PAPER 7. FINANCING OF AQUACULTURE, CAPTURE, PROCESSING AND MARKETING OF FISH, SHRIMP AND OTHER AQUATIC RESOURCES IN BANGLADESH

SUMMARY
1. INTRODUCTION
2. THE FISHERFOLK
3. THE FISHERIES SECTOR
4. CREDIT POLICIES
5. THE CONSTRAINTS BANKS FACE
6. THE SUCCESS STORIES
7. SPECIAL SCHEMES
8. MARKETING SYSTEM
9. FISHERIES SECTOR PROBLEMS
10. WHAT IS NEEDED

by
A B M Mahbubul Amin Khan
Deputy Governor, Bangladesh Bank

SUMMARY

Bangladesh, as one of the world's largest deltaic regions, has great potential for development of its aquatic resources, both inland and marine. Fish and shrimp have been captured by non-mechanized and mechanized boats and trawlers for decades. But pond culture of fish and shrimp for commercial purposes started in an organized manner only from 1980.

Fish production, gradually increasing, reached 1.2 million tonnes in 1994-95. Export earnings have also recorded considerable increase, standing at US $ 325.11 million in 1994-95 and representing 9.38 % of the total exports of the country.

Due to depletion of fish and shrimp in both inland waters and the Bay of Bengal, mainly on account of overfishing, there is urgent need to prohibit fishing during the breeding periods and the catching of juveniles. Re-stocking of the inland waters by released artificially bred fish fingerlings, the establishment of hatcheries, including those for shrimp, the establishment of fish sanctuaries, enforcement of environment pollution control regulations and for launching a well-coordinated drive for organized, intensive/semi-intensive culture of fish and shrimp are other initiatives crucial for increasing the catch.

While the owners of boats in inland waters and owners of artisanal boats and trawlers can easily access credit from institutional sources, being able to provide the necessary collateral, the poor and illiterate fishing communities continue to remain impoverished due to control of the capturing and marketing systems by the moneylender-cum-boat-owners and the middlemen who play an exploitative role.

Banks are not in a position to reach the poor fishermen communities, as they need supervised credit together with a package of socioeconomic services. These can be effectively provided only by NGOs.

The Grameen Bank and the Bangladesh Rural Development Board have successfully organized assetless poor people, mostly women, who were not members of the fishing community, to culture fish and shrimp in ponds. The NGO activities, however, remain very limited among the real fishermen communities who generally live in remote and inaccessible areas on the river banks and in the coastal regions.

The Bangladesh Bank continues to encourage the banks extending credit to the poor through forging appropriate linkages with the available NGOs/Self-help Groups. The NGOs can also help in bringing about improvement in the quality of the lives of the poor fishermen by motivating them to engage in subsidiary income-generating activities to get out of their cast-based profession and look for alternative livelihoods. The IFAD/DANIDA-assisted ox-bow-lakes project, which is being implemented by the Directorate of Fisheries in collaboration with NGOs has, reportedly, addressed the issue of improving the standard of living of the fishing community living in the project area.

The Bangladesh Bank is implementing a credit guarantee scheme under which banks are lending to fisheries projects without any collateral. The Sonali Bank is also implementing a special programme under which it may lend for fish farming upto Tk. 50,000 without any collateral. This is an intensively supervised credit programme which involves cost subsidization and therefore cannot be replicated throughout the country.

Bangladesh has already deregulated its financial system. As such, the days of directed credit for any particular sector or subsector are over. The financial institutions are absolutely free to choose their borrowers as also to fix their interest rates within the existing bands and set terms on the basis of banker-customer relationships. But occasionally this reality is not quite understood by the large borrowers or by some people associated with the promotion and development of the fisheries sector. If the bank could be assured that their loans would be repaid in time there should not be any reason to discourage their lending to any sector, including the fisheries sector.

The recently taken Government decisions to extend the tenure of lease of Government lands, the abolition of the system of leasing of open waterbodies, the strengthening of the infrastructural facilities for culture of shrimp and marketing of fish, enforcement of quality control on exportable aquatic products, efforts to augment the technological support, and implementation of research and extension-cum-credit projects by the Directorate of Fisheries are all expected to bring about a flow of institutional credit to the fisheries sector and, thereby, usher in the much-desired 'Rupali Biplab' (Silver Revolution) in the country.

1. INTRODUCTION

Bangladesh, as one of the world's largest deltaic zones, has great potential for culture of aquatic resources in its large number of sweetwater rivers, closed inland waterbodies, brackishwater areas of the coastal regions, and the marine waters in the country's Exclusive Economic Zone. The details of Bangladesh's aquatic areas are shown alongside.

Table 1: Aquatic resource area of Bangladesh

Fisheries sector		Water area (Hectare)
A. Inland Fisheries
	a) Capture
	1. Rivers & estuaries (except Sundarban area)	1,031,563
	2. Sundarbans	-
	3. Beels	114,161
	4. Kaptai Lake	68,800
	5. Floodlands	2,832,792
	Capture total	4,047,316
	b) Culture
	1. Ponds	146,890
	2. Baors	5,488
	3. Shrimp farms	108,280
	Culture total	260,658
	Inland total	4,307,974
B. Marine Fisheries
a) Industrial fisheries (Trawl)
b) Artisanal fisheries
Marine total		48,365
		square nautical miles

Source: Directorate of Fisheries, Ministry of Fisheries and Livestock, Government of Bangladesh

The inland waters in Bangladesh are, reportedly, the abode of 258 indigenous and eight exotic species of fish and 22 major species of prawn as well as of different species of turtles, crabs and other varieties of shellfish. The Bay of Bengal, along the Bangladesh coast, is reported to be the habitat of 475 species of fish and 38 species of shrimp. Fish production in 1994-95 has been estimated at 1.2 million tonnes, comprising of inland open waters, 0.58 million tonnes, closed waters 0.92 million tonnes and marine waters 0.27 million tonnes. The details of yearwise fish production in Bangladesh are shown on the facing page.

