Communities under Stress: Trade Liberalization and Development of Shrimp
Aquaculture in Orissa Coast, India
Dolagobinda Pradhan M. A., Utkal University, 1990 M. Sc., Asian Institute of Technology, 1994
A Dissertation Submitted in Partial Fulfillment of the Requirements for the Degree of
DOCTOR OF PHILOSOPHY
In the Department of GeographyO Dolagobinda Pradhan, 2004 University of Victoria
All rights reserved. This dissertation may not be reproduced in whole or in part, by photocopying or other means, without the permission of the author.
Supervisor: Dr. M. S. Flaherty
ABSTRACT
The past two decades have witnessed a growing number of developing countries adopting trade liberalization initiatives to integrate more fully with the global economy. One of the main outcomes of this development was the promotion of high value food products. Growth of brackish water shrimp farms in the coastal areas is one of the prime examples of this export-driven production system. Although the development has resulted many positive impacts including generating income and employment opportunities for the rural poor, it has raised serious concerns over the accompanying social, economic and environmental impacts occurred upon the coastal communities.
India liberalized its economy in the early nineties with an objective to achieve higher economic growth so as to combat poverty. Emphasis was given on the production of export oriented high value commodities that have demand in the international market. The underlying conditions of poverty, rapid population growth and aspirations of the young people towards non-agricultural pursuits, however, intensified the pressure to choose short- term economic gains over long-term resource management strategies. Development of shrimp aquaculture along the coasts received high priority in the national agenda as a drive to increase the country's foreign currency reserve. Although the development has brought significant amount of foreign currency to the national economy, at the local level it has disrupted the livelihoods of the rural communities and altered the coastal environment.
This study addresses the consequences of the transformation of the rural economy as a result of trade liberalization in InQa. It examines the social, economic and environmental impacts that have been generated upon the rural communities in Chandabali block after the introduction of industrial shrimp farming. To achieve the research objectives, a 'multiple methods approach' comprising document review, key informant interviews, household surveys and group discussions has been adopted. After discussing the main findings of this study, several recommendations were offered at the end to help improve the role of shrimp farming in rural development.
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The findings of this research suggest that the impacts of commercial shrimp farming in Chandabali block are of mixed type. After shrimp farming, the local economy became increasingly diversified and people had more options to work in rice farming, shrimp farming, trawler fisheries or service sector industries. Due to the lack of jobs both in the public and private sectors, many youths, particularly those having college or university degrees, found shrimp farming as an ideal profession to generate income. Wage labourers received long-term employment in shrimp farms. Many local people leased their land to shrimp farmers and received lvgher income compared to rice farming.
Another finding of this study is that shrimp farming has widened the gap between the rich and poor in the rural society. Rich and elite farmers who have access to credit and apply high value inputs received higher benefits. In contrast, the small and marginal farmers who pay more for credit, are unable to buy required inputs and receive less in selling their product, can not compete with rich farmers. In several places due to successive crop failure as a result of disease, many small and margrnal farmers sold their household properties to pay back their loans. Due to seepage of saline water from the neighboring shrimp farms, many rice farmers received less production. In one hand, these farmers are unable to establish a shrimp farm due to lack of financial resources, and on the other, they receive less production because of salinization of their paddy fields.
Shrimp farming has also altered the coastal ecosystem and the local environment. As much of the mangrove areas, wetlands and village common land have been encroached by shrimp farmers, there is little space available for domestic animals, and the poor people who have been depending upon these resources, struggle to find alternatives in meeting their household needs. Women, who are responsible for collecting fuelwood and fodder from the mangrove areas, have to put more efforts in collecting these materials. Traditional fishing communities struggle as the access to coastal water and boat landing areas have been restricted by shrimp farmers. Local water bodies became polluted due to discharge of wastewater from the shrimp farms.
The findings of this study suggest that macro level policies such as trade liberalization initiatives may be useful in some respect at the national level, but at the local level it can generate imbalance growth. There is a need to formulate appropriate policy guidelines at the national level and establish sufficient institutions at the local level to
monitor the development activities. In the case of shrimp farming, India needs to formulate more effective coastal resource management policies and provide sufficient institutional resources at the local level to protect the livelihoods of the rural communities and the environment. This will help ensure a stable source of income from shrimp farming for rural communities and minimize adverse impacts on the local environment.
TABLE OF CONTENTS
ABSTRACT TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES LIST OF PLATES ACKNOWLEDGEMENTS DEDICATION ACRONYMS CHAPTER 1: INTRODUCTION 1.1 Nature of the Problem1.2 Purpose and Objectives of Research 1.3 Outline of the Dissertation
Page
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11 v X xii xiii XV xvii xviiiCHAPTER 2: TRADE LIBERALIZATION AND RURAL COMMUNITIES 10
2.1 Trade Liberalization and Rural Communities 10
2.2 Trade Liberalization and Agricultwe 18
2.3 Trade Liberalization and Aquaculture 24
2.4 Information Needs for Community Impact Assessment 33
CHAPTER 3: DEVELOPMENT OF COASTAL AQUACULTURE 3.1 Global Aquaculture Development
3.1.1 Global Aquaculture Production 3.1.2 Global Shrimp Production 3.2 Aquaculture Development in India
3.2.1 Aquaculture Production 3.3 Coastal Shrimp Culture in India
3.3.1 Historical Development 3.3.2 Current Status and Production 3.3.3 Culture Systems in Practice
3.3.4 Government Policy and Regulations 3.4 Shrimp Aquaculture in Orissa Coast
3.4.1 Current Status and Production 3.5 Summary
CHAPTER 4: RESEARCH DESIGN
4.1 Trade Liberalization and Agro-food Studies 4.2 Study Area
4.2.1 Selection of the Study Area 4.2.2 Topography
4.2.3 Land Use Types 4.2.4 Demography
4.2.5 Infrastructure Development
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4.3 Field Research Design
4.3.1 Secondary Data Collection 4.3.2 Key Informants Interview 4.3.3 Community Survey 4.3.4 Group Discussions 4.4 Data Collection Issues 4.5 Ethical Considerations 4.6 Summary
CHAPTER 5: CHARACTERIZATION OF SHRIMP AQUACULTURE IN CHANDABALI BLOCK, ORISSA STATE
5.1 Caste System in Rural India 5.2 Composition of Shrimp Farmers
5.2.1 Caste and Origin of Shrimp Farmers 5.3 Characteristics of Shrimp Farmers
5.3.1 Age Group
5.3.2 Levels of Education 5.3.3 Technical Background 5.4 Adoption of Shrimp Farming 5.5 Characteristics of Shrimp Farms
