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Aquaculture Economics & Management

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Economic and social dimensions of aquaculture

management
a
T. V. R. Pillay
a
15‐Lalehzar, 45/1 Palace Road, Bangalore, 560 001, India Fax:
Published online: 13 Nov 2008.

To cite this article: T. V. R. Pillay (1997) Economic and social dimensions of aquaculture management, Aquaculture
Economics & Management, 1:1-2, 3-11, DOI: 10.1080/13657309709380199

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 Economic and social dimensions of aquaculture
management
T. V. R. PILLAY
45/1 Palace Road, Bangalore, India

Abstract ranging from subsistence and integrated farming to

large-scale commercial farming or the development of
Aquaculture management patterns are greatly Influ- culture-based fisheries, continue to exist, albeit as links
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enced by the economic or social purpose of the project. in an evolutionary chain. Obviously the nature of
Though some types of farms may yield both economic farming determines the management practices, but the
and social benefits, they can generally be classified on sustainability of most activities is dependent on their
the basis of their major objective. Economic benefits, in economic and environmental consequences.
one form or the other, gets considered in the planning Developments have taken place in many areas,
stage of all farming activities; but it is necessary to without much consideration to these essential ele-
ensure social and environmental viability as well to ments of sustainability, and the consequences of these
achieve sustainability. Subsistence and family farm- are not very difficult to identify. Of these three ele-
ing, crop/animal integrated farming and farming for ments, it is usually the economic viability that gets
recreational purposes, are largely orientated to social some attention right from the beginning. But this sel-
benefits; whereas small-scale farming enterprises, dom goes beyond the estimation of return on invest-
cooperative and state farms, as well as vertically inte- ment, or the pay-back period of investments. The inter-
grated large-scale farms are run mainly for economic actions of economic viability with social equity and
gains. Stock enhancement and creation of culture- environmental integrity are seldom taken into account
based fisheries represent a mix of all the three elements in the over-all context of sustainable development. The
of sustainability, with a stronger base of environmen- neglect of these elements, or the sole concentration on
tal improvement. The complexity of management dif- one at the expense of the others, have often affected the
fers significantly between these types of enterprises. success of operations on a long-term basis.
The systems of production adopted, such as extensive, For a very long time there were doubts about the rel-
semi-intensive, intensive and super-intensive, as well ative economics of aquatic farming compared to har-
as farm location (land-based or open waters) bring vesting natural resources. Many believed that it will be
about their own special management problems, espe- unwise to spend money, effort and time in farming
cially in relation to ecological integrity. when there are seemingly unlimited resources in the
seas and inland waters, waiting to be harvested with
Keywords: aquaculture management, socio-economics. more efficient fishing methods. The present state of
world fisheries (FAO 1992) has proved the fallacy of
this perception. Besides the world-wide reduction of
Introduction stocks of valuable fish stocks, the relative economic
benefits and energy efficiency of aquaculture, have
The present state of aquaculture as well as its history been demonstrated by some important investigations
from ancient to modern times, show the diversity of (Perrot 1986; Chong 1992). In fact it has been shown
objectives of aquatic farming practices, and the variety that in shrimp farming at least, the investments are
often recovered from profits from less than two crops Aquaculture Economics
of procedures adopted to meet the goals. Practices & Management
obtained in a year (Csavas 1994).
Volume 1, Number 1
Correspondence DrT. V. R. Pillay, 15-Lalehzar, 45/1 Palace An attempt is made here to examine more closely the 1997
Road, Bangalore 560 001, India. Fax: (91-80) 2266248. major economic and social dimensions of different pp3-ll

