Seafood export from Bangladesh
Tuesday, 14 October 2008
M. H. Bari
BANGLADESH is a densely populated country and has many problems like extreme poverty, high rate of illiteracy, extensive nepotism, corruption, political turmoil and poor governance, etc. We are also lagging behind in trade and commerce. The yawning gap between our exports and imports is not good for our economy. An increase in production and expansion of trade and commerce can be an effective means of generating resources locally.
Employment opportunity can be created in a densely populated country like ours through promoting export. RMG (readymade garments) industry is playing a major role in the export sector. About 74 per cent of our total exports are coming from RMG alone.
Currently Bangladesh's export trading depends on two products (75 per cent RMG and 6.0 per cent seafood). Such dependency is not desirable for any country. So, we need to produce new products with higher values, develop the designs and find new markets. But it is necessary to keep the existing market. Bangladesh Seafood sector is also facing various problems. Our seafood sector needs attention in this respect. But it is a fact that no pragmatic study has been carried out as yet to develop this sector, especially for marketing out seafood on a global scale.
Bangladesh's seafood (shrimp) industries are playing a significant role in the national economy. It is the second largest source of export earning. A large number of families are directly or indirectly involved with related industries. Bangladesh contributes about three per cent to the global production of shrimp.
There are approx 37,397 brackish water shrimp (bagda, scientific name-Penaeus monodon) farms in Bangladesh. Most of the farms are located in Khulna region with an average size of 4.50 hectares. Twenty five thousand tons of shrimp was produced in 2001. Shrimp production has been increased by about 25 per cent per annum in the last 15 years and it is generating above USD$500 million annually from brackish water shrimp and sweet water prawn (golda, scientific name- Macro brachium rosenbergii). It contributes roughly 5.0 per cent to national GDP and 6.0 per cent to our total export. Though RMG (ready made garment) constitutes about 74 per cent of our total exports, still it is not real earning, since RMG sector has to pay about over 60 per cent of its earning for import of raw materials. But in case of seafood, it is totally different. Here earning is 100 per cent, because it is coming from 100 per cent indigenous products.
There were only 15 seafood industries in 1973 and our export earning was $3.17 million whereas Bangladesh in fiscal year (FY) 2006-07 exported approximately 112.15 million pounds of shrimp worth US$515.32 million which is equivalent to Taka. 35.5878 billion. The importance of seafood (shrimp) industries cannot be ignored anymore.
As per record of BFFEA (Bangladesh Frozen Foods Exporters Association), about 145 seafood industries have been established until now. Of those, 90 are BFFEA members, 74 have government licence, 63 are European Union (EU) approved and 65 are the United States Food and Drug Administration (USFDA)-approved units. Out 65 USFDA approved industries, only 25 are running. And of the 90 BFFEA members, about 48 industries are in operation.
So, it is evident that seafood industries have been established without proper feasibility studies. The total production capacity of the existing seafood industries is about 250,000 MT, whereas the country is producing only 50,000 to 60,000MT of shrimp including those from brackish as well as sweet water. Due to scarcity of raw materials, 80 per cent of the production capacities of these industries remain unutilized. Undoubtedly, it is a major setback for the industry.
These industries are mostly run by the owners themselves, whether they are competent or not. There are no permanent professionals on the management staff to run these factories. These factories are run according to hiring and firing systems.
They do not have proper strategy to face challenges or utilising opportunities due to poor management visions. As a result, they are always facing risks and surviving sometimes with the help of financial support from the government.
There is a severe dearth of skilled and professional manpower. Each and every industry has demand for competent persons, but our fresh graduates from the universities in different fields do not like to join these industries and if someone joins, he or she also leaves it ultimately. Apathy of skilled manpower to continue their service in the service reflects the lack of social recognition of the shrimp industry job, its low wages and poor working conditions. But still the industry lacks any strategy for developing human resources and to retain them in the industry.
Our seafood industries are experiencing upheavals and every year some of those face closures, while some new industries come into operation. Industries are facing continuous loss but there is no research on it until now. Neither the association of the industry, nor the individual industries have any R&D (research & development) wing.
These industries do not own have any policy for marketing, promotion or research. They have established industries without proper feasibility studies. They are producing goods for marketing in the overseas destinations, but they have no marketing people who would explore the market or assess the market needs.