5.5.1 Land Ownership
5.5.2 Culture Systems in Practice 5.5.3 Sources of Brackish Water 5.5.4 Water Treatment
5.5.5 Sources of Post-Larval Shrimp 5.5.6 Sources of Feed
5.6 Shrimp Farm Operation 5.6.1 Sources of Finance
5.6.2 Sources of Technical Support 5.7 Income from Shrimp Farming
5.7.1 Marketing of Shrimps
5.7.2 Income from Shrimp Farming
5.7.3 Outbreak of Disease in Shrimp Ponds 5.8 Problems Faced by Shrimp Farmers
5.9 Corporate Shrimp Farmers 5.10 Summary
CHAPTER 6: DISCUSSION
6.1 Trade Liberalization and Rural Economy 6.2 Economic Diversification
6.3 Socio-Economic Differentiation 6.4 Impact on Rice Farming
6.5 Degradation of Coastal Resources and Environment 6.5.1 Mangroves and Wetland Conversion 6.5.2 Alteration of Natural Systems 6.5.3 Loss of Valuable Coastal Land 6.5.4 Loss of Common Property Resources 6.5.5 Water Pollution
6.6 Shrimp Farming and Women
6.7 Shrimp Farming and Traditional Fishing Communities 6.8 Shrimp Farming and Rural Society
6.9 Summary
CHAPTER 7: SUMMARY AND CONCLUSIONS
7.1 Summary of the Research 7.2 Conclusions
7.3 Directions for Further Research
BIBLIOGRAPHY
APPENDICES
Appendix 1. Key Informant Interview Schedule Appendix 2. Questionnaire
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S h m p Farmers Survey Appendix 3. Questionnaire-
Rice Farmers Survey Appendix 4. Corporate Farm Interview ScheduleLIST OF TABLES
Page Table 2.1 Table 3.1 Table 3.2 Table 3.3 Table 3.4 Table 3.5 Table 3.6 Table 3.7 Table 4.1 Table 4.2 Table 5.1 Table 5.2 Table 5.3 Table 5.4 Table 5.5 Table 5.6 Table 5.7 Table 5.8 Table 5.9 Table 5.10Selected Economic Indicators of Indian Economy During Liberalization Period (1 99 1-2000)
Leading Aquaculture Species in the World Top Ten Aquaculture Producers in the World
Top Ten Shrimp Producing Countries in the World, 200 1 Aquaculture Production in India (1 99 1-2000)
Details of Shrimp Farming in India (1 990-200 1)
Shrimp Exports from India- Contribution of Cultured Shrimp Brackish Water Area in Orissa by Districts
Area under Shrimp Farming in Chandabali Block Characteristics of Sample Villages Surveyed Shrimp Farmers Based on Caste
Shrimp Farmers Based on Origin Age Group of Shrimp Farmers
Levels of Education of Shrimp Farmers Technical Background of Shrimp Farmers Production Analysis of a Typical Shnmp Farm Production Analysis of a Typical Rice Farm Reasons for Adoption of Shrimp Farming Land Ownership of Shrimp Farms
Table 5.1 1 Table 5.12 Table 5.13 Table 5.14 Table 5.15 Table 5.16 Table 5.17 Table 5.18 Table 5.19 Table 6.1 Table 6.2 Table 6.3
Distance of Shrimp Farms from Coastline Treatment of Intake Water by Shrimp Farmers Sources of Post Larvae Shrimp
Sources of Capital for Shrimp Farming Sources of Technical Support
Marketing of Shrimps
Impact of Shrimp Farming on Household Income Problems Faced by Shrimp Farmers
Characteristics of Corporate Shrimp Farmers Land Use Before Shrimp Farming
List of Antibiotics and Other Pharmacologically Active Substances Banned by the Aquaculture Authority, India Socio-economic Conditions of Shrimp Farmers
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LIST OF FIGURES
Page Figure 2.1 Figure 2.2 Figure 2.3 Figure 3.1 Figure 3.2 Figure 3.3 Figure 3.4 Figure 3.5 Figure 4.1 Figure 4.2 Figure 4.3 Figure 4.4Change in Production of Foodgrain and Cash Crops in India Change in Area Under Foodgrain and Cash Crops in India Progress of Shrimp Culture in India (1981-2000)
Global Aquaculture Production
Maritime StatesAJnion Territories of India Trend of Aquaculture Development in India Coastal Districts of Orissa State
Growth of Shrimp Culture in Orissa
Location of Chandabali C. D. Block in Orissa State Land Use Map of Chandabali Block
Area under Shnmp Farming in Bhadrak District, Orissa Location of Surveyed Villages in Chandabali Block
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XlllLIST OF PLATES
Plate 3.1 Plate 4.1 Plate 4.2 Plate 4.3 Plate 4.4 Plate 4.5 Plate 4.6 Plate 4.7 Plate 4.8 Plate 4.9 Plate 4.10 Plate 4.11 Plate 4.12 Plate 5.1 Plate 5.2 Plate 5.3 Plate 5.4 Plate 5.5 Plate 5.6 Plate 5.7 Plate 5.8 Plate 5.9 Plate 5.10Black Tiger prawn dominates the global shrimp production Healthy mangrove forests along river Baitarani
Degraded mangrove forests in Chandabali block A typical village in Chandabali block
Location of Dhamara port in Chandabali block
The paved road that connects Dhamara with Baleswar
Transportation through water is a vital part of local transportation
A woman making dung patties for coolung A typical traditional fish pond in Orissa Coast A semi-intensive shrimp pond in Chandabali block Interview with a village leader
Interview with rice farmers Discussion with wage labourers
Shrimp farming attracts many urban dwellers (investors) Youths prefer to be involved in shrimp farming
A seminar organized by a shrimp feed company Farmers are unable to sell rice
A shrimp farm located along river Baitarani CP shnmp feed available in local market
Page 47 89 90 9 1 92 93 93 94 96 98 105 112 113 126 128 131 134 139 144 Farmers like to buy a motor bike with money received from shrimp 15 1 Farmers use crab net to protect shrimp from virus 152 Shrimp farming was started by corporate farmers in Chandabali 156 Abandoned corporate shrimp farms in Chandabali block 159
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Plate 6.1 Plate 6.2 Plate 6.3 Plate 6.4 Plate 6.5 Plate 6.6 Plate 6.7 Plate 6.8 Plate 6.9 Plate 6.10 Plate 6.1 1 Plate 6.12 Plate 6.13 Plate 6.14 Plate 6.15 Plate 6.16 Plate 6.17 Plate 6.18 Plate 6.19 Plate 6.20 Plate 6.21 Plate 6.22 Plate 6.23 Plate 6.24Mode of local transportation in Chandabali block 168 Dhamara, a small business centre in Chandabali block 168
A typical feed store in Dhamara 169
Shrrmp feed retailing provides employment to local people 169 School going children are involved in shnmp fiy collection 170 Top soil needs to be removed at the end of each shrimp crop 175 A typical paddy field is being converted into a shrimp pond 177 Shrimp farms are located very close to rice fields 179 Conversion of mangrove areas into shrimp pond 183 Conversion of degraded mangrove forests into shrimp pond 184
Conversion of wetlands into a shnmp pond 184
A natural creek has been converted into a shrimp pond 186 Abandonment of shrimp farms due to land contamination 187
Accumulation of sludge in a shrimp pond 190
Use of lime and chemicals during pond preparation 192 Antibiotics and drugs available in the local market 193 Traditional fishing provides employment for local women 194 Shrimp farming provides few on-farm activities for local women 196 A seminar on shrimp farming is attended by men only 197 A woman is catchng fish to support her family 198 A school in Orissa coast does not have classrooms 20 1 A typical elementary classroom in Chandabali block 202 Many villages are poorly connected with roads 204 Many people have to share one tube well for drinking water 204
ACKNOWLEDGEMENTS
Various people and institutions have offered their help and assistance in the course of this research. On an individual level, I am grateful to my supervisor, Dr. Mark Flaherty, for his help in designing this research program and timely and skillful review of this dissertation. I am also indebted to my committee members, Dr. Olaf Niemann, Dr. Stephen Tyler and Dr. Don Eastman for their suggestions during the conception of this study, and valuable comments during the preparation of this dissertation. I am also grateful to a few individuals who helped me in India are Dr. D. K. Singh, Dr. J. K. Routray, Dr. P. Pakshirajan and Dr. K. C. Samal. Some people who helped me in the field are Nayak Babu, Abhash, Rabi Babu, Deepak and Sudhakar to whom I am thankful.
