Nizam M. Selim
Managing Director
PIONEER HATCHERY LIMITED
1. Introduction
The prospects of mass seed production of the Penaeus monodon from hatcheries in Bangladesh as a commercial proposition need to be evaluated on the given aspects of hatchery production. This paper therefore discusses both the aspects and prospects of mass production of the Penaeus monodon postlarvae in the country.
The aspects of mass production of the species for investment in a hatchery entail a review of the competing factors which are as follow:
The market for hatchery-bred postlarvae of the Penaeus monodon, as compared to the wild juveniles either directly from fry collectors or those reared in nurseries;
Abundant and economic supply of wild juveniles of the species from nature and nurseries;
Results of natural or nursery-reared wild fry, in terms of growth performance and survival;
Survival and growth performance of imported postlarvae and
Comparative advantages, economic or otherwise of wild juveniles over hatchery-bred postlarvae in long-distance transportation to ponds or farms.
2. Demand of Seed
On the basis of the demand-gap of stocking materials as experienced in 1994, the economic viability and prospect of investment in hatcheries for mass seed production of the Penaeus monodon appears to be very promising.
The seed requirement for about 130,000 hectares of land (in 1994) with a water area of about 97,000 ha. would be about 4,875 billion. This contrasts to a wild collection of about 1.0 billion annually, with mortality during transportation to ponds accounting for some 35%. Thus, the demand gap for stocking materials appears very wide.
Wild juveniles of the P. monodon are abundant seasonally and availability does not necessarily match growout stocking cycle(s). On the other hand, studies also reveal that there has been an alarming decline in the availability of the shellfish and fin fish in the coastal waters of Bangladesh. Under such conditions, expansion of shrimp farming will encounter serious limitations.
The crisis was particularly felt during the first crop cycle in 1994 when prices of wild juveniles shot up to Tk.0.65 to 0.70/PL from fry collectors in Cox's Bazar and Tk. 1.20 to Tk. 1.80/PL when delivered to farm sites in Khulna, Bagerhat and Satkhira by nursery operators and fry traders. Even when the farmers were ready to pay such high prices, wild juveniles for pond stocking were not available in adequate numbers.
3. Seed from wild and from Hatchery
Comparative studies between wild juveniles from nature and hatchery-bred postlarvae of the Penaeus monodon show conclusively that hatchery-bred postlarvae are homogeneous, disease-free and uniform in size.
Information from shrimp farmers using wild fry and hatcherybred postlarvae suggest that hatchery-bred postlarvae of the Penaeus monodon had a better growth rate and survival over wild fry. Similarly, reports suggest that buyers and traders of hatchery-bred postlarvae of the greater Khulna region experienced better survival rate compared to either wild or nursery-reared wild juveniles of the species. However, more precise information and data are required to make adequate conclusions on the aspect of survival or mortality of postlarvae due to transportation stress and strain.
4. Importation of Seed
In 1994, the Ministry of Fisheries had declared a liberalised policy for import of postlarvae of the species. It is reported that some traders did import a number of consignments from Thailand. Since facts and data about these imports are not known, it is difficult to conclude on the comparative advantages of investments in hatchery facilities for mass seed production in Bangladesh against fry trading through imports. It is learned that Haltia Farms Limited (a sister concern of Gachihata Aquaculture Farms Limited) and Mr. Syed Mahmudul Huq, President, Bangladesh Frozen Food Exporters Association, had imported fry for the first time in Bangladesh. Perhaps the experiences of Haltia Farms Limited and Mr. Huq in import of fry could be of some value in taking investment decisions on the development of hatcheries in the country compared to importation from abroad.
Considering the ecological imbalance caused by indiscriminate catching of wild fry, it would appear that it has become essential for us to encourage investments in hatcheries for mass seed production of Penaeus monodon, as opposed to buttressing the cause of imports of fry or of wild fry catching in the coastal areas and nursery-rearing of wild fry.
5. Prospect of Investment in Establishment of Hatchery
The prospects for such investment are to be weighed against an industrial investment scenario. The following considerations are essential:
Whether government policy encourages the establishment of hatcheries?
Whether land for hatchery construction is available, and whether land laws encourage investment in hatcheries?
Whether such land or sites for hatchery construction have been ensured with infrastructures, such as road, fresh water supply, power and communication by government, and if sites have been ensured protection against the ravages of nature?
