Asia-Pacific Trade Economists’ Conference

Trade-Led Growth in Times of Crisis

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 Cash Incentives for Agricultural Export:
Impact on Farm Level Income and Employment in Bangladesh1

Uttam Deb and Subir Kanti Bairagi2

Paper for the Asia-Pacific Trade Economists’ Conference on

Trade-Led Growth in Times of Crisis

Bangkok, Thailand
November 2-3, 2009

Abstract
The study has examined the impact of cash incentives provided for export of shrimp, frozen
fish and vegetables on farm level income and employment in Bangladesh. It has
documented evolution of the cash incentive programme and its implementation mechanism
for agricultural products (shrimps and other frozen fish, vegetables and fruits, and
processed agro-products), which was introduced in FY2002-03. Analysis of the study
revealed that cash incentive had positive contribution to the export of frozen shrimp/prawn,
frozen fish and vegetables. It had also contributed to the income of shrimp farmers, fish
farmers and vegetable farmers. During the six years (2002-03 to 2007-08) of the cash
incentive scheme, net income (profit) received by farmers from exported shrimp, frozen fish
and vegetables were respectively 34 percent, 52 percent, and 79 percent higher than that of
the pre-cash incentive period (comparable years). Cash incentive also had positive impact
on labour employment particularly for labour engaged in production and processing of
exported shrimp, and production of fish and vegetables. Labour engaged in production and
processing of exported shrimp in the cash incentive period was 85 percent higher than that
of the pre-cash incentive period (comparable years). On the other hand, labour engaged in
production of exported white fish and vegetables in the six years of the cash incentive
period was 118 percent and 7.5 percent higher than that of the pre-cash incentive period
(comparable years). Therefore, the study suggests that the government should continue the
cash incentive programme with a view to increase export at the national level, and income
and employment in the farm level.

1
Paper presented at the Asia-Pacific Trade Economists’ Conference on Trade-Led Growth in Times of Crisis,
th
held at the United Nations Conference Centre on 2-3 November 2009 Celebrating the 5 Anniversary of the
Asia-Pacific Research and Training Network on Trade (ARTNeT), Bangkok, Thailand.
2
Dr Uttam Deb is the Head of Research at the Centre for Policy Dialogue (CPD), Dhaka and Mr Subir Kanti
Bairagi is a Research Associate at the CPD. Contact email: uttam@cpd.org.bd

1
I. INTRODUCTION

Bangladesh has been providing cash incentives for export of agricultural commodities since
FY2002-03. It is provided in the expectation that it will enhance competitiveness of
Bangladeshi exporters which will help to increase export, and, thereby, will have positive
impact at the farm level by raising production and farm level income as well as increased
opportunity for employment. Therefore, it is important to know the impact of cash
incentives provided for export of agricultural commodities at the farm level. No study has
yet analysed this important aspect. The present study has made an attempt to do so.

The broad objective of the study is to analyze the impacts of cash incentives provided for
export of agricultural commodities by the government of Bangladesh. The specific objectives
of the study are as follows:
i. To review the evolution of cash incentive related policies adapted by the
government of Bangladesh particularly for agricultural products;
ii. To analyze Bangladesh’s performance in production and export of shrimp, other
frozen fish, and vegetables;
iii. To identify value chain of shrimp, other frozen fish, and vegetables in Bangladesh
and margin received by different agents engaged in the value chains;
iv. To estimate cost and profitability in shrimp and vegetable production and marketing
in Bangladesh;
v. To put forward some policy suggestions regarding the cash incentive programme

II. CASH INCENTIVES FOR EXPORT OF AGRICULTURAL PRODUCTS

Bangladesh has introduced cash incentive (export subsidy) programme back in July 1994,
with a view to increase its export. Initially it was for export of jute goods produced by
government and non-government jute mills, and export oriented local textiles. Since then,
scope and extent of the cash incentive programme has been expanded. New products are
included in the eligibility list. Cash incentive for leather goods (100 per cent export oriented
industries) was introduced in April 2000. In case of agricultural products, cash incentive was
declared in December 2002 which was effective from the fiscal year FY2002-03. Through this

2
announcement cash incentive facility was provided for export of frozen shrimps and other
fish, agro product (vegetables/fruits) and processed agro-products. Along with agricultural
products cash incentive benefits have also been extended for export of bone meal, bi-cycle,
and commodities made of hogla, straw, coir of sugarcane etc. since FY2002-03. In 2003, the
government also declared cash incentive for export of tobacco but it has been discontinued
since July 2008. Cash incentive benefits were declared for export of potato in January 2004,
followed by hatching eggs and day old chicks of poultry industries (July 2005), liquid glucose
produced at Iswardi EPZ (December 2005), light engineering products (February 2006) and
Halal meat (December 2006).

At present, thirteen commodities are enjoying cash incentive facility, which includes (i)
Frozen Shrimps and other fishes, (ii) Agro product (vegetables/fruits) and processed (agro
processing) agro products, (iii) Potato, (iv) Hatching eggs and day old chicks of poultry
industries, (v) Halal meat, (vi) Commodities made of hogla, straw, coir of sugarcane etc., (vii)
Export oriented local textile, (viii) Jute goods, (ix) Leather goods, (x) Bone meal, (xi) Bi-cycle,
(xii) Liquid glucose produced at Iswardi EPZ, and (xiii) light engineering products. Direct
beneficiaries of the cash incentive programme are producers/ manufacturers, processors
and exporters. Cash incentives are provided on net fob (free on board) value of the selected
commodities exported (shipped) during the concerned fiscal year. Export value is calculated
using a fixed price set by the Bangladesh Bank. Administered price for exported shrimp is
fixed at $3.79 per pound and for other fishes at $1.10 per pound.

Rate of cash incentive varies among commodities (Table 1). It has also changed over time.
Cash incentive provided for export of shrimp and other frozen fish was 10 percent during
FY2002-03 to FY2008-09, which was increased to 12.5 percent in April 2009 under the
stimulus package to combat negative affect of global economic crisis. For export of
vegetables and fruits, rate of cash incentive was 15 percent in FY2002-03, 25 percent in
FY2003-04 and FY2004-05; 30 percent in FY2005-06 and 20 percent during FY2006-07 to
FY2008-09. Rate of cash incentive applicable for export of processed agro-products was 15
percent in FY2002-03, 25 percent in FY2003-04 and FY2004-05. In FY2005-06, depending
upon the local input use level for exported agro-processed products two different rates was
applicable. If the processed agricultural product used at least 80 percent of local inputs then

3
it received 30 percent as cash incentive but for products which have used at least 70 percent
local inputs then cash incentive was applicable at the rate of 20 percent of export value in
FY2005-06. Since, FY2006-07, 20 percent cash incentive is provided for export of agro-
processed products which fulfils the minimum 70 percent local raw material use criteria. For
export of potato, applicable cash incentive rate was 15 percent in FY2003-04 and FY2004-
05, 20 percent in FY2005-06 and 10 percent since FY2006-07. For export of Halal meat,
applicable rate for cash incentive was 20 percent during FY2006-07 to FY2008-09.