At an institutional level, I am thankful to various organizations who assisted me during my fieldwork in India. Director of Fisheries, Government of Orissa; Aquaculture Authority of India, Chennai; Marine Products Export Development Authority, Cochin and its Regional Office in Bhubaneswar; Ministry of Agriculture, India; District Fisheries Office, Bhadrak; CP Aquaculture India (Pvt.) Office, Baleswar; District Forest Office, Chandabali; Orissa Census Office, Bhubaneswar; Aquaculture Foundation of India, Chennai; Central Marine Fisheries Research Institute, Kochi; Central Institute for Brackishwater Aquaculture, Chennai; Department of Geography, Utakal University and Nabakrushna Choudhury Centre for Development Studies, Bhubaneswar.
At University of Victoria, special thanks due to Ole Haggen for preparing my maps and scanning the photographs and Ken Josephson for helping in making graphs. My
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friends including Brian, Rosaline, Ian, Paul, Rob, Nandan, Kathy, Marut, Anukul, Michele, Eleanor and Anne Cathe were continuous sources of inspiration during my study period.
Finally, I am grateful to my parents who live in a remote village in India and my parent in-laws who encouraged me to pursue this Ph. D. study. Special thanks to my wife and daughter who have been with me here in Victoria starting from the very beginning of my Ph.D. program.
Funding for thrs research was arranged by Dr. Mark Flaherty through his research project funded by the Social Sciences and Humanities Research Council of Canada (SHHRC). Thanks again to Mark for k s continuous effort in arranging funding for my staying over in Victoria. Thanks to University of Victoria Students' Society for bearing a part of my travel expenses to India to conduct my fieldwork.
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DEDICATION
This dissertation is dedicated to my wife Nibedita and daughter Dolphy who were always asking me when I was going to complete my study.
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ACRONYMS
AAI AAB ADAP ADB AFI AoA BFDA BOBP C.D. Block CIESIN CMFRI CP CRZ CYSD DANIDA DFO EDF EIA ERRP FA0 GAA GATT GDP HVFP I . IRDP ISA Net ISED MAPAquaculture Authority of India Aquaculture Authority Bill
Area Development Approach Programme Asian Development Bank
Aquaculture Foundation of India Agreement on Agriculture of GATT
Brackishwater Fishfarmers Development Agency Bay of Bengal Programme
Community Development Block
Center for International Earth Science Information Network Central Marine Fisheries Research Institute
Charoen Popkhand Group of Thailand Coastal Regulated Zone
Center for Youth and Socio-economic Development Denmark International Development Agency
District Fisheries Office Environmental Defense Fund Environmental Impact Assessment Economic Rehabilitation of Rural Poor
Food and Agriculture Organization of the United Nations Global Aquaculture Alliance
General Agreement on Tariffs and Trade Gross Domestic Product
High Value Food Product International Monetary Fund
Integrated Rural Development Programme Industrial Shrimp Action Network
Institute for Socio-economic Development Mangrove Action Project
MoAAH MoEF MoTC MPEDA MSSRF NACA NCDS NEERI NGO NRDC ODA ORSAC SAP UNDP UNEP WB WTO WWF
Ministry of Agriculture and Animal Husbandry Ministry of Environment and Forests of India Ministry of Trade and Commerce
Marine Products Export Development Authority of India M. S. Swaminathan Research Foundation
Network of Aquaculture Countries in Asia
Nabakrushna Choudhury Center for Development Studies National Environmental Engineering Research Institute Non Governmental Organization
Natural Resources Defense Council
Overseas Development Agency of the United Kingdom Orissa Remote Sensing Applications Center
Structural Adjustment Programme
United Nations Development Programme United Nations Environment Programme World Bank
World Trade Organization World Wildlife Fund
Chapter 1
INTRODUCTION
1.1 Nature of the Problem
The past two decades have witnessed a growing number of developing countries embarlung on the liberalization of their trade and foreign investment regimes, adjusting their domestic economic structures, and strengthening their export capacity (Cheru, 2000). These adjustments have been facilitated by three global actors namely the General Agreement on Tariffs and Trade (GATT), the World Bank, and the International Monetary Fund (IMF). These agencies can be considered as the pillars of the Anglo- American infrastructure designed to promote economic liberalization (Greenaway, 1998). Whle the proponents of trade liberalization consider it as a major contributor to economic growth, employment and poverty alleviation (Greenaway, 1998; Krueger, 1998; Taniguchi and West, 1997), opponents consider it to be an agent for the development of growing inequalities of wealth and income within and between countries (Cheru, 2000; Lopez, 1992; Shuman, 1994). Some scholars believe that except for a few positive impacts such as increasing foreign investment flow and national income, liberalization brings many adverse impacts. Those include increased stress on the environment in developing countries (Esty and Geradin, 1998; Lopez, 1992; Schoenbaum, 1997), reduced domestic food availability due to reorientation of agricultural production to export crops (Patnaik, 1997), and increased marginalization of
the rural poor who are dependent on open access or common property resources for their livelihoods (Bailey, 1988; James, 1999; Richards, 1997; Stonich et al., 1997).
In the developing world, many countries rely on food exports as one of the main sources for earning foreign exchange. One consequence of the rush by developing countries to liberalize their economies so as to integrate them into the global market, has been a drastic reorientation of agricultural priorities (Arce and Marsden, 1993; Friedmann, 1995; Samatar, 1993). Traditional low-value export commodities such as coffee, tea, sugar, tobacco, cocoa and so on have been phased out and displaced by the so called 'high value food" (HVF) commodities such as fresh fruits and vegetables, poultry and dairy products, and shell-fish (Raynolds, 1994; Watts and Goodman, 1997). Factors such as dietary changes in the developed world, trade liberalization, improved transportation system, and technological advancement in the food industry have all contributed to the growth of the HVF sector (Friedland, 1994). Some scholars argue that economic liberalization and regional integration is leading to increased specialization of food and scale economies on an individual product basis (McMichael, 1998; Wilkinson,
1997).
Much of the ago-food literature focuses on changes in the agricultural sector brought about by trade liberalization. Similar transformations, however, are underway in the world's fisheries sector. With market reforms, the trade in fishery products increased significantly during the past two decades. Stagnating and/or declining capture fisheries, combined with rising demand for fish and seafood products, increased reliance on aquaculture (Bailey, 1997; Reiger, 1996; Safina, 1995). Many analysts (Ganapathy, 1996; New, 1999) suggest that the wild catch will be inadequate to meet the needs of the
world's population without supplementation through aquaculture. Although more than 100 species are available for aquaculture production around the world, the most rapid increase in production has been experienced by only a few carnivorous species, whch have high commercial value in the international market (New, 1999; Stonich and Bailey, 2000). These are primarily salmon, shrimp, seabass and seabream.
