August 10, 2018
Myanmar's interrupted aquaculture boom: Abundant resources in need of physical, legal and financial infrastructure
New laws, roads, ports and support industries must be established before the cultivation of feed dependent, value-added species can expand.
By ERIC J. BROOKS
An eFeedLink Hot Topic
Despite having 3,000km of warm tropical coastline and 3.3 million ha of inland waters, Myanmar aquaculture is both underdeveloped and paradoxical. On one hand, from 2000 through 2015, total aquaculture increased by 900% or ten times, growing at 24% annual rate in the years leading up to 2010. Total output rose from barely 100,000 tonnes in 2000 to a million tonnes by 2015, but still accounts for only 20% of seafood production.
On the other hand, after a robust start, Myanmar's farmed seafood output is growing far more slowly than it should and in the case of high-value species, not growing at all. Superficially, FAO statistics show that from 2000 through 2016 inclusive, aquaculture output grew at 15.6% annual rate with carp like species (14.5%), tilapia (24.5%), crabs (18.1%) and shrimp (7.0%) all expanding at respectable rates. -In fact, the years since 2010 have seen output expand only 3% annually, with far slacker growth in carp production (3.2%) making up for stagnation or falling output in lines such as shrimp (-1.7%) or tilapia (-4.5%).
Even so, like neighboring China or Japan, Myanmar has a centuries-old aquaculture sector with impressive seafood consumption levels. While estimates made by analysts, NGOs and government agencies peg Myanmar's per capita seafood consumption anywhere from 30kg to 56kg, what is certain is that approximately one million tonnes or over 19kg per capita comes from aquaculture. Myanmar's people eat a quantity of fish per capita comparable to the Chinese (35kg) and several times more than Americans.
Moreover, widespread poverty and consumption disparities imply that decades of pent-up, rapid consumption growth remain. With 35% of children under age 5 stunted from a lack of nutrition, the UN FAO states that "These [seafood consumption] figures show diverse consumption and nutritional patterns between regions and households." Similarly, an FAO survey found that per capita seafood consumption ranged from 67.7kg in the southern coastal Kayin state to under 15kg in northern states such as Chin (6.4kg), Kayah (9.3kg) or Shan (10kg), with most regions consuming between 10kg and 27kg.
Despite the impressive recent growth spurt, over 90% of commercial aquaculture output is provided by a handful of traditional species based on one of three regional business models: Traditional, inland freshwater pond-based fin fish growing, more recent coastal shrimp cultivation and traditional mud crab harvesting and fattening. Prior to the mid-1990s, carp-like species made up almost the entirety of Myanmar aquaculture, with mud crabs playing a more minor role.
That decade saw Myanmar aquaculture take off, as the collective production of carp-like species including rohu, mrigal and catla rose from under 10,000 tonnes in 1990 to over 90,000 tonnes by 2000. The late 1990s also saw the attempted introduction of high-value commercial species such as tilapia and pangasius, which are commonly grown in neighboring Southeast Asian countries.
Since 2000, pond-based cultivation of carp family species such as rohu, mrigal and catla have accounted for 75% to 80% of aquaculture production by volume. They are easy to raise but due to high per capita consumption levels and low value-added, they do not have as much potential for output expansion or high returns. At the same time, the cultivation of higher value-added species has not been entirely successful.
For example, the years since 2000 have seen attempts at raising tilapia, which offer better returns and have the potential to be a source of hard currency exports. As they are less hardy and more difficult to raise than carp, output has stagnated in the 30,000 to the 40,000-tonne range after pond densities increased. Alongside carp and tilapia, many other finfish are grown, but mostly in small, stagnant quantities below 10,000 tonnes. They include pangasius, pacu, snakehead, seabass, grouper, flounder and various catfish species.
Even though studies have found that large enterprises account for most aquaculture production, poor farm management and low levels of technological investment make it difficult to expand the production of non-traditional species, especially if they require commercial feed. Even for enterprises that can afford feed, government control over input prices and trade make Myanmar's aqua feed the most expensive in Southeast Asia.
Consequently, most freshwater fin fish cultivation occurs in polyculture rice paddies, a majority of whom feature poultry excrement as their main feed input. Chicken farms are commonly constructed on bamboo stilts. They are designed so that poultry excrement drops straight into the pond, where it provides fin fish food and nutrients.
