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THE KANDALERU SHRIMP FARMING INDUSTRY AND ITS IMPACTS ON THE RURAL ECONOMY: AN EMPIRICAL ANALYSIS#

THE KANDALERU SHRIMP FARMING INDUSTRY AND ITS IMPACTS ON THE RURAL ECONOMY: AN EMPIRICAL ANALYSIS#

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Published by Dr. M.KRISHNAN
Shrimp farming, Nellore, India
Shrimp farming, Nellore, India

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Published by: Dr. M.KRISHNAN on Oct 26, 2008
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08/02/2009

 
(Patil Pawan G. and M.Krishnan, 1998, The Kandeleru Shrimp Farming Industry and itsimpacts on the rural economy: an empirical analysis, in Ramesh Chand and V.C.Mathur(Eds.), Agriculture Industry Interface, Advance Publishing Concept, New Delhi – 110064,pp.156-173)THE KANDALERU SHRIMP FARMING INDUSTRY ANDITS IMPACTS ON THE RURAL ECONOMY:AN EMPIRICAL ANALYSIS#Pawan G. Patil* and M. Krishnan**Introduction
 The role that brackishwater shrimp aquaculture development has played on India'seconomy is substantial. Indian marine exports were the second largest foreign exchange earnerin 1994-95 primarily because of high value shrimp exports to Japan, Europe and the UnitedStates. Shrimp (captured and cultured) constituted 70.2 per cent of the total marine export valuein 1994-95 which slipped slightly to 67.3 per cent in 1995-96 due to fluctuations in export prices.According to the latest export statistics, farmed shrimp alone generated over Rs.1,500 crore forthe Indian economy in 1995-96 (MPEDA, 1996).Amidst its economic boom in the coastal areas, shrimp farming is creating concern over itsdegradation of he environment (Flaherty and Karnjanakesorn, 1995; APO, 1995; Southgate andWhitaker, 1992) and its marginalization of local inhabitants from coastal resources (Sebastini etal., 1994; Bailey, 1988). The markets have yet to incorporate the brackishwater shrimp farmingin India's maritime states. Instead the environmental and social costs associated withrapid growthand development of environmental and social costs associated with this industry's negativeexternalities are often borne by the rural poor, who __________________________ * This research was conducted with the partial support of the Rajiv Gandhi Foundation, New Delhi,India while the first author was serving as the 1996-1997 Rajiv Gandhi Foundation Scholar. Theresults presented in this paper are preliminary and should be treated as such. The overall paperis subset of a wider study:
A Microeconomic Analysis of the Impacts of Brackishwater ShrimpAquaculture on Rural Producers and the Environment in Nellore District, Andhra Pradesh
(Patil, P.G.,London School of Economics, 1997). We would like to thank the staff of BFDA (Nellore) for thetheir assistance in our data gathering efforts. The ideas expressed in this paper are our own anddo not necessarily represent the above mentioned institutions. We alone are responsible for anyerrors.* Corresponding author; London School of Economics, Houghton Street, London WC 2A 2AE,United Kingdom; tel:44-171-837-8888 ext.5921; fax 4-171-713-5158; e-mail:p.patil@lse.ac.uk** Local Major Advisor to first author and Senior Scientist ( Economics), Central Institute forBrackishwater Aquaculture, Chennai – 600 008, India.
 