In the developing countries, economically pressured governments view the aquaculture industry as a means to acquire foreign investment, increase export earnings, and reduce trade deficits (Weeks, 1992; Skladany and Harris, 1995). The promoters of the aquaculture industry believe that aquaculture has the potential to increase rural employment and income, improve local food security and nutrition (FAO, 1997; Ganapathy, 1996). As a result, in many developing countries, the traditional low-input based forms of aquaculture that helped meet local food needs are being superseded by modern resource intensive production methods that serve food mainly to the international markets (Coull, 1993; Kelly, 1996; Williams, 1997). A prime example of this is shrimp farming, the frenetic expansion of which has been called an "aquatic gold rush" (McGinn, 1998). Today, it is the highest-value seafood product entering world trade channels, and has become an important export product and hard currency earner for countries with requisite resources (Flaherty and Karnjanakesorn, 1995). Cultured shrimp, which contributed about 40 per cent of the total shnmp production in 2001, is now being practiced in more than fifty nations (Lockwood, 1997; Rosenberry, 2001).
Although shrimp farming has been one the fastest growing components of the global aquaculture industry in the past two decades, its development has been accompanied by serious concerns over the associated social, economic and
environmental impacts (Flaherty et al., 2000; Stonich et al., 1997). The benefits generated from the industry are hghly unevenly distributed within rural communities. Local elites who have the advantage of education and wealth that provide access to knowledge, institutional resources and capital necessary, have adopted new production technologies more easily (Hannig, 1986; Bailey and Skladany, 1991). In contrast, the poor coastal communities, who have been enjoying their traditional use rights for centuries, lose access to coastal resources such as mangroves, salt pans, wetlands, coastal waters, and ultimately lose their livelihoods (Bailey, 1988; Flaherty and Karnjanakesorn,
1995; Stonich et al., 1997).
In India, the economic liberalization that started at the beginning of the 1990s, has been a major factor of change in the Indian economy and society. Although the per capita income of Indian people has increased after liberalization, this has been accompanied by increased marginalization of a sizable rural population (Dutt and Rao, 1996; Holmstrom, 1999; Patnaik, 1997). The adverse impacts include an intensification of natural resource extraction, deterioration in the stock and quality of renewable resources, worsening environmental conditions, and rapid decline of common property resources (Dutt and Rao, 1996). In the agro-food sector, several multinational and transnational corporations invested money in the production of cash crops such as soya and sunflower, which have a high international demand (Holmstrom, 1999; Patnaik, 1997). Owing to the shift to export based agriculture, the land area under food grains has gone down sharply since liberalization, while the area under new crops of export demand such as soya and sunflower has grown up dramatically (Patnaik, 1997). This has resulted in reduced domestic per capita foodgrain availability and aggravated poverty in rural
areas. Although the technological change and global markets created new opportunities for well-paid careers, it left a large mass of poorly-educated unshlled people, the majority of whom live in rural areas, with only the prospect of low-paid casual work (Holmstrom, 1999). This in long-run would intensifjr the already existing process of peasant differentiation in rural areas, and increase the economic polarity and political antagonism between landless and rich farmers (Brass, 1994).
In the fisheries sector, with opening of the economy for augmenting export through export oriented programs, private sector investment and foreign investment have increased in the aquaculture industry, particularly for shrimp farming in the past few years (James, 1999). The subsidies, provided by the government in the form of soft loans, tax breaks and import tariff relaxation, have provided strong incentives to a large number of private entrepreneurs and corporations who have started shrimp farming with the prospects of getting high profits (The Hindu, 1998; Shetty and Satyanarayana Rao, 1996). The recent industrial and export-import process announced by the government, has allowed the aquaculture industry to import technology, equipment, machinery, chemicals, feed, foreign investment and technical collaboration with simplified procedures (Ganapathy, 1996). The above mentioned factors resulted a boom in aquaculture industry in the country, and is reflected in the production figures of an increase from 0.78 million mt in 1987 to 1.77 million mt in 1996. The corresponding value was an increase fiom 0.83 billion in 1987 to USD 1.98 billion in 1996 (Kutty, 1999). In the shrimp industry, production was approximately 70,000 mt from a production area of about 200,000 hectares (Shrimp Sentinel Online, 1999). It has been predicted that if the recent investment trend in aquaculture industry continues, farm produced shrimp may emerge as
one of the top five export earners for India in the non-traditional sector (James, 1999; Mahapatra, 1995).
Although the marine shrimp industry has grown rapidly over the past decade, there is ongoing concern that it is not economically and socially beneficial to the majority of coastal communities. The prospect of high profits has attracted many urban-based investors, who have provided limited and generally low-paying employment opportunities for the local people. Moreover, the degradation of the coastal ecosystems by the shrimp industry poses a direct threat to the welfare of the majority of the rural poor, who are reliant upon these resources for their livelihoods. Naganathan et al. (1995) in their study for Tamil Nadu, found that the shrimp industry has been generating many negative impacts on the welfare of the local communities including loss of valuable agricultural land, particularly paddy fields, unemployment of farm laborers, displacement of poor and traditional fishermen, and deprivation of coastal communities from their common property resource use. The National Environmental and Engmeering Research Institute (NEERI), in its study for Andhra Pradesh, estimated that the annual earning from aquaculture is 15 billion rupees, whereas the annual value of damage caused by aquaculture is rupees 63 billion (Khor, 1995). It is believed that unless appropriate precautionary measures are taken now, in the hture, many coastal areas in India will be zones of serious political and social conflicts, and will turn into a terrain of man-made disasters (James, 1999).
Until recently, much of the research on marine shrimp aquaculture has focused on improving existing technologies or developing new ones for increased production (Barraclough and Edwards, 1999; Finger-Stich, 1996; Pillay, 1992). Many investigations
are confined to the technology and management aspects, particularly on the biology and physiology of commercially desirable species (Stonich et al., 1997; World Bank, 199 1). With the exception of some studies on environmental impacts, less attention has given on the socio-economic impacts of marine shrimp aquaculture (Edwards, 1999; FAO, 2000~). Some scholars (Ben-Yami, 1986; Gujja and Finger-Stich, 1996; James, 1999) have argued that aquaculture, like any other industry, should be evaluated in terms of its economic, social and environmental impacts, and that more research needs to be done on these areas to formulate appropriate policy tools for long-term sustainability of the aquaculture industry. Although some investigations have been conducted on the socio- economic impacts of shrimp aquaculture, most of them are confined to South-East Asia, particularly in Thailand (Flaherty and Karnjanakesorn, 1995; Flaherty and Vandergeest; 1998; Flaherty et al., 1999, 2000), the Philippines (Kelly, 1996; Primavera, 1991, 1994), and Honduras in Central America (Dewalt et al., 1996; Stonich, 1995; Stonich et al.,
1997).