Table 1: Rate of Cash Incentives (Export Subsidy) provided for Export of Different
Agricultural and Agro-processed Products: FY2002-03 to FY2008-09.

Fiscal Frozen Shrimp Agro Agro Processed Potato Halal

Year and other fish Products Products Agro Products Meat
(Vegetables) (Fruits)
FY2002-03 10 15 20 15 - -
FY2003-04 10 25 25 25 15 -
FY2004-05 10 25 25 25 15 -
FY2005-06 10 30 30 20 (Local input use 20 -
requirement: minimum 70%)
30 (Local input use
requirement: minimum 80%)
FY2006-07 10 20 20 20 (Minimum 70% local raw 10 20
material use)
FY2007-08 10 20 20 20 10 20
FY2008-09 10 (July-March) 20 20 20 10 20
12.5 (April- June)
FY2009-10 12.5 20 20 20 10 20
Source: Annual Report (various issues), Bangladesh Bank
Note: FY = Fiscal Year

Annual disbursement of money provided as cash incentive for agricultural and non-
agricultural products during FY2002-03 to FY2007-08 is reported in Table 2. Amount of
disbursement has increased for both agricultural and non-agricultural products. Product
specific analysis revealed that amount of cash incentive provided for export of frozen
shrimp and other fish has increased from $8.64 million in FY2002-03 to $52.60 million in
FY2007-08 and total spending for this commodity was $167.14 million. Total amount of cash
incentive provided for export of Vegetables and fruits was $22.96 million and annual
disbursement has increased from $0.13 million in FY2003-04 to $9.42 million in FY2007-08.
In case of potato, $0.47 million was spent as cash incentive. On the other hand, $6.02
million was spent as cash incentive for export of processed agricultural products during
FY2006-07 and FY2007-08.

4
Table 2: Amount of Money Disbursed under the Cash Incentives Scheme: FY2002-03 to
FY2007-08
(Unit in million $)
Product FY2002-03 FY2003-04 FY2004-05 FY2005-06 FY2006-07 FY2007-08
Frozen Shrimps and other fishes 8.64 21.21 28.18 23.85 32.66 52.60
Agro product (vegetables/Fruits) - 0.13 1.63 5.81 5.97 9.42
Potato - - 0.03 0.14 0.17 0.13
Processed agro products - - - - 1.98 4.04
Commodities made of hogla,
straw, coir of sugarcane etc. 0.06 0.19 0.16 0.16 0.33 0.39
Jute goods 14.68 11.88 16.29 14.91 18.11 24.78
Leather goods 2.33 3.36 5.95 5.96 6.58 14.71
Bone meal 0.01 0.04 0.05 0.06 0.08 0.17
Export oriented Local Textile 106.65 75.71 68.41 37.27 48.74 76.72
Bi-cycle - - - - - -
Jamdani Saree and Lungi - - - - - -
Tobacco - 0.16 1.63 1.58 1.24 2.16
Light engineering product - - - - 0.03 0.00
TOTAL 132.37 112.68 122.31 89.74 115.89 185.13
Source: Accounts and Budgeting Department, Bangladesh Bank.

III. PRODUCTION AND EXPORT PERFORMANCE OF SHRIMP, FISH AND VEGETABLES

III.1 Production Performance

III.1.1 Shrimp production
Fish production registered substantial increase during the last two decades. An analysis of
trends in production of shrimp in farms indicates that within a span of two decades
production of shrimp has increased by five times (Figure 1). Production of shrimp in
aquaculture farms has increased from 14.7 thousand metric tons in FY1985-86 to 90.6
thousand metric tons in FY2007-08. During this period, capture of shrimp and prawn from
marine water has gradually increased from 7.6 thousand metric tons in FY1985-86 to 53.2
thousand metric tons in FY2007-08. During the same period, capture of shrimps from inland
water bodies fluctuated widely and was in the range of 34.3 thousand metric tons and 92.7
thousand metric tons. Amount of production of other fish has also increased over the years.
Total amount of harvest of other fish (culture and capture) has increased by three times;
from 704.5 thousand metric tons in FY1985-86 to 2340.2 thousand metric tons in FY2007-
08. It may be recalled that cash incentive for export of frozen shrimp and frozen fish was
introduced in FY2002-03. Therefore, it is important to know what happened to production
of shrimp and other fish after the introduction of the cash incentive scheme. Increase in

5
production of shrimp and prawn in farms in FY2007-08, compared to FY2001-02, was 38
percent (from 65.0 thousand tons in FY2001-02 to 90.6 thousand tons FY2007-08). During
this period, harvest of shrimp and prawn increased by 69 percent from marine water and by
43 percent from inland water. On the other hand, production of other fish has increased by
35 percent. Thus, it seems that there was possibly a relation between the introduction of
cash incentive scheme and production of shrimp and other fish in Bangladesh.

Figure 1: Trends in Production of Shrimps and Other Fish in Bangladesh: FY1985-86 to

FY2007-08

2700

2200
Production (in '000 metric tons)

1700

1200

700

200
1999-00

2000-01

2001-02

2007-08
1985-86

1986-87

1987-88

1988-89

1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

2002-03

2003-04

2004-05

2005-06

2006-07

Other Fish Shrimp and Prawn

Source: Fisheries Statistical Yearbook of Bangladesh, Department of Fisheries (DoF) and Yearbook of Agricultural Statistics
of Bangladesh, BBS.

Total fish production in Bangladesh has increased over time. However, the rate of growth in
fish production has declined in the cash incentive era (2002-03 to 2007-08), compared to
pre-cash incentive era (1985-86 to 2001-02) and long-term (1985-86 to 2007-08) growth in
fish production (Table 3). In the cash incentive era, total production of fish increased
annually at the rate of 4.98 per cent against 5.86 percent annual growth in the pre-cash
incentive period and 5.90 percent long-term growth. Annual growth in harvest of shrimp
and prawn (both from inland and marine water bodies) was higher in the cash incentive era
than pre-cash incentive period and long-term growth. But, annual growth in shrimp
6
production in farms in the cash incentive era (5.70 percent) was lower than growth in the
pre-cash incentive period (11.36 percent) and long-term growth (9.43 percent). In case of
other fish production, annual growth rate in the cash incentive era (4.79 percent) was lower
than pre-cash incentive period (5.86 percent) and long-term (5.90 percent). Thus, it seems
that there is slow down in growth in production of shrimps and fish but harvest of shrimp
from both inland and marine water grew at a much higher rate in the cash incentive period.