It is very important to consider the social and regulatory compliances if our seafood traders are interested in selling their products in Europe or the USA. Otherwise, very soon they will face problem because all the retailers and non-government organisations (NGOs) like Green Peace are strongly working on these items through TV, newspapers and different types of advertisement/and by other means.
Our foreign customers want to know the background of the shrimp we produce, that is, whether those have sustainable background. That in other words means where the shrimp does come from, the environment in which it is produced, the people behind it, treatment of the surroundings and environments, how safe it is and if the catching or beheading style is detrimental to the environment.
In fact, they want green shrimp. So, certificates such as ACC level, Global Gap, etc., will be needed. Retailers may enquire about the relevant codes of conduct.
Child labour: Importers and retailers in Europe and the USA will only buy from those companies that meet social and regulatory compliances and can provide the above certificates.
So this is extremely important for us if we have to sell our seafood products to overseas importers.
But our seafood industries are not aware of it. Recently, our seafood industries are facing heavy pressure from all quarters due to these factors.
USFDA restriction: USFDA put a restriction on Bangladesh-origin seafood in 1996 and it is in force till today. Bangladesh seafood (fresh/frozen/raw shrimp) always faces physical examination for salmonella, decomposition and filth at the US port of entry.
If goods are passed by the FDA, then only our importers can receive those. Otherwise we are to take back our cargo at our own cost. If the USFDA finds any hazardous substance in our seafood, it then just cancels the respective exporter's permission to export to the USA. Then exporter has to pass minimum five containers consecutively by the USFDA to get fresh permission from the FDA. And that is a costly and time-consuming procedure. Due to this, only a limited numbers of seafood industries have the USFDA green ticket for exporting their seafood to the USA.
The EU is always vigilant about Bangladesh. In 1997 they put embargo on us and after implementation of HACCP they lifted the ban gradually. According to EU RASSF(Rapid Alert System for Food and Feed), there were 34 notifications about Bangladeshi shrimp for unauthorized substances like Nitro furan and Chloramphenicol in 2004 and 2005 and most of those were for fresh water shrimp.
After that the EU demanded antibiotic tests for Bangladeshi shrimp and we were compelled to do the same from Singapore and Thailand. Then the government of Bangladesh upgraded its laboratory for antibiotic test and invited the EU team but they pressed for more sophisticated procedure for tests and according to their recommendation, The government of Bangladesh imported LCMS-MS (Liquid Chromatoghraphy-Mass Spectronomy/Mass Spectroscopy) machine and started antibiotic tests. The government's Quality Control Department has also taken various measures to control contamination by harmful bacteria. After adoption of such measures, there were no major cases detected in Bangladeshi shrimp for last several years.
Since June this year, the European Union made the following demands for tests:
The analytical tests must be carried out, in particular, with a view to detecting the presence of chloramphenicol, metabolites of nitrofurans, tetracycline, malachite green and crystal violet in conformity with Commission Regulation (EC) No 2377/90[1] and Commission Decision 2002/657/EC[2].
These tests are costly and an extra burden to our seafood exporters and we are obliged to do these for the sake of our export to the EU countries as 70 per cent of our total export market is occupied by the USA and EU.
Bangladesh's seafood industries are always under attack in our national as well as the international media. A report titled "The True Cost of Shrimp" by Solidarity Center, Washing D.C, USA this year in May (2008) depicted Bangladeshi seafood industries very nakedly.
But their report was totally motivated and fabricated. Consequently, the government of Bangladesh had to invite USA Solidarity Centre representative in Bangladesh to see the actual condition of the seafood industries here. They were satisfied after seeing the environment of our seafood industries.
An article by John Vidal published in the Guardian on April 23 2008 portrays the seafood sector in a negative light. This report was not correct. Thus such reports in the media always affect our seafood business in the world market.
It will be highly appreciated, if the government of Bangladesh sets up a "National Advisory Council" to oversee the seafood export business. Highly qualified and experienced persons in this trade may be made members of the advisory council. The council will review the total situation in the seafood business, its problems and prospects and will place recommendations to the government for overall development of seafood business in Bangladesh in order to face global competition.
