated as a result of replacing family labour in a subsistance agriculture by hired labour producing for a market or exchange economy. (iv) Subsistance agriculture will be replaced by commercial production primarily for export market. This entails a shift in the distribution of income/ output away from the subsistance farmer to traders which may have an adverse nutritional/health impact. (v) Shrimp culture will complete with rice for land - the most critical and scarcest input. As shrimp cultivation yields higher income, it is likely that there will be some substitution of shrimp for rice.

1.1 Survey Methodology

The main objective of the tidal area study is to collect and collate technical information on the basis of which proper optimum utilization of coastal land can be planned. As a part of the project agro-fishery-economic study was undertaken at three polders of Satkhira District and Chakaria area in Cox's Bazar District.

Presently utilized and prospective potential area for brakish water fish culture of selected poldered area (where Hydro-Biological Survey was conducted) were considered as sampling universe. The two stage stratified random sampling technique was used as sampling design for the survey. Villages were considered as primary sampling units and households as ultimate sample unit. Questionnaire was pre-tested in both Satkhira and Chakaria. On the basis of these, printed close-ended questionnaire was used for collection of data.

1.11 Survey in Satkhira Area

Ten (10) percent of the listed villages within the identified zone of influence of brakish water fish culture of each polder was considered as first stage sampling. Ten(10) percent households of each selected village were taken into consideration as second stage sampling, which represented 1.0 percent of total households of the sampling universe.

Sampling Methodology

Presently utilized and prospective potential area for brakish water fish culture of Polder-1, Polder-2 and Polder-3 were identified on the water Development Maps of the Bangladesh Water Development Board and then were superimposed on the Upazila Administrative Maps. Polder-1, Polder-2 and Polder-3 were considered as strata. The villages within the identified area of each polder were listed together with the number of households collected from the Population Census Report. Ten (10) percent of the listed villages were selected randomly from each strata. Each of the households of each selected village was enumerated through printed questionnaire, covering occupation of the head of the household, ownership of land and utilization of farm land. The enumeration was undertaken to ascertain the farm size and categorical classification of households such as, landless, crop farmer, and shrimp culturist.

The enumerated households are distributed into the following groups:

Ten (10) percent of the total enumerated households were considered for second stage sampling and proportionally distributed to the groups. The allocated 263 households of each group were selected randomly as the ultimate sampling unit.

1.12 Survey in Chakaria Area

The population density in Chakaria Sundarban area is much less than elsewhere in the country and many of the farmers, shrimp culturists, and salt cultivators come from outside during the cultural season. If the sampling universe were restricted to the currently cultured area and the potential area around it, the sample would be too small to yield any meaningful finding. Accordingly, the sampling universe was extended to the surrounding villages of the identified brakish water fish cultured area. It was also noted during the survey that same sample size as in Satkhira area would not be adequate for the Chakaria area; relatively thinly populated and widely dispersed villages required larger sample size.

a. Sample size

On consideration of the above mentioned fact the sample size was extended to 5 percent of the total population. To stage stratified sampling technique was used for the selection of 50 percent of the total villages and 10 percent of the total households from the selected villages.

b. Sampling Methodology

The presently utilized and prospective area for brakish water fish culture were identified on the water development maps of BWDB and then the identified zone of influence was superimposed on Upazila Administrative Maps. Each Administrative Union within the identified zone was considered as strata. The villages located within and surrounding the identified zone were listed together with the households, collected from the census report. Fifty(50) percent of the listed villages were selected randomly from each stratum. The enumerated households are distributed into the following groups:

Ten(10) percent of the total enumerated households were taken into consideration for second stage sampling and proportionally distributed to each groups. The allocated 86 households of each group were selected randomly as the ultimate sampling unit, and data collected from each selected household.

SECTION - 2
SATKHIRA

2.0 General

The area surveyed is situated in Satkhira, Asasuni, Debhata and Kaliganj Upazilas under the Satkhira district. The descriptive profile is to bring into focus its difference from and similarity with the rest of the country. Comparison is done on the following dimensions : demographic characteristics; agrarain structure and landlessness employment and underemployment, etc. all representing critical issues of the economy.

2.1 Population and Labour Force

Table-1 sets the age structure of the population surveyed in the perspective of the age structure of the Bangladesh population. The age structure of the total population is derived from two sources, projection of total population of Bangladesh in 1980 based on 1974 census and the Bangladesh Manpower Survey 1980. The sampled population has a more youthfull age structure than the national demographic structure. The age group not exceeding nine years of age constitute 35% of the sample population compared with 29% in the total population of the country and 32% in BMS. When the age group below 15 years is taken into account, this relationship is somewhat modified. In the sample they constitute 46% of the population; 41% in the country's population; 46% in BMS. It may be noted that, according to BMS, 46.3% of the rural population belong to this group compared with 46.4% in survey; the proximity of the two presumably is due to the homogeneity of the (i.e. rural residence) of the two populations. Secondly, the sample has a smaller proportion in the age group 60 years and above - 3.2% compared with 4.5% or 4.6% of total population or BMS. Thirdly, in the sample the age group which constitute the labour force is smaller than in the two other statistics. Assuming that the age cohort 10–59 years makes up the labour force, it is only 61% compared with 66% in the projection and 63–64% in BMS. When the labour force is defined to include age group 15–59, this differences no longer holds so strongly; in the sample this age group makes up 50% of the population compared with 54% in the total populations and 49%–50% in BMS. It may be noted that in whatever way we may define the active labour force, the total population and the urban stratum of BMS show a higher proportion in that age group than the survey and the rural stratum of BMS.

Table-2 sets out the proportion of the sample population that is male and compares that with the proportion of male in 1980 population and BMS. The interesting feature to note is that virtually for all the age groups between 15 years and 59 years, the sample has higher proportion of men than women relative to the two other populations. Unless this is dismissed as a quirk of the data, further investigation into the phenomenon may reveal many interesting demographic features. Is female mortality very high in the area ? Are the respondents virtually all men, shy of reporting about female members of the family ? But that is beyond the scope of our present task.

Table-1 : Demographic Structure : Age Profile

Note : Population for Bangladesh refers to the projection for 1980 based on census data of 1974. Bangladesh Manpower Survey was carried out in 1980.

Source: SYB 1981, P. 46
BMS 1980, P. 12

Table-2 : Demographic Structure : Sex Ratio

Note : (a) Percentage of men in the age group.

Source: As in Table-1.

2.2 Land Ownership and Tenurial Structure

The structure of land ownership in the survey area has been shown in comparative perspective in Table-3. The data for Bangladesh do not include the landless. For comparability, sample data have been adjusted (as shown in Table-3). For owners having not more than one acre of land there is very close similarity between the two sets of data; for small/ medium farmers (owning 1.00–4.00 acres), however, the distribution in the sample area is less favourable. On the other hand, concentration of ownership among large farmers(owning more than 4 acres of land) is much higher in Satkhira area than in the country as a whole. It is apprent, therefore, that distribution of land ownership in the area is more skewed than in the country.