In the inland areas fish and shrimp are generally cultured in ponds of different sizes and shapes. Various types of nets, fishing rods and lines are used in the capture of these fish. In the large water bodies, locally known as haors and baors, and in the numerous rivers, creeks and canals, fish are generally captured from non-mechanized boats using different types of traps and nets. However, mechanized boats are being increasingly used for transport of the catch, with or without ice, to the nearest wholesale fish market. Marine fishing is done by using both industrial and artisanal methods. The latest available data relating to total catch and species groupwise catch in marine fishing are shown below and on facing page.

Table 2: Fish production in Bangladesh

Source		Year-wise Production in M.T.
		1984-85	1985-86	1986-87	1987-88	1988-89	1989-90	1990-91	1991-92	1992-93	1993-94	1994-95
A. Inland water
	(a) Inland Openwater (Capture)
	(1) River & Estuaries	213,057	199,600	195,117	183,817	181,140	173,410	135,355	124,843	138,746	130,235	135,550
	(2) Sundarbans	6,825	7,112	6,035	8,066	6,416	6,393	6,651	6,297	6,939	6,970	7,550
	(3) Depressions (Beels & haors)	45,893	45,258	42,077	45,610	47,019	46,594	47,923	49,201	53,019	56,678	62,550
	(4) Kaptai Lake	2,700	2,433	3,981	4,068	3,439	3,713	4,392	4,216	4,142	4,815	5,500
	(5) Floodland	194,130	187,396	183,796	182,037	186,126	193,762	249,083	295,185	329,573	353,530	365,500
	Sub Total	462,605	441,799	431,005	423,598	424,140	423,872	443,404	479,742	532,419	552,226	576,650
	(b) Inland Closewater (Culture)
	(1) Ponds	111,567	123,804	142,576	149,423	155,012	163,730	181,018	195,034	202,167	231,530	285,520
	(2) Ox-bow Lake (Baos)	962	968	1,174	1,254	1,321	1,357	1,544	1,682	1,803	2,250	3,550
	(3) Shrimp Farm	11,282	19,951	22,050	25,246	27,172	27,505	28,431	30,147	33,773	41,500	56,630
	Sub Total	123,811	144,723	166,100	175,925	183,505	192,592	210,993	226,863	237,743	275,280	345,700
	Total Inland	586,416	586,522	597,106	599,523	607,645	616,464	654,397	706,605	770,162	827,508	922,350
B. Marine Fisheries
	(a) Industrial	12,440	11,898	12,356	10,395	10,353	11,379	6,760	9,623	12,227	14,600	17,530
	(b) Artisanal	175,123	195,503	205,223	217,187	222,928	227,684	232,776	235,851	238,265	245,000	260,360
	Total Marine	187,563	207,401	217,579	227,582	233,281	239,063	241,538	245,474	250,492	259,600	277,890
	Country Total	773,979	793,923	814,685	827,105	840,926	855,527	895,935	952,079	1,020,654	1,087,108	1,200,240

Source: Directorate of Fisheries Ministry of Fisheries & Live Stock, Government of Bangladesh.

Figure 1. Trend of fish production in Bangladesh (in thousand MT)

Source: Hussain, Alhaj M. Muzaffar "Fish Marketing in Bangladesh" September, 1994

Table 3: Total catch of the Marine Fisheries (1992-93)

Type of Fishing			Number of Craft (Trawler/Boat)		Number of Unit (Gear/Net)			Catch in Metric	Ton
							Shrimp	Fish	Total
A. Industrial
	(1) Trawl Fishing
		a) Shrimp Trawlet	37		-		3,903	5,493	9,396
		b) Fish Trawler	14		-		285	2,546	2,831
	Total Industrial		51		-		4,188	8,039	12,227
B. Artisanal
	(1) Gill Net Fishing
		a) Mechanised	2,880		2,880		-	123,680	123,680
		b) Non-mechanised	3,509		3,509		-	20,210	20,210
	Sub Total		6,389		6,389		-	143,890	143,890
	(2) Set Bag Net Fishing
		a) Seasonal (M.B)	182		5,400		6,581	40,424	47,005
		(N.M.B)	2,689
		b) All Season (N.M.B)	4,590		7,215		11,375	12,828	24,203
	Sub Total		7,452		12,615		17,956	53,252	71,208
	(3) Long Line Fishing
		Jewfish Long Line
		a) Mechanised	255		1,121		-	6,960	6,960
		b) Non-mechanised	127
		c) Other Longline	1,000		963		-	2,930	2,930
Sub Total			1,382		2,084		-	9,890	9,890
	(4) Trammel Net Fishing		500		500		443	3,584	4,027
	(5) Other Gears Fishing		1,608		2,222		1,388	7,862	9,250
Total Artisanal (M.B)			3,317		23,810		19,787	218,478	238,265
(N.M.B)			14,014
Grand TOTAL			Trawler	53	Gill	6,389	23,975	226,517	250,492
(Indus. + Artis.)			(M.B)	3,317	SBN	12,615
			(M.M.B)	14,014	L.Line	2,222
					Trammel	500

M.B - Mechanised Boat; N.M.B - Non-mechanised Boat; SBN - Set Bag Net.
Source: Hussain, Alhaj M. Muzaffar "Fish Marketing in Bangladesh" September, 1994.