© 19 9 7 Blackwell Science Ltd 3

 4 Economic and social dimensions of aquaculture management • T. V. R. Pillay

types of aquaculture, and their influence on manage- aspects of the programmes as possible, in most cases
ment on a global level. Lack of appropriate data make successful running of such farms came to depend on
quantitative comparisons impossible. But qualitative the inputs and technical assistance, and even super-
evaluations may prove of some value in planning vision, provided by the government or donor agency.
aquaculture enterprises according to clearly conceived Farmers did not recognize any major risk if the farms
objectives and devising appropriate management mea- were not a success.
sures for their sustainability. As is obvious, such farming was largely focused on
the social uplift of rural communities, and gave only
marginal consideration to the economics of the activi-
Farming objectives and management ties undertaken. As a result, their sustainability could
patterns not be ensured, except when the farming made a mea-
surable contribution to the income of the farmer and
Governments and development agencies have pro- his family. Successful aquaculture calls for higher per-
moted, and farmers have practised, various forms of sonal attention and specific levels of skills. Experience
aquaculture for different reasons. The main types and seems to show that under-employed or even unem-
levels of aquatic farming that have to be considered in ployed rural people seldom devote enough interest and
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this context are: attention to activities that do not provide adequate and
ready income. Their immediate needs are such that
(a) subsistence and family farms; they are persuaded to concentrate on tasks that give
(b) crop-animal integrated farms; them immediate cash returns even if they have to work
(c) recreational farms and aquaculture-based fisheries; as casual labourers.
(d) small-scale farm enterprises;
Albeit a few exceptional cases, aquaculture pro-
(e) cooperative and state farms;
grammes devoid of economic incentives have not
(f) vertically integrated farm enterprises.
become sustainable activities. Credit, subsidies and
While all these categories of farming can have some grants may not be the best means of motivating the
form of environmental impacts (either positive or neg- poorest of the poor to undertake activities that they do
ative), the first three are largely orientated to social not perceive as economically profitable to them. This has
benefits and the rest are predominantly for economic been demonstrated in some developed countries, where
gains. It has, however, to be recognized that the classi- employment generation and economic gains were given
fication is in no way exclusive, and as will be evident basic emphasis right from the beginning of aquaculture
from the discussions below, various degrees of mix of development projects in isolated areas (OECD 1989). In
objectives occur in actual practice. contrast, family farming that was organized and man-
aged on the lines of small-scale businesses succeeded in
Subsistence and family farms most social situations. In fact, a good percentage of the
Subsistence-level fish culture was probably the earliest present-day aquaculture production comes from such
form of aquatic farming practised in many countries of farms. The extent of individual family farms would, of
Asia and southern Europe. The main objective was to course, vary depending on the nature of operations, but
raise enough fish or shellfish for consumption of the a major determinant of success is the economic return
farmer and his family. Any excess production was that is needed to make it a viable activity for the particu-
shared among friends and neighbours. In some areas it lar family. The cost and standard of living, and other
was considered socially prestigious for a family to own opportunities for gainful employment in the region, will
a fish pond or a fish farm, where the owners and their play an important role in inducing families to go in for
guests could enjoy recreational fishing. aquaculture. Nevertheless, the economics of the opera-
tion serve as the main incentive for such farming, rather
In most developing countries and in certain under-
than any social benefits.
developed areas of industrial countries, subsistence
and family farms were promoted by governments and Though the management of such farms generally
donor agencies. Governments provided financial, devolves on the head of the family, it provides opportu-
technical and organizational support for the purpose nities for the entire family, especially the women, to be
Aquaculture Economics
& Management
of improving the nutritional status of rural popula- closely involved. The capital investment is likely to be
tions, or for opening new avenues of employment for low, and the farm may be constructed on family owned
Volume 1, Number 1
1997 them. Albeit efforts by extension agents and aid land or water area. Such enterprises are better placed
pp3-U workers to involve the beneficiaries in as many to utilize the support services provided by governments

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 T. V. R. Pillay • Economic and social dimensions of aquaculture management 5

