Bangladesh J. Agric. Econs. XXXIV, 1&2 (2011) 129-140 Research Note RICE VERSUS SHRIMP FARMING IN KHULNA DISTRICT OF BANGLADESH: INTERPRETATIONS OF FIELD-LEVEL DATA* Kanij Fatema1 Tofazzal H Miah2 ABSTRACT This study was designed to assess the relative profitability of rice and shrimp farming in two villages of Tildanga Union in Dacope Upazila of Khulna district in Bangladesh. In total, 120 farmers were randomly selected for the study. Descriptive statistics, activity budgets, Cobb- Douglas production function model were employed to achieve the objectives of the study. The study confirmed that both T. Aman rice and shrimp production were profitable. Shrimp production is more profitable than the rice production. Despite the fact, a large number of farmers prefer rice to shrimp due to environmental effects and welfare grounds of the common people. The results clearly indicated that farmers were producing in rational zone of a typical production function. Nevertheless, there is a scope to increase both Aman rice and shrimp by applying more doses of the concerned inputs under the present technology. It was concluded that all the farmers’ opinions regarding crop cultivation were not same in the study area. The present study, of course, assessed the profitability of growing transplanted Aman rice and shrimp in Polder 31 and has given some important clues to make right decisions regarding better options for more environment-friendly profitable crop farming for individual farmers in Polder 31. I. INTRODUCTION Bangladesh’s overall agricultural policy objective is to expand and diversify agricultural production and to maintain food security, especially with regard to sustaining near self- sufficiency in rice. Coastal areas in the Southern part of Bangladesh constitute a specific ecological zone having specific problems and possibilities of cyclones, tidal bores, salinity, etc (Hoque, 2001). During the last few years, increasing proportions of land in the coastal areas have been devoted to shrimp and crop cultivation. Shrimp farming has proved a highly profitable business in Bangladesh, providing substantially higher incomes for the farmers. Due to the high potential short-term economic benefits of shrimp farming and increased saline water intrusion in the field, many small and marginal farmers have been encouraged to switch from agriculture to aquaculture. There are apparent conflicts between subsistence agriculture * This paper is based on first author’s MS thesis done under the research project titled G3: Water Governance and Community based Management in Bangladesh of Ganges Basin Development Challenge (GBDC) Programme Water and Food. 1Lecturer in the Department of Agricultural Economics and Policy, Sylhet Agricultural University, Sylhet, Bangladesh. 2Professor, Department of Agricultural Economics, BAU, Mymensingh. 130 The Bangladesh Journal of Agricultural Economics and shrimp cultivation and conflicts over land rights and access to resources. According to the latest estimation made by BBS (Bangladesh Bureau of Statistics) 2010, per capita rice consumption is about 166 kg/year. Rice alone provides 76.0 percent of the calorie intake and 66.0 percent of total protein requirement and shares about 95.0 percent of the total cereal food supply (Alam, 2012). In 2009/10, cereal production of Bangladesh was 33.25 million tonnes and in 2010/11, this was 34.61 million tonnes which was 4.15 percent higher than previous years (BBS, 2010). In order to feed the increasing population, the present pace of foodgrain production needs to be sustained. Considering the situation emphasis should be given on the increase of production of T. Aman. Therefore priority should be given to bring more acreage under HYV (High Yielding Variety) of Aman cultivation rather than the cultivation of local varieties. Concurrently emphasis should be given on the other sectors such as fisheries sector. In the fisheries sector, shrimp plays a vital role in the economy. This sector has many potentialities to make the economy more viable by increasing the production and earning a lot of foreign exchange which is very essential for the country. One of the major exports earning industry of Bangladesh is shrimp. At present, Bangladesh is the seventh largest country of shrimp exporting to USA (United States of America) and Japan market. Considering these issues a number of studies have been made on Shrimp and T. Aman rice. Islam et al. (2002) conducted a study on socioeconomic and environmental impacts of alternative shrimp-crop farming in Bangladesh. The study was designed to analyze the comparative profitability of alternate shrimp-crop farming and to determine the socioeconomic and environmental impacts of shrimp farming in coastal areas of Bangladesh. In year-round shrimp farming per hectare production of shrimp was higher compared to the production of shrimp under