Table 4: Species groupwise catch in Marine Fisheries by type of fishing gear (1992-93)

Unit: metric tons

Sector			Species
				Milan	Bombay Duck	Indian Salmon	Promfret	Jaw Fish	Cat Fish	Sharks & Rays	Other Marine Fish	Shrimp	Total
A. Industrial
	(1) Trawl Fishing			-	28	965	201	2,343	1,109	338	3,055	4,188	12,227
B. Artisanal
	(1) Gill Net Fishing
		a) Mechanised		105,128	-	1,237	1,546	1,608	6,184	1,484	6,193	-	123,680
		b) Non-mechanised		17,987	-	-	80	1,112	273	-	756	-	20,210
	Sub Total			123,115	-	1,237	1,626	2,720	6,457	1,454	7,251	-	143,890
	(2) Set Bag Net Fishing
		a) Seasonal		-	11,281		705	-	-	-	28,438	6,581	47,005
		b) All Season		-	7,745	-	-	303	242	97	4,441	11,375	24,208
	Sub Total			-	19,026	-	705	303	242	97	32,879	17,956	71,208
	(3) Long Line Fishing
		a) Mechanised b) Non-mechanised						3,132	2,018	1,392	418		6,960
		c) Other Long Line		-	-	-	-	820	1,025	645	440	-	2,930
	Sub Total			-	-	-	-	3,952	3,043	2,037	858	-	9,890
	(4) Trammel Net Fishing			-	-	-	81	1,047	483	20	1,953	443	4,027
	(5) Other Gears Fishing			-	2,035	-	647	1,110	1,758	-	2,312	1,388	9,250
	Total Artisanal			123,115	21,061	1,237	3,059	9,132	11,983	3,638	45,253	19,787	238,265
Grand Total				123,115	21,089	2,202	3,260	11,475	13,092	3,976	48,308	23,975	250,492
(Industrial+Artisanal)				49.15	8.42	0.88	1.30	4.58	5.23	1.59	19.29	9.57	100

Source: Hussain, Alhaj M. Muzaffar "Fish Marketing in Bangladesh" September, 1994.

Table 5: Trend of shrimp/prawn catches in Bangladesh (live-weight in M.T.)

Source-wise catch of shrimp/prawn
F. Y.	Trawler catch	Marine capture		Coastal aquaculture	Fresh water capture	Country Total
		Artisanal catch	Total
1983-84	4,500	7,520	12,020	4,386	41,250	57,656
1984-85	3,140	8,760	11,900	7,578	40,069	59,547
1985-86	4,031	3,550	7,581	14,658	53,085	75,324
1986-87	4,488	10,666	15,154	14,773	40,945	70,872
1987-88	3,545	11,535	15,000	17,889	36,386	69,355
1988-89	4,893	12,211	17,104	18,235	42,824	78,163
1989-90	3,117	12,751	15,868	18,624	36,284	70,776
1990-91	3,696	13,937	17,633	19,489	43,262	80,384
1991-92	2,902	17,140	20,042	20,335	46,500	86,877
1992-93	4,188	19,045	23,233	26,000	50,225	99,458

Source: DOF/GOB

After the capture of the fish, shrimp and other aquatic resources, these are transported to the different fish landing and processing centres for distribution and marketing in different parts of the country as well as for exports.

Bangladesh, with its large number of people living below the poverty line, is heavily dependent on fish for its population's intake of animal protein. In fact, available surveys indicate that the per capita annual consumption of fish is declining. The intake of the minimum required amount of fish protein can only be ensured through poverty alleviation and by increasing production through both extensive and intensive fish culture and aquaculture in closed waterbodies and in replenishing the dwindling natural fish resources in the floodplains and rivers that has been caused by overfishing, the erection of dykes and levies which disturb free movement of fish to their breeding grounds, and the widespread use of ecologically harmful pesticides, chemical fertilizers and industrial effluents.

2. THE FISHERFOLK

It is reported that 1.276 million people catch fish, 0.76 million in inland waters and 0.516 million in marine waters. Traditionally, the fisher community is comprised mostly of low caste Hindus, who, due to their beliefs and taboos, are generally reluctant to change their traditional profession. Poor Muslims are now engaging themselves in increasing number to eke out a living by working mainly as boathands in the boats of the boatowner-cum-money lenders.

With the gradual depletion of aquatic resources in both the inland and marine waterbodies and with the existing exploitative system practised by lease-holders, owners of boats and fishing gear, and the middlemen involved in marketing, the poor fisher communities need to be helped in strengthening their group strength to obtain better wages and more reasonable prices for their catch and to find subsidiary income-generating activities and alternative employment for the unemployed and surplus among them. In this task, the Government, the financial institutions and the NGOs can join together to bring about improvement in the income-earning capacity of the fishing community's poor.