or aid agencies, as the farm may be the only, or at least Recreational aquaculture
a major, source of family income, and therefore deserv- The social dimensions as opposed to economic benefits
ing their special attention. are obvious in respect of recreational aquaculture,
especially when undertaken by sport fishery associa-
Crop-animal integrated farms tions. Measurable economic benefits are obtained
Crop-animal integrated farming can be considered as a when recreational fishing facilities are developed by
progress of family farming, where traditional agricul- tourist agencies or individual entrepreneurs. In either
ture and/or animal husbandry combined with aqua- case, economic benefits show up in the over-all evalua-
culture are practised in such a way as to utilize the tion of tourist industries. Though the rearing of orna-
farm resources, including farm wastes to the maxi- mental fish is essentially a hobby with social, artistic
mum extent. By targeting the production of basic and educational implications, in some countries their
requirements of the family and the community, culture and trade are significant commercial enter-
extreme economy and self-reliance is exercised. The prises. Breeding of ornamental fish, and maintenance
costs of inputs like water, feed and manure, are greatly of homestead or ranch fish ponds for recreational fish-
reduced, and economic risks spread by the raising of ing are generally individually owned and operated.
several farm products. The incorporation of polycul- The management of recreational fish farming,
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ture of compatible species in aquaculture effects which often includes hatchery production of juveniles
further economizing of production costs and recycling and fingerlings, stocking and habitat improvement (of
of wastes within the composite farm, as well as in the streams or other water bodies), licensing and monitor-
aquaculture ponds. ing of fishing, and enforcing sport fishing regulations,
Besides being an economically efficient practice, are relatively more complex. It calls for suitable organi-
integrated farming has played a social role, when orga- zations that may sometimes be required to develop also
nized on a co-operative basis, as in the communal essential tourist amenities. This accounts for the
farms of China or the kibutzim of Israel. Several fami- involvement of sport fishermen's associations, who
lies live and work on an integrated farm, which obvi- have a direct interest in the sustainable management
ously has to be of a larger size in order to yield enough of recreational fishing. Anglers' Associations or Sport
income to sustain all of them. A larger work force Fisheries Clubs/Associations in many countries have
becomes available to the farm, but temporary workers taken leading roles in the establishment of recreational
may have to be hired sometimes for farm maintenance fisheries, and the introduction and protection of sport
or harvesting when the farm is too large. fish species.
When single families undertake integrated farming, Because of the social dimensions and tourist impor-
the management functions are carried out in a manner tance, such associations become eligible for govern-
similar to small-scale farming enterprises. Communal ment subventions. The main users of recreational fish-
or co-operative integrated farming require a more ing facilities belong to the upper middle classes of
organized management structure. But in both types, society, and therefore there may not be any financial
decisions have to be made whether aquaculture should impediments in operating them independently, but
be the major activity or a subsidiary one, on the basis of they would need government support by way of exclu-
available farm resources. This can be a complex prob- sive rights for the use of land and water areas, and the
lem, when farming objectives undergo changes. As for enforcement of fishing restrictions through appropri-
example, in the communal farms of China, the main ate legislation. In many areas, sport fishing bodies have
mandate used to be the production of an agreed quota not only become quite affluent, but have also acquired
of food products, and only by producing in excess of the significant political clout to influence water resource
quota could they get additional economic benefits by use policies.
selling the excess at higher prices. But with the liberal-
ization of the economy, the farm managers tend to con- Small-scale enterprises
centrate on activities that are the most remunerative. Small-scale farming enterprises in many respects
As mentioned earlier, larger integrated farms usu- resemble family farms, but are generally managed as
ally establish well-organized management structures, businesses with a keener eye on financial gains. Estab-
Aquaculture Economics
ensuring direct involvement of the farming commu- lished under small-scale industry framework, such & Management
nity according to their abilities. Equitable sharing of enterprises are able to obtain the support of financial Volume 1, Number 1
economic as well as social benefits among members is institutions more easily, but become more exposed to 1997
made possible through interaction and accountability. restrictions imposed by governments and financing pp3-ll