The tenurial structure of the survey area also differs significantly from the finding of the Land Occupancy Survey 1977. In the sample, land under owner-cultivation (75.5%) is much larger than in LOS/77 (56%) and the incidence of owner-cum-tenant farming is far lower (19%) than in LOS/77 (44%). Tenant farming, however, is more important in the sample (5.4%) than in LOS/77 (0.4%). Three more points ought to be noted about the sample tenurial structure. First, in the category of owner-cum-tenant farming, 62.5% of the land are owned by the cultivator in LOS/77 data; in the sample, only 34% are owned by the cultivators. Secondly, only 24% of the land under owner-cum-tenant cultivators grow rice; the remaining 76% are under shrimp cultivation. Similarly, only 23% of the land cultivated by tenants are under paddy and the remaining 77% are under shrimp cultivation. Finally, virtually all the land cultivated by tenants or owner-cum-tenants are leased out by large farmers (i.e. Owning more than 4 acres) : 96.4% in the case of owner-cum-tenants and 93.0% in the case of exclusive tenants. The morable of the statistics : small and marginal farmers are losing out to the large farmers/land owners and paddy to shrimp(Table-4).

The sample shows a higher incidence of landlessness than in LOS/77. LOS/77 uses four alternative definitions of landlessness, of which the following definition is the closest to definition used for the analysis : “a rural household that does not claim ownership of any land other than homestead land but such a household may or may not claim ownership to homestead land”. In our sample, the landless own homestead land only, but no agricultural land, and constitute 46.5% of the sample population. According to LOS/77, landlessness of this type is only 27% (Table-5).

Table-3 : Distribution of Land Ownership

Note : Landless population include those who have homestead land only and no cultivable land.

Figures within brackets are percentages based on data adjusted by excluding the landless, which allows comparison with available data on Bangladesh.

Source: SPBB 1979, P. 203.

Table-4 : Tenurial Structure

Note : Indicates percentage of area under each form.

Owner-farmer is one who cultivates the land owned by him. He does not rent in land.

Owner-cum-tenant farmer is one who cultivates land owned by him and rents in additional land. Total land cultivated by him exceeds land owned by him by the extent of land leased in from others.

Tenant farmer is a cultivator who does not cultivate any land owned by him and leases in all the land which he cultivates.

Source : SYB 1980, P. 164.

Table-5 : Incidence of Landlessness

Note : Criterion 3 is closest to the definition of Landlessness used in the present survey.

Source : SPBB 1979, P. 205.

2.3 Occupational Structure

The sample occupational structure is described in Table-6. As could be expected in the rural area where the survey was done, 77% of the population are engaged in crop cultivation, including 10% who have other minor occupations in addition to crop cultivation. Twenty-one percent of the sample population are engaged in non-farm occupations including business (9.8%), services (5.2%), and others (6.4%). Fishing is relatively unimportant, being the exclusive occupation of only 1.2% of the population or of 2% if other minor occupations are included. However, a slightly larger proportion-3.4% - are engaged in fishing, if fishing in combination with other major occupations are taken into account.

The occupational structure of the surveyed population is different from the occupational structure in BMS. Together with fishing, 79% of the sampled population are engaged in agricultural occupations. This is a smaller than the proportion found in BMS - 86%. Correspondingly, the proportion of non-agricultural occupations is also higher in this sample than in BMS - 21% compared with 14% in BMS. This is consistent with higher incidence of landlessness and skewed distribution of ownership indicated earlier : the landlords engage in cultivation fewer people than would be employed as family labour by small owner-farmer or owner-cum-tenant farmer, farmer; consequently, more people seek non-farm employment.

Table-6 : Occupational Structure

Note : Occupational classification used in the present survey is different from the one used in BMS, Nevertheless, some comparison is possible, see BMS, P. 34-5.

2.4 Employment and Unemployment Rates

Table-7 (Part-A) summarizes the unemployment situation in the sample area. Nearly 6% of the labour force are without employment; the highest incidence of unemployment is found among shrimp farmers (12.6%) and the lowest among medium (1.00–4.00 acres) farmers (2.6%). These farmers cultivate their own land and also rent in land from other farmers. Non-utilization of available manpower, calculated on the basis of man-days available but not used, is 16%. Again, the extent of non-utilization is the highest among shrimp farmers (20%), followed by the landless (18%) and farmers of all size classes around 15% (14.9% to 15.5%).

Table-7 (Part-B) reproduces some under-employment (or disguised unemployment) data from BMS. In a strict sense, the data in part-A and part-B are not comparable; while the former shows people not employed at all, the latter shows people who are engaged in work but whose effective work is less than one standard or full work per day week, or any other reference period. If the labour force employed could be reduced such that all engaged in work had to work the standard hours per day or week to obtain the same output, part of the under-employed labourers could be laid off. In other words, under-employment would become explicit in the form of unemployment. Labour employment in the informal labour market where the family household is the unit of labour supply does not allow the transformation of under-employment into explicit unemployment. As shrimp cultivation has forward linkage with competetive exchange market, it will hire-labour to the extent necessary for a given output. Thus under-employment or disguised unemployment will be gradually replaced by open unemployment.

Table-7 : Utilization and Under-utilization of Manpower

Note : BMS assumes 290 working days in a year and 40 hours of work per week.

Under-employment is the difference between hours available and hours employed/worked, based on people actually engaged in work

Source : BMS pp. 25–27

2.5 Cropped Acreage and Yield Per Acre

The distribution of land under paddy and other cash crops has been shown in Table-8. It is clear that transplanted Aman is the main crop of the area, accounting for 82% of the land under cultivation. Together with broadcast Aus (4%) and Boro (5.6%) paddy accounts for 92% of the cropped land. Cash crops account for 8% of the total cropped land and include jute (2.7%), pulses (3.2%), oil seeds (1.6%), and other non-specified items (0.9%). The cropping intensity is about 106% which is much lower than the country average at 150.7 (SPBB 1979, P. 201).

According to the survey data the average yield of paddy from one acre of land under rainfed condition and irrigated condition amount to 544 kg or 14.6 maunds and 1738 kg or 46.6 maunds respectively, giving an weighted average of about 616.5 kg or 16.5 maunds for the paddy as a whole. The per acre yield of individual variety of paddy ranges as follows: 406 kg for B. Aus, 550 kg for T. Aman and 173 kg for Boro. The yield of T. Aman is much lower than the average yield of the country whereas the other two are almost same or closer to the country average. The yield of the cash crop like jute, pulses, oilseeds are 623 kg, 317 kg and 188 kg respectively. So, T. Aman is the main crop and the economic well being of community is directly dependent on the production of it.