Women in Bangladesh have not generally been involved in aquaculture or fishing in the open waters. But, of late, the Grameen Bank, the Bangladesh Rural Development Board and some NGOs have successfully encouraged and financed the culture of fish and shrimp by groups of women as well as the peddling of fish by individual women micro-entrepreneurs through extension of micro-credit for income-generating activities. The Grameen Bank, the BRAC and the BRDB have achieved commendable success in organizing and reaching credit to the poor among the fishing communities of a few areas, like the IFAD-DANIDA financed Jessore Beel and Baor Project. The NGOs and even the Grameen Bank, on the other hand, have not taken much initiative in improving the lot of the poor fisher communities who live in not so easily accessible areas on the large river banks and coastal areas of Bangladesh. As a result, they continue to remain exposed to the exploitative arrangements of the lease-holders, boatowners, moneylenders, marketing middlemen and, occasionally, even to the exactions of extortionists. The welcome recent decision of Government not to lease out fishing rights of jal mohals (open water bodies) to individual bidders has to be enforced through strengthening the personnel of the relevant law-enforcing authorities and providing them logistic support facilities.

3. THE FISHERIES SECTOR

The fisheries sector, apart from providing employment to a sizeable part of the population, contributes about 3.5 per cent to the GDP of the country. With the Ministry of Fisheries, through its Directorate of Fisheries, the Grameen Bank and some NGOs encouraging modem artificial fish- and shrimp-breeding techniques, supplying fingerlings to potential pond fish culturists, releasing fish fingerlings in large beels and ox-bow lakes and open waterbodies, enforcing restrictions on the use of fine-mesh nylon nets, prohibiting fishing during the natural breeding periods in the open water, and declaring certain waterbodies as fish reservation areas to protect natural bio-diversity, production of fish and shrimp are increasing in the country. The export earnings from fish (all species) have also recorded steady increases and these account for 9.38% of the total export earnings of the country (details below).

Table 6: Statement showing exports of fish - all sorts

Volume=Metric ton Value=Million US Dollar

Fiscal Year	Shrimp		Frog	legs	Frozen	fish	Dry	fish	Salted	fish	Turtles/Crabs		Shark fins/maws		Total		% of Total Export
	Volume	Value	Volume	Value	Volume	Value	Volume	Value	Volume	Value	Volume	Value	Volume	Value	Volume	Value
1981/82	6903	45.07	1851	5.63	631	2.08	39	0.20	123	0.65	507	1.16	63	0.64	10117	55.41	8.84
1982/83	9312	63.00	1878	5.03	1279	3.24	79	0.35	128	0.54	479	0.99	64	0.74	13219	73.88	10.88
1983/84	8818	62.34	2495	7.72	2817	5.68	74	0.34	283	1.29	440	1.01	43	0.52	14970	78.9	9.89
1984/85	12682	76.82	1360	3.96	3297	5.69	47	0.21	382	1.41	425	0.94	108	0,82	18316	89.84	9.66
1985/86	13631	90.11	2463	10.23	5017	12.21	786	3.37	422	1.66	679	1.44	50	0.36	23048	119.37	10.65
1986/87	16275	114.19	2168	9.98	4046	11.56	402	1.60	295	1.25	461	1.34	114	1.14	23761	141.08	12.99
1987-88	15023	115.60	2708	13.58	4191	9,07	475	2.14	372	1.54	524	1.94	130	1.48	23423	145.35	11.93
1988/89	15386	118.86	2685	13.63	2427	7.03	567	4.32	293	1.28	293	0.82	68	0.86	21719	146.81	11.51
1989/90	17505	125.85	730	3.13	3484	7.77	1278	7.11	161	0.44	146	0.29	35	0.85	2339	145.43	9.62
1990/91	17985	126.48	318	2.06	5702	11.60	427	1.61	1194	3.91	405	0.90	78	1.04	26109	147.62	8.64
1991/92	16730	119,47	771	4.91	2604	7.89	892	3.70	80	0,36	938	1.71	65	1.42	22080	137.46	6.91
1992/93	19224	154.33	0	0.00	2704	9.79	1042	3.13	599	2.51	2800	5.52	238.39	3.64	26607	178.92	7.57
1993/94	22054	196.92	0	0.00	3125	12.79	2473	10.46	50	0.26	4088	9.09	45	0.70	31835	230.23	9.12
1994-95	26277	260.11	0	0.00	9267	44.84	521	2.09	649	3.82	4760	10.12	212	4.13	41686	325.11	9.38

Source: Directorate of Fisheries

The National Fish Policy and the Perspective Plan for Bangladesh underscore the importance of inland closed water fish and shrimp culture for augmenting production to meet local needs as well as increase export earnings. The shrimp subsector by itself has great potential for increasing export earnings within a very short period. However, in view of the adverse impact on the environment that expanding shrimp culture may have, there has to be clear policy guidelines on the zoning for the use of feed, water management, and maintenance of quality, according to internationally acceptable standards in processing and packaging of aquatic products. Proper zoning for semi-intensive aquaculture would not only help to minimize the extent of land used and the harmful effects to the fragile ecosystem, but would also help in avoiding social tensions arising from the same land being used for salt-water shrimp culture as well as cultivation of paddy.

The trade-offs need to be carefully considered and decisions taken to optimize use of land and minimize the possible impacts on the environment.