In India, the s h m p industry has been viewed as a means to achieve economic benefits without giving much attention to the long-term social and environmental consequences (James, 1999). Although some concerns have raised in the past by a few environmental activists and NGOs, most of them emphasized the environmental issues. Less study has been conducted to understand the social and economic impacts of shrimp farming on the livelihoods of the rural communities. As industrial shrimp farming is in its early stage of development in India and has large potential for fwther development, there is an urgent need to carry out more investigation on the social and economic implications of shrimp farming on the livelihoods of the coastal communities. This will help provide
directions to decision-makers and government agencies in formulating appropriate policy guidelines to protect the livelihoods of the rural poor and the environment.
1.2 Purpose and Objectives
of Research
The overall goal of this study is to improve our understanding of how trade liberalization initiatives bring changes to local economies and societies, and affect the livelihoods of rural communities in the developing world. The specific context for this study is to understand the linkages between trade liberalization, the development of shrimp aquaculture, and the social, economic and environmental impacts generated by coastal shrimp farming on the local communities along Orissa's coast in the eastern part of India. As such, this study will contribute towards a more comprehensive understanding of the linkages between macro economic policies, the processes underlying natural resource and environmental degradation, and the welfare of people living in rural communities. The specific objectives are to:
1. Critically review the literature on trade liberalization and its implications for rural communities so as to set the context for this study;
2. Document the development and expansion of coastal shrimp aquaculture globally, with particular emphasis on India;
3. Investigate the legal, institutional, economic and social factors that have contributed to the development and growth of coastal shrimp aquaculture along Orissa's coast; 4. Assess the socio-economic impacts of coastal shrimp aquaculture on the welfare of
5. Provide recommendations to improve the role of coastal shrimp aquaculture in rural development planning.
1.3 Organization of the Dissertation
T h s dissertation has seven chapters. Chapter 2 reviews the literature on trade liberalization and its implications for the rural communities in the developing world. It also examines information needs for community impact assessment in conducting research on coastal aquaculture development in the developing countries. Chapter 3 describes the development of coastal aquaculture globally with particular emphasis on India. Coastal aquaculture development along Orissa's coast is also discussed. Chapter 4 discusses the methodological framework adopted for this research and explains the various survey methods used for field data collection. This chapter also describes the biophysical and socio-economic characteristics of the study area, data collection issues, and research ethical considerations. Chapter 5 presents the results obtained from a community survey undertaken in Chandabali block. It describes the operation and management practices of shrimp farming and the social and economic conditions of the shrimp farmers. Chapter 6 examines the social, economic and environmental impacts generated by industrial shrimp farming on the local communities in Chandabali block. The impact of coastal shrimp aquaculture on various social groups including shrimp farmers, rice farmers, women workers, traditional fishers and landless laborers has discussed in greater detail in this chapter. Chapter 7 discusses the implications of this research and provides directions for hrther research.
Chapter 2
TRADE LIBERALIZATION AND RURAL COMMUNITIES
This chapter reviews the literature on trade liberalization and its impact on rural communities in developing countries. The impacts on the agriculture and aquaculture sectors are examined in greatest detail. This chapter also discusses the types of information needed for community impact assessment as well as for the long-term planning and management of coastal shrimp aquaculture in protecting the livelihoods of the rural communities.
2.1 Trade Liberalization and Rural Communities
One of the most striking features of the economic environment of the developing countries in the past two decades has been the adoption of trade liberalization and restructuring of domestic markets (Greenaway, 1998). More than 100 countries around the world have undertaken economic reforms of one form or another. Only a few of these have been voluntary, with the majority of them have been initiated by the two key multilateral lending agencies namely the World Bank and the International Monetary Fund (Dixon, 1998). The rationale underlying the push for greater integration of national economies with the world economy is that with increased access to input and output markets, the per capita income of hundreds of millions of low-income people will rise and thus, improve the quality of life in the developing countries (FAO, 1996). In other
words, the promoters of trade liberalization believe that through global integration, trade will promote growth and growth will reduce hunger and alleviate poverty in the developing world (Bhagwati and Srinivasan, 2002; Dollar, 2001; Krueger, 1998; Winters, 2002).
The tern 'economic liberalization' denotes the process of integrating national economies with the world economy so that there will be free flow of goods and services, capital, labor and knowledge around the world (Dollar, 2001). Trade liberalization, which is a vital component of the globalization and economic liberalization processes, encompasses the conversion of domestic markets into international one that facilitates the international mobility of factors of production or commodities thereby taking the best benefits of the factors of production (Bhagwati and Srinivasan, 2002; Krueger, 1998). It has been argued that workers with the same skills are less productive and earn less in developing economies than in advanced ones, and that integration through trade in goods, foreign investment, international telecommunications, and migration reduce these gaps by raising productivity in the developing world (Dollar, 2001). Although economic growth has accelerated in many parts of the world during the past two decades as a result of Ereer trade and restructuring of domestic markets, the benefits have recently come under intense scrutiny at both national and international levels. There exists a heated debate on whether economic liberalization has generated positive or negative impacts on developing countries, particularly on the rural poor, and the lines between advocates and opponents of economic liberalization are by no means neatly drawn (Morrissey and Filatotchev, 2000).
Advocates of trade liberalization argue that the debt-ridden countries in the developing world can pull themselves out of poverty and underdevelopment by shifting their development paradigm from development planning, with an active and commanding role for the state, to devaluation, deregulation, liberalization and privatization (Cheru, 2000; Dollar, 2001). Neo-liberal economists (Dollar, 2001; Bhagwati, 2002; Krueger, 1998) argue that with the lifting of trade barriers between countries and freer movement of capital across borders due to globalization, there is a tendency towards the narrowing down of cross-country income differentials. Some others argue that trade liberalization has the potential to facilitate rural development through the distribution of land, the improvement of educational services, the direct participation of the rural communities in policy formulation and the reduction of gender disparities (FAO, 1996). The general belief is that with liberalization, considerable amounts of productive capital will flow into the underdeveloped countries to use their cheap labour for meeting global demand, and thereby helping them overcome their state of underdevelopment (Patnaik, 1997). It represents therefore, a basic instrument for poverty alleviation and eventual eradication in the developing world (Bhagwati and Srinivasan, 2002; FAO, 1996).
Opponents of trade liberalization characterize it as a serious threat to human welfare in the developing world (Cheru, 2000; Patnaik, 1996; Samantar, 1993). The promises of more equal distribution of income and reduced poverty around the globe have failed to materialize under the current form of economic reforms (Weller and Hersh, 2002). The living standards of the majority of the rural poor in the developing countries have declined, and investment in the productive and social sectors of their
economies has dwindled (Cheru, 2000; Panchamukhi, 2000). As resources switch from non-tradable sectors to tradable sectors of the economy, and as a major shift occurs in production and cropping patterns in response to the adjustment policies, resource degradation has been manifesting itself as by-products of this particular pattern of growth (UNEP, 1999). Several studies (Chandrasekhar and Ghosh, 2002; Barbier, 2000; Pasha, 1996; Samantar, 1993) conclude that most of the benefits achieved through structural adjustment initiatives have not spread evenly among the rural communities. Conflicts over who manages resources versus who receives the benefits can be found between rich and poor, men and women, and among various ethnic groups
0,
1996). Efficiency gains in the output of export crops which are needed to meet adjustment goals have led to the inability of some countries through domestic production to be able to satisfl their food needs. Moreover, relative and absolute rural poverty levels have risen in many developing countries (Patnaik, 1996). Unemployment remains a major cause for concern and there have been grave doubts about the capability of trade liberalization to resolve the problem (Ghosh, 2002; Reddy, 1995). Economic liberalization can also lead to reductions in rural wage and employment levels, increases in product prices, increasing factor costs of production and reduced compensatory public sector welfare expenditure (Chandrasekhar and Ghosh, 2002; Patnaik, 1997; FAO, 1996). Rural communities have remained marginalized and powerless in the face of pressure and impact from recent development of agribusiness, which is dominated by the multinational corporations (Gutberlet, 1999; Samantar, 1993). Many scholars (Howell and Kambhampati, 1999; Samantar, 1993) argue that trade liberalization may enhance economic growth, but it deepens inequality in the society, worsens living condition of the worlung people, andsignificantly increase inequality between and within nations. In other words, it is a growth rather than a development strategy, and growth with equity is a goal that is yet to be achieved.