Whether government customs duty, tariff structures and tax policies and their corresponding execution or implementation encourage development of this innovative and new industry?
Whether fishing laws, regulations and enactments and their implementation or execution encourage investment in hatcheries?
Whether financing laws and practices encourage investment in hatcheries ? and
Whether ambivalence, ambiguities and/or contradictions in government policies and practices inhibit a correct perspective on investment in hatcheries.
6. Govt. Policy
Three different policy approaches of the government are perceived, at the present moment, if one were to interpret that the Ministry of Fisheries, GOB as the authority for formulation of government policies for the sector,. The first policy encourages wild fry catching and nursery-rearing of fry, the second encourages import of fry from foreign countries, and the third presumably encourages investment in hatcheries.
Historically the priority and emphasis of the Ministry and its Department of Fisheries appear to have been on educating people in Bangladesh how to catch wild fry of the Penaeus monodon and rear them in nurseries indeed, despite reports and studies of an alarming decline in the availability of shell fish and fin fish, in the coastal waters of Bangladesh due to indiscriminate fry catching of the Penaeus monodon.
The fund for investment components for setting “Project” hatcheries under IDA and ADB finances up of for Penaeus monodon hatcheries went unutilized bears testimony to priorities attached both by the government.
It is fortunate that this Workshop on the occasion of the Fish Fortnight 1994 has made focussed the urgency and necessity for assessing the prospects of investments in hatchery facilities for mass seed production of the Penaeus monodon in Bangladesh. The 1994 policy declaration of the Ministry of Fisheries for liberalisation of import of fry therefore comes apparently as a dichotomous approach towards the subject.
Consideration of investment requires the first step of securing land for hatchery. Since hatchery sites have to be in the vicinity of the unpolluted brackish water of the Bay of Bengal, it is perhaps pertinent to know whether such lands are under private ownership or are within the jurisdiction and ownership of the government. As one understands, majority of such suitable sites are owned by the government. If hatcheries are to be developed under private enterprise, land laws and land ownership mechanisms are required to be conductive to private investment.
Prospects would also increase for investments in Bagda hatcheries if government would ensure infrastructural facilities and support services to the ecologically suitable hatchery sites or zones. One tends to be optimistic that based on the above report, the Ministry will ensure such facilities to encourage investments in hatcheries.
PIONEER's Hatchery at Kalatali, Cox's Bazar had to pay Customs Duty Sales Tax, Advance income Tax and VAT capital machinery and equipment. Considering, that the Governments declared policy is that Capital Machinery & Equipment can not be subjected to Sales Tax and that the Shrimp Culture sub-sector has a Tax Holiday for 9 years, it is surprizing that the Customs have levied Sales Tax and Advance Income Tax on capital investments of Pioner's Hatchery. Such contradictions will be counterproductive for new investments in this sub-sector. Removal of such anomalies in the Duty and Tariff levies will increase the prospects of investments in hatcheries.
Similarly, existing fishing laws and regulations have to be implemented and applied in such a fashion that people are motivated to invest in hatcheries rather than indulge in disruption of the environment to make quick gains from the sale of wild juveniles of the species.
PIONEER HATCHERY LIMITED has had the experience that no scheduled commercial Bank that it had approached so far would finance Working Capital for its hatchery operation. The sponsors of the Company had been injecting Directors Loan to operate the hatchery since 1992 till date. This exemplifies the financial institutions of the country, vis-a-vis financing for mass seed production of the Bagda. Some Banks are reported to be financing hatcheries for their old and established trading clients who are not at this juncture known to have any track record of production performances in mass seed production of the Penaeus monodon.
While this financing picture suggests that new investments in hatcheries are welcome, it establishes the fact that neither production performance nor prospective production are relevant to Bank financing. Generally, old networks and ties are the determinants for investment financing for hatcheries, not enterprise and entrepreneurship. In case of new entrepreneurs in particular, the Banks apparently take no part in risk management. In such a scenario, either only an entrepreneur with a sizable quantum of assets becomes the major risk taker in hatchery investment, or it is the Banks old client with established rapport.
The government favours fry importers with zero tariff or duty. Also wild fry collectors and nurseries owners are exempted from any duty or tariff. Under the circumstances law of equitable justice demands that the primary producer from a hatchery should also be accorded similar favour by way of zero tariff or exemption from duty on all capital machinery equipments and hatchery consumable.