Irrigation is virtually non-existing; less than 6% of cropped land, all under Boro paddy, get irrigated water supply.

Table-8 : Distribution of Crop Land

2.6 Income and Profit

2.61 From Crop Production

Income from the different crops and shrimp culture very due to cost of production and unit sale price differentials. For the same crops the small farmers, retained the farmer's income is higher than the relatively large farmers due to the farmers higher productivity and larger component or virtually all labour supplied by the family. However, in order to arrive at some assessment of aggregate income and profit, the accounting has been done on the basis of transplanted Aman on owner-cultivated land. As this is the main crop, this will approximate the reality more than calculations based on any other crop.

Table-9 summarizes the data on cost of production, value of output, and net income from cultivation of paddy per acre of land. The total cost of production is Tk 964.00, including cost of inputs (Tk 295.00) and wages (Tk 669.00). Netting out the cost, net income from paddy produced on one acre of land comes to Tk 1776.00 only. It is pertinent to note that 63% of the total labour employed is family labour; so Tk. 606.00 will be retained by the farming family. If it is owner-farmer family, the net income accruing to the family is Tk 2382.00, including the value of the output and the retained labour income. It should be noted that in the calculation rent does not features as a component of cost of paddy production.

Table-9 : Profitability of Paddy Cultivation

Note : Proportion of family labour varies according to size of ownership, the average for the sample is 62.9% of all labour employed.

The calculation is on the basis of output on one acre of paddy land.

2.62 From Shrimp Culture

According to the data, output from one acre of land under shrimp cultivation comprises 38 kg of shrimp and 114 kg of other varieties of fish. The gross value of shrimp is Tk 7164.86 at Tk 187.56 per kg; that of the other fish is Tk 1225.32 at Tk 10.70 per kg. Thus shrimp accounts for only onefourth of the output but 85% of the revenues. The low level of income is due to low proportion of shrimp caused by inferior and indifferent cultural practices. Technically, it is possible to improve the cultural practices which will lead to a higher proportion of shrimp or virtually the entire output consisting of shrimp and thus to higher levels of income and profit.

Detailed data on shrimp culture, including area, cost, pattern of management, output profitability, etc. were available from four respondents who cultivate three shrimp ponds. Data on selected variables are summarized in Table-10 (further details are in Annexure-3). As a caveat, the data are not sufficient to establish any strong conclusion; nevertheless they indicate certain interesting characteristics which appear logically or conceptually tenable.

First, total output does not differ according to size of plot but output of shrimp per acre is higher the smaller the size of the pond; on the basis of the data from three ponds, it is 30% to 37% higher. Secondly, total cost as well as variable cost increases inversely with the size of the pond. Fixed cost is slightly higher for the larger ponds because they have to put in more sluice gates, embankments, etc. But the smaller ponds incur a higher total cost because of higher expenditures on variable inputs, i.e., fry labour, manure, etc. Thirdly, the smaller farms use relatively intensive methods of culture, i.e., more careful screening and stocking of fries, more intensive manuring, and more careful/intensive supervision. In fact, intensive cultural methods require more labour inputs and closer supervision; capital cost may not increase except for installing more efficient screening devices to shut-off the fin and predatory varieties from the pond. Finally, productivity, net return and profitability are higher for small or medium size farms.

Table-10 : Data on Shrimp Cultivation

Note : Arranged in reverse order of size to high-light advantages of smaller farms.

Figures within brackets are cost of sluices and gates, which form part of fixed costs.

Production of shrimp does not use standardized mechanical techniques. Efficient operation of a field requires finally inlet and outlet of water, correct mix of food, manure etc., carefully screening out the fin and predatory varieties of fishes, selective stocking of fry, etc. This can be done by carefull and intensive supervision which essentially are labour intensive procedures. Too large farms possibly suffer from diseconomies of scale; the medium size farms between 125 and 200 acres according to available data - appear to enjoy advantage.

It should be noted that extensive cultural practice is prevalent in Satkhira area (and also in Chakaria). If intensive culture could be introduced replacing the extensive practices, output and profitability would have improved. The relative profitability of the two methods is shown in Table-11 on two sets of assumptions : first, the existing level and composition of output will continue; secondly, a change in the composition of output with the entire output consisting of shrimp.

Table-11 : Profitability of Shrimp Cultivation

Note : The calculations are based on output of one acre of land. Part-A shows the profitability under existing cultural practices; Part-B under improved cultural practices.

Part-A is based on observed output mix of shrimp and other fishes, cost and sales value.

As show in Part-B of Table-11, i.e., adoption of improved practices, such as eliminating other varieties to fish, adequate and proper stocking of fry, supply of artificial feed etc., it has been assumed that yield of shrimp will be 140 kg per acre which is 3.7 times higher than the shrimp component under the first assumption. For the purpose of calculation, it is assumed that all variable costs increase directly as increase of output (i.e. by the same factor) but fixed cost remains constant. (In fact, fixed cost is so designated as it does not change with change of volume of output). The total cost of output is estimated at Tk 7443.00 i.e. it is higher by 70% only in relation to the cost under the first assumption. The cost rises at a lower rate than output or gross value thereof, because of the constancy of the cost of embankment, sluices, and rent. The incremental benefit being higher than the incremental cost, total income and net profit are predicted to rise. According to estimates shown in Table-11 (Part-B), the gross value of the output is over Tk 26,000.00 and net income is Tk 18,700.00. The firm reaps the benefit of scale as well as higher productivity from more labour and technological improvements which is also labour intensive (All section on employment and income distribution below).

A comparison between net income from paddy cultivation and that from shrimp cultivation reveals the following advantages of shrimp cultivation : (i) On the basis of the existing level and composition of output, shrimp cultivation yields about four thimes higher net income; (ii) On the basis of improved cultural practices net income is twelve times higher (rent is excluded from cost in both cases).

2.7 Employment and Income Distribution

Table-12 compares employment per acre of land under crop cultivation and shrimp cultivation. For one acre of land, paddy requires 63.3 man-days of labour whereas shrimp requires only 24 man-days. Based on this calculation, employment per acre of land under shrimp is 38% of that under paddy. However, if improved practices were adopted in shrimp cultivation, employment may rise to nearly 90 man-days per acre which is 1.43 times higher than under paddy cultivation.

The cost per work place in shrimp, however, is much higher than in paddy cultivation. For instance, in Paddy cultivation Tk 15.00 are required to create employment for one worker (cost includes only expenditures on inputs and wages and no investment on improvement of land, irrigation, etc.), but Tk 67.00 or Tk 54.00 are required in shrimp. Though under improved method the cost per work-place declines, it still remains significantly higher than in paddy cultivation. In other words, with the same expenditure in paddy cultivation, 3 to 4 times more jobs could be created, assuming that there was no natural/technological limit on expansion of paddy cultivation, but in reality there are such limitations (rainfed area dependent on season; lack of irrigation etc.). Also to be noted is the wage ratio between paddy and shrimp. The wage per man-day for paddy cultivation is Tk 10.56 only; wage in shrimp cultivation is Tk 15.00 or nearly 42% higher. This results in lower employment levels, but each labourer hired for shrimp cultivation gets higher wages. So, they are better off.