4. CREDIT POLICIES

Credit to the fisheries sector used to be classified as agricultural credit. The Bangladesh Bank, the central bank of the country, introduced credit norms for the fisheries sector in its agricultural and rural credit policy announced immediately after the independence of the country. However, initial credit for culture of fish was restricted to pond culture of carp. Later, the bank took special initiative to extend bank credit to saltwater shrimp culture in the coastal areas using traditional methods. There are some fishermen's co-operative societies which used to offer credit for the purchase of boats, nets and other fishing gear. However, their loans were mostly accessed by middlemen who became members of the co-operatives. Bangladesh, unfortunately, is a disaster-prone country. Borrowers both from the banking as well as the co-operative sectors, have generally avoided repayment of their loans on the plea of natural disasters. This default culture has at times, discouraged financial institutions from lending to the fisheries sector.

The Directorate of Fisheries was mainly concerned in the past with the pond culture of carp. They also introduced some exotic varieties of carp, namely Common Carp, Silver Carp, Grass Carp, Mirror Carp and Nylotika, Tilapia, Thai puti and, of late, hybrid catfish and That pangas. The Fisheries Research Institute, using extension personnel of the Directorate of Fisheries and NGOs, did a commendable job in disseminating information and for quick growing and economically profitable fish culture. The institute has also developed technologies for seasonal fish culture in derelict ponds and burrow pits as well as for the culture of fish in irrigated/rainfed paddy fields

Pond culture of fish was not initially taken up as a commercial venture by well-to-do gentlemen farmers, as, traditionally, rearing fish for commercial purposes was considered an occupation only for low caste fishermen. However, the potential for earning good profit from pond fish culture has, over time, encouraged the well-to-do farmers to drop their inhibitions.

Once they took to fish culture, they were not very inclined to repay their loans, giving one plea or another. The most common excuses are occurrence of droughts, floods and thefts. Although there are, in the rural areas of Bangladesh, severe systems of imposing penalties and social sanctions on any person guilty of stealing or damaging other peoples' crops, vegetables and fruits, it seems stealing of fish is still considered a very minor offence. The law enforcement agencies, for their part, are not in a position to provide adequate protection to fish and shrimp culture in closed waterbodies. This dampens the enthusiasm of the financial institutions to directly lend for fish culture.

Past experience in lending to the fisheries sector clearly indicate that it needs to be closely supervised. The DANIDA-financed and supervised project in Mymensingh, in which the Directorate of Fisheries and certain banks were involved, was remarkably successful, mainly because of very close and intensive supervision. The role of the banks involved was limited to the keeping of loan accounts. The Mymensingh experience is being replicated in other districts by the Directorate of Fisheries, particularly in a couple of southern districts, with Government's own funds.

The ADB's second aquaculture credit could not be utilized in full due to the inability of the Directorate of Fisheries and the participating banks to ensure proper supervision. However, the Bangladesh Bank took a special interest and launched a drive to educate and motivate branch managers by holding workshops in different centres in the country. These initiatives have yielded good results, inasmuchas the participating banks have not only utilized the balance of the ADB credit but have also indicated their willingness to utilize more funds, if available, for extending credit to fish and shrimp farmers.

The Government's decision to declare fishery projects as industries has also helped in augmenting the flow of institutional credit to the fisheries sector.

Banks have lent for all sorts of requirements of fish culture. These include:

- Pond fish/shrimp culture projects;

- Seasonal fish-rearing in derelict ponds and other waterbodies and the raising of fish in rainfed/irrigated paddy fields;

- Credit for purchase of fishing boats - both mechanized and non-mechanized; and

- Fishing gears, sea-going trawlers, shore-based ice plants, processing and packaging plants, and refrigerated vans for transport of fish products to the major inland marketing centres as well as to the export points.

Banks also provide all the credit needs of exporters.

Details of banks credit for production of fish and shrimp are shown on the next page.

The Bangladesh Bank took the initiative, in November 1993, to respond to Government's request to provide bank credit to the semi-intensive shrimp culture subsector. As a result, banks and financial institutions sanctioned Tk. 104.03 crores and disbursed Tk. 61.49 crores upto August 1995 to this subsector.

Table 8: Statement on Sanction and Disbursement of Bank Credit for semi-intensive shrimp cultivation up to August, 1995

(Taka in crores)

Name of the Bank	No. of projects	Amount sanctioned	Amount disbursed	Area of land (acre)
Sonali Bank	8	3.44	3.35	378
Janata Bank	5	1.24	0.40	78.55
Rupali Bank	2	0.41	0.00	17.47
Arab Bangladesh Bank Ltd.	16	1.94	0.30	110
Basic	2	1.13	0.00	32
Bangladesh Shilpa Bank	12	7.83	1.03	268
SABINCO	15	23.09	21.96	758
Total	60	39.08	28.07	1642.02
FY 1993/94	64	64.95	34.42	2533
Total	124	104.03	61.49	4175.02

Source: Bangladesh Bank

Table 7: Statement on Disbursement and Recovery of Credit for Culture and Capture of Fish and Shrimp by the Government-owned Banks

Taka (in Crores)

*Others = Foreign Aided Projects and Cost of Equipments for Inland and Marine Capture.

The repayment rate of this credit has, reportedly, been satisfactory. The banker's risk has also been reduced through introduction of the shrimp culture insurance scheme by the Sadharan Bima Corporation. This compensates for the loss of shrimp fry and the cost of feeds used or lost as well as for damage to the infrastructural facilities of the shrimp project.

The Government has decided to set up a number of semi-intensive shrimp culture centres in various coastal areas to provide technological and natural support to small shrimp farmers.