(M.H. Bari MBA (Commonwealth), LL.B, PGDPM has been associated with seafood industries of Bangladesh for last 25 years and is currently working for Global Marketing of Seafood from Bangladesh)
BANGLADESH is a densely populated country and has many problems like extreme poverty, high rate of illiteracy, extensive nepotism, corruption, political turmoil and poor governance, etc. We are also lagging behind in trade and commerce. The yawning gap between our exports and imports is not good for our economy. An increase in production and expansion of trade and commerce can be an effective means of generating resources locally.
Employment opportunity can be created in a densely populated country like ours through promoting export. RMG (readymade garments) industry is playing a major role in the export sector. About 74 per cent of our total exports are coming from RMG alone.
Currently Bangladesh's export trading depends on two products (75 per cent RMG and 6.0 per cent seafood). Such dependency is not desirable for any country. So, we need to produce new products with higher values, develop the designs and find new markets. But it is necessary to keep the existing market. Bangladesh Seafood sector is also facing various problems. Our seafood sector needs attention in this respect. But it is a fact that no pragmatic study has been carried out as yet to develop this sector, especially for marketing out seafood on a global scale.
Bangladesh's seafood (shrimp) industries are playing a significant role in the national economy. It is the second largest source of export earning. A large number of families are directly or indirectly involved with related industries. Bangladesh contributes about three per cent to the global production of shrimp.
There are approx 37,397 brackish water shrimp (bagda, scientific name-Penaeus monodon) farms in Bangladesh. Most of the farms are located in Khulna region with an average size of 4.50 hectares. Twenty five thousand tons of shrimp was produced in 2001. Shrimp production has been increased by about 25 per cent per annum in the last 15 years and it is generating above USD$500 million annually from brackish water shrimp and sweet water prawn (golda, scientific name- Macro brachium rosenbergii). It contributes roughly 5.0 per cent to national GDP and 6.0 per cent to our total export. Though RMG (ready made garment) constitutes about 74 per cent of our total exports, still it is not real earning, since RMG sector has to pay about over 60 per cent of its earning for import of raw materials. But in case of seafood, it is totally different. Here earning is 100 per cent, because it is coming from 100 per cent indigenous products.
There were only 15 seafood industries in 1973 and our export earning was $3.17 million whereas Bangladesh in fiscal year (FY) 2006-07 exported approximately 112.15 million pounds of shrimp worth US$515.32 million which is equivalent to Taka. 35.5878 billion. The importance of seafood (shrimp) industries cannot be ignored anymore.
As per record of BFFEA (Bangladesh Frozen Foods Exporters Association), about 145 seafood industries have been established until now. Of those, 90 are BFFEA members, 74 have government licence, 63 are European Union (EU) approved and 65 are the United States Food and Drug Administration (USFDA)-approved units. Out 65 USFDA approved industries, only 25 are running. And of the 90 BFFEA members, about 48 industries are in operation.
So, it is evident that seafood industries have been established without proper feasibility studies. The total production capacity of the existing seafood industries is about 250,000 MT, whereas the country is producing only 50,000 to 60,000MT of shrimp including those from brackish as well as sweet water. Due to scarcity of raw materials, 80 per cent of the production capacities of these industries remain unutilized. Undoubtedly, it is a major setback for the industry.
These industries are mostly run by the owners themselves, whether they are competent or not. There are no permanent professionals on the management staff to run these factories. These factories are run according to hiring and firing systems.
They do not have proper strategy to face challenges or utilising opportunities due to poor management visions. As a result, they are always facing risks and surviving sometimes with the help of financial support from the government.
There is a severe dearth of skilled and professional manpower. Each and every industry has demand for competent persons, but our fresh graduates from the universities in different fields do not like to join these industries and if someone joins, he or she also leaves it ultimately. Apathy of skilled manpower to continue their service in the service reflects the lack of social recognition of the shrimp industry job, its low wages and poor working conditions. But still the industry lacks any strategy for developing human resources and to retain them in the industry.
Our seafood industries are experiencing upheavals and every year some of those face closures, while some new industries come into operation. Industries are facing continuous loss but there is no research on it until now. Neither the association of the industry, nor the individual industries have any R&D (research & development) wing.
These industries do not own have any policy for marketing, promotion or research. They have established industries without proper feasibility studies. They are producing goods for marketing in the overseas destinations, but they have no marketing people who would explore the market or assess the market needs.