Regardless of the species, 77% of freshwater, pond-based finfish are raised along the Irrawaddy river delta on the country's southern coast. According to a University of Michigan study sponsored by USAID (Development Paper #139, 'Aquaculture in Transition: Value Chain Transformation, fish and food security in Myanmar', December 2015), the largest proportion of aquaculture is done within 50km of the former capital, Yangon, where the Irrawaddy river delta's eastern tributaries reach the coast. Fish farming of comparable scale also occurs in the western Irrawaddy River delta tributaries, near the city of Pathein.
There remain a considerable number of mostly undeveloped freshwater pond based frontier regions further up along the Irrawaddy and its tributary rivers. These span Myanmar's arid interior and reach up into the Irrawaddy river's mountainous headlands in Shan state, situated near the country's northeastern borders with China, Laos and Thailand. For now, most new ponds are being opened up in the Bago state region, located north of Yangon, where the delta ends and main Irrawaddy river channel begins.
The FAO estimates that in a world with too much rice and not enough protein, the mere converting of 100,000 ha or 3% of Myanmar's rice-growing acreage to aquaculture could on its own double farmed seafood production. This however, is not feasible under current Myanmar law, which forbids its peasant farmers from converting their rice paddies to full time, year round finfish production. In a country that is too technically backward to successfully boost stocking densities, these restrictions held back the industry's continued expansion after 2010.
While rice paddy ponds are used to raise finfish, the trapping and fattening of mud crabs make up 7% of aquaculture output. Motivated by the prospect of exports to China and the US, mud crab production exploded from just under 5,000 tonnes in 2000 to 70,875 tonnes in 2016. However, as the crabs are trapped in the wild and not bred in captivity, it is believed that the current, harvesting based mud crab business model can only be sustained somewhere near current output levels.
Finally, coastal aquaculture is newer to Myanmar and occurs in the warm, Indian ocean waters off southern Irrawaddy state and the northwestern coast of Rakhine state, which borders on Bangladesh. Within these coastal regions, marine shrimp cultivation got off to a promising start but ran into trouble. From less than 28,000 tonnes in 2000, output nearly tripled to 77,500 tonnes by 2006, but has stagnated in the 67,000 to 83,000-tonne range ever since. Approximately two-thirds of production is the black tiger shrimp species, which while less efficient, has higher survival rates in unsanitary conditions.
-But these raw production numbers do not tell the full story of Myanmar shrimp's failings: According to the government's National Biodiversity Strategy and Action plan, Rakhine state nearly doubled shrimp farming acreage from 34,000 ha to 64,000 ha but its productivity fell from 200kg/ha to 20kg/ha -and under normal conditions, shrimp farming that depends on livestock waste (and without commercial feed) should produce 1,000kg/ha of shrimp. While they have been replaced by the opening of new shrimp cultivation areas, acreage fell by a third in Rakhine, as older mismanaged sites could no longer be used for shrimp cultivation. Hence, since the late 2000s, Myanmar shrimp farming has been a story of adding enough pond acreage to match annual drops in productivity, making for near flat output.
This is due to poor pond management techniques as well as the clearing of mangrove-rich coastal areas, which creates space for unsustainable shrimp farming. Going forward, the government is trying to rectify the problem, with plans to reforest over 100,000 ha of unusable, badly managed shrimp farms with mangrove trees.
This however, is the 'easy part'. An EU report notes that even with mangrove reforestation "This would need investments in pond management, hatcheries and landscaping to re-establish the tidal hydrology, natural and assisted mangrove regeneration." Similarly, a Michigan State University study done for USAID notes that "Prawn hatcheries in Myanmar are known to face difficulties in producing sufficient prawn post larvae to meet demand due to high PL mortality rates, severely limiting the extent of production at the present time."
With all these management and infrastructure issues dogging it, Myanmar shrimp production's growth rate fell from 10.2% a year in the decade 2000-10 to less than 2% since 2010 -and recovery obviously requires a change of mindset as much as it does monetary investment.
A similar story dogs tilapia production. Here too, poor pond maintenance allowed for rapid increases in output for the first few years. Thereafter, deteriorating pond conditions made tilapia output fall at by more than 4% annually in the years since 2010.