The country already has as many as 116 fish processing plants, but, due to the inadequate supply of fish, only 18 to 20 per cent of their capacity is being utilized. As a result, most of these fish processing plants, which have been set up with credit from banks, are now experiencing difficulties in servicing their loans. Some of the bank loans have already been rescheduled by the banks involved. Yearwise details of outstanding bank credit to the fisheries sector, including fish and shrimp processing, are shown on Table 9.

The combined efforts of the banks and some of the non-financial institutions, like the Saudi Bangladesh Investment Company (SABINCO), in providing production, harvesting, transporting, processing and preshipment and postshipment export credit, are ensuring continuous support to the country's effort to boost exports in general and that of fish and shrimp in particular.

The structure of the rural and agricultural credit system of Bangladesh is shown on Figure 2.

Inspite of the efforts made over the last two decades, the amount of bank credit extended to the real fishermen for culture and capture of fish still remains at a low level. The needs for export credit, however, have been met adequately by the banking sector.

5. THE CONSTRAINTS BANKS FACE

In order to understand the constraints in extending and recovering institutional credit for culture and capture of fish and shrimp, it is necessary to be aware of the practices in fish and shrimp culture; the method of leasing ponds, coastal lands and open water bodies, the harvesting and processing technologies, and the structure and management complexities of fish marketing in Bangladesh.

The fishermen of Bangladesh are, mostly, illiterate and poor. They cannot afford to purchase their own boats, large nets and other fishing gear. They either have to take loans from moneylenders at exorbitant interest rates to rent boats, nets and other fishing gear, or work as contract labourers on very low wages in the boats of the money lender-cum-boatowners. In either case they do not have the right to sell the fish at a reasonable price.

In the case of open waterbody fishing, the harvest is collected by the lease-holders, boatowners or their henchmen at dictated prices, which usually are a fraction of the inland retail prices or the prices at the export point. The fishermen do not have the right to take their catch to the markets themselves.

Attempts have been made in the past in different parts of the country to organize the actual fishermen in cooperatives, but these soon became indirectly controlled by the moneylenders or their henchmen. The Bangladesh Rural Development Board (BRDB) has, however, been successful in organizing assetless fishermen and women into co-operatives to produce brackish as well as sweetwater shrimp in certain parts of a coastal district. But they are facing stiff resistance from the big fish farmers and the moneylenders.

Table 9. Statement on Bank Credit to the Fisheries Sector including Fish and Shrimp Processing

(Amount in Lacs of Taka)

Bank	June 1989	June 1990	June 1991	June 1992	June 1993	June 1994
Agrani Bank	14.76	22.21	29.32	30.28	18.66	28.98
Janata Bank	11.52	9.65	15.09	16.48	18.71	35.14
Sonali Bank	36.77	46.31	28.21	30.01	37.58	46.82
Rupali Bank Ltd.	8.91	3.88	3.68	3.11	4.03	3.86
American Express	-	10.00	-	1.04	1.53	-
Grindlays Bank Plc	-	-	-	-	22.00	-
Standard Chartered	-	1.96	1.04	98.00	21.00	53.00
State Bank of India	-	-	-	-	-	-
Habib Bank Ltd.	-	-	-	-	-	-
Banque Indosuez	-	-	3.58	6.08	2.84	35.00
BCCI Ltd.	6.82	9.03	-	-	-	-
BKB	144.96	188.60	186.06	208.55	202.78	211.38
BSB	37.70	40.09	31.96	46.72	53.21	67.24
RAKUB	22.74	36.59	34.65	30.04	27.69	30.52
AB Bank Ltd.	12.00	25.00	17.00	19.00	1.00	94.00
Islami Bank Bangladesh Ltd.	55.00	47.00	41.00	58.00	10,00	67.00
UCBL	2.00	2.00	-	-	-	-
National Bank	1.97	4.70	2.17	1.17	1.48	2.42
The City Bank Ltd.	-		-	-	52.00	51.00
Pubali Bank Ltd.	3.62	6.77	6.55	6.30	6.84	8.79
Uttara Bank Ltd.	70.00	1.31	2.14	1.66	1.50	1.65
AI-Baraka Bank	25.00	87.00	64.00	83.00	83.00	83.00
Basic	-	-	-	-	30.00	-
Eastern Bank Ltd.	-	-	-	-	9.32	7.79
NCCBL	-	-	-	-	23.00	25.00
IFIC Bank Ltd.	7.00	3.00	1.05	1.81	3.69	5.90
Total Fishing Loan	291.48	372.53	346.72	385.83	393.36	454.57

Source: Bangladesh Bank

Figure 2. Rural and Agricultural Credit System of Bangladesh

6. THE SUCCESS STORIES

One of the most successful innovative credit-cum fish culture schemes is the Grameen Bank's Neemgachi Project which was handed over to it by the Government following initial management failure. The project, with a large number of ponds, was originally funded by the British O/D/A.

The Grameen Bank, using innovative methods, organized the local community, who were mostly poor, in groups and motivated them through training and by allowing them an assured share of the harvests for their help in the culture, protection and overall management of different species of carp. The necessary technological advice, input support and credit are provided by the Grameen Bank.

The Grameen Bank has also organized assetless people in a coastal area and has got them to successfully engage in shrimp-farming. The Grameen Bank groups, however, have been not so successful in getting lease rights over large waterbodies or weekly/daily village markets.