rely on natural coastal resources for their livelihood. In the literature, however, these claimsremain anecdotal with little empirical support. In our paper we move beyond the traditionalliterature in this subject area by providing empirical support to claims made both in opposition toand in favour of this industry.The economic analysis and policy conclusions presented in this paper draw on two types ofdata collected from Nellore District. Primary data were collected from 518 brackishwater shrimpfarms located along the Kandaleru creek in Nellore District of Andhra Pradesh. Additionally,Socio-economic and impact data were collected from surveying local populations in 26 vilageslocated along the Kandaleru creek and the Bay of Bengal and adjacent to clusters of shrimpfarms.Our paper is divided into six section. In section one we present an overview of therelationship between farm size, ownership status, production technology and output. In section twowe examine the growth and development of the Kandaleru shrimp industry between 1993 and1997. In section three we analyse the industry's impact on the growth and development ofancillary industries. In section four we assess shrimp farming's impact on fishing and farmingcommunities living adjacent to shrimp farm clusters. In section five we offer policyrecommendations toward the sustainable development of this industry. In the final section weoffer three concrete recommendations and some concluding remarks.
Kandaleru Shrimp Farm Characteristics
 The are approximately 530 brackishwater shrimp farms located along the Kandalerucreek. Together, they occupy 2, 166 hectares in total area of which 1,675 hectares are waterspread. In 1996 the 2,478 ponds in operation produced, 1,788 metric tons of shrimp. This is anaverage of 450 kilograms of shrimp per pond or 620 kilograms of shrimp output per hectare ofwater spread area. Similar to other shrimp farming regions throughout India's coastal belt,Kandaleru shrimp farms vary significantly by size, ownership status and production technologyused. We discuss each characteristic in turn.
Size
 On par with the national average, 79 per cent of Kandaleru shrimp farmers produce onland-holdings of less than five hectares. There are 253 small and marginal farmers operating onland-holdings less than two hectares in area. This constitutes 49 per cent of all Kandaleru shrimpfarmers. In contrast, 108 farmers on 21 per cent of all Kandaleru farmersproduce on land-holdings greater than five hectares. Of these 108 farmers, 43 or 8 per cent ofall KAA farmers operate on 10 or more hectares of land (Table 1).
Table 1.1997 Kandaleru Shrimp farms by size of land-holdings in hectares.
 ________________________________________________________________________ Land-holdings size (hectares) ___________________________________<1 1-2 2-5 5-10 >10 Total ________________________________________________________________________ No. Shrimp Farms 202 51 156 65 43 518Share (%) 39 10 30 13 8 100 ________________________________________________________________________ Source: KAA Database, 1997.
 
Ownership status
 Of the 518 shrimp farmers in the KAA, 285 farmers or 55 per cent reported that theyown their farms, 81 or 16 per cent reported that they lease their farm land and 152 or 29 percent reported that they received their land through a government land transfer scheme for thepurpose of shrimp farming (Table 2.)
Table 2. Ownership status by size of land-holding in hectares
Land-holdings size (hectares)
  ___________________________________ 
<1 1-2 2-5 5-10 >10
  _______________________________________________________________________ 
No. of Shrimp farms 202 51 156 65 43Share (%) 39 10 30 13 8Farm land owned 50 42 87 59 42Share (%) 25 82 56 94 98Farm land leased 0 9 69 6 1Share (%) 0 18 44 6 2Farm land transfer 152 0 0 0 0Share (%) 75 0 0 0 0 _______________________________________________________________________ Source : KAA Database, 1997.The data reveal that farm ownership status varies with farm size. Ninety-six per cent ofKAA farms operating on five or more hectares and 82 per cent operating on an area betweenone and two hectares are owned by the operators. In the case of the smaller farms, the ownersare the individual farmers. In the case of the large fars, 71 per cent are owned by wealthyfarmers and 29 per cent are either corporate entities with publicly owned shares or privatelimited companies.The majority of shrimp farmers who
leased 
land operate on land-holdings between twoand five hectares and are mostly non-natives of Nellore district. Their motivation for coming tothe region and entry into the industry was in most cases entirely profit driven. In most cases thesefarmers came to the Kandaleru region in 1993, before the first major shrimp disease outbreak(Patil, 1997).All 152 farmers reporting that they received land via a government
transfer
scheme wereentitled to this classification as members of on of India's Scheduled Castes or Scheduled Tribes
 
(SC/ST)
.
Each one of them operates on a total area of less than one hectare of land.
Production technology and output
 Generally, we find a strong positive correlation between average output per waterspreadhectare and farm size. The strongly positive and significant Pearson correlation (r=.92; p=0.00)suggests that as farm size increases, the average output per hectare increases. This relationship isfurther illustrated in Table 3.

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