© 19 9 7 Blackwell Science Ltd

 6 Economic and social dimensions of aquaculture management • T. V. R. Pillay

agencies. Many governments actively support small- combining advanced farming systems with social
scale enterprises with a view to achieving social and objectives of total employment and acceptable living
economic development objectives, such as employ- standards to the farming communities. It became pos-
ment generation, arrest of migration from rural areas sible to bring under farming large areas of public lands,
to urban centres, export promotion or improvement of and use mechanized equipment as far as possible to
rural incomes. reduce manual labour. The equipment operations
Small-scale farms generally depend on outside were usually integrated vertically from seed and feed
sources for many of the required inputs, and may production to harvesting and marketing.
depend on established marketing channels for sale of The State provided most of the capital needed and
their produce. This enables them to concentrate on the organized necessary support services, but the farms
grow-out of marketable products within short periods were required to produce agreed quotas of farm prod-
of time. It is only when essential good quality inputs ucts, generally for national distribution, but sometimes
are not available at reasonable prices that they resort also for export. Though state farms in some countries
to input production on the farm itself. like China, managed to introduce incentives for group
Small-scale farming enterprises may also confine achievements, there was very little encouragement for
themselves to the production of seed-stock for sale for on- individual contributions. The over-all concept of state
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growing, when availability of land and water resources, farms was heavily orientated to social benefits to the
expertise and the level of profitability are favourable. In community as a whole. With the adoption of market
certain circumstances, it may prove to be more prof- economies, state farms in many socialist countries have
itable to produce and sell seed-stock only, especially broken up into small-scale profit-orientated enterprises.
when hatcheries can be operated almost throughout the Co-operative farms, owned and operated by members
year, and there is a shortage of quality seed-stock. of societies with a stake in their cost-effective running,
Small-scale, enterprises generally economize on could ideally benefit greatly from the economies of scale
man-power, but do offer opportunities for short-term of such farms and ensure equitable distribution of the
employment in farm construction and maintenance, benefits among their members. Diversification of activi-
as well as harvesting, packing and marketing. As indi- ties and vertical integration were made possible and
cated earlier, the management of such farms has to be economical by the large size of the operations. In devel-
on business lines, especially when they depend on oping countries, the State provided several incentives
bank financing or government-sponsored loans. As the and financial support to co-operatives. This, unfortu-
enterprise may be too small to afford the employment nately brought with it several bureaucratic procedures
of a professional management specialist, the functions and interference in the business part of fanning.
of technical and business management have to be com- In many democratic countries, co-operatives were
bined in order to achieve maximum cost-effectiveness. started with the intention of eliminating middle men in
That this combination of technical and business order to maximize benefits to farm workers. But co-
management expertise is not always attained is obvi- operatives found it difficult to enforce government pro-
ous from the spectacular differences in the perfor- cedures in place of the simpler conventional business
mance of the same type of farms in the same area, oper- practices of the middlemen, despite their exploitative
ated under similar conditions using the same nature. Largely because of this, co-operative aquacul-
technologies. Success often devolves on the manager ture like many other co-operative activities, has had a
who understands the farming technology well enough checkered history, even though there are some out-
to adapt it to the best advantage and manage the standing success stories as well. Most of the successful
resources, including know-how, land, water, labour, co-operatives had members who had reached educa-
capital and time to achieve the goals of the enterprise. tional and economic levels required to appreciate the
This clearly shows the need for including the principles benefits of joint efforts. The quality of leadership, espe-
and practices of business management in educational cially its ability to instill principles of co-operation
programs related to aquaculture. among the members have played a major role in the
effective running of co-operative societies and their
Cooperative and state farms farming activities.
Aquacvlture Economics
& Management The common features of co-operative and state farms
Volume 1, Number 1
are their larger size and community involvement in the Large-scale farm enterprises
1997 planning, operation and sharing of benefits. State Large-scale aquaculture owned and operated by indi-
pp3-U farms were a characteristic of socialist economies, vidual entrepreneurs, companies or corporations, are

© 1997BlackwellScience Ltd
 T. V.R.Pillay • Economic and social dimensions of aquaculture management 7

of relatively recent origin. To a certain extent this has with other users of such areas, and concerns of water
been impelled by expanding export opportunities for pollution and destruction of scenic beauty.
seafood, and inadequacies of catches from natural As a consequence of all this and the media and polit-
resources to meet market demands. Additionally, ical attention focused on possible negative impacts, a
stagnant industrial growth and economic recession public perception has been created that large-scale
made it necessary for private sector companies to aquatic farming should be rigorously controlled. In
diversify their activities. Aquaculture came out as one response to this many governments have imposed arbi-
of the few profitable growth industries that attracted trary regulations and antipollution measures, which
investors even during periods of economic recession. add to the capital and operational expenses of farms.
Many exporting countries that wanted to increase Though the highly profitable export-orientated farms
their foreign exchange earnings, or achieve balance of may not have any real problems in bearing the extra
trade, offered several incentives such as subsidies, expenditure involved, others may find it a major bur-
grants and duty-free or concessional imports required den, at least in the short term. The procedural delays in
for the industry, and encouraged tie-up with foreign obtaining appropriate clearances are bound to have
companies. Under such favourable conditions export- initial economic consequences for all types of enter-
orientated aquaculture for highly valued species like prises.
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shrimps and salmon attracted investors to support the If the probable adverse environmental impacts are
establishment of large-scale farming enterprises. identified at the time of site selection and farm design
Many companies that started as private concerns and construction, the outlays required for mitigating
have gone public and augmented their capital to them can be minimized. Though at later stages the
expand the operations. As the main object of such expenses may prove to be very high, suitable measures
enterprises is to get the best return on investment, are unavoidable for making the enterprise sustainable.
management patterns adopted are very similar to
From the management point of view, the more diffi-
manufacturing industries. Although some of these
cult problem can be the handling of social reactions,
investing companies are off-shoots of fishing, seafood
which range from 'not-in-my-backyard' posturing to
exporting, or feed manufacturing firms, with some
conflict of interest and loss of access to common prop-
acquaintance of farming, the majority are new
erty resources. Political antagonism may masquerade
entrants to aquaculture business. As a result of this
as devotion to preservation of natural resources. Obvi-
and lack of adequate appreciation of social and envi-
ously considerable tact and understanding are
ronmental dimensions of aquatic farming, several
required to counter such reactions.
management problems have arisen.
Many companies have sought to win over the sup-
The very fact that most such enterprises are owned port of local communities by providing work opportu-
by nonlocal companies or multinational corporations, nities to the people, and by financing local amenities
and are able to obtain very high levels of profits is and social facilities. Others have resorted to contract or
enough to create animosity among local residents. In satellite farming, where local farmers are assisted with
the case of pond farming, for example shrimp raising, credit, inputs and technical assistance to carry out
companies often buy low-yielding agricultural land farming in their own small farms or in leased out farms
from local communities by offering very attractive belonging to the company on condition that their pro-
prices. Though they sold the land willingly to take duce will be sold to the company at agreed rates. This
advantage of the high prices offered, they began to arrangement is expected to eliminate the perception
regret it when they saw that the companies were mak- that nonindigenous investors are exploiting local
ing high profits. This animosity was accentuated by resources without giving adequate benefits to natives.
some of the negative environmental impacts of poor Though the enterprise in its entirety remains large
siting, design and operation of farms, like the salina- enough for economy of size, and allows vertical inte-
tion of neighbouring agricultural lands or drinking gration of all activities from hatchery production of
water sources. seedlings to processing and marketing of harvests, the
Indiscrete destruction of common property wetland grow-out part is carried out on a small scale by individ-
areas such as mangrove swamps for pond farm con- uals or families.
Aquaculture Economics
struction, has also aroused considerable environmen- Large-scale farming, whether centrally managed or & Management
tal, as well as social concerns. Large cage farms con- on contract basis, requires a variety of skills and know- Volume 1, Number 1
structed in protected coastal areas and inland water how, besides over-all business management. In addi- 1997
bodies have also given rise to considerable conflicts tion to a group of technicians to run different units of VP3-U