Table 3: Annual Compound Rate of Growth of Shrimp and Fish Production in Bangladesh
(% per annum)
Sector 1985-86 to 2007-08 1985-86 to 2001-02 2002-03 to 2007-08
Shrimp and Prawn (Culture) 9.43 11.36 5.70
Shrimp and Prawn (Capture, Marine) 6.15 6.45 12.22
Shrimp and Prawn (Capture, Inland) 0.84 -1.47 5.51
Total Shrimp and Prawn 4.43 4.05 7.03
Other Fish 6.07 6.05 4.79
Total Fish Production 5.90 5.86 4.98
Source: Authors’ calculation based on data collected by BBS.

III.1.2 Vegetable production

III.1.2 Vegetable production
All vegetables experienced very high increase in production during the last two and a half
decade from 2281 to 8685 thousands metric tons. During the last 18 years, production of
vegetables increased by about four times. In 2007-08, compared to 1990-91, highest
increase in production was in Potato (5.4 times) followed by Puisak (3.9 times), Patal (3.3
times), Lady's finger (3.3 times), Cabbage (3.0 times), Chichinga (2.7 times), Pumpkin (2.5
times), Cucumber (2.5 times), Arum (2.3 times), Beans (2.3 times), Cauliflower (2.3 times),
Bitter gourd (2.1 times), Brinjal (2.0 times), Jhinga (2.0 times), Water gourd (1.9 times),
Tomato (1.6 times) and Radish (1.5 times).

The annual compound rate of growth in production in vegetables in Bangladesh is presented

in Table 4. It reveals that annual compound rate of growth in production of vegetables
registered 9.68 per cent annual growth in the cash incentive era (2002-03 to 2007-08),
compared to 11.19 percent in the pre-cash incentive period (1990-91 to 2001-02) and 9.30
percent in the long-term (1990-91 to 2007-08). Product specific analysis revealed that

7
growth in production of majority vegetables (Pumpkin, Patal, Lady's finger, Bitter gourd,
Puisak, Chichinga, Cucumber, Cabbage, Cauliflower, Water gourd, Tomato, Radish, Beans)
were higher in the cash incentive era than pre-cash incentive period and long-term. Some
vegetables (Brinjal, Potato, Jhinga, and Arum) registered a lower rate of growth in
production in the cash incentive era than in the pre-cash incentive period. In fact Brinjal
(eggplant) production declined at the rate of 1.96 percent per annum in the cash incentive
era.
Table 4: Annual Compound Rate of Growth in Production of Different Vegetables
(% per annum)
Vegetables 1990-91 to 2007-08 1990-91 to 2001-02 2002-03 to 2007-08
Pumpkin 5.29 3.93 9.06
Brinjal 5.44 15.06 -1.96
Potato 12.03 15.00 11.59
Patal 8.95 10.74 12.69
Lady's finger 8.02 5.89 13.02
Jhinga 4.16 4.16 6.15
Bitter gourd 5.20 1.27 11.50
Arum 5.45 7.48 2.10
Puisak 9.88 2.46 24.28
Chichinga 7.53 2.40 16.31
Cucumber 5.83 4.89 9.35
Cabbage 6.19 5.62 11.91
Cauliflower 5.87 2.15 12.25
Water gourd 3.99 4.92 5.71
Tomato 3.72 2.22 6.17
Radish 2.20 1.38 5.23
Beans 5.20 3.47 10.68
Total vegetables 9.30 11.19 9.68
Source: Authors’ calculation, based on data collected from Bangladesh Bureau of Statistics (BBS).

8
III.2 Export Performance
III.2.1 Shrimp export

Bangladesh experienced very high increase in export in shrimp and other frozen fish (Figure
2). Due to two consecutive floods and cyclone Sidr in 2007, both production and export of
shrimp was negatively affected in 2007-08. In 2006-07, quantity of shrimp export (53.36
thousand metric tons) was 3.9 times of export in 1985-86 (13.6 thousand metric tons).
During the same period, it was 3.7 times for other frozen fish (from 5.02 thousand metric
tons to 23.52 thousand metric tons). In 2006-07, value of shrimp export was 4.8 times of
1985-86 while value of export of other frozen foods was 3.9 times. It may be recalled that
cash incentive on export of shrimp and other frozen foods was introduced in 2002-03. It is
important to compare the level of export of shrimp and other frozen fish in the era of cash
incentive than with the pre-cash incentive period. Export of shrimp has increased from
30.21 thousand metric tons in 2001-02 (last year before the introduction of cash incentive)
to 53.36 thousand metric tons in 2006-07 and then declined to 49.91 thousand metric tons
in 2007-08. On the other hand, export of other frozen shrimp increased from 9.86 thousand
metric tons in 2001-02 to 18.38 thousand metric tons in 2006-07 and then to 23.52
thousand metric tons in 2007-08. In case of value of export of shrimp, it increased from
$252.07 million in 2001-02 to $433.47 million in 2006-07 and then declined to $417.48
million. Value of export of other frozen fish increased from $23.92 million in 2001-02 to
$72.22 million in 2007-08. Thus, within the span of six years, export of shrimp (both in
quantity and value terms) was 1.7 times of the base period (2001-02) and export of other
frozen fish was 2.4 times of the base period in terms of quantity and 3.0 times in terms of
value. This indicates that probably cash incentive had a positive role on the increase in
export of shrimp and other frozen fish.

9
Figure 2: Trends in Quantity and Value of Export of Shrimp and other Frozen Fish by
Bangladesh: 1985-86 to 2007-08

80 600

70
500

60

400

Value of export (In million USD)

Quantity of Export ('000 MT)

50

40 300

30
200

20

100
10

0 0
1985-86

1986-87

1987-88

1988-89

1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08
Quantity of Frozen shrimp Export ('000 MT) Quantity of Other Frozen Fish Export ('000 MT)
Value of Exported Frozen Shrimp (in million USD) Value of Exported Other Frozen Fish (in million USD)

Source: Fisheries Statistical Yearbook of Bangladesh, Department of Fisheries (DoF), GoB.