alternate shrimp-crop farming. The study revealed that the existing unplanned shrimp culture has adversely affected the production of cereal crops and vegetables, trees and plantation crops, poultry and livestock which was a major concern of famer to make decision over their enterprise. Uddin (1995) conducted a study on the shrimp farming of Khulna and Satkhira districts. Per hectare cost of shrimp was Tk. 62,613.26 in Satkhira district while it was Tk. 41,815.69 in Khulna district. He also found that per hectare net income in Satkhira district was Tk. 78,374.60 and in Khulna district it was Tk. 32,447.49 only. This indicated that net income in Satkhira district was much (i.e., 2.41 times) higher than that of Khulna district. In other words, shrimp farming in Satkhira district was more profitable compared to Khulna district. The present study was conducted to assess the relative profitability of rice and shrimp farming in selected areas of Khulna district and also to identify the nature of conflicts associated with making decision on crop and/or shrimp farming in the polder area. Although various institutional and non-institutional mechanisms usually followed by the community to resolve these conflicts, but these are not yet clearly documented. This study was therefore designed for seeking answers to this basic problem of the farmers in the polder area. This paper is organized into five sections. Following this introduction, Section II highlights the methods of data collection and analytical techniques used for the study. Main results and discussion of the study are presented in Section III. Farmers’ decisions on T. Aman rice and shrimp farming in the polder area are discussed in Section IV. Finally, conclusion and recommendations of the study have been presented in the last section. Rice Versus Shrimp Farming in Khulna District 131 II. METHODOLOGY OF THE STUDY A set of tools and techniques were followed to meet the aims and objectives of the study. Based on the objectives of the study Tildanga Union of Dacope Upazila under Khulna district (Polder No. 31) had to select purposively for the study. In fact, two adjacent villages namely Kaminibashia and Botbunia under Tildanga union have purposively been selected for the research investigation. In total 120 farmers have been selected for research investigation in which 80 farmers were selected from Kaminibashia and 40 farmers were selected from Botbunia village. Mainly three analytical tools were chosen to achieve the ultimate goals of the study. These are: (i) Descriptive statistics; (ii) Activity budgets; and (iii) Cobb-Douglas production function model. In the present study, the activity budgets (Dillon and Hardaker, 1993) were used to assess the relative profitability of rice and shrimp farming. For T. Aman rice the following algebraic equation was used to prepare activity budgets: π 1 = PF1.QF1 + PS1.QS1 - ∑ (Pxi1Xi1) – TFC1 Where, Pxi1 = Per unit price of i-th inputs used for Aman π 1 = Profit of rice production (Tk/ha) rice production; ; Xi1 = Quantity of i-th inputs used for T Aman PF 1= Per unit price of rice (Tk/kg); rice/ha; QF1 = Quantity of rice (kg)/ha; i = (1,2,3,…,n); and Ps1 = Per unit price of straw (Tk/kg); TFC1 = Total fixed cost involved in producing Qs1 = Quantity of straw (kg/ha)/ha; per hectare rice. For Shrimp the following algebraic equation was used to prepare activity budgets: π 2 = PF2.QF2 - ∑ (Pxi2Xi2) – TFC2 Where, π 2 = Profit from shrimp production (Tk/ha) ; Xi2 = Quantity of i-th inputs used for PF 2= Per unit price of shrimp (Tk/kg); shrimp QF2 = Quantity of shrimp (kg)/ha; farming/ha; Pxi2 = Per unit price of i-th inputs used; i = (1,2,3,...,n); and TFC2 = Total fixed cost related to the production per hectare shrimp production. The specification of the Cobb-Douglas production function model for T. Aman rice was as follows: b1 b2 b3 b4 b5 b6 b7 Y = a X1 X2 X3 X4 X5 X6 X7 ui It can be written in log linear form as follows: Ln Y = ln a+b1 ln X1+b2 ln X2+b3 ln X3+b4 ln X4+b5 ln X5 + b6 ln X6+b7 ln X7+ Ui. 132 The Bangladesh Journal of Agricultural Economics Where, X5 = TSP cost (Tk/ha); Y = Return per hectare (Tk); X6 = MOP cost (Tk/ha); X1 = Seedling cost (Tk/ha); X7 = Insecticide cost (Tk/ha); X2 = Power tiller cost (Tk/ha); a = Constant or intercept term; X3 = Human labour cost (Tk/ha); b1, b2, . b7 = Coefficients to be estimated; X4 = Urea cost (Tk/ha); and Ui = Error term. The specification of the Cobb-Douglas production function model for shrimp was as follows: b1 b2 b3 b4 Y = a X1 X2 X3 X4 ui It can be written in log linear form as follows: Ln Y = ln a+b1 ln X1+b2 ln X2+b3 ln X3+b4 ln X4 + Ui. Where, Y = Return from shrimp (Tk/ha); X4 = Lime cost (Tk/ha); X1 = Post larva (PL) cost (Tk/ha); a = Constant or intercept term; X2 = Human labour cost (Tk/ha); b1, b2, b3, b4 = Coefficients to be estimated; and X3 = Feed cost (Tk/ha); Ui = Error term.