Cutback in cash incentive could crimp shrimp exports
Monira Munni | Saturday, 26 February 2011
Monira Munni
Overseas sales of shrimp-- third largest export earner of the country-may decline in the next fiscal due to reduction in government cash incentives for the sector, exporters say. The exporters say farmers are the prime beneficiary of the cash support as they get it directly and this encourages farmers to cultivate more shrimp. But the government's decision to cut the additional incentive might have negative impact in production and export volume in the next fiscal, they feared. In 2009-10 fiscal year, the government increased cash support to 12.5 per cent from 10.0 per cent for the exporters to overcome the effect of financial crisis. But the government withdrew 2.5 per cent additional financial assistance in the current fiscal. They said the country earned $384.27 million by shrimp exports during July-January period in 2010-11 fiscal up by $132.79 million than that of the same period of the last fiscal. "We can see the impact of the cash support in our export earning which accelerated the growth by 53 per cent during July-January period," Maksudur Rahman, vice president of Bangladesh Frozen Food Exporters Association (BFFEA), told the FE Thursday. The reduction in cash incentive for the exporters will seriously affect the sector and country will lose competitiveness in the global market, he said. He feared that production cost would increase compared with sale rates and thus the country will lose its competitiveness. If the exporters get the incentive, ultimately the farmers will be the beneficiary as exporters will help them to meet their production cost. Farmers will be discouraged and decrease the cultivation of shrimp if the government discontinues this cash support, Khan Habibur Rahman, senior executive director of Lockpur Group, said. "The government should continue the cash support at the previous year's rate of 12.5 per cent to maintain the present export growth," he added. The local production of shrimp is poorer than other exporting nations and this reduction in cash incentive will discourage the farmers, Maksudur Rahman said. He said the withdrawal of additional cash support will act as a serious blow to the sector when it is going ahead to raise export volume and production.
Overseas sales of shrimp-- third largest export earner of the country-may decline in the next fiscal due to reduction in government cash incentives for the sector, exporters say. The exporters say farmers are the prime beneficiary of the cash support as they get it directly and this encourages farmers to cultivate more shrimp. But the government's decision to cut the additional incentive might have negative impact in production and export volume in the next fiscal, they feared. In 2009-10 fiscal year, the government increased cash support to 12.5 per cent from 10.0 per cent for the exporters to overcome the effect of financial crisis. But the government withdrew 2.5 per cent additional financial assistance in the current fiscal. They said the country earned $384.27 million by shrimp exports during July-January period in 2010-11 fiscal up by $132.79 million than that of the same period of the last fiscal. "We can see the impact of the cash support in our export earning which accelerated the growth by 53 per cent during July-January period," Maksudur Rahman, vice president of Bangladesh Frozen Food Exporters Association (BFFEA), told the FE Thursday. The reduction in cash incentive for the exporters will seriously affect the sector and country will lose competitiveness in the global market, he said. He feared that production cost would increase compared with sale rates and thus the country will lose its competitiveness. If the exporters get the incentive, ultimately the farmers will be the beneficiary as exporters will help them to meet their production cost. Farmers will be discouraged and decrease the cultivation of shrimp if the government discontinues this cash support, Khan Habibur Rahman, senior executive director of Lockpur Group, said. "The government should continue the cash support at the previous year's rate of 12.5 per cent to maintain the present export growth," he added. The local production of shrimp is poorer than other exporting nations and this reduction in cash incentive will discourage the farmers, Maksudur Rahman said. He said the withdrawal of additional cash support will act as a serious blow to the sector when it is going ahead to raise export volume and production.