Table-12 : Employment and Wages in Paddy and Shrimp Cultivation

Note : Calculations are based on cultivation of one acre of land to paddy or shrimp.

Shrimp (existing) refers to the observed output and cultural practices currently in use.

Shrimp (improved) refers to the situation in Part-5 of Table-11.

Distribution of gross income shows the percentages weight of major items out of the gross value of output.

Cost per work place show ratio of cost of output (i.e. cost of output/employment).

Wage ratios show the relationship between wage in paddy cultivation (numerire) and shrimp cultivation (i.e. wage rate in shrimp cultivation, wage rate in paddy cultivation).

The following is an explanation for this phenomenon. In paddy cultivation labour is supplied by the family whether the land is operated by the owner or by the tenant. All the labour force (i.e. member who can work or are in the relevent age group) that the family can supply work in the paddy field. Although the marginal productivity of the family as the organizational unit for labour supply may remain positive, the marginal productivity of some individual members or hours may be zero, if not negative. For Shrimp cultivation, individual workers are hired; so the marginal productivity of the workers cannot fall below their (individual) marginal productivity. Thus, under-employment or disguised unemployment is eliminated or reduced. Labour productivity in shrimp thus is higher than in paddy; lower level of aggregate employment coupled with higher productivity and wage is the manifestation of this phenomenon.

The relative share of wages out of total net income is lower under shrimp cultivation than in paddy cultivation. In paddy, slightly less than one-fourth of the total income is paid out in wages; under the existing methods of shrimp cultivation, it is only 15%; if the methods improve it may remain at the same level or may decline some what (to 13%). The share of income accruing to land or ownership is 81–82% in shrimp compared with 65% in paddy cultivation. Further, it should be noted that while under existing shrimp cultivation methods the absolute amount of wage also is lower, when improved practices are adopted the absolute wage bill will increase significantly.

2.8 Nutritional Impact

The nutritional impact of shift from paddy to shrimp cultivation bring into focus more clearly the impact of subsistance agriculture. This procedure also allows focussing on the real variables underneath the monetary value and the hiatus between the two.

As noted earlier, output per acre of shrimp cultivation comprises 38 kg of shrimp and 114 kg of other varieties of fish. The nutritional equivalent (measured in kilo-calories) of 100 gram of shrimp is 89 or 90, and for other fishes it has been assumed to be 120 k.cal. We have assumed that the nutritional content of the total catch is 17,1000 K. calories. (Hilsha has 273 kilo-calories which has been ignored. The kilo calories of other varieties of fish range from 75/80 to 120/139). Under improved methods of cultivation, it was assumed that the output will be 140 kg of shrimp, which is equivalent to 12,6000 kilo calories.

The output of paddy is 550 kg per acre. At the rate of 350 kilo calorie per 100 gramme, the nutritional equivalent is 1,92,5000 kilo calories.

Table-13 : Nutritional Impact of Paddy & Shrimp

Note : Caloric per 100 gram of rice varies from 345 to 349; for convience of calculation, we have assumed 350 K.cal.

Caloric per 100 gram of shrimp is 900 K.cal. and of other fishes has been assumed as 120 K.cal.

Source : Nutrition Standards of Local Foodstuff, Nutrition & Science Institute, Dhaka University.

A comparison between the nutritional values of the two crops reveals the advantage of paddy over shrimp. The nutritional output of shrimp per acre of land is 8% or 14% of paddy output. This is a significant reduction in the local production and supply of nutrition. The relative share accruing the workers is smaller than under paddy cultivation; so the nutritional status of the agricultural workers, already very unsatisfactory, would further deteriorate.

2.9 Policy Conflict and Policy Choice

The conflict as regards policy choice arises from the dichotomy : (i) between money income and nutritional outcome and impact on subsistence agriculture, (ii) and between increase in aggregate income (in money terms) and distributional impact; (iii) both viewed in the context of a closed economy. Once the closed economy assumption is relaxed and all incomes are expressed in terms of one common unit of measurement (say US dollars or Taka) the conflict is removed and the policy choice (clearly) emerges in favour of shrimp cultivation in preference to paddy.

To demonstrate the validity of this conclusion, we may pursue the following logic : Shrimp and paddy both are domestically produced and consumed. Bangladesh is a closed economy which does not import or export anything. Assume now that the domestic price ratios of the two commodities are identical with their relative nutritional equivalents, i.e., the price of rice is four times as high as that of shrimp. Given the overwhelming consumption preference for rice (which is consistant with the subsistance nature of the economy), more paddy would be produced than shrimp.

Now, assume that shrimp is produced exclusively (or primarily) for export and that the international price ratios of the two comprodities are such that the price of one unit of shrimp is four times (or twelve times) as much as that of rice. Given the preference for shrimp and the response of the domestic production system to the international price and preference, more shrimp will be produced now. The export income from shrimp would be higher than the income from rice at domestic or international price. Now, if it is also assumed that the income from export of shrimp would be spent entirely on import of rice in order to augment its supply, it will be obvious that a larger quantity of paddy would be available now than could be produced domestically (A geometrical demonstration of the logic appears in Appendix 1 to this chapter).

This, however, ignores the distributional consequence. Our computations showed that the share of labour income will deteriorate under shrimp cultivation and that the absolute level of income under the existing cultural methods also will be lower. If improved methods are adopted, the level of employment as well as wage rates will increase. However, the relative share will be low because of higher returns to capital and ownership (and in most cases investment finances are provided by owners). Under improved conditions, therefore, there are gains for all in absolute terms and aggregate welfare improves.

2.10 Conclusions and Recommendations

1. The survey area is typical of rural Bangladesh. Although its demographic and economic characteristics differ somewhat from the country as a whole, the deviations are minor. In all important aspects, it reveals the same characteristics : poverty, subsistence agriculture dependent on paddy cultivation, high rates of unemployment, high demographic/economic dependency ratio, etc.

2. Introduction of shrimp cultivation produces initial adverse effects on the subsistence economy. The level of employment is reduced; income accruing to the labourers declines in relative as well as absolute terms; income accruing to landlords (income from rent) and entrepreneurs (profit on investment) increases. As the landlords and entrepreneurs tend to be the same group of people, their share increase while that of the agricultural labourers declines. With adoption of improved methods of cultivation, the absolute levels of incomes for all the groups increase, though the relative share of the labourers remains low and the income accruing to them grows at a much slower rate. What is important, however, is that both level of employment and wage rates are likely to increase simulteneously.