Annual compound rate of growth in export of frozen shrimp/prawn, and frozen fish was
very high in the cash incentive era (2002-03 to 2007-08), compared to pre-cash incentive
period (1985-86 to 2001-02) and long-term (1985-86 to 2007-08) growth (Table 5). In case of
quantity of frozen shrimp export, annual growth was 6.36 percent in the cash incentive era,
compared to 4.47 percent in the pre-cash incentive period and 6.02 in the long-term. On the
other hand, value of frozen shrimp export had 6.56 percent annual growth in the cash
incentive era, compared to 8.17 percent in the pre-cash incentive period and 7.08 percent in
the long-term. This indicates an important possibility. Probably exporters of shrimp were
interested to export shrimp even at a relatively lower price since they knew that with the
cash incentive their profit would be higher. However, before such conclusion more
disaggregated analysis is required, which we failed to do due to non-availability of
disaggregated export data. In case of growth in exported quantity of frozen fish, annual
growth was 19.28 percent in the cash incentive era, compared to 7.00 percent in the pre-
cash incentive period and 8.27 percent in the long-term. In terms of value of export, annual

10
growth in frozen fish export was 16.72 percent in the cash incentive era, compared to 9.09
percent in pre-cash incentive period, and 8.58 percent in the long-term. These estimates
signify that there was a link between export of frozen shrimp and frozen fish with the
introduction of cash incentive for such products.

Table 5: Annual Compound Rate of Growth in Export of Shrimp and Other Frozen Fish from
Bangladesh
(% per annum)
Product Quantity of Export Value of Export
1985-86 to 1985-86 to 2002-03 to 1985-86 to 1985-86 to 2002-03 to
2007-08 2001-02 2007-08 2007-08 2001-02 2007-08
Frozen Shrimp/prawn 6.02 4.47 6.36 7.08 8.17 6.56
Frozen Fish 8.27 7.00 19.28 8.58 9.09 16.72
Source: Authors’ calculation, based on data collected from BBS.

III.2.2 Vegetable export

Bangladesh exports 36 vegetables (Bitter gourd, Amaranth, Bottle gourd, Broccoli,

Cucumber, Banana flower, Drumstick, Eddoe, Rhizome of Taro, Stolon of Taro, Cauliflower,
Brinjal, French Bean, Green chilli, Green papaya, Hyacinth Bean, Indian Spinach, Jackfruits
Seeds, Okra, Pointed gourd, Potato, Radish, Ridge gourd, Red Amaranth, Snake gourd, Sweet
Potato, Sweet gourd, Sponge gourd, Teasle gourd, Tomato, Ash gourd, Yard long Bean,
Mushroom, Zinger, Green Turmeric, and Green Banana), 16 fruits (Jujube, Hogplam, Indian
Olive, Jackfruits, Lemon, Lime, Litchi, Anola, Pineapple, Mango, Starfruit, Satkara, Taikar,
Wood apple, Grapefruit, and Guava) and two other products (Betel Leaf, Green Coriander)
(Bangladesh Fruits and Vegetables Exporters Association, 2009).

Export of vegetables (both quantity and value) from Bangladesh increased substantially
during the last 18 years (Figure 3). Quantity of export of vegetables has increased from 3.75
thousand metric tons in 1990-91 to 30.93 thousand metric tons in 2007-08. During the same
period, value of vegetable export has increased from $4.37 million to $60.47 million. It is
pertinent to ask whether there is any change in quantity and value of exported vegetables
after the introduction of cash incentive scheme for vegetables in 2002-03 (December 2002).
Quantity of vegetable export in 2007-08 (30.93 thousand mt) was 2.43 times of 2001-02
(12.75 thousand mt). On the other hand, value of vegetable export in 2007-08 ($60.47

11
million) was about four times of 2001-02 ($15.31 million). Thus, it seems that there was a
positive relation with the export of vegetables and introduction of cash incentive scheme for
vegetable export.

Figure 3: Trends in Export of Vegetables by Bangladesh

35 70

30 60

25 50

Value (in million USD)

Quantity (in '000 MT)

20 40

15 30

10 20

5 10

0 0
FY1990-91

FY1991-92

FY1992-93

FY1993-94

FY1940-95

FY1995-96

FY1996-97

FY1997-98

FY1998-99

FY1999-00

FY2000-01

FY2001-02

FY2002-03

FY2003-04

FY2004-05

FY2005-06

FY2006-07

FY2007-08
Quantity (MT) Value (Million USD)

Source: Export Promotion Bureau (EPB)

Estimated annual compound rate of growth in vegetable export (both in terms of quantity
and value of export) was much higher in the cash incentive era (2002-03 to 2007-08) than in
the pre-cash incentive period (1990-91 to 2001-02) and long-term (1990-91 to 2007-08)
export (Table 6). Annual growth in exported quantity of vegetables was 16.01 percent in the
cash incentive era, compared to 9.50 percent in pre-cash incentive period and 8.11 percent
in the long-term. In case of value of exported vegetables, annual growth was 24.06 percent
in the cash incentive era against 11.78 percent in the pre-cash incentive period and 11.64
percent in the long-term.

Table 6: Annual Compound Rate of Growth in Export of Vegetables by Bangladesh

(% per annum)
Product Quantity of Export Value of Export
1990-91 to 1990-91 to 2002-03 to 1990-91 to 1990-91 to 2002-03 to
2007-08 2001-02 2007-08 2007-08 2001-02 2007-08
Total Vegetables 8.11 9.50 16.01 11.64 11.78 24.06
Source: Authors’ calculation, based on data collected from BBS.

12
IV. ANALYSIS OF VALUE CHAINS IN EXPORT OF SHRIMP, FROZEN FISH AND VEGETABLES
IV.1 Value Chain for Export of Shrimp
The value chain of shrimp export from Bangladesh has four distinct stages: (a) pre-
production stage, (b) production stage, (c) post-production marketing, and (d) processing
and export stage (Table 7 and Figure 4). A large numbers of intermediaries are engaged in
the pre-production stage, such as Fry Collectors/Catchers, Sea Fishermen, Hatchery Owners,
Hatchery Agents, Fry Farias, Fry Aratdars, Fry Commission Agents and Nursery Owners. The
farmers’ and feed suppliers are mainly involved in the production stage. Major actors in the
post-production marketing stage are Shrimp Faria, Shrimp Aratdars, Shrimp Commission
Agents, and retailer in the domestic market. On the other hand, Processors/Exporters, and
Foreign buyers are engaged in the processing and export stage.