© 1997Blackwell Science Ltd

 8 Economic and social dimensions of aquaculture management • T. V. R. Pillay

the farm and its business aspects, there is need to have the introduction of valuable species. This is generally
the services of people skilled in public relations to main- financed by governments, even though often under-
tain cordial relations with the local communities and taken through nongovernmental bodies, like fisher-
their leaders. Security of stocks and prevention of men co-operatives as in Japan. Intervention of bodies
poaching and willful damage to stocks are difficult to that have a direct stake in the conservation of fishery
manage in extensive farms. resources, facilitates the successful management of
In order to reduce the work force and standardize stock enhancement.
operations, mechanization is attempted to the extent Notwithstanding the conservational role, stock
feasible. But this leads to the additional task of main- enhancement and creation of new fishery resources
taining sophisticated farm equipment and life support failed to muster public support till the economic bene-
systems. fits of such procedures could be demonstrated. This
Another cost factor of large farms is risk insurance became possible only after major improvements could
required for financial security as well as bank financing. be effected in the original methods of seed-stock rear-
With the adoption of increasingly intensive production ing and release, as well as protection after stocking to
systems and expansion of farming areas, the risks of enable acceptable survival rates. This is exemplified by
losses due to diseases, accidents, poaching or natural the take-off of salmon stocking in north-west USA
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disasters increase rapidly. Major losses sustained by after the cost-effectiveness of the procedure was
aquaculture industries have retarded the growth of spe- proved beyond doubt. Another example of aquacul-
cialized insurance services in some areas. Though it is ture-based fisheries that is considered economically
preferable to have comprehensive insurance against all acceptable, is the stocking of Seto Inland Sea in Japan
losses, the premium levels demanded by insurance with hatchery reared fish and shrimps. The commer-
companies are prohibitively high. So farm managers cial application of the recent stock enhancement
are forced to be selective in seeking insurance coverage. experiments on the US west coast and Norway, awaits
Decisions are often made to cover only unpredictable the demonstration of their cost-effectiveness. The
losses such as losses due to diseases. Experience indi- point to be made is that even a conservational mea-
cates that many of the risks encountered in aquaculture sure of reviving valuable stocks is dependent on eco-
can be minimized by proper management. This natu- nomic viability for attaining public acceptance and
rally puts greater onus on farm managers. becoming sustainable.
It may not be quite justified to compare the eco-
nomics of large-scale farming enterprises with small-
scale or family farming. But an attractive return on Economic features of major farming
investment is common to all these types of farms. Large systems
farms are, however, able to further diversify to allied
activities like feed manufacture, production and sale of From the management patterns based on the main
aquaculture inputs, and general seafood export, etc. goals of farming discussed in the previous sections, it is
and add to their over-all turn-over. fairly clear that the economic performance of farms
depends very much on the systems and techniques of
Stock-enhancement and aquaculture-based fisheries production adopted. Aquaculture systems have been
Though essentially a resource management proce- loosely classified as 'extensive', 'semi-intensive', and
dure, stock enhancement and the creation of new fish- 'intensive', and sometimes also as 'super-intensive'.
ery resources have become important aquaculture Though there are no precise definitions of these sys-
activities in some countries. The periodic stocking of tems, they have been characterized as follows based on
small freshwater lakes and reservoirs to establish or general concepts (Pillay 1994).
increase fishery resources has a long history in some Extensive systems involve low capital investments
countries, particularly in Asia and Latin America. and operating costs, are labour-intensive, use low
Recreational aquaculture referred to earlier can in stocking densities and external inputs, depend mainly
some respects be considered as coming under this cate- on natural food and feed stuffs, employ low levels of
gory, but differs significantly in economic and social management, and are expected to provide only low
Aquaculture Economics perspectives. Except in the case of anadromous species,
& Management
levels of yield per unit area.
where property rights can be specifically protected dur- Intensive systems use dense stocking rates, frequent
Volume 1, Number 1
1997 ing their inland water migration phase, the purpose of water exchange, high rates of feeding with formulated
pp3-ll stock enhancement is to restore the declining stocks or feeds, exercise greater environmental control, mechanize