Another important source of rural environmental degradation is the disruption of the traditional institutions of the poor, which until recently had permitted an efficient and sustainable use of natural resources (Lopez, 1992). Rural communities were originally poor, but had sufficient means to satisfy their basic needs and maintain their environment. After the local institutions collapsed, they became desperately poor, unable to satisfy even their basic needs. A direct effect of this development was the encroachment and conversion of the common property resources into private properties in the developing countries. Welfare improvement via trade liberalization can not be guaranteed if optimal domestic policies are not undertaken to protect the natural resources on which a sipficant amount of poor people rely for their livelihood (Anderson, 2002). For instance, reducing restrictions on the export of marine products in the absence of any other marine resource conservation policies is likely to lead to coastal ecosystem degradation, and displacement of the rural poor in the coastal areas.
India began to liberalize its economy at the beginning of the 1990s, so as to widen and deepen its integration with the world economy as a part of the structural adjustment program initiated by the International Monetary Fund and the World Bank (Kumar, 2000). The prime objectives of the reform process were to integrate with the global economy through trade, investment, and technology flows and to create conditions which would provide Indian entrepreneurs an environment broadly comparable to that in other developing countries (Ahluwalia, 2002). The general belief was that with liberalization
considerable amounts of external productive capital would flow into the economy and help India to overcome its state of underdevelopment (Patnaik, 1997).
Since the introduction of economic reforms in 1991, the Indian economy has continued to be one of the ten fastest growing economies in the world (Saxena, 2001). Other significant positive impacts include India's foreign exchange reserve which increased from $1.2 billion in 199 1 to over $42 billion in year 2000, foreign investment flow accelerated from $103 million in 1990-91 to $5181 million in 1999-2000, GDP growth rate increased on average by 6.2% during 1992-2000, and the manufacturing sector growth rate averaged 8% (Gulati, 1999; WI, 2002; Parikh, 2002). The above achievements, however, have been accompanied by several adverse impacts on the Indian economy. The employment growth rate declined, per capita foodgrain availability fell sharply, and public investment in the social sector declined significantly (Table 2.1) during the reform period. While the advocates of Indian trade liberalization (ADB, 2001; Bhagwati, 1993; Mohan, 1999; Parikh and Radhakrishna, 2002; Srinivasan, 1998) have argued that growth rates in the Indian economy have risen dramatically af3er liberalization, the critics (Chandrasekhar and Ghosh, 2002; Panchamukhi, 2000; Patnaik, 1997; Saxena, 2001) have argued that the aggregate growth performance of the economy during the post-reform period was much below what was expected at the beginning of the reform process.
Poverty reduction through rapid economic growth was one of the prime objectives of economic liberalization in India (Singh, 1995). Although the economy grew rapidly during the post-reform period, a great concern exists as to whether the economic growth during the 1990s has been accompanied by a reduction in poverty. A preliminary analysis
suggests that the proportion of the poor in the total population may have declined from 36% in 1993-94 to 26.1% in 1999-2000, but not fast enough to reach the Ninth Plan target of 16.5% by 2001-02 (Saxena, 2001). Several studies (Datt, 1999; Dev, 2000; Gupta, 1999) have found that rural poverty did not decline, but rather increased initially, during the post-reform period in India. Since agriculture is the most important source of employment and income generation in rural areas, it is natural to expect that performance of the agricultural sector will have a direct impact on poverty @ev, 2000). The average annual growth rate of all crops in India during the reform period (1992-99) was 2.6% against 3.5% during the pre-reform period (1981-91) (Parikh and Radhaknshna, 2002). Annual per capita foodgrain availability, which was 186.2 kg in 1991, was reduced to
167.2 kg in year 2000 (Table 2.1).
Generating more employment opportunities for the rural poor was another objective of the trade liberalization process. However, several studies (Chandrasekhar and Ghosh, 2002; Ghosh, 2002; Kothari, 1995; Saxena, 2001) have found that the growth rate of empIoyment in the rural areas slowed down (Table 2.1) during the post-reform period. The growth rate of employment in the rural areas, which was 2.03% during 1987- 88 to 1993-94, declined to 0.67% during 1993-94 to 1999-2000 (Ghosh, 2002). In urban areas, the employment growth rate also declined from 3.39% to 1.34% during the same period. Agriculture, which accounts for two-thirds of employment experienced the fastest deceleration in the rate of growth of employment from 1.51% during 1983-94 to - 0.34% during 1994-2000 (WI, 2002). As agriculture becomes increasingly industrialized, small farmers are uprooted from their land and forced to become landless laborers or join the ranks of the marginalized urban poor (Sharma, 2001). The
liberalization policies of 1991 have accelerated a process of restructuring in the Indian industry and resulted in the large-scale closure of small industries to compete with large farms globally (Howell and Kambhampati, 1999). Such a dramatic deceleration in employment growth, which was well below the estimated rates of population growth, would normally be associated with very significant increases in unemployment. There have been grave doubts expressed about the capability of the new economic policy to resolve this problem (Chandrasekhar and Ghosh, 2002). The most vulnerable were the women workers living in rural areas of which more than 87% are employed in agriculture as cultivators and daily laborers (Chenoy, 1995).
There has been intense debate over whether economic liberalization has generated adverse effects on the social sector and the rural poor. It is evident that public investment on the social sector which encompasses basic health, education, rural
infrastructure and anti-poverty programs, declined significantly during the reform period (Table 2.1). Panchamukhi (2000) in his study of the effects of trade liberalization on the social sector found that during the reform period, the allocation for education and public health were adversely affected. Economic gains without parallel improvements in the equitable distribution of the economic surplus can and does, lead to heighten social tensions. The liberalization decade has not only failed to make expected contributions to the social sector; it has created an environment in the rural areas where communities live in social unrest (Chandrasekhar and Ghosh, 2002; Pancham&u, 2000).
2.2 Trade Liberalization and Agriculture
Agriculture plays a vital role in the national economies of the developing countries as a source of food, employment and foreign exchange earnings. Besides meeting domestic food needs, many developing countries heavily rely on agricultural exports as a crucial source of foreign exchange earnings. Rural development, the process of sustained growth of the rural economy and improvement of well-being of rural communities, has various dimensions, but in many cases it is particularly the development of the agnculture sector whch is widely recogmzed as the main impetus not only for reducing poverty and hunger, but also for ensuring food security for all (FAO, 2002).