Table 7: Functional Analysis of Shrimp Supply Chain

Stage of the Activities Actors Output Physical Trade

Chain Flows
Pre-Production Fry collection, Fry Collectors/Catchers Post Larvae (PL) Wild fry: [50 per
Production Sea Fishermen cent of total]
Marketing Hatchery Owners Fry production by
Transport Hatchery Agents hatcheries
Fry Farias
Fry Aratdars
Fry Commission Agents
Nursery Owners
Production Cultivation Shrimp Farmers Shrimp Galda: 85.54
Feed Millers million pound
Feed Marketing Agents Bagda: 89.84
million pound
Marketing Marketing Shrimp Farias Both the full and de-
Transport Shrimp Aratdars headed shrimp
Shrimp Commission Agents
Processing Processing Processors Shrimp to domestic
Plants [de-headed, Exporters consume and to
refrigerating, Workers in the Plants exporters
packaging]
Retail Transport Retailers – Retail market Full Shrimp Domestically
Final Sale Retailers – Wholesale market De-headed Shrimp consumed
Retailers – Departmental store Processed Shrimp approximately 10
per cent of total
Export Marketing Exporters Frozen Shrimp 117.39 million
Transport pound or $433.48
Million in FY2006-
07
Source: Gammage et al. (2006); dTS (2006) and Quassem et al. (2003).

13
Figure 4: Value Chain of Shrimp Export from Bangladesh

Sea Fishermen: Hatchery/Brood

Trawlers, Boats
Fry Collector

Fry Faria

Fry Aratdar STAGE I

Fry
Collection,
Fry Commission Agent Production
[PL] and
Marketing

Nursery
Feed
Miller

Shrimp Farmer
[SHRIMP FARMING STAGE II] Feed Dealer

Shrimp Faria
Retailer
[Consumption 10%]
STAGE III
Shrimp Aratdar
[DEPOT] Shrimp
Marketing

Shrimp Commission Agent

Processor Processor and

STAGE IV
Exporter
Processing and
Export
Domestic Buyer Foreign Buyer

Source: Adapted from Gammage et al. (2006); dTS (2006) and Quassem et al. (2003)

14
Cost and Return from Shrimp Production
Profitability of shrimp (galda and bagda) cultivation at the farmers’ level mainly depends on
farming methods (traditional, extensive, semi-intensive) adopted, the species (galda or
bagda) cultivated, location and farm management practices followed. Per hectare yield of
shrimp in Bangladesh varies between 188 to 628 kg for galda (Table 8). In case of bagda,
yield was 300 kg in extensive cultivation, 600 kg in improved-extensive cultivation, and
ranged between 2000 to 2250 kg in semi-intensive cultivation. Net return from production
of a kg shrimp varied between $0.46 and $4.42. Distribution of margin along the value chain
of shrimp marketing, as documented by dTS (2006) is reported in Figure 5.

Table 8: Costs and Return from Shrimp Farming in Bangladesh

$/kg
Sources of Reference Yield
As cited in Species Method/region Gross Net
information Year (kg/ha) Total Cost
Return Return
Shah et al. (2008) 2006 Prawn Khulan 575 4.48 5.15 0.67
Satkhira 376 4.67 5.52 0.85
Bagerhat 628 5.19 5.76 0.57
Ahmed et al. Dey et al. Prawn or Extensive 292 3.66 5.75 2.09
(2008) (2008) Galda Semi-intensive 478 3.26 5.65 2.38
dTS (2006) 2005 Galda 496 3.74 8.16 4.42
Ahmed Prawn or
Ahmed (2001) 188 7.16 7.63 0.46
et al.(2008) Galda
Banks (2002) Quassem
2002 Galda 175 7.20 9.69 2.49
and BCAS (2001) et al. (2003)
dTS (2006) 2005 Bagda 133 4.16 5.99 1.83
Banks (2002) Quassem
2002 Bagda 140 4.84 8.98 4.14
and BCAS (2001) et al. (2003)
Alam (2002) 2002 Bagda 322 3.37 2.65 -0.71
Ahmed et al.
Shah et al (2000) Bagda 130 5.00 5.80 0.80
(2002)
Ahmed et al.
Thomas et al (2001) Bagda 132 5.30 7.89 2.60
(2002)
Bagda Extensive farming n.a. 4.07 6.90 2.83
Ahmed et al.
Ling et al (2001) Semi-intensive
(2002) n.a. 12.04 5.26 -6.78
farming
Traditional 275 3.38 1.65 -1.73
Gammage Marine
2005 Modified 600 2.37 2.24 -0.13
et al. (2006) Shrimp
Semi-intensive 2000 2.45 2.17 -0.28
Black Individual owner 146 7.41 5.84 -1.57
Alam, N. (2007) 2002 Tiger Group farm 153 6.81 6.02 -0.80
Shrimp Outsider lease 152 7.51 5.54 -1.96
Extensive 300 2.23 6.14 3.91
Barman and
Muir (2003) 2002 Shrimp Improved-extensive 600 1.92 6.14 4.22
Karim (2007)
Semi-intensive 2250 0.92 5.26 4.34
Note: Bagda Shrimp (Penaeus Monodon)) or Black Tiger Shrimp or Marine Shrimp

15
Figure 5: Distribution of Margin along the Value Chain of Shrimp Marketing

25.0

20.0 Exporters Margin

Processing Profit-Factory Price

15.0 Processing Costs

USD/Kg.

Shrinkage

Faria-Aratdar Margin
10.0

Farm Profit- Farm-Gate Price

Shrimp Farming Cost

5.0

Faria-Aratdar Margin

Fry Catcher Sale Price

0.0
Bagda Galda

Source: dTS (2006), page 56.

16
IV.2 Value Chain for Export of White Fish
A recent study (World Bank, 2008) has traced the value chain involved in marketing of white
fish (Figure 6). Major players engaged in the value chain are Hatchery for fingerling, Nursery
for fingerling rearing at 60 days, Fish grower/farmer, Aratdar (commission agent), Paiker
and Consumer.

Figure 6: Supply Chain of Freshwater Aquaculture in Bangladesh

Hatchery
[Fingerling]

Nursery
[Fingerling rearing at 60 days]

Fish Grower/Farmer

Aratdar
[Commission Agent]

Paiker

Consumer

Source: World Bank (2008)

17
IV.2 Value Chain for Export of Vegetables Supply Chain
There are a large numbers of intermediaries involved in the vegetable marketing chain. The
following figure is documented based on the study made by Hasan et al., 2007 and
Mahmoud et al., 2005. The key intermediaries are of the vegetables marketing are Farias,
Aratdars, Beparis, Wholesalers, Retailers and Exporters.

Figure 7: Value Chain of Vegetable Export from Bangladesh

Farmers/Growers
[Field/ Local Market]

Farias

Beparis Aratdars
[Local/Urban]

Wholesalers
Stallholders

Retailers

Consumers Exporters

Source: Hasan et al. (2007); Mahmoud et al. (2005).

