Aquaculture in Bangladesh : essays on production variability, consumer preferences and market integration

Abstract

The main objective of this thesis is to increase knowledge about production, consumer and market issues related to aquaculture in Bangladesh. This is done by investigating (1) production risk and technical efficiency, (2) farmers’ risk perceptions and risk management strategies, (3) consumer preferences for fish attributes and (4) market integration of aquaculture products. The thesis is based on data collected in two surveys and time series data from secondary sources. It contributes to the empirical literature on production risk, consumer preference studies and price movement of seafood products in a developing country. The thesis consists of an introductory chapter and four independent papers.

Paper 1 examines production risk and efficiency of a relatively fast-growing tilapia aquaculture industry. By employing a stochastic frontier production model with flexible risk specification, this paper quantifies production variability of tilapia fish farming by means of two main possible sources: production risk and technical inefficiency. There are significant production risks and technical inefficiencies in tilapia farming. Feed is the most important input in terms of variable cost sharing for tilapia production. Based on the estimated results, feed and fingerlings have risk-increasing effects, while capital has a risk-reducing effect. Extension services and training on management skills and technical knowledge for aquaculture production systems has reduced inefficiency. Credit has risk-reducing effects on production risk as well as reduced technical inefficiency.

Paper 2 examines Bangladeshi fish farmers’ perception of risk sources, risk management strategies and the relationship with socio-demographic variables. We assess farmers’ attitudes toward risk and their risk management strategies. The results reveal that the most important perceived sources of risk were fish diseases, fish price variability, low quality of feed and fingerlings, floods and credit constraints. The most important strategies to mitigate risks were the supply of good quality feed and fingerlings, disease prevention, crop insurance, increasing personal savings, and assurance of bank loans. The findings also show that farmers are engaged in multiple management strategies to reduce losses from aquaculture, and that socio-demographic variables have a significant effect on farmers’ perceptions of risk sources and risk management strategies.

Paper 3 examines Bangladeshi consumer preferences regarding wild-caught and farm-raised fish. A choice experiment was conducted at the consumer level in three cities, and the data were analyzed with a mixed logit model in willingness-to-pay (WTP) space. The results showed that on average, consumers were willing to pay more for indigenous fish than foreign fish species. Furthermore, they preferred domestic production to imported fish, and fresh to frozen fish. However, Bangladeshi consumers were not willing to pay a significant premium for wild-caught fish. The lack of consumer differentiation in regard to the production method is promising for aquaculture in this region and provides hope for reducing the pressure on wild fisheries.

Paper 4 investigates market integration between regional markets in Bangladesh and between traditional carps and the non-indigenous farmed species pangasius and tilapia. The results indicate that the species are partially integrated on the regional markets and that there is no price leader among the species in the market. Furthermore, the integration test between regional markets show that the regional markets for rohu, pangasius, tilapia and silver carp are fully integrated. This implies that all prices follow the same stochastic trend in the regional markets. There is no market leader among the regional markets, which indicates that markets have their own power to transmit price information.

Based on the findings, in the thesis I will argue that aquaculture has a potential to increase fish supply in Bangladesh. This increase largely depends on increasing production, reducing production risk, consumer acceptance and the number of new market segments for fish products. Fish production can be increased by reducing production risk and technical inefficiency. Management strategies related to supply of quality inputs, disease prevention and available credit can help to mitigate risk. In terms of consumers’ preferences, domestic production and indigenous species have potential to increase fish supply. The performance of markets has increased in terms of market linkage. The government policy should focus on increasing the supply of quality inputs, improving extension services and training, supplying credit for small-scale farmers with less collateral and low interest rates and designing efficient marketing strategies.

Hovedformålet med denne oppgaven er å øke kunnskapen om produksjon, forbruker- og markedsspørsmål knyttet til akvakultur i Bangladesh. Dette gjøres ved å undersøke (1) produksjonsrisiko og teknisk effektivitet, (2) bønderes risikooppfattelser og risikostyringsstrategier, (3) forbrukerpreferanser for fiskeattributter og (4) markedsintegrasjon av akvakulturprodukter. Avhandlingen er basert på data samlet i to undersøkelser og tidsseriedata fra sekundære kilder. Det bidrar til den empiriske litteraturen om produksjonsrisiko, forbrukerpreferanse og prisbevegelse av sjømatprodukter i et utviklingsland. Avhandlingen består av et innledende kapittel og fire uavhengige papirer.