The IFAD/DANIDA assisted ox-bow lakes project in the Jessore area has organized fishermen living near the lakes through BRAC and another NGO. The Directorate of Fisheries and the two NGOs are providing training and technological advice on the stocking, rearing, protecting and proper harvesting of fish.

These success stories and the fact that IFAD-assisted projects have not been considered as cyclone-affected rural households in coastal areas hit by cyclones indicate that formal institutions like banks can effectively reach the poor fishermen with credit and recover it successfully - but only through having appropriate linkages with NGOs or local self-help groups, who can ensure the intensive supervision and the management needs of the fishermen groups necessary, for facilitating repayments of loans in time.

7. SPECIAL SCHEMES

The Sonali Bank, the largest commercial bank of the country, has introduced a special rural investment programme under which it may lend for fish farming upto Tk. 50,000 without any collateral. To implement this scheme, the Sonali Bank has designated only its branches which are adequately manned by suitable extension staff to ensure intensive supervision of the fishery projects. The Bangladesh Krishi Bank is also studying a scheme for lending to small fish farmers without collateral. However, the fact remains that in the absence of any effective supervisory arrangements of their own, or any linkage with NGOs self-help groups, banks would usually like to have some collateral.

The Government of Bangladesh has now declared fisheries projects as 'industries', which would allow entrepreneurs the benefits of lower interest rates and tax holidays. The Government has also made amendments to the relevant laws and regulations for extending the tenure of lease periods for Government-owned ponds/tanks and, particularly, land in coastal areas suitable for shrimp culture.

The Bangladesh Bank is implementing a credit guarantee scheme under which a borrower can set up a hatchery, a fish feed/fishing accessory-producing plant, a processing unit or even a fish and shrimp culture project without any collateral. As a result, a lot of enthusiasm has been generated in the country for investment in pond fishery projects, particularly for culturing quick-growing Catfish, sweetwater shrimp, exotic varieties of carp and Thai puti. The Bangladesh Bank is also encouraging seasonal culture of fish and shrimp, including fish culture in rainfed/irrigated ricefields.

8. MARKETING SYSTEM

It has already been pointed out that the actual fishermen and fish farmers do not get proper prices for their harvests due to a complex marketing system and the very dominant role of middlemen in it. There are four distinct tiers in the marketing system in Bangladesh, namely,

1. Primary markets. These are located near the points where the fish are caught. The moneylenders or moneylender-cum-wholesalers (Aratdar) procure the fish from the fishermen, generally through their henchmen, at predetermined prices. Only a part of the catch is allowed to be sold locally by local retailers. There is no problem of credit, as it can be easily obtained as trade finance from the nearest bank by affluent moneylenders/aratdars.

2. Secondary markets. The fish collectors at the primary markets bring the fish/shrimp to the landing ghats (jetties) in important commercial centres which are well-connected by river, road and/or rail transport. The dominant player in these markets are known as beparis (large traders).

3. Higher Secondary Markets. In these markets the beparis sell the fish to large wholesalers (paikers) through the local aratdars (commission agents). All the players in these markets can easily access institutional credit as trade finance.

4. Final Consuming Market. In this market, the big wholesalers sell their fish to the retailers who, in turn, either sell at permanent stalls in local markets or peddle it to homes on their heads or in rickshaw vans equipped with ice boxes.

With the availability of ice and fast-moving motorized boats, the fish catch is increasingly brought from the catch areas directly to the final consuming market.

There is no price control on wholesale or retail fish markets. While fish is generally auctioned in the large markets, this system is yet to be introduced for selling shrimp produced in closed waterbodies whose harvests processors/exporters usually buy at predetermined prices. The banks have generously financed the establishment of fish processing plants for processing, packing, storage and export of shrimp and whitefish although they do not usually receive timely repayment of their loans.

The role of the Bangladesh Fisheries Development Corporation in modernizing marine fishing, improving the landing places and storage facilities, popularizing the consumption of iced seafish, improving processing and storage of dry fish, and developing new, ready-to-cook products from trash fish, needs to be acknowledged. The infrastructure developed by this corporation is also being utilized by the private sector, which plays the dominant role in production, capture, processing, storage and internal and external marketing of shrimp, fish and fish products.

9. FISHERIES SECTOR PROBLEMS

Bangladesh has already deregulated its financial system. As such, the days of directed credit for any particular sector or subsector are over. The financial institutions are absolutely free to choose their borrower as well as to fix the interest rates, within the existing bands, and set terms on the basis of banker-customer-relationships. But, occasionally, this reality is not quite understood by the large borrowers and some people associated with the promotion and development of the fisheries sector. If the banks could be assured that their loans would be repaid in time, there should be no reason to discourage them from lending to any sector, including the fisheries sector.

However, the following problems have been identified as factors inhibiting increased flow of institutional credit to the fisheries sector:

1. Land record-keeping in Bangladesh needs to be updated and modernized. Most of the ponds and tanks in the country are jointly owned and the record of rights has not been properly updated. The co-sharers are not always willing to allow one of them to culture fish on a medium- or-long-term basis. Motivational work needs to be done by the Directorate of Fisheries/concerned banks/the NGOs to encourage the entrepreneurs to initially go in for short-term or seasonal culture of quick-growing and high-valued species of fish, such as catfish, exotic varieties of carp and sweet water shrimp to demonstrate the high profitability to the co-sharers. This would encourage co-sharers to allow one of their number to culture fish or motivate the lot to join together in culture and make accessing institutional credit easier.