Cost and Return of Vegetable Production

A summary of costs and returns from production of different vegetables, estimated by
different studies, are reported in Table 9. Per hectare net return from production of
vegetables varied between $354 and $8386. Per hectare net return from production of
Snake gourd was $446.07, which was $863.05 for Indian spinach, $1694.60 for Brinjal and
$507.98 for Okra. In other words, net income (profit) received by farmers from production
of one metric ton of Snake gourd was $16.01, for Indian spinach $43.00, for Brinjal $44.76
and for Okra $35.04.

18
Table 9: Economic Return from Vegetables Production

Vegetables Sources of Yield Price Gross Net Return Benefit-cost ratio

Information (ton/ha) ($/ton) Return ($/ha)
($/ha)
Full Cash Full Cash
cost cost cost cost
Bean Mallic, 2004 14.39 219.70 3161 1536 2.06
Bitter gourd Hossain et al. 1994 12.94 184.42 2386 1191 1665 2.00 3.31
Bitter gourd Mallic, 2004 13.77 120.93 1665 675 2.47
Brinjal Mallic, 2004 32.53 120.90 3933 1563 2.52
Brinjal Haque et al. 2007 37.86 18.90 2459 1744 3.44
Cabbage Huq and Rahman 31.84 67.03 2134 1157 1354 2.18 2.74
1993
Cabbage Mallic, 2004 43.37 38.86 1685 698 2.42
Cauliflower Huq and Rahman 20.10 89.45 1798 824 1085 1.85 2.52
1993
Cauliflower Mallic, 2004 29.24 74.99 2193 802 2.74
Eggplant Sabur 1990 14.94 99.56 1487 1074 1283 3.60 7.28
Eggplant Hoque et al. 1991 28.36 167.49 4750 3962 4548 6.03 23.57
French bean Mallic, 2004 11.24 286.03 3215 1488 2.16
Hyacinth bean Huq and Rahman 18.63 140.93 2626 1564 2004 2.47 4.22
1993
Indian spinach Haque et al. 2007 20.07 27.39 1438 888 2.62
Mukhikachu Ahmed et al. 13.96 124.14 1733 656 1128 1.61 2.87
1990a
Okra Haque et al. 2007 16.73 32.08 1059 523 1.97
Okra WB, 2008 7.91 46.36 573 367 1.56
Panikachu Baksh et al. 1990 99.81 52.15 5205 3926 4.07 -
Pointed gourd Sabur 1990 10.74 192.91 2072 1711 1908 5.73 12.63
Pointed gourd Ullah et al. 1994 31.81 153.30 4877 3180 4065 2.87 6.01
Potato Elias et al. 1984 30.35 37.91 1151 354 670 1.44 2.40
Potato Mallic, 2004 16.50 69.08 1140 673 1.69
Pumpkin Sabur 1990 23.71 34.23 812 601 708 3.85 7.85
Radish Huq and Rahman 12.43 70.70 879 424 581 1.93 2.96
1993
Radish Sabur 1990 18.15 62.23 1130 834 1003 3.82 8.94
Snake gourd Haque et al. 2007 27.87 20.96 1043 459 1.79
Teasel gourd Barman et al. 1990 27.78 364.22 10119 8386 9377 5.84 13.64
Tomato Sabur 1990 7.30 164.90 1204 839 1018 3.30 6.47
Tomato Matin et al. 1994 20.43 41.13 841 366 592 1.77 3.38

Note: Original figures related to cost and returns were in Tk., Authors have converted those into US Dollars using annual
average exchange rates in corresponding years.

19
Marketing margin
Marketing margin of summer vegetables in Dhaka is reported in Table 10. It shows that
vegetable farmers received 51.1 percent of the price paid by the consumers while Paikers
received 20.1 percent, Aratdars received 1.9 percent and Retailers got 26.5 percent of the
payment made by the consumers of summer vegetables.

Table 10: Marketing margin of summer vegetables in Dhaka

Margin as % of
Intermediaries Buying price Selling price Margin retail price
Farmers 10.80 10.80 51.11
Paikers 10.80 15.05 4.25 20.11
Aratdars 15.10 15.50 0.40 1.89
Retailers 15.53 21.13 5.60 26.50
Source: Adapted from IFAD newsletter (special issue, 2007)

V. IMPACT ON EXPORT, FARM LEVEL INCOME AND EMPLOYMENT

V.1 Impact on Export
Our descriptive analysis in Section III showed that export of frozen shrimp, frozen fish and
vegetables was higher in the cash incentive era than the pre-cash incentive period. So, it is
important to know whether it was due to the introduction of cash incentive scheme. To
know the impact of cash incentive on export of shrimps/fish/vegetables from Bangladesh, a
regression analysis was carried out following equation (1).

EV =β 0+β1EP+β 2DCI............................................(1)

Where, EV = export earnings (in million $), EP = export price ($/ton), and DCI = dummy
variable assuming value equal to One when cash incentive given to exporters otherwise
Zero.

Estimated value of the coefficients is reported in Table 11. It is revealed from the estimated
coefficients that price and cash incentive had contributed to the export of shrimp at 1
percent level of significance. In case of export of frozen fish, both export price of fish and
cash incentive had a contribution to the export of frozen fish at 1 percent level of
significance. On the other hand, for export of vegetables, export price of vegetables had

20
contributed to the value of vegetable export at 1 percent level of significance. Cash
incentive had positive but insignificant effect on export of vegetables.

Table 11: Parameter estimates of linear function of export of shrimp, fish and vegetables

Dependent Export of Frozen Shrimp Export of Frozen Fish Export of Vegetable

Variable
Independent Parameter Coefficient Standard Coefficient Standard Coefficient Standard
variables error error error
Constant β0 -108.093 54.386 -13.199 9.488 -32.556 12.493

Export Price 0.030* 0.006 0.010* 0.003 0.039* 0.010

β1
($/ton)
Dummy for 199.687* 23.648 26.414* 5.405 1.800 6.183
Cash β2
Incentive
(DCI)
2
Adjusted R 0.79 0.56 0.64
F 42.91* 15.08* 16.26*
N 23 23 18
Note: One star (*) indicate significant at the 1 percent level.

