Modelling and Measuring the Efficiency of the Brackishwater Shrimp Aquaculture Sector & Its Socio

340 Pages·2014·11.38 MB·English

Modelling and Measuring the Efficiency of the Brackishwater Shrimp
Aquaculture Sector & Its Socio-economic and Environmental Impacts
on Rural Producers in Nellore District, India
Pawan Ganapati Patil
Doctor of Philosophy London School of Economics
November 30, 1999 & Political Science
UMI Number: U615215
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Abstract
The lack of economic analysis on export-led shrimp farming in India has
become of major national importance as a result of the Indian Supreme Court’s
December 1996 decision to ban the shrimp farming sector. The ban was a direct
result of concerns over the impact of shrimp farming—in terms of its degradation of
the environment and marginalization of local people from coastal resources. In
addition to questions raised with respect to the nature and extent of environmental
and socio-economic externalities of this sector, recent parliamentary debate raised
equally important questions regarding the sustainability of shrimp farming under a
variety of production methods. However, assessment of the productive efficiency of
shrimp farms under increasingly intensive production methods is lacking.
Parametric and non-parametric approaches to measuring the productive
efficiency of shrimp farms are applied to farm-level data collected from the
Kandaleru region in India. First, technical efficiency is modelled, measured and
explained by estimating a restricted translog stochastic frontier production function
using maximum-likelihood methods. The variation of technical efficiency indices
across the shrimp farm sample is explained using farm specific characteristics and
managerial variables. Farm mechanisation, location and size are found to be
significant factors explaining total inefficiency. Second, scale effects are extracted
from the total efficiency index by applying Data Envelopment Analysis techniques.
An inverse relationship is found to exist between farm size and efficiency.
Next, social and environmental impacts facing rural inhabitants as a result of
the shrimp farming sector’s growth and development are assessed using primary
survey data collected from twenty-six villages located adjacent to shrimp farms. The
most frequently cited problem by local inhabitants is blocked access to public areas.
This is followed by problems of agricultural land salinity, well water salinity,
unemployment, fodder & fuelwood collection problems and health problems,
respectively.
The immediate policy direction is clear: larger farmers could reduce the
intensity of production to maximise efficiency and minimise input slacks to reduce
the risk of environmental degradation both within the aquatic pond environment and
to the natural ecosystem. Similarly, they could enable free but supervised access
through their farms to public areas such as the Bay of Bengal, Kandaleru creek or
public pasture lands.
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Modelling and Measuring the Efficiency of the Brackishwater Shrimp Aquaculture Sector &
Its Socio-economic and Environmental Impacts on Rural Producers in Nellore District, India
Table of Contents
Parti: Assessing Shrimp Farming’s Growth and Development...... 12
Chapter 1: An Overview of Asian Shrimp Farming & Its Impacts........... 15
Chapter 2: A Discussion of the Survey Data & Methodology.................... 52
Chapter 3: An Analysis of Shrimp Farming’s Growth & Development
Along the Kandaleru................................................................. 86
Chapter 4: Shrimp Farming & the Impact of Changing Land Use Patterns
on Agricultural Labour......................................................................... 113
Part II: Evaluating Indian Shrimp Farm Performance..................... 146
Chapter 5: Parametric Analysis (Stochastic Production Function
Approach)................................................................................. 151
Chapter 6: Non-Parametric Analysis (Data Envelopment Analysis)......... 200
Part III: Assessing the Social Impacts of Shrimp Farming................. 237
Chapter 7: An Empirical Investigation of the Socio-economic Impacts of
Kandaleru Shrimp Farming....................................................... 243
Chapter 8: Identifying the Determinants of Shrimp Farming’s Negative
Externalities............................................................................... 284
Part IV: Conclusion................................................................................. 316
References................................................................................. 320
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List of Tables
Table 2.0: Location of 1997 Creek-Based Shrimp Farms Along the Kandaleru..... 67
Table 2.1: Location of 1997 Sea-Based Shrimp Farms Along the Bay of Bengal.. 68
Table 2.2: Summary Characteristics of Surveyed Villages..................................... 71
Table 2.3: Reported Social & Environmental Impacts............................................ 74
Table 2B: Primary Inputs and Descriptive Farm Characteristics............................ 85
Table 3.0: 1997 Shrimp Farms by Size of Land Holdings....................................... 89
Table 3.1: 1997 Kandaleru Average Farms Size, Culture Area & Utilisation Rate. 90
Table 3.2: Ownership Status by Size of Land Holding............................................ 91
Table 3.3: Five Culture Techniques Defined by Stocking Density......................... 93
Table 3.4: Matrix of Major Production Input Correlation....................................... 94
Table 3.5: Partial Productivity Ratios..................................................................... 96
Table 3.6: Average Output by Farm Size (1993/4 and 1996/7 Seasons)................ 100
Table 3.7: Number of Kandaleru Shrimp Farms & Share of Total by Size............ 101
Table 3.8: Average Farm Size, Water Spread Area & Land Utilisation Rate......... 102
Table 3.9: Capacity of Ancillary Services in Nellore District................................. 105
Table 3.10: Average Seed & Feed Inputs per Crop by Size...................................... 106
Table 3.11: Growth Patterns of Ancillary Services................................................... 110