3. Measured in terms of nutritional contents, shrimp is far lower in the scale of preference than paddy. And, the decline in the supply of nutrition resulting from the shift from paddy to shrimp cultivation affects the labourers or small farmers very acutely, (assuming that there is no supplementary source of income or supply of nutrition for them).

4. The adverse impact assumes a closed economy. A more accurate description of Bangladesh, however, would be as an open economy. Because of the higher international price of shrimp, Bangladesh gains from increased production and export of shrimp. The expected gain from substitution of shrimp for paddy under the existing shrimp cultivation methods is ambivalent, but from improved cultivation method it is clearly very high. The higher international income may be used for augmenting cereals supply through import, which raises the aggregate level of welfare. Though the income distribution becomes more skewed, the total income as well as sbsolute income of all groups rise.

5. The above analysis points to the need for a policy package including : expansion of shrimp cultivation; greater efficiency in shrimp production by adoption of improved methods; credit facilities for financing the required investment and higher working capital needs to meet operational cost; organization of marketing and storage facilities; extension services for dissemination of the knowledge of improved methods and related information; etc.

2.11 Geometrical Appendix

At the initial stage, the country produces OF_o quantity of fish and OP_o quantity of paddy and reaches equilibrium level of production and consumption at point A. The economy is closed and without any international exchange. The production and consumption equilibrium occur at the same point A. Line I is the price ratio.

At some later stage, the country opens up and entire international transactions. In response to international preferences, the country produces OF₁ quantity of fish and OP₁ quantity of paddy, OF₁ being larger than OF_o and OP₁ being smaller than OP_o. The international exchange of fish for rice takes place at price ratios shown by line 2 tangent to the production posibility curve TT' at C. On line 2, the country reaches consumption equilibrium at point B, that is its preference remains as before and it consumes the same amount of fish (OF_o) but more rice at OP₂ which is larger than the initial consumption OP_o by P_oP₂. F_oF₁ quantity of fish is exchanged internationally for obtaining P₁P₂ quantity of paddy.

Note that at the new price relation consumption and production equilibria are at different points - C for production and B for consumption.

BDC is the trade triangle showing that DC (=F_oF₁) quantity of fish is traded for BD (P₁P₂) quantity paddy. AB(=P_oP₂) is the net increase in consumption of rice and represent gains in welfare, i.e. aggregate income has risen from Y_o to Y₁ on price line 2.

This does not show how the gains from trade is distributed. In fact, as production of paddy decreases, the producers of paddy will be worse off than before; the gains will accrue to those who produce and exchange the additional quantities of fish. This calls for policy intervention to facilitate transfer of paddy producers to shrimp production and/or alternative occupations. In the absence of such policy, aggregate income/welfare gains may be accompained by misery for particular sections of the population.

In this particular case, the land owners and investors easily shift to shrimp cultivation and gains therefrom. The agricultural workers are displaced as fewer workers are required for shrimp cultivation on the same extent of land. If shrimp is cultivated by improved method, labour demand is likely to increase. Hence the need for policy intervention by the Government.

Annexure-C₁ and C₂ presents the analytical data on agro-aquacultural economy of Satkhira area and analytical data on shrimp culture of three fields in Satkhira respectively.

SECTION - 3
AGRO-AQUACULTURAL ECONOMIC STUDY FOR CHAKARIA SUNDARBAN AREA

3.0 Introduction

The area surveyed is at Chakaria Sundarban Area in Chakaria thana under Cox's Bazar district. As in the case of Satkhira area the descriptive profile is intended to bring into focus its difference from and similarity with the rest of the country and the comparison is along the same dimension : demographic characteristics; agrarian structure and landlessness; employment and underemployment, etc.

Two additional characteristics of the area, differentiating it from Satkhira and the rest of the country, should be noted with care. First, it is located within the Chakaria Sundarban forests. Its inhabitation is less dense than elsewhere in the country and many of the farmers, shrimp culturists, and salt cultivators come from outside the area during the production season. A corollary of this is the large extent of khas (Government owned) land available here; many of the cultivators obtain land from the Forest Department on temporary lease for a year or longer periods. It was noted during the survey that the sample would not be adequate it confined to the strictly defined zone of influence and size. Accordingly, the sample size and the geographical area covered were extended after the initial census.

Secondly, Chakaria has an important place in the salt industry of the country. Over 98% of the salt produced in Bangladesh is manufactured in Chittagong district, and 93% of the total in Chakaria. The conflict between salt industry and shrimp culture in Chakaria or Cox's Bazar thus assumes a major national importance; it is not only a local or regional economic issue.

3.1 Population and Labour Force

Table-1 sets the age structure of the surveyed population and compares it with the population in the country as reported in BMS and the Ststistical Year Book 1981. First, the sample has a more youthful age structure than in the two other populations. The age group 0–9 years constitute 39.0% of the sample population, compared with 29% in the total population, 32% in BMS, and 35% in Satkhira. This characteristics pertists in the age group 0–14 years also: 48.5% in the sample; 41% in the country; and 46% in BMS as well as Satkhira. Secondly, the age group 60 years and above is a much smaller proportion in the sample: 2% only compared with 4.5% or 4.6% in BMS or total population and 3.2 in Satkhira. Thirdly, the working age cohort is much smaller in the sample than in other populations. Depending on whether labour force is defined to include the age group 10–59 years or 15–59 years, the working population constitutes only 49.5% or 37.6% of the sample population; the corresponding proportions in Bangladesh, BMS, and Satkhira are 66% and 54%, 63% – 64% and 49% – 50% and 61% and 50%. The high proportion of children coupled with smaller proportions of working age group and older people indicate probably a shorter life expectancy coupled with a high rate of natural increase in the last ten or fifteen years.

Table-1 : Demographic Structure : Age Profile

Source : SYB 1981, P. 46;
BMS 1980, P. 12

Note : As in Table 1 in Chapter-2

Table-2 sets the proportions of male of population in the various age groups and compares them with the total population and BMS. It appears that in certain age groups the sample proportions of men are lower (5 – 9, 15 – 19, 24 - 24 and 45 – 49) and higher in the other groups. This also demonstrates the demographic basis for smaller proportion of working age population. Though these are legitimate demographic curiorities, they are beyond the scope of this analysis.

Table-2 : Demographic Structure : Sex Ratio

Note : Percentage of men in the age group.

Source : As in Table-1.

3.2 Land Ownership, Tenurial and Agrarian Structures

Table-3 shows distribution of ownership of and access to land. In a straight forward fashion, ownership refers to the land which is owned and operated by the respondents; access to land includes also the land which the respondents obtained on lease, tenancy, etc. and operates. Data on access refers to the entire land operated by the respondents (211.5 acres) and is much larger than the owned land (132.75 acres).