During the past few decades, as a part of the economic liberalization process, many developing countries restructured their agriculture sector so as to integrate themselves more fully into the global economy. The WTO treaty on agriculture known as the "agreement on agnculture" (AoA), which is mandatory for the member countries to follow, requires member countries to undertake reforms in four principal areas: market access, domestic support, export competition/subsidy, and sanitary and phyto-sanitary measures (Chand and Jha, 200 1)
Several studies suggest that much of the structural adjustment and related economic liberalization initiatives have had negative impacts on the rural economy, particularly on the agriculture sector (Samatar, 1995; Howell and Kambhampati, 1999; Patnaik, 1997). Some scholars argue that trade liberalization and associated market reforms in agnculture have greatly increased pressure to build national economies based on comparative advantage and specialization (Barbier, 2000; Patnaik, 1997). In the
developing world, which heavily relies on agricultural commodities for export earnings, these pressures have pushed farmers to focus on export-oriented hgh value food crops, which are in demand internationally (Chandrasekhar and Ghosh, 2002). The growth of such farming systems has often been at the expense of lands devoted towards foodgrains which, in long run, could detrimentally affect food security in the developing world (Barbier, 2000; Gutberlet, 1999). Many governments in the developing world provided significant amount of incentives and subsidies in the form of irrigation facilities, fertilizers, pesticides, and other inputs for the farming of high value food crops to enhance their export capabilities. As a result, the country's basic natural resources such as land, water and air were subject to pollution by heavy use of fertilizers and pesticides. Moreover, the mechanization of the apcultural activities has intensified the use and conversion of various natural resources. There is little doubt that modern apcultural production, whose main aim is to cater food to international markets, degrades the country's natural resources and negatively affects the living conditions of the rural poor (CIESIN, 2002).
Export-oriented agricultural development in the developing world has induced a shift fiom subsistence farming to a more commercial profit oriented farming system. Although some nations have gained financially from the new structuring, this has often been achieved at the expense of the environment, and without generating sufficient benefits to the rural poor (ADB, 2001; Shiva, 1991). Local level impacts include mechanization of production, the rise of wage labor in place of community labor, and widening of inequalities in rural communities as the rich exploit the resources and technology extensively, and capture most of the benefits (Rigg, 199 1; Shiva, 199 1; Wolf,
1986). New technologies have been found to be less suitable to resource poor environments and farmers with small or marginal holdings. The emphasis on intensive monoculture of certain crops has made production more susceptible to environmental stresses and shocks (Conway and Barbier, 1990; Singh, 2000). Many scholars perceive globalization and liberalization as the process of shifting of power from local communities and nation-states to international institutions includmg transnational corporations and multinational agencies, or even to supranational regional political organizations (Friedmann, 1995; McMichael, 1994; Watts and Goodman, 1997). Currently, ago-food corporations are the major players who are controlling the production and investment flows and deciding the pricing structure (Friedmann, 1995).
Agriculture in India accounts for 30% of the country's GDP, employs around two- thirds of the entire labor force, and provides livelihood to nearly three-fourths of the total population (Gulati, 1999). The country successfully implemented the Green Revolution during 1970s and 1980s, and achieved self-sufficiency in foodgrain production (Gulati, 2002). As a result, India's poverty ratio, which was 55% in 1973-74, was reduced to 36% in 1993-94 (GOI, 2002). However, as a part of the structural adjustment program (SAP), the agriculture sector was forced to liberalize in the early 1990s to meet the IMF and the World Bank requirements. This period also coincided with the new GATT, which made it obligatory for member countries to liberalize their apcultural sector (Chand and Jha, 2001). As a result, restrictions on the import of most agricultural commodities were removed, tariff rates were reduced, the Indian currency was devaluated, and domestic support to f m e r s was eliminated. Moreover, bureaucratic procedures were simplified
Table
2.1 Selected
Economic
Indicators
of
Indian
Economy
during
Liberalization
Period
(1991-2000)
*
Fiscal year starts from lSt April and ends on 3 1" March next year. Year 1991 1992 1993 Source:'
Economic Survey 1999-2000 & 2001-02, Government of India, New Delhi India Development Report 1997 & 2002 (Parikh and Radhakrishna, 2002) Population Growth Rate (in %)' 2.29 1.89 1.86 GDP Growth Rate (in %)' 1.3 5.1 5.9 Foreign Investment Flow (in %) 29.13 320.30 643.03 Export (value) Growth Rate (in %)I -1.5 3.8 20.0 Foreign Exchange Reserve Growth Rate (in %)' 58.04 6.64 95.83 Employment Growth Rate (in %)' 1.44 1.21 0.44Agriculture Production Growth Rate
(in
%)
-2.0 4.2 3.8
Per
Capita
Foodgrain Availability (Kgs./year)
1 186.2 171.1 169.4 Social Sector Expenditure (% of GDP)
'
17.2 16.8 15.9and agncultural exports and imports were permitted through private trade for most of the agncultural commodities (Gulati, 2002). Incentives were provided to exporters in the form of tax rebates, and an import license was provided to each exporter on the basis of their export earnings on various exported items. These changes exposed the Indian agriculture sector to the outer world and created new challenges and opportunities for Indian farmers and the agri-business community (Gulati, 2002; Chand and Jha; 200 1).
Concern over the impact of trade liberalization on the rural economy, producers and consumers has become widespread. Opinions are sharply divided between the advocates and opponents of economic liberalization. Those who support liberalization of agricultural commodities (Gulati and Sharma, 1994; Purse11 and Gulati, 1995; Singh, 1995; Vyas, 1999) argue that India has a strong comparative advantage in agriculture over most of the developed world, and that the WTO-induced trade liberalization has made agricultural exports more attractive and remunerative. T h s advantage is said to be strong in the case of high value food crops such as h i t s , floriculture products, vegetables, basmati rice, and cotton (Chand and Jha, 2001). On the other hand, those who oppose globalization of In&an agriculture (Chandrasekhar and Ghosh, 2002; Patnaik, 1996; Patnaik, 1997; Saxena, 2001) assert that liberalization of agricultural commodities will destabilize prices and expose Indian markets to violent fluctuations in the international market. Their main argument is that liberalization of agricultural exports will change the cropping pattern away from foodgrains and result in steep hikes in food grain prices, which would jeopardize the food security of vulnerable sections of the rural communities. Even now one third of the country's total population is below the poverty
line and cannot afford to buy adequate foodgrains even under the existing price structures (Chand and Jha, 200 1).