Moreover, combined with rising domestic seafood demand, falling output in export-oriented, value-added lines is impacting Myanmar aquaculture's terms of trade: According to U Han Tun, executive vice president of Myanmar Fishery Federation, seafood exports declined from U$650 million in 2010 to US$480 million in 2015. In particular, rohu exports fell from the 90,000 tonne level of recent years to 64,000 tonnes in 2017.
Totaling around 100,000 tonnes over 95% of exports consist of low-value, carp-like species. They are mostly shipped to countries with large expatriate South Asian populations. Kuwait (34%), Saudi Arabia (18%), Bangladesh (17%) and the United Arab Emirates (12%) take in over 80% of these shipments. Most the remainder is accounted for by mud crabs, which are exported to China and the United States. -Even so, the real frontier at this time is Myanmar's domestic market, where all studies have shown has a high level of pent-up demand for additional seafood.
With respect to all these challenges, the USAID study's findings explain the 2010 inflection point that ended Myanmar's aquaculture boom. As the attached graph shows, in the ten years since 2009, pond acreage grew far more slowly than in the preceding decade. Prior to that, both pond acreage and productivity were both growing by more than 8.5% annually.
The early productivity gains of standardizing production gave way to the limitations of feed-less, polyculture fish farming. The resulting 2009-14 fall in productivity growth to 2.5% coincided with the exhaustion of easy-to-exploit river delta farming areas -and expansion into countless interior farming fields was restricted by government law.
Lacking the technology to raise stocking densities, the production of shrimp and tilapia fell back and leveled out, while that of carp-like species grew far more slowly than before.
The good news is that Myanmar aquaculture output is dominated by an unusually high number of large-scale growers. They now their industry is in trouble but also understand it has great potential and what needs to be done. In an interview with the Myanmar Times, Myanmar Fishery Federation vice-president U Han Tun, stated "In order to surpass all these constraints and to meet new challenges, Myanmar's governmental institutions have to convert conventional farming practices with advanced methods, provide establishment of pellet feed factories to manufacture efficient aqua feeds, modernize hatcheries to produce sufficient aquaculture seeds [breedstock]."
But there are two obstacles to actualizing Tun's vision. First, it's not enough to say "Myanmar should move from cultivating carp to value-added species": It has already tried doing so but lacks the technological capital and farm management expertise to do so at this time.
To actualize this nation's rich water resources require both the creation of a supporting infrastructure spanning the entire supply chain from feed mills to hatcheries, modern pond water management equipment and the training of staff in modern pond management techniques. While it may be a cliché to say it,all this takes money. In Myanmar's case, a lack of access to credit affects large enterprises and not just small farmers.
Traditionally, when a promising nation's domestic companies lacked capital, its potential would attract wealthier, more technologically advanced foreign companies. Interestingly, Myanmar has attracted leading foreign integrators -but not to its aquaculture sector.
CP for example, has had Myanmar livestock and poultry raising facilities for over ten years. Despite having considerable experience managing aquaculture operations outside its native Thailand, it does not do so in Myanmar. Other integrators ranging from Europe's De Heus to Thai-based Betagro have also opened livestock rearing facilties in Myanmar but not aqua feed or aquaculture operations.
Much of this has to do with restrictions on the use of the most easily available source of pond acreage; rice paddies. Policymakers needed to allow farmers more flexibility in converting rice paddies to aquaculture use, including exclusive, feed-driven aquaculture use (as opposed to seasonal, less productive polyculture).
Another challenge is a lack of infrastructure. New road construction and port construction is required to open more northerly regions up the Irrawaddy river to aquaculture. That would make it easier for foreign integrators to establish aquaculture facilities, as they would not have to compete with established (but backward) domestic producers for scarce land in the developed Irrawaddy river delta.
Infrastructure development will also make it more economical for integrators to invest by lowering their feed costs. According to a World Bank Study, "Soybean and wheat have to be imported into Myanmar to produce the soybean cake and soybean meal that commercial producers need. According to the available data import costs are up to 40% higher than Vietnam due to inefficiencies at the port, and due to a lack of economies of scale."
Hence, until Myanmar modernizes both its physical, legal and financial infrastructure, its aquaculture sector will continue to plod along at around 3% annual growth rates dominated by polyculture driven cultivation of traditional domestic species. As soon as it becomes possible to easily convert rice paddies to aquaculture, obtain financing and import feed inputs at minimal cost, Southeast Asia's tried and tested aquaculture business model will quickly take root in this water blessed country.
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