Table 3.12: Average Annual Growth Rates of Firms & Capacity Growth................ 111
Table 4.0: Private Land Purchase & Lease Prices (1989-1997).............................. 116
Table 4.1: Extent of Land Converted to Shrimp Farms........................................... 122
Table 4.2: Net Sown Area & Total Cultivators in Nellore...................................... 125
Table 4.3: Area Under Shrimp Farming in Nellore District’s Mandals................... 127
Table 4.4: Labour Use Intensity Index..................................................................... 128
Table 4.5: Duration of Shrimp Production Phases................................................... 133
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List o f Tables (continued)
Table 4.6: Gender Divisions in the Shrimp Production Cycle.............................. 135
Table 4.7: Average Daily Labour Requirements on Shrimp Farms...................... 136
Table 4.8: Average Total Labour Inputs Required per Production Phase............. 137
Table 4.9: Total Labour Requirements (person-days per water spread hectare)... 139
Table 4.10: Returns to Labour................................................................................. 140
Table 4.11: A Comparison of Total and Hired Labour Inputs for Seven Crops..... 143
Table 4A.1: Unskilled Workers Hired from Local Workforce by Culture Intensity 145
Table 4A.2: Unskilled Workers Hired from Local Workforce by Farm Size.......... 145
Table 5.0: Summary Statistics for 82 Kandaleru Shrimp Farms........................... 171
Table 5.1: MLE for Two Selected Stochastic Frontiers (Two-Stage Approach).. 174
Table 5.2: Tests of Hypothesis: Farm Effects (Two-Stage Approach)................. 176
Table 5.3: Likelihood Ratio Tests for Model Selection (Two-Stage Approach)... 176
Table 5.4: Distribution of Technical Efficiency Measures (Two-Stage
Approach)............................................................................................. 177
Table 5.5: Second Stage Regression Results Explaining Technical Efficiency.... 180
Table 5.6: MLE for Two Selected Stochastic Frontiers (Single-Stage
Approach)............................................................................................. 182
Table 5.7: Tests of Hypothesis: Farm Effects (Single-Stage Approach).............. 184
Table 5.8: Likelihood Ratio Tests for Model Selection (Single-Stage Approach) 184
Table 5.9: Chi-Square Test of the Inefficiency Effects (Single-Stage Approach) 185
Table 5.10: MLE for Three Selected Inefficiency Models (Single-Stage
Approach)............................................................................................. 187
Table 5.11: Likelihood Ratio Tests for Model Selection (Preferred Model)......... 188
Table 5.12: Distribution of Technical Efficiency Measures (Single-Stage
Approach)............................................................................................. 189
Table 5.13: Technical Efficiency by Size of Farm.................................................. 193
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List o f Tables (continued)
Table 5.14: Technical Efficiency & the Production Environment.......................... 194
Table 5A.1 Efficiency Indices................................................................................ 199
Table 6.0: Pure Technical, Scale and Total Efficiency Indices (Non-Parametric) 214
Table 6.1: Efficiency and Farm Size: Production Intensity and Feed Use............ 215
Table 6.2: Returns to Scale in the Shrimp Farming Sector................................... 217
Table 6.3: Input Slacks.......................................................................................... 221
Table 6.4: Explaining Economies of Scale............................................................ 224
Table 6.5: Pearson, Spearman, and Kendall Measures: Feed Use & Efficiency... 230
Tablr 6.6: Summary of Efficiency Measures: Parametric v DEA......................... 232
Table 6.7: Pearson, Spearman, and Kendall Measures: Parametric v DEA.......... 234
Table 7.0: Impacts Identified by Kandaleru Villages............................................ 247
Table 7.1: Social Impacts Ranked by Frequency.................................................. 248
Table 7.2: Summary Characteristics of Ranked Data............................................ 251
Table 7.3: Social Impacts Ranked by Mean Score................................................ 255
Table 7.4: Social Impact Index by Village Occupation......................................... 266
Table 7.5: Severity Class-Impact Intensity Conversion Table.............................. 266
Table 7.6: Impacts Ranked by Social Impact Index.............................................. 267
Table 7A.1: Results of Ranking Game for Gummaladabba Village........................ 272
Table 7B.1: Summary Statistics of Surveyed Creek-Based Villages...................... 273
Table 7B.2: Percent of Village Sample Claiming Impact as Problematic............... 273
Table 7C.1: Summary of Ranked Impact Data by Location................................... 274
Table 7E.1 Simulation Experiments on Theta........................................................ 278
Table 7E.2 Selected Methods to Rank Impacts...................................................... 280
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List o f Tables (continued)
Table 8.0: A Roster of Explanatory Variables..................................................... 293
Table 8A.1 Factors Explaining Well Water Salinity Problems............................. 305
Table 8A.2: Factors Explaining Agricultural Land Salinity Problems................... 306
Table 8A.3: Factors Explaining Blocked Access Problems.................................... 307
Table 8A.4: Factors Explaining Fodder & Fuelwood Collection Problems........... 308
Table 8A.5: Factors Explaining Unemployment Problems.................................... 309
Table 8A.6: Factors Explaining Health Problems................................................... 310
Table 8C.1: Primary Assets Owned by Fishing Communities in Andhra Pradesh. 314
Table 8D.1: Marginal Effects of Significant Ordered Probit Coefficients............. 315
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