Table-3 : Ownership and Access Land

The distribution of ownership of land is characterized by inequality. The following categories of owners have relatively more land than their share of the sample population: farmers owning more than 4 acres of land; farming-cum-salt cultivators; shrimp-cum-salt cultivators; and farming-cum-salt-cum-shrimp cultivators. The relative shares of the other categories are lower than their shares of the sample population: farmers owning upto 4 acres of land; salt and shrimp cultivators.

Access to land is also inermal and in case of some categories land under tenancy exacerbates the in equality of ownership. The population shares of shrimp-cum-salt and shrimp-cum-salt-cum-farming categories are 4.6% and 18.7% respectively; their ownership 8.2% and 30.5%; after inclusion of land leased in, their shares of access to land increases to 11.4% and 42.4%. The shares of the salt cultivators and farming-cum-salt cultivators decline from 18.7% and 32.1% of owned land to 16.9% and 20.8% of accessed land, accentuating the skewed distribution against them. This happens presumably because they lease in small extents of land. For small farmers (1.01 – 4.00 acres or more) and shrimp culturists, inclusion of tenancy land improves their accessibility but still remains below their relative shares of the sample population. Inequality of access correlates with inequality of ownership for one important reason; the small and marginal farmers lease in land so that the total area under their operation increases.

Tenurial structure (Table-4) shows significant difference from both Satkhira and the country as a whole. For the country, 60% of the land is operated by owner farmers, whereas in Chakaria only 26% of the land is cultivated by owners. The proportions of land cultivated by owner-cum-tenant and tenants are much larger - 59% and 15% respectively compared with 44% and 0.4% for the whole country. The shares of owner farmer, owner-cum-tenant, and tenant farmer in Satkhira area as follows: 75%, 19% and 5%. The dominance of owner-cum-tenant and tenant farming is perhaps due to two factors peculior to the area. (i) A large number of the respondents come from outside during the production season and take the land on lease. (ii) The forest department also leases out land, specially for salt cultivation and recently for shrimp culture also. This raises the proportion of tenants and owner-cum-tenant farmers above the country average.

Table-4 : Tenurial Structure

Of the total farmers/cultivators, 23% is landless. Landlessness, as defined here, refers to persons who own only homestead land. According to land occupancy survey 1977, 27% of farmers fall in this categories, in the Satkhira sample, it was over 46% (including marginal farmers owning not more than 0.5 acres of land). Incidence of landlessness seems lower in Chakaria. Even if the marginal farmers (owning not more than 0.5 acres) were included, the sample proportion of landlessness would not exceed 25% of the total sample population (i.e. landless farmers owning 0.01 - 1.00 acres = 22.7% + 2.2% = 24.9%) (Table-3).

Allocation of land to various uses reveals an interesting characteristic of the area. The highest proportion of land is allocated to crop-cum-shrim-cum-salt cultivation (42.5%) followed by crop-cum-salt (20.9%), salt (16.7%), and shrimp -cum-salt (11.4%); less than 10% is allocated to paddy (7.2%) and shrimp (1.3%). This shows a remarkable degree of diversification in the utilization of land (Table-5).

Table-5 : Allocation of Land for Different Uses

Within crops also the area has attained relatively high level of diversification and modernization. Not more than one-third of the area is allocated to a particular crop (33% to local T.Aman); the total area under irrigation is 53%; and 55% of the land is cultivated to HYV. (Table-6).

Table-6 : Some indicators of Crop Diversification and Modernization

Irrigation is 53% and the total area cultivated to HYV is 55% of the total land.

The diversification in the use of land for on-farm and off-farm activities, diversification of crops, and levels of modernization signify weakened influence of subsistance agriculture in area. Consequently, the surveyed area is expected to be more responsive to price and economic incentives than most other areas in Bangladesh.

3.3 Occupational Structure

The occupational/employment structure is described in Table-7. The importance characteristic to be noted is the diversification within the rural occupational range and relative unimportance of crop cultivation. Only 7% of the employed work force are engaged in crop cultivation; and 31% and 40% are engaged respectively in crop and salt cultivation along with other activities. Shrimp is still at an early stage of growth; 6.4% of the employed population are engaged in shrimp production, only half of which are exclusively in shrimp production. Business (7.7%), services (1.9%) and other occupations (5.8%), together absorb 15% of the employed population.

It should be noted that 85% of the employed population are absorbed in the agriculture sector broadly defined; and this is also the proportion for the total labour force as reported in BMS. In Satkhira, agriculture accounted for only 79% of the employed population.

Table-7 : Occupational Structure

3.4 Employment and Unemployment Rates

Table-8 Summarizes the data on unemployment. Nearly nine percent of the male population are without work which is much higher than in Satkhira (6%). The highest rate of unemployment is found among farmers earning more than 4 acres of land (20%), followed by farmers owning 1 to 4 acres of land (17%), shrimp/salt cultivators (4–5%), salt cultivators (10%), crop/salt cultivator (8.7%) and crop/ salt/shrimp cultivators (7.9%).

Table-8 : Utilization and Under-utilization of Manpower

Man-days not used average 16% of the man-days available. High incidence of underemployment or disguised unemployment ranging between 15% and 21% or more - occurs among owner-farmers owning more than one acre of land (21%), salt cultivators and Shrimp-cum-salt cultivators (18%–19%), the landless (16%), shrimp and crop-cum-salt cultivators (15%); only among the small farmers (owning/operating upto one acre of land) and crop-cum-shrimp-cum-salt cultivators is it about 10% or less. The high incidence of under-employment is close to the levels reported in BMS.

3.5 Economics of Salt Industry

Salt is an important component of food, providing sodium and chloride required by human body. It has also important industrial uses, e.g. basic raw material in certain chemical industries such as chlorine-caustic and soda industries, soap, detergent, leather tannery; rubber; food processing, preservation, refrigeration; petroleum exploration; etc. Because of the low level of industrialization, human consumption requirement predomeniate the structure of demand for salt in Bangladesh. Industrial use has stagnated at 24 lac maunds since early 1970; though its relative share has slipted down from 18% in 1973–74 to an estimated 16% in 1982–83, (Table-9).

No definite or reliable estimate of the dietary requirement of salt is available. The official estimate assumes per capita requirement of six seers per annum; the Bureau of Statistics found actual consumption ranging around 8.4 kg per person per annum; and the Survey of Consumer's Expenditure 1973–74 conducted by the Bureau of Statistics found 0.6 seers to be the per capita annual consumption. The first two are estimates of total requirement including direct and indirect consumption. BBS estimate of 8.4 kg is based on the quantity actually disappearing during a year and represents both direct and indirect consumption as well as industial use.

Table-9 : Demand and Production of Salt

Note : Quantities in lac maunds.

Source : BCSIC, Action Plan on Development of Salt Industry 1983–84 September 1983, P. 4.