But the fact remains that the hatchery investor is exposed to more risks than either the nursery operator thriving on rearing of wild fry or the fry importer engaging minimal financial outlay for imports. If the government's policy is to encourage production, it has to fix the right priorities and follow and implement a consistent mechanism for application of the given policy.
Divested of such an imbalanced scenario of inconsistencies prevalent in the market, the prima facie prospect of mass seed production of the Penaeus monodon from hatcheries has been emphasised in certain government-initiated sectoral studies. To cite a few:
“At the present time, the availability of seed-stock is the limit to national production and it is likely to remain so during the next 10 years” (Aquatic Farms, Inc 1986).
“The ability to introduce hatchery technology during the next 10 years will ultimately dictate the future prospects of the shrimp industry in Bangladesh” (Aquatic Farms Inc. 1986).
“The availability of wild postlarvae is considered adequate to support low levels of shrimp farming intensity. However, semi-intensification of the industry will require long-term considerations for both resource conservation and higher demands for shrimp seed. Dependance upon wild stock is susceptible to both seasonal and annual fluctuations in availability leaving the shrimp industry vulnerable to nature's unpredictability.
The demand for postlarvae will continue to grow and the rate of growth will accelerate with semi-intensification. Hatcheries are therefore a medium-term need for industry development” (Ministry of Irrigation, Water Development & Flood Control, GOB, Master Plan Organization).
Other spheres of considerations for determination of the prospects of mass seed production of the Penaeus monodon are ecological conditions, spawner availability, technology, and manpower.
Proper ecological conditions are the primary requisite for evaluation of the prospects for hatchery production. Unpolluted brackish water and a conducive salinity regime are the prime requisites which determine the suitability of a hatchery site. Availability of fresh water and compact soil have also to be taken into consideration for construction of a hatchery. Although green house facilities and heaters or heat exchanger can ensure maintenance of the required temperature range, availability of natural temperature at a suitable site will contribute towards reduction of energy costs thereby increasing the prospects of improving the economics of mass production of seed.
For instance, at Kalatali, it has been observed that conducive salinity regime for artificial propagation of the species persists between January through till end-April or early May, offering the possibility of production during 4 months only Conducive temperature range on the other hand, commences from early-February. There may be other locations which may possibly have longer durations of both conducive salinity regime and ambient temperature range.
Despite existing constraints in investment climate and policy contradictions, the sine qua non of development of the integrated marine shrimp farming industry in Bangladesh is the development of P. monodon hatcheries as an alternative source of stocking materials. However, the prerequisites for successful development of hatcheries are “appropriate technology” for ensuring mass production.
Often both entrepreneurs and financiers tend to interpret technology in terms of “hardware” only: capital machinery, equipment and civil facilities. This is a risky oversimplification as buildings and machinery and equipment can not and do not produce living creatures. The “hardware” only complements the “software” that is the technique and expertise of propagation of the given species. In fact, based on a given production technique (which is specific and particular to a given mode of production expertise and experience), selection of facilities, design and “Hardware” is made.
7. Success Story of Pioneer Hatchery Limited
The trial production of 15.0 million and commercial production of 27.0 million hatchery-bred postlarvae of the Penaeus monodon from one single cycle/run during March 1993 and March 1994 respectively by PIONEER HATCHERY LIMITED redressed the conceptual hiatus for technology and commercial viability of artificial propagation of the Penaeus monodon in Bangladesh, dispelling the myths and misconceptions generated by the failures of various ventures over more than a decade. The tested and proven leadership of Taiwanese technology for the artificial propagation of the Penaeus monodon was established in Bangladesh, lending fillip to increased investments in integrated shrimp farming as an industry.
The key to this success had been in the entrepreneurs' locating a genuine source of “appropriate technology” for production from Taiwan- “the cradle of intensive shrimp culture”. Site selection, facilities design, hardware selection construction supervision, machinery and equipment erection, installation and commissioning, selection and production management - all - were conducted by the Taiwanese experts of HANAQUA, and with corporate support and expert back-up services for trouble shooting in hatchery operation.
8. Constraints
The prospect for any hatchery would largely depend on the technology factor. As long as the entrepreneur is capable of ensuring this aspect, be it from any part of the globe, other things remaining the same, the investment acquires almost 80–90% prospects for success. If the Bankers and financiers are also capable of distinguishing and identifying the real McCoy of “appropriate technology”, their risks in loan portfolios will be reduced to a great extent, allowing them to do away with prohibitive strictures of collateral security, etc. thereby improving prospects of investment.