V.2 Impact on Farm Income

Based on the above-mentioned margins received by different players engaged in
production, processing and export of shrimps from Bangladesh, we have estimated net
income received by different players involved in this process. Our estimates show that
farmers received largest share of the net benefit received from export of shrimps. Net
income (profit) received by shrimp farmers have increased from $17.08 million in 1985-86
to $79.12 million in 2007-08. Cumulative earnings by shrimp farmers, during 1985-86 to
2007-08, as net income (profit) were $1076.44 million. During this period, cumulative profit
received by fry catchers and hatchery owners was $374.68 million (which gradually
increased from $5.94 million in 1985-86 to $27.54 million in 2007-08). Faria and Aratdars of
shrimp received $474.42 million (which gradually increased from $7.53 million in 1985-86 to
$34.87 million in 2007-08). Shrimp processing factories received $394.34 million (which
gradually increased from $6.26 million in 1985-86 to $28.98 million in 2007-08). Exporters
received $427.16 million (which gradually increased from $6.78 million in 1985-86 to $31.40
million in 2007-08). During the six years (2002-03 to 2007-08) of cash incentive scheme,
shrimp farmers received $433.49 million as net income (profit) from exported shrimp
compared to $322.59 million received in the previous six years (Table 12). In other words,

21
net income received by shrimp farmers in the cash incentive period was 34 percent higher
than that of the pre-cash incentive period.

Figure 8: Net Income Received by Farmers and Others Involved in Export of Shrimp by
Bangladesh: FY1985-86 to FY2007-08.
250
Fry Catcher Faria-Aratdar (Fry) Farm Profit

Faria-Aratdar (Shrimp) Processing Factory Exporter

200
(Unit in million USD)

150

100

50

0
1999-00

2000-01

2001-02

2007-08
1985-86

1986-87

1987-88

1988-89

1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

2002-03

2003-04

2004-05

2005-06

2006-07

Source: Authors’ estimation

Net income received by farmers’ from export of frozen fish by Bangladesh during FY1985-86
to FY2007-08 is reported in Figure 9 and Table 12. Cumulative earnings of fish farmers,
during 1985-86 to 2007-08, as net income (profit) were $135.76 million. Net income (profit)
received by fish farmers have increased from $2.67 million in 1985-86 to $15.81 million in
2007-08. During the six years (2002-03 to 2007-08) of cash incentive scheme, fish farmers
received $58.40 million as net income (profit) from exported fish compared to $38.43
million received in the previous six years (Table 12). In other words, net income received by
fish farmers in the cash incentive period was 52 percent higher than that of the pre-cash
incentive period.

22
Figure 9: Net Income Received by Farmers from Export of Frozen Fish by Bangladesh:
FY1985-86 to FY2007-08.
18.00

16.00

14.00

12.00
Income (million USD)

10.00

8.00

6.00

4.00

2.00

0.00 1999-00

2000-01

2001-02

2007-08
1985-86

1986-87

1987-88

1988-89

1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

2002-03

2003-04

2004-05

2005-06

2006-07
Source: Authors’ estimation.

Net income received by vegetable farmers from export of vegetables is reported in Figure
10 and Table 12. Cumulative earnings of vegetable farmers, during 1990-91 to 2007-08, as
net income (profit) were $34.36 million. Net income (profit) received by fish farmers have
increased from $0.40 million in 1990-91 to $5.52 million in 2007-08. During the six years
(2002-03 to 2007-08) of cash incentive scheme, vegetable farmers received $19.18 million
as net income (profit) from exported vegetables compared to $10.69 million received in the
previous six years (Table 12). In other words, net income received by vegetable farmers in
the cash incentive period was 79 percent higher than that of the pre-cash incentive period.

23
Figure 10: Net Income Received by Farmers from Export of Vegetable by Bangladesh:
FY1990-91 to FY2007-08.
6.00

5.00

4.00
Income (million USD)

3.00

2.00

1.00

0.00
FY1990-91

FY1991-92

FY1992-93

FY1993-94

FY1994-95

FY1995-96

FY1996-97

FY1997-98

FY1998-99

FY1999-00

FY2000-01

FY2001-02

FY2002-03

FY2003-04

FY2004-05

FY2005-06

FY2006-07

FY2007-08
Source: Authors’ estimation.

Table 12: Net Farm Income Received by Farmers from Export of Frozen Fish, Shrimp and
Vegetables by Bangladesh: 1985-86 to 2007-08.
(in million $)
Financial Year Frozen Shrimp Frozen fish Vegetables
1985-86 17.08 2.67 -
1986-87 21.15 2.53 -
1987-88 21.91 1.99 -
1988-89 22.53 1.54 -
1989-90 23.85 1.70 -
1990-91 23.97 2.54 0.40
1991-92 22.64 1.73 0.50
1992-93 29.25 2.14 0.74
1993-94 37.32 2.80 0.74
1994-95 49.30 9.82 0.79
1995-96 51.35 9.47 1.32
1996-97 52.77 9.06 2.27
1997-98 49.26 7.30 2.96
1998-99 45.83 7.01 1.61
1999-00 60.73 5.97 1.28
2000-01 66.22 3.85 1.17
2001-02 47.78 5.24 1.40
2002-03 56.30 6.00 1.21
2003-04 69.23 7.51 2.25
2004-05 70.44 9.14 3.95
2005-06 76.24 9.60 3.00
2006-07 82.16 10.34 3.25
2007-08 79.12 15.81 5.52
TOTAL 1076.43 135.76 34.36
Source: Authors’ estimation.

24
V.3 Impact on Labour Employment

Labour required in production and processing of shrimps, and for production of vegetables
are reported in Table 13. We have utilized this information for calculation of labour
employment in production of shrimp, fish and vegetables.

Table 13. Labour Requirement in production and Processing of Shrimp and Vegetables in
Bangladesh.
Commodity Activity Labour/ha Year Source
Shrimp Farming 28.2 2001 Alam (2002)
Processing 1.38* 2005 dTS (2006)
Fish Farming 78 (kapasia) 1991 Ahmed, Rab and Bimbao (1993)
32 (Sripur)
Potato Farming 226 2007 Deb and Bairagi (2009)
Brinjal Farming 60.2 Haque et al. (2007).
Okra Farming 65.1 Haque et al. (2007).
Other vegetables Farming 36.9 Haque et al. (2007).

Note: * kg/person

Labour employment in production and processing of shrimp is reported in Figure 11. During
the last 23 years (1985-86 to 2007-08), total employment of labour in production and
processing of shrimp was 93.506 million man-days (comprising 92.628 million man-days for
shrimp production and 0.878 million man-days for shrimp processing). Annual labour
employment for shrimp farming has gradually increased from 2.462 million man-days in
1985-86 to 6.144 million man-days in 2007-08. On the other hand, annual labour
employment for shrimp processing has gradually increased from 18.8 thousand man-days in
1985-86 to 68.8 thousand man-days in 2007-08. Out of the total labour employed in shrimp
production and processing, 55.832 million was engaged in production and processing of
exported shrimp which is about 60 percent of the total labour engaged in this sector.