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 T. V. R. Pillay • Economic and social dimensions of aquaculture management 9

many of the farm operations, and target high Intensive and super-intensive systems
production levels. As indicated earlier, intensive and super-intensive sys-
Semi-intensive systems come in between these two, tems strive to obtain higher or maximum yields
combining their characteristics in varying degrees. through high stocking rates, intensive feeding with for-
Super-intensive systems involve much higher levels mulated feeds and sophisticated water management.
of sophistication of culture techniques, involving These systems have the inherent advantages of econ-
greater consumption of energy, less of land and water omy of space, ease of monitoring the growth and state
sources, often resorting to recycling of water, and aim- of health of stocks, mechanizing many of the farming
ing at maximum possible production from limited procedures and controlling water quality. On the other
areas, often on a 'factory level'. hand, high stock densities can create undue stress on
As these systems are conceptually stages in a contin- the animals and disturb the balance with the environ-
uum and in actual practice modified to suit farm condi- ment and pathogens in the aquatic milieu, leading to
tions, they are often categorized also as 'modified conditions suitable for the onset and spread of diseases,
extensive', 'modified semi-intensive', 'modified inten- which is a frequent occurrence in intensive systems. If
sive', etc. There is also a broad categorization of sys- adequate waste disposal methods are not adopted,
tems based on the nature and location of sites. These effluents from such production systems are likely to
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are land-based farms and open-water farms, with dis- contain heavy loads of raw or semi-decomposed wastes
tinctly different farm designs and operational proce- that may adversely affect the outside environment.
dures. They differ significantly in their economic effi- Constant or frequent water exchange results in
increased drainage of waste products from the farms.
ciencies and management patterns.
Against the inherent advantages of these systems
Extensive systems there is the need for higher financial investments and
As extensive systems of aquaculture yield only lower operational costs. There are also higher risks of disease
rates of production, the general perception is that they outbreaks and failure of life support systems that can
are the least economical of all the systems. Experience lead to financial ruin. It becomes necessary to make
seem to show that this need not be the case, when suitable arrangements for regular health inspection of
availability of space and labour is not a major con- farm stocks, which is an added operational expense.
straint. An example is the rearing of king size shrimps Though employment of unskilled labour can be
by certain farmers in ponds stocked at lower rates, and reduced as a result of mechanization, there is a concur-
fed on natural foods produced by pond fertilization rent need for more number of technicians and skilled
together with supplementary feeds. In lower stock den- labour. The overall result of these could be lower levels
sities, with a healthy feeding schedule, the shrimps of profitability and higher liability for environmental
grow to attractive sizes during the normal crop cycle. degradation.
Water exchange is governed by the requirements of The logical question raised is why such systems
fertilizer application. As water retention time in ponds should not be discouraged or even prohibited, under
is higher, much larger quantities of waste products are such circumstances. Intrinsically these systems econo-
mineralized for organic production in the ponds. Con- mize on the use of space and increase human control of
sequently, the quality of effluents is greatly improved production procedures, besides enhancing yields. In
and the possibility of environmental deterioration in areas where there is a scarcity of land and water
effluent-receiving waters greatly reduced. resources, there may not be any other alternative. Addi-
Though the overall yield per unit area of the pond tionally, many of the negative impacts are capable of
may be relatively less due to lower stocking rates, this being reduced or eliminated by appropriate manage-
may be more than compensated for by individual weight ment measures, albeit increased costs. Where enhanced
and the high prices obtained for large-sized shrimps. The outputs are required for meeting export obligations or
profits are further increased when the harvests are sold ensuring domestic food security, there is sufficient justifi-
in live or farm-fresh condition in specialty markets. cation for the adoption of intensive or super-intensive
Nonetheless, it is only small farming enterprises that systems. Nonetheless, success will depend on the level of
show interest in this type of production. Large export- management skills and the ability to adopt the most
appropriate procedures suited to local conditions. There Aquaculture Economics
orientated farms set higher production quota and mostly & Management
do not consider it worthwhile to adopt systems that is usually considerable latitude for decision-making on
Volume 1, Number 1
require greater care of stock, including the raising of nat- the extent of intensification that would give optimum 1997
ural food organisms, feeding and water management. results in specific farming conditions. pp3-ll