There is a growing concern that liberalization of the agricultural sector has an adverse impact on the rural communities in general and the country's food security in particular (Gulati, 2002). For several decades, the Indian economy experienced a secular growth rate of foodgrain production of around 2.5% per annum, which was a little higher than the population growth rate. During the 1990s, however, the growth rate of foodgrain production dropped to 1.75% annum, which was lower than the population growth rate of 1.9% in the same period (Chandrasekhar and Ghosh, 2002). This was not only the lowest average rate since the mid-1950s, but also amounted to a dramatic drop when compared with the earlier decades (Acharya and Chaudhri, 2001). This was due to the apculture policies in the 1990s which focused on securing increased production through subsidies on inputs such as power, water and fertilizer, and by increasing the minimum support price rather than through building new capital assets in irrigation, power and rural infrastructure (Saxena, 200 1). In contrast, the production of export-oriented agricultural crops such as soybean, sunflower, cotton, cashewnut, fresh fruits and vegetables has gone up dramatically (Figure 2.1). One reason behind this could be that with the opening of the agriculture sector, private investment on export oriented hgh value food crops, which have demand in international markets, has gone up dramatically (Patnaik, 1997). This has raised the question of food security in general, and the likely impact on the rural communities who rely on agriculture for food and employment generation (Vyas and Reddy, 2002).
One important factor behind the drop in foodgrain output growth rate was the significant decline in cultivated area under foodgrain crops during the reform period (Figure 2.2). Much of the land devoted to foodgrain crops has shifted towards export- oriented crops like sunflower, soybean, cotton, cashewnut, fresh vegetables and floriculture, which are in demand in the international market (Chandrasekhar and Ghosh, 2002). Another factor was the drastic decline in real public investment that occurred in agriculture over a long period of time (Datta, 2002; Patnaik, 1997). Moreover, the investment has been concentrated in the non-traditional sectors of export-driven crops rather than in foodgrain production (Chandrasekhar and Ghosh, 2002). Reduction of public investment in rural areas and the attempts to reduce subsidies will lead to hgher input costs, and in long-run will certainly worsen the conditions of the farming community in rural India (Chand and Jha, 2001).
2.3 Trade Liberalization and Aquaculture
Fisheries play an important role in the national economies of the developing world as a source of food, employment and foreign exchange earnings. Many rural communities, particularly those in coastal areas, are directly dependent on fisheries for food and income generation, Many developing countries including Brazil, Ecuador, Indonesia, Thailand, Philippines, Sri Lanka, Bangladesh and India rely heavily on marine product exports as a crucial source of foreign exchange earnings. However, the decline of capture fisheries and advancement of technologies for fish farming have generated worldwide interest on aquaculture ((Safina, 1995; Reiger, 1996; Bailey, 1997). Although hundreds of species are available for aquaculture, only a few high value
Production of Foodgrain Crops in India
r l ( r . ,
I
-+ P u k s - - C o a e Cereals+
W a r -++ Bajra t ladey/f -.
Production of Cash Crops in lndia
--t- Soyabean
a
SunflowerArea Under Foodgrain Crops in lndia
-+-Total Foodgrains - - Pulses Coarse Cereals +Jowar --3lt--
Area Under Cash Crops in lndia
I
--t- Soyabean* -m- Cotton* -%- Cashewnut*-+Fruits* +Vegetables** 4 Major cash crops
commercial species including shrimp, salmon, yellowtail, seabass and seabream dominate production in coastal areas (New, 1999; Stonich and Bailey, 2000). The process of globalization and associated trade liberalization has helped developing nations import needed technology, equipment, feed and expertise from other parts of the world. Moreover, many private sector entrepreneurs including multinational and transnational corporations have invested in aquaculture due to its high profit margins. As a result, aquaculture, which has long been treated as a subsistence farming system in rural areas in the developing world, is being transformed rapidly into an export-oriented high value seafood industry (UNEP, 1999; Pillay, 1992).
Shrimp, particularly black tiger (Penaeus monodon) is the most profitable and widely cultured species in the present day's aquaculture in the tropical region. The "age of shrimp aquaculture" has certainly overshadowed the culture of many other aquatic species in the past few decades (Thia-Eng and Tech, 1990). High economic returns, strong international demand, and static supplies of shrimp from capture sources, have made shrimp culture attractive to national governments, international development agencies and private sector entrepreneurs (Bailey, 1988; Stonich and Bailey, 2000). International donor agencies, including the Food and Agriculture Organization, the World Bank, and the Asian Development Bank have been supporting several shnmp aquaculture projects in the tropical world with a belief that it would contribute to world's food security, generate significant foreign exchange earnings, and enhance employment opportunities for the rural poor in the coastal areas (Gujja and Finger-Stich, 1996; Stonich and Bailey, 2000).
Though an explosive growth of shrimp farming has occurred in the developing world during the past few decades, it has generated mounting criticisms over its social, economic, and environmental consequences (Flaherty et.al, 1999; Stonich and Bailey, 2000). There exists a strong debate on the positive and negative impacts of shrimp farming on the rural poor, particularly those who depend on coastal and marine resources for their livelihoods. Globally several environmental groups, includmg Greenpeace, the World Wildlife Fund (WWF), the Mangrove Action Project (MAP), the Environmental Defense Fund (EDF), and the Natural Resources Defense Council (NRDC), have strongly opposed the practice of industrial shrimp farming with a view that the social and environmental costs of building shrimp ponds in the fragile coastal ecosystems is very high (Stonich and Bailey, 2000). These organizations along with several NGOs and community-based organizations from the developing world have established the Industrial Shrimp Action Network (ISA Net) to resist industrial shrimp farming. On the other hand, the promoters of industrial shrimp farming, mainly the producers, processors, input suppliers, exporters and importers have established the Global Aquaculture Alliance (GAA) to resist the anti-shrimp farming campaigns, and to promote shrimp farming in the developing world.
The proponents of shrimp farming argue that it can contribute to the world's food security by compensating for declines in capture fisheries, generate employment opportunities for the rural poor, and earn significant amounts of foreign exchange. Although they acknowledge that industrial shrimp farming has contributed to the degradation of coastal ecosystems to a certain extent, they maintain that several other actors, including the rural poor in coastal areas, play a larger role in the destruction of
coastal ecosystems than does the shrimp industry (Stonich and Bailey, 2000). Opponents argue that although s h m p farming can generate significant amounts of foreign exchange at the national level, at the local level it can widen the gap between rich and poor, and worsen the living condition of the rural communities (Baily, 1988; Flaherty et al., 2000; Shiva, 1995; Stonich et al., 1997). While 99% of cultured shrimp are raised in the developing world, virtually all are exported to industrial countries, principally to the U.S., Europe, and Japan. The primary motives are generating high profits for producers and input suppliers, and enhancing export earnings for national treasuries (Stonich and Bailey, 2000). This raises serious questions about cultured shrimp's capacity to improve nutritional status among the rural poor in the countries where they are produced. Moreover, as shrimp farming is a very capital intensive production system, only rich farmers, who have access to capital resources and technological know-how, can adopt production technologies more easily and extract most of the benefits (Hannig, 1986; Bailey and Skladany, 1991). Although commercial shnmp farming has brought large infusions of cash into rural areas, its distribution within communities is highly uneven (Flaherty and Karnjanakesorn, 1995). It has disrupted traditional communities, degraded and encroached common property resources, and created tension between those involved in the industry and other community residents (Muluk and Bailey, 1996; Parks and Boniface, 1994; Primavera, 199 1 ; Stanley, 1998; Stonich et al., 1997).
In India, the early 1990s witnessed a remarkable change in the fisheries sector. With the opening of the economy through export-oriented programs, aquaculture, particularly s h m p farming, was given high priority in terms of policy, strategy and planning at the national level. The government sponsored several people-oriented and