2. The promotional agency - The Directorate of Fisheries - should take appropriate steps to enforce the existing laws, which does not permit a pond/tank without fish culture. The training and motivational programmes which are being implemented by the Directorate are expected to create individual as well as social awareness about the importance and profitability of closedwater fish culture.

3. Apart from training, the prospective fish farmers should be provided with technical advice and guidance on overall farm management, including information on water management, the availability of fish fry and fingerlings, appropriate density of fish population in monoculture or polyculture and disease control etc.

4. In the case of open waterbodies, the Government has already abolished the system of leasing the jal mahals. But it might be difficult to enforce this decision and protect the small fishermen's right to freely fish in these waters unless there is proper enforcement by the relevant agencies.

5. The Government is continuing with its pragmatic policy of re-stocking the open waterbodies with fish fry/fingerlings. These programmes help in augmenting the catches of the fishermen who are dependent on fishing for their livelihood in the large beels, haors, baors, lakes and rivers. However, these efforts are being frustrated by the widespread use of densely meshed nylon nets which destroy the juveniles and hurt the prospects for several potential harvests of different species of inland water fish, particularly that of Hilsa which accounts for a sizeable portion of the annual fish production. The prohibition of densely meshed nylon nets alone is, however, not enough. Banning the capture of certain species of fish during their breeding periods should also be vigorously enforced.

6. The Government has already decided to maintain fish sanctuaries in different parts of the country. This is expected to augment the catch.

7. With the spread of shrimp culture in the country, the requirements for shrimp fry have gone up tremendously. This cannot be met only through collection of shrimp fry from rivers and the seashore by using nylon nets. This, in any event, is a harmful practice as it destroys the fry of other fish and affects the overall availability of fish both for internal consumption as well as export. It needs to be emphasized that the repayment capacity of credit is linked with the sustained flow of income of the borrowers, the fishermen.

8. There are reports of fishing grounds in the Bay being depleted due to overfishing, mostly by unauthorized trawlers. There have to be arrangements to protect the country's marine fishing zone from unauthorized fishing as well as to totally stop fishing, particularly trawling for shrimp, during the shrimp breeding periods.

9. Proper surveys needs to be conducted to assess Bangladesh's marine resources, if necessary with the assistance of FAO. The financial institutions which have lent to the owners of trawlers and artisanal boats, have a stake in this matter, as this information would help to evaluate their lending policies to this subsector and assess the regularity of repayments.

10. Government has already decided to extend the tenure of lease of khas lands for shrimp farming and make the lease inheritable. This has removed the constraints which had been experienced by banks in accepting khas land as collateral.

11. There has to be proper registration of a shrimp project with the law enforcement agencies so that the actual farmer can get protection for it from any disturbance.

12. The financial institutions have already started financing the semi-intensive shrimp sector and till now the repayment rate remains very encouraging. However, the relevant authorities should come but with a clear-cut policy with regard to the zoning of shrimp farming in general and semi-intensive culture in particular and make expeditious arrangements for providing necessary infrastructural facilities such as all-weather roads, electricity, overall water management facilities and security arrangements.

13. The greatest constraint to expanding shrimp culture, which is very profitable, is the availability of shrimp fry at reasonable prices. While technology for sweetwater shrimp (Golda) has been successfully adopted by certain hatchery owners in the private sector, success with breeding brackishwater shrimp (Bagda) remains very limited and uncertain. Urgent attention is needed to ensuring the breeding of shrimp fry not only to augment export earnings from shrimp, but also to gradually enforce prohibition of collecting shrimp fry from the wild by means that destroy the fry of other fish.

14. Bangladesh is a disaster-prone country. This makes both pond culture in inland areas as well as shrimp culture in coastal areas a rather risky venture. While the Sadharan Bima Corporation has introduced an insurance scheme for shrimp culture projects, there is no insurance cover available for fish-farming. Therefore, the case for introducing insurance cover for fish farming, with proper evaluation of the projects and intensive supervision, merits urgent consideration. The availability of insurance cover and/or any guarantee fund would help in augmenting the flow of credit to the fisheries sector.

15. Bangladesh is very conscious about the environmental issues which are germane to fish farming in general and shrimp culture in particular. Government has already taken steps to protect the quality of inland waters and that of the Bay. But this also calls for co-operation from the upper riparian countries as well as from the marine traffic in the Bay of Bengal. In the case of shrimp culture. Government is determined to contain and minimize the possible adverse impact on the environment through zoning and evolving and introducing proper water management systems.

16. The financial institutions have a great stake in the maintenance of phyto-sanitary standards and quality control in production, processing, packaging and storage of shrimp, fish and other aquatic products, as problems with export consignments will undoubtedly affect repayment of loans. Government is very conscious of this and the relevant agencies are rigorously enforcing quality control according to internationally acceptable standards.

10. WHAT IS NEEDED

It is in the interest of Bangladesh's financial institutions to invest in profitable ventures. They have already voluntarily invested substantial amounts in the semi-intensive shrimp culture subsector. With proper co-ordination and technological support from the relevant Government agencies and by establishing links, where possible, with NGOs/Self Help Groups who would ensure intensive supervision of pond fishery projects, the financial institutions would be able to augment the flow of credit to the fisheries sector. And this would help usher in the much-desired 'silver revolution' for Bangladesh.