© 1997BlackwelI Science Ltd

 10 Economic and social dimensions of aquaculture management • T. V. R. Pillay

Semi-intensive systems anaerobic conditions and release of lethal gases. To

Semi-intensive systems of farming that come in avoid such problems, the present trend is to locate
between extensive and intensive systems, include a cages in off-shore waters. This obviously needs spe-
wide range of procedures and different levels of cially designed strong cages that can withstand stormy
input-output ratios. Based on experience gained, seas, and ancillary facilities for day-to-day operations.
many farmers have now come to prefer semi-intensive Obviously, the capital investment and operating costs
production systems, making major modifications to of these facilities are bound to be much higher, and
suit local conditions and requirements. Though yield therefore out of reach of small-scale operators.
rates may be less than in intensive systems, returns on As mentioned earlier, the short-term economics of
investment have often been found to be much more cage and pen farming have been spectacular, and
favourable and the risks relatively lower. attracted entrepreneurs of different backgrounds. In
The disastrous consequences of intensive shrimp industrial countries, mechanization went over-board
farming in many Asian countries have been the major with various types of engineering designs and fancy
contributory factor to the prevailing preference of products being sold in the markets. Many of them
entrepreneurs to semi-intensive or modified semi- appeared to be of marginal value for farming, even
intensive systems. Their economic viability has been though they helped to bring in much-needed engi-
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demonstrated, when appropriate measures are taken neering contribution to the aquaculture sector.
against uncontrollable disease outbreaks. Rapidly increasing cage farming industry in some
countries reached unsustainable levels of over-pro-
Land-based and open-water farming duction leading to major financial problems and even
The oldest form of aquaculture was land-based pond bankruptcies.
farms, and this continues to be the most dominant sys- As far as social benefits are concerned, cage farming
tem, contributing to about 54% of world aquaculture contributed substantially to the economic develop-
production, comprising mainly of fishes and crus- ment of backward areas, and settlement of remote
taceans. Most of the water-based systems like cage and coastal regions in countries like Norway (OECD 1989;
pen farming of fish, and also of molluscs and algae, Pillay 1994). In other areas, especially in developing
may depend on land-based facilities, as for the produc- countries, efforts have been made to employ excess
tion of seedlings, depuration and processing of har- small-scale fishermen in cage farming, with consider-
vests, etc. able success. For oyster and mussel fishermen, it was
The shortage of suitable sites on land and inherent relatively simple to move from the normal practice of
problems of water management have led to the utiliza- re-laying spat to raft or rack culture. It was economi-
tion of water-based facilities for on-growing. Sessile cally more profitable, as also necessary, to counter
organisms like molluscs and floating or rooted sea diminishing production rates.
weeds are more easily grown in inshore areas of the
sea, rather than in confined facilities. Improvement
and expansion of the traditional cage and pen farming Sustainable farming and ecological
systems to protected coastal embayments have made management
intensive rearing of high-valued species of fish very
profitable. It is coincidental that the growth of aquaculture as an
The most attractive returns on investment, espe- industry occurred during a period of growing aware-
cially during periods of recession in northern indus- ness of environmental consequences of development.
trial countries, induced several small and larger com- As a result, the sustainability of aquaculture practices
panies and family concerns to invest in farming of has come into increasing scrutiny for social equity,
salmonids, mainly for export. Financial returns were ecological integrity, and long-term economic viability.
exceptionally high and this led to rapid increases in The implications of different aquaculture systems have
production and consequent market competition. been discussed in the previous sections. As indicated
Adverse effects of this are history now, and the indus- economic viability is in most cases a determining fac-
try has started stabilizing. tor, and is therefore assessed as an integral part of ini-
Aquaculture Economics tial feasibility studies, even if the long-term economic
& Management The environmental costs of farming in semi-enclosed
bays and fjords or inland water areas became too performance may not be fully taken into account. The
Volume 1, Number 1
1997 excessive due to over-crowding and heavy accumula- social implications generally become evident from the
pp3-U tion of wastes on the sea bottom, giving rise to very early stages of farm development, but the ecologi-