Two other characteristics of demand for salt also should be noted. First, the demand for salt is both price and income inelastic, though consumption increases by very small quantities at each higher income level (Consumer's Expenditure Survey 1973–74). Secondly, salt is a Consumption item for the common people and stable supply and price of the commodity area politically very sensitive. High price and scarcity of salt have often proved the rallying ground for political opposition and presaged change of regime.

The supply of salt has been very uneven. There have been large shortages in many years requiring import. Import used to be made from Pakistan (then West Pakistan) until 1971; after independance, India has been the main source of import.

Virtually there is not much choice of source for import because of the hygroscopic nature of salt, which explains its execlusion from international trade. For the same reason, storage of salt also is extremely limited and hardly ever stock is carried beyond the next manufacturing season.

Chakaria occupies a unique position in the production of salt in Bangladesh. According to the latest data available from BSIC's survey of cottage industry, there were 431 salt manufacturing units in 1980, with a total fixed capital of Tk 106.87 lacs and producing salt worth Tk 291.92 lacs at whole sale price. Chittagong's share of the industry was as follows: 399 or 93% of the manufacturing units; Tk 105.13 lacs or 98% of fixed capital; Tk 287.23 lacs or 98% of the output. Nearly all the units in Chittagong were located in Chakaria Sundarbans: 389 units; Tk 91.53 lacs of fixed capital; and Tk 270.90 lacs of output value. In other words, Chakaria's share of the total industry is as follows: 90% of the manufacturing units; 86% of fixed investment; and 93% of the output (Table-10). The lower proportion of fixed investment relative to share of output shows more efficient production process used in Chakaria.

Outside of Chittagong, salt is produced in the coastal areas of Noakhali, Khulna, Barishal and Patuakhali. Together, they account for less than 2% of the total output. And virtually all the salt manufacturing units in Chittagong district are located in Cox's Bazar district including Moheshkhali and Kutubdia off-shore islands.

Production of salt in Chittagong and particularly in Cox's Bazar district uses evaporation process, which is more efficient and widely used elsewhere and in the sub-continant.

Table-10 : Statial Distribution of Salt Industry

Note : Number of Units value in lac.

Source : BSCIC, Cottage Industries of Bangladesh:

A Survey 1962–1980, October 1983, pp. 8, 47, 54, 438.

Only about 3% of the total quantity of salt produced in the country uses the lixivation process, which is relatively inefficient and expensive because of the cost of fuel used. The first modern solar salt plant was established in Gomatali in Cox's Bazar in 1949; after about thirty five years, the process is confined mostly to Cox's Bazar and has not gone beyond Chittagong.

The high degree of concentration of modern salt manufacturing in Cox's Bazar and particularly Chakaria is explained by climatological advantages of the area. The coastal water between the mouth of Karnafuli river and Teknaf contains brine density of 2° to 3° Be compared with 1.5° Be or less in Noakhali, Barisal, Patuakhali, and Khulna. The high discharge of sweet waters in those areas reduce the brine density. The low dilution effect makes Banskhali, Chakaria, Cox's Bazar, Moheshkhali and Kutubdia in Chittagong suitable for salt production using solar evaporation process.

Size of the salt manufacturing field is an important determinant of the effieiency of the process. About 65% of the salt manufacturers in Cox's Bazar operate on 2 acres farm; only about 5% of the firms are 5 acres or larger. Some studies have shown that the cost of production declines by 50% as the size increases from 1 acre to 5 acres. Further, there is also evidence to suggest that the economic size of a salt firm is about 50 acres. In the survey area, the average land per household is 0.25 acres only, which is also the average for the exclusive salt cultivators; for those who manufacture salt in rotation with shrimp the average may go upto 0.46 acres per household but still no where near the optimal size of the size field. Some institutional innovation allowing consolidation or pooling together of land without impinging upon ownership is a pre-requisite for establishment of optimal farm size. The ownership of vast tracts of land by the Government (i.e. forest Department), however, can allow optimal scale of salt field even without the difficult if not impossible, social institutional innovation required. The land can be leased out in large size so that the salt producers can up farms of optimal size.

3.6 Productivity and Profitability of Alternative Products

Table-11 describes the gross value and return from salt per acre of land. Two cultural practices are followed in salt production: in one the field is used for production of salt only (Part-A) and in another the field is used for shrimp culture also following salt production (Part-B). It may be noted that the cost of production of salt in beds which are used afterwards for shrimp culture is Tk 261.00 higher per acre but the additional return is Tk 82.00 only. In other wards, the marginal cost is much higher than the marginal revenue product, which should discourage more intensive use of land. Accordingly, only 21% of the salt bed area is used also for shrimp culture.

Table-11 : Profitability of Salt Cultivation

Table-12 describes the output and return of shrimp on four assumptions:

1. Assumption ‘A’ describes the production of shrimp under the existing cultural practices. The land is not used for any other purpose.

2. Assumption ‘B’ refers to production of shrimp only on the land but using improved methods so that the output of shrimp is higher and the quantity of other fishes is eliminated. Under assumption ‘A’ total output from one acre of land is 92 kg of fish, including 30 kg of shrimp and 62 kg of other fish. Shrimp is 88% of the sales revenue and other varieties of fish only 12%; and their prices are respectively Tk 180 and Tk 12 per kg. Following the arguments developed in Chapter-2, shrimp cultural practices may be improved; this involves additional cost but brings in additional profits. For Satkhira, it was assumed that when other varieties of fish were eliminated, the total production would be around 92% of the earlier production. On that anology, the output would be 85 kg of shrimp and the total value would be Tk 15,300.00 at the existing prices. The variable cost (i.e. on account of inputs, wages, etc.) rises by 3.7 times but the other cost (rent, embankments, sluice gates, etc.) remain constant. Total cost increases by 70% to Tk 2171.00. Net profit increase from Tk 4883.00 to Tk 13,129.00. Overall, while the value of output increases by 2.48 times, net profit increases by 2.69 times.

3. Assumption ‘C’ shows the value of output and return from shrimp cultivation in fields used for salt production also, but using the existing practices. The gross value of output per acre is Tk 5345.00, cost of production Tk 1137.00, and net profit Tk 4227.00 only. It may be noted that the rate of return in ‘C’ is Tk 3.72 per taka of spent whereas in ‘A’ it is Tk 3.82 which explains the small proportion of shrimp fields used also for salt manufacturing also 20% only.

4. Assumption ‘D’ describes production and return from shrimp as under ‘C’ but using improved cultural practices. The rate and pattern of increase of production cost are the same as in ‘C’ i.e. variable costs increase by 3.7 times but total cost increases by 1.7 times only from Tk 1137.00 to Tk 1933.00. Under ‘C’ total output included 23 kg shrimp (22%) and 83.5 kg (78%) of other varieties of fish. The output under improved practices is expected to be 99 kg of shrimp and no other varieties of fish. At Tk 180.00 per kg which is the existing price, the gross value of output increases to Tk 17,820.00, and net return to Tk 15887.00 only that is, the value of total output increases by 2.96 times and net profit by 3.76 times.