During the six years (2002-03 to 2007-08) of cash incentive scheme, labour engaged in
production and processing of exported shrimp was 24.29 million man-days compared to
13.11 million man-days in the previous six years (Figure 11). In other words, labour engaged
in production and processing of exported shrimp in the cash incentive period was 85
percent higher than that of the pre-cash incentive period.

25
Figure 11: Labour Employment in Production and Processing of Shrimp.

7.00 85

6.00
75
Number of labour (in million mand-days)

5.00
65

Per cent of Total

4.00

55

3.00

45
2.00

35
1.00

0.00 25

1999-00

2000-01

2001-02

2007-08
1985-86

1986-87

1987-88

1988-89

1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

2002-03

2003-04

2004-05

2005-06

2006-07
Per cent of total Labour engaged in Shrimp farming and Processing Labour Engaged in Production and Processing of Exported Shrimp

Source: Authors’ estimate.

Labour employment in production of White fish (exported as frozen fish) is reported in Table
14. During the last 23 years (1985-86 to 2007-08), total employment of labour in production
of white fish was 141.526 million man-days. Annual labour employment in white fish
cultivation has gradually increased from 36.070 million man-days in 1985-86 to 169.062
million man-days in 2007-08. In case of production of exported white fish, total labour
employment was 28.167 million man-days which were about two percent of the total labour
engaged in white fish farming. During the six years (2002-03 to 2007-08) of cash incentive
scheme, labour engaged in production of exported white fish was 1.45 million man-days
compared to 0.67 million man-days in the previous six years. In other words, labour engaged
in production of white fish in the cash incentive period was 118 percent higher than that of
the pre-cash incentive period.

26
Table 14: Labour employment in production and Processing of white fish

Financial Number of Labour (‘000 Number (000 man-days) Percent of Labour Engaged
Year man-days) engaged in Labour Engaged in in Production of White
Production of White Fish Production of White Fish Fish for export
for export
1985-86 3607.0 68.3 1.89
1986-87 2908.9 55.1 1.89
1987-88 3013.1 57.1 1.90
1988-89 1744.9 33.0 1.89
1989-90 2504.8 47.4 1.89
1990-91 4099.5 77.6 1.89
1991-92 1872.2 35.5 1.90
1992-93 1944.1 36.8 1.89
1993-94 2246.7 42.5 1.89
1994-95 6662.5 126.2 1.89
1995-96 6346.2 120.2 1.89
1996-97 6293.7 119.2 1.89
1997-98 6352.7 120.3 1.89
1998-99 4597.7 87.1 1.89
1999-00 6818.6 129.1 1.89
2000-01 5726.5 108.4 1.89
2001-02 7091.8 102.1 1.44
2002-03 6359.9 74.8 1.18
2003-04 7354.2 94.5 1.28
2004-05 11332.9 236.0 2.08
2005-06 12530.7 287.5 2.29
2006-07 13211.5 299.0 2.26
2007-08 16906.2 459.0 2.71
TOTAL 141526 2816.7 1.99
Source: Authors’ estimate.

Labour employment in production of vegetables is reported in Table 15. During the last 18
years (1990-91 to 2007-08), total employment of labour in production of vegetables was
1298.28 million man-days (comprising 928.89 million man-days for potato production,
45.83 million man-days for Brinjal production, 6.99 million man-days for okra production,
and 316.54 million man-days for production of other vegetables). Annual labour
employment for vegetable production has gradually increased from 45.13 million man-days
in 1990-91 to 121.27 million man-days in 2007-08. On the other hand, annual labour
employment for potato production has gradually increased from 28.90 million man-days in
1990-91 to 90.64 million man-days in 2007-08. Out of the total labour employed in
vegetable production, 4.282 million man-days were engaged in production of exported
vegetables which is 0.33 percent of the total labour engaged in vegetable production.
During the six years (2002-03 to 2007-08) of cash incentive scheme, labour engaged in
production of exported vegetable was 1.86 million man-days compared to 1.73 million man-

27
 days in the previous six years (Table 15). In other words, labour engaged in production of
exported vegetables in the cash incentive period was 7.5 percent higher than that of the
pre-cash incentive period.

Table 15: Labour employment in Production of Major Vegetables.

(Unit in million man-days/ year)

Fiscal Year Potato Brinjal Okra Other TOTAL Production of Exported Vegetables
Vegetables VEGETABLES
Number % of Labour engaged in
Vegetable Production
FY1990-91 28.90 16.22 45.13 0.074 0.16
FY1991-92 28.63 16.22 44.85 0.087 0.19
FY1992-93 29.63 1.75 0.35 13.34 45.08 0.116 0.26
FY1993-94 29.72 1.74 0.36 13.74 45.57 0.092 0.20
FY1994-95 29.91 1.75 0.37 14.24 46.28 0.090 0.19
FY1995-96 30.27 1.77 0.39 14.19 46.62 0.222 0.48
FY1996-97 30.82 1.80 0.35 14.75 47.72 0.354 0.74
FY1997-98 55.33 1.82 0.35 15.07 72.58 0.608 0.84
FY1998-99 54.97 4.02 0.37 15.43 74.79 0.230 0.31
FY1999-00 56.25 3.92 0.39 16.05 76.60 0.176 0.23
FY2000-01 53.69 3.87 0.40 16.90 74.86 0.153 0.20
FY2001-02 55.43 3.79 0.43 17.21 76.86 0.215 0.28
FY2002-03 61.19 3.77 0.45 17.65 83.06 0.164 0.20
FY2003-04 73.72 3.62 0.47 19.12 96.92 0.278 0.29
FY2004-05 73.72 3.48 0.49 20.59 98.28 0.438 0.45
FY2005-06 68.05 3.05 0.57 23.76 95.43 0.276 0.29
FY2006-07 78.02 2.81 0.61 24.94 106.38 0.277 0.26
FY2007-08 90.64 2.87 0.64 27.12 121.27 0.432 0.36
TOTAL 928.89 45.83 6.99 316.54 1298.28 4.282 0.33
Note: Other Vegetables include Pumpkin, Cauliflower, Cabbage, Water Melon, Tomato, Radish, Beans, Carrot,
Indian Spinach, bitter gourd, Pumpkin, Pointed gourd, Bitter gourd, Arum, Ash gourd, Cucumber, Teasel gourd.

VI. IMPLICATIONS FOR POLICY

Analysis of this study revealed that cash incentive had positive contribution to the export of
frozen shrimp/prawn, frozen fish and vegetables. It had also contributed to the income of
shrimp farmers, fish farmers and vegetable farmers. Cash incentive had positive impact on
labour employment particularly for labour engaged in production and processing of
exported shrimp, and production of fish and vegetables. Therefore, the government should
continue the cash incentive programme with a view to increase export at the national level
and income and employment in the farm level.

28
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