© 1997Blackwell Science Ltd

 X. V.R.Pillay • Economic and social dimensions of aquaculture management 11

cal impacts may take a much longer time to unravel, sidered suitable for implementation, provided the moni-
and are often too late and too expensive to remedy. toring of impacts and correction of adverse impacts are
In a continuing pursuit of achieving increased pro- accepted as integral parts of project activity. This
duction and higher economic returns, farmers and approach is justified in aquaculture by the observation
entrepreneurs have resorted to intensive farming sys- that 'in most cases the negative effects have not been as
tems. The high stock densities and feeding rates result severe as scientists anticipated, the media reported or the
in enhanced waste production and stressful conditions public perceived' (Rosenthal 1994). Most of the adverse
in farms. These give rise to disease outbreaks and stock effects identified so far are indeed capable of being cor-
mortality, causing major economic losses. Excessive rected by the adoption of better farming procedures and
waste discharges from such farms into the receiving careful site selection. The most difficult aspect of ecologi-
waters may cause major ecological changes, when the cal management is the balancing of economic, social and
water flow is not adequate to disperse them over large environmental costs and benefits. Management decisions
areas and utilize them for optimum levels of organic involve considerable trade-offs and risk-taking, and con-
production. There is also considerable concern about stant evaluation of farm procedures is required to elimi-
the ecological effects of establishing aqua-farms in nate avoidable losses.
mangrove swamps and other wetlands, and the salina-
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tion of drinking water sources and agricultural land in

rural areas.
Because some of the adverse impacts are not con- References
fined to the originating farms only, and can spread to
Chong, K.C. (1992) Improving profitability of shrimp
others as well, and affect the general ecology of the
aquaculture. Shrimp '92. Proceedings of the 3rd Global
region, governments are obliged to intervene and reg-
Conference on the Shrimp Industry, Hong Kong (eds H. de
ulate development. This entails restrictive legislative
Saran & T. Singh).
measures that cause delays and additional costs in Csavas, I. (1994) Important factors in the success of
starting and operating farm projects. This appears shrimp farming. World Aquaculture, 25, 34—56.
unavoidable, but in compensation offers avoidance of FAO (1992) Review of the State of World Fisheries, Part
long-term losses. If entrepreneurs appreciate this, there 1. Marine Resources. FAO Fisheries Circular, 710,
will be much less opposition to sound regulations. Revision 8, Part 1.
It follows that regulations should be based on accurate OECD (1989) Aquaculture-Developing a New Industry.
predictions of adverse impacts, and proven effectiveness Organization for Economic Cooperation and
of recommended mitigatory measures. Impact assess- Development Press, Paris.
ment methods, particularly for new sectors like aquacul- Perrot, J. (1986) Comments on aquaculture. Fisheries
Development 2000 AD. Association of Indian Fishery
ture, are still not well established. There is very little rele-
Industries, Oxford & IBH, New Delhi.
vant data presently available for precise assessments, and
Pillay, T.V.R. (1994) Aquaculture Development - Progress
so it is generally agreed that flexible approaches should be
and Prospects. Fishing News Books, Blackwell Science,
followed in such cases. If initial evaluations based on Oxford.
existing local information and experience elsewhere Rosenthal, H. (1994) Aquaculture and the environment.
show prima facie acceptability, the project should be con- World Aquaculture, 25, 4-11.

Aquaculture Economics
& Management
Volume 1, Number 1
1997
pp3-ll

01997Blackwell Science Ltd