It may be noted that the data show lower shrimp productivity in Chakaria than Satkhira under the existing cultural practices. In Satkhira, the total output per acre was 38 kg of Shrimp and 114 kg of other varieties; in Chakaria, the highest observed output (assumption C) is 23 kg shrimp and 83 kg. other varieties of fish. Productivity in Satkhira is 42% higher on total output and 65% on shrimp only.

Table-12 : Profitability of Shrimp Cultivation

Paddy produces the lowest value of output and return. Total income from one acre of land is estimated to be Taka 3208.00 and return Tk 2437.00 (Table-13).

Table-13 : Profitabilities of Paddy

Comparative productivity and profitability of the three products are shown in Table-14, using salt as the base. The unique position of Chakaria in the salt industry of Bangladesh amply justifies the choice. The average of the values of salt production under two assumptions has been taken as the numberaire. The values are so close to each other that the use of any particular value would not have much difference.

As the comparison shows, paddy is the weakest candidate for use of resources, producing only about 40% of the output (valued sales price) and about 80% of the return of salt on the same area of land. Notwithstanding the low value paddy would have some strong social justification had it been the only or main source of income and subsistence. As it was noted before, the area has moved away from subsistence agriculture and the social justification for continuing with low-output/low income syndrome is no longer there.

Shrimp cultivation under the existing cultural practices, whether with salt produced in the same field or not, does only slightly better than paddy. If only shrimp is produced, the value of the output is nearly 80% of salt; if salt is also produced, the return is about 70% of salt production. However, with adoption of improved cultural practices, the value of the output increases by about two times if only shrimp is produced; if salt is also included the value becomes 2.3 times higher. Return from shrimp under any cultural practices is higher than salt; but very high return are obtained from improved methods under assumptions ‘B’ and ‘D’. So, ultimately, the choice is between salt and shrimp production. It should also be noted that there is a gap between output and profitability of shrimp compared with salt; while the value of output of shrimp is lower than salt; its profitability is higher. This points to a higher share of income apportioned to profit in shrimp production which is discussed below:

Table-14 : Comparative Profitabilities Per Acre of Land.

3.7 Employment and Distributional Impact

The shift from paddy to salt or shrimp and from salt to Shrimp is likely to affect the employment pattern of labour, their income, and level of employment, (Table-15).

On the basis of the survey data, it appears that salt has the highest employment generation capability and that it also pays the highest wage rate. On one acre of land, it employs 137 to 148 man-days of labour and pays wage at Tk 25.00 for one man-day. The share of income acruing to the labourers is 45% – 47% much higher than in case of paddy and shrimp.

Next in the scale is paddy, which employs 65 man-days; pays wages at Tk 12.00 per man-day and allocates to labour 38% of the total value of output. The wage rate is the lowest in paddy, however.

The lowest is shrimp and its performance is rather dismal. In case of ‘A’ and ‘C’ which are based on observed performance, employment is only 20 or 21 man-days, wage rate above Tk 19.00, and labour's share of income is 7% – 8%. Under assumptions ‘B’ and ‘C’ total employment increase to 57 to 78 man-days, depending on whether the wage rate is assumed to be the going rate in shrimp cultivation (Tk 18.50) or in salt manufacture.

Table-15 : Employment and Income Distribution Impact

Note : Man-days requirement of labour for shrimp under ‘B’ and ‘D’ have been calculated by dividing total wage bill by wage rate assumed at Tk 19.50 or Tk 25.00 (see also text for explanation).

The share of labour income is 8% or 9%; the increase, if at all is imperceptible.

From employment and income distributional point of view, salt production holds the best promise: it creates much more employment; pays much higher wages allocates to labour a much larger share of total income than either paddy or salt; and labour's income rises in both relative and absolute terms.

3.8 Policy Conflict and Policy Choice

The conflict as regards policy choice is between salt and shrimp production; the value of output, employment, labour income, etc. of paddy are way below the two other products to be a serious contender for resources. And Consideration due to subsistence agriculture does not seem to be relevant.

The conflict arises from two factors. (i) Production of salt has a strategic importance for the whole economy as Chakaria produces 93% of the country's total salt output. The potentiality of expansion of salt production using modern solar method also is concentrated in the area. Vast areas of forest land is an advantage. Expansion of shrimp cultivation can be only at the cost of salt. (ii) There is some dichatomy between the total social output or income generated by shrimp and the rate of return. On the basis of existing shrimp culture practices, the value of the social output is smaller but profit higher than in salt. With better cultural practices and more investment, both the value of output and returns become higher than in salt. But, similar investment may also raise further the output (and return perhaps) of salt. There is thus, a conflict between private benefit and social benefit from shrimp cultivation.

The case for salt receives strong support from the following considerations:

1. Salt is not an internationally traded commodity. So, the country must depend on domestic output of salt to meet its requirement. An export oriented production like shrimp, therefore, cannot be an alternative to domestic salt production.

2. Salt industry contributes much more than shrimp culture towards rural employment generation, egalitarian income distribution, and increasing rural wages. Its impact on rural welfare is much higher.

3. Climatological conditions and the vast forest land provide advantages for location of salt industry in Chakaria. If shrimp culture expands here, it is not likely that salt industry can be relocated elsewhere and can attain the same level of efficiency. The consideration points to a policy in favour of promoting salt industry in Chakaria area. The Government should rather discourage the growth of shrimp cultivation in areas which have natural advantages for salt production.

3.9 Conclusions and Recommendations:

1. The survey area is atypical. Its land allocation and utilization patterns show a high degree of diversification and modernization and shift away from subsistence agriculture towards commercial production.

2. The occupational structure shows considerable diversification. Though the occupations are all within the agriculture or rural sector broadly defined, dependence on any particular activity is limited.

3. The area occupies a unique position in the field of salt production in the country. Over ninety percent of the domestic salt production is done here. More importantly, climatological conditions make the place suitable for expansion of modern salt industry based on solar evaporation process; and the vast tract of khas land permits establishment of salt farms or optimal/efficiency size. There is no other alternative location for salt industry with similar climato-logical and institutional advantages.

4. Salt is not a traded item. So, the country must produce its own requirement.

5. In respect of employment generation, income distribution, and enhancement of wage income relatively as well as absolutely, salt production contributes much more than either shrimp culture or paddy.

6. Public policy, therefore, should be directed towards encouragement of salt production in Chakaria and Cox's Bazar district and restriction of shrimp culture exclusively. Annexure-C₃ presents the analytical data on agro-aquacultural economy of Chakaria Sundarban area.