It is very important to consider the social and regulatory compliances if our seafood traders are interested in selling their products in Europe or the USA. Otherwise, very soon they will face problem because all the retailers and non-government organisations (NGOs) like Green Peace are strongly working on these items through TV, newspapers and different types of advertisement/and by other means.
Our foreign customers want to know the background of the shrimp we produce, that is, whether those have sustainable background. That in other words means where the shrimp does come from, the environment in which it is produced, the people behind it, treatment of the surroundings and environments, how safe it is and if the catching or beheading style is detrimental to the environment.
In fact, they want green shrimp. So, certificates such as ACC level, Global Gap, etc., will be needed. Retailers may enquire about the relevant codes of conduct.
Child labour: Importers and retailers in Europe and the USA will only buy from those companies that meet social and regulatory compliances and can provide the above certificates.
So this is extremely important for us if we have to sell our seafood products to overseas importers.
But our seafood industries are not aware of it. Recently, our seafood industries are facing heavy pressure from all quarters due to these factors.
USFDA restriction: USFDA put a restriction on Bangladesh-origin seafood in 1996 and it is in force till today. Bangladesh seafood (fresh/frozen/raw shrimp) always faces physical examination for salmonella, decomposition and filth at the US port of entry.
If goods are passed by the FDA, then only our importers can receive those. Otherwise we are to take back our cargo at our own cost. If the USFDA finds any hazardous substance in our seafood, it then just cancels the respective exporter's permission to export to the USA. Then exporter has to pass minimum five containers consecutively by the USFDA to get fresh permission from the FDA. And that is a costly and time-consuming procedure. Due to this, only a limited numbers of seafood industries have the USFDA green ticket for exporting their seafood to the USA.
The EU is always vigilant about Bangladesh. In 1997 they put embargo on us and after implementation of HACCP they lifted the ban gradually. According to EU RASSF(Rapid Alert System for Food and Feed), there were 34 notifications about Bangladeshi shrimp for unauthorized substances like Nitro furan and Chloramphenicol in 2004 and 2005 and most of those were for fresh water shrimp.
After that the EU demanded antibiotic tests for Bangladeshi shrimp and we were compelled to do the same from Singapore and Thailand. Then the government of Bangladesh upgraded its laboratory for antibiotic test and invited the EU team but they pressed for more sophisticated procedure for tests and according to their recommendation, The government of Bangladesh imported LCMS-MS (Liquid Chromatoghraphy-Mass Spectronomy/Mass Spectroscopy) machine and started antibiotic tests. The government's Quality Control Department has also taken various measures to control contamination by harmful bacteria. After adoption of such measures, there were no major cases detected in Bangladeshi shrimp for last several years.
Since June this year, the European Union made the following demands for tests:
The analytical tests must be carried out, in particular, with a view to detecting the presence of chloramphenicol, metabolites of nitrofurans, tetracycline, malachite green and crystal violet in conformity with Commission Regulation (EC) No 2377/90[1] and Commission Decision 2002/657/EC[2].
These tests are costly and an extra burden to our seafood exporters and we are obliged to do these for the sake of our export to the EU countries as 70 per cent of our total export market is occupied by the USA and EU.
Bangladesh's seafood industries are always under attack in our national as well as the international media. A report titled "The True Cost of Shrimp" by Solidarity Center, Washing D.C, USA this year in May (2008) depicted Bangladeshi seafood industries very nakedly.
But their report was totally motivated and fabricated. Consequently, the government of Bangladesh had to invite USA Solidarity Centre representative in Bangladesh to see the actual condition of the seafood industries here. They were satisfied after seeing the environment of our seafood industries.
An article by John Vidal published in the Guardian on April 23 2008 portrays the seafood sector in a negative light. This report was not correct. Thus such reports in the media always affect our seafood business in the world market.
It will be highly appreciated, if the government of Bangladesh sets up a "National Advisory Council" to oversee the seafood export business. Highly qualified and experienced persons in this trade may be made members of the advisory council. The council will review the total situation in the seafood business, its problems and prospects and will place recommendations to the government for overall development of seafood business in Bangladesh in order to face global competition.
(M.H. Bari MBA (Commonwealth), LL.B, PGDPM has been associated with seafood industries of Bangladesh for last 25 years and is currently working for Global Marketing of Seafood from Bangladesh)