The experience of PIONEER HATCHERY LIMITED's operation reiterated the importance of timely availability of P. monodon broodstock or spawners. For every cycle or run of artificial propagation of the species, broodstock or spawners have to be collected from the Bay of Bengal. And, without an ocean-going vessel having the specific purpose of broodstock collection for hatchery operation for each cycle or run during the growout stocking season, a hatchery may not be able to produce postlarvae to its capacity, which may be in the region of 3 to 4 cycles/runs in a season spanning 3 to 4 months, as in the case of PIONEER.
At the moment, there is only one vessel available in Bangladesh which has been rendering its services for P. monodon broodstock collection. Department of Fisheries' Research Vessel ANUSANDHANI R.V. ANUSANDHANI is basically a research vessel, and does not happen to be full-time operational vessel and in fact, is logistically oriented to taking intermittent voyages for research purposes only understandably 2 to 3 times in one year. Its tools and gears, operational budget, maintenance spares, provisions, etc. do not permit it to cater to the requirement of 3/4 voyages within a span of 3 to 4 months. During PIONEER HATCHERY's requirement, it was often discovered that R.V. ANUSANDHANI was not able to embark on a timely voyage for broodstock collection either because the vessel was not in readiness, or that it did not have the maintenance and repairs required for voyage.
Although R.V. ANUSANDHANI did undertake voyages for PIONEER's broodstock collection at a cost. The existing mechanism of approval for availing finances from a private company by a government owned organization often appeared to be time consuming, often delaying voyage and subsequent production process. If the procedures of approval of financing, preparedness of the Vessel and undertaking of a cruise may be streamlined, R.V. ANUSANDHANI will be a key element in determining the success of hatchery operation.
Any consideration of the prospect for mass seed production of the marine species Penaeus monodon will have to take this aspect into serious consideration. If the R.V. ANUSANDHANI can not take 3 to 4 voyages in time for broodstock collection during a given growout season, until alternative arrangements of one or more commercial trawlers for the purpose is ensured prospects of seed production of the species will remain bleak.
Another constraint in mass seed production in Bangladesh which is gleaned from PIONEER's experience is the lack of laboratory facilities for isolation of pure phytoplankton strains. At the moment, PIONEER has to engage a technician to bring such a strain of algae from Taiwan. This needs to be viewed seriously and research organizations and institutions should make available pure strains of Chaetoceros, Skeletonema costatum, Tetraselmis, etc. This will largely contribute towards increased seed production of shrimp.
Another limiting factor to the prospects of hatchery investment in Bangladesh is the lack of adequate skill of manpower to whom the expatriate expert may transfer technology and know-how of production. Training and development of such human resource is necessary to encourage investments in hatcheries. The government may play a catalytic role in identifying technically qualified suitable manpower and extending to them opportunities for training for employment in the industry. This would greatly enhance the prospect of investments in hatcheries.
9. General Remarks
Pundits, however, still consider the hatchery technology between “art” and “science”. It is not an exact science, and nothing indeed can be taken for granted. If entrepreneurs, policy makers, implementing agencies and financiers are capable of comprehending the intrinsic dynamics of a hatchery for Penaeus monodon and accordingly engage “appropriate technology” for production, and provide a full-time operational vessel for collection, hatcheries would be a profitable investment in Bangladesh. And, indeed, without hatcheries as a reliable and consistent source of supply for homogeneous, disease-free and uniform sized postlarvae as stocking materials for shrimp aquaculture, investments in shrimp farms are likely to be put to risk.
However, “market-oriented production” and “real-time” products are the key to commercial success. If investors or entrepreneurs oversimplify the intrinsic dynamics of the hatchery industry, and go on constructing civil facilities without ensuring production their fate will be like those processors who have become the owner of “sick industries” scouring for government subsidy, financial relief and patronage.
BIBLIOGRAPHY
Aquatic Farms, Inc., ADB 1986. Bangladesh Second Aquaculture Development Project Preparation Report, Final Report.
Ministry of Irrigation, Water Development & Flood Control, Government of Bangladesh, Master Plan Organization, National Water Plan Project, Vol. vii, Fisheries.
