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close this bookHandling, Processing and Marketing of Fish in Bangladesh - Part 1 (NRI)
close this folderSection 4: The shrimp industry
View the document4.1 Trade flows and intermediaries
View the document4.2 Marketing infrastructure
View the document4.3 Handling and processing
View the document4.4 Packaging
View the document4.5 Losses
View the document4.6 Quality control

4.5 Losses

It is almost impossible to estimate the financial losses to Bangladesh caused by questionable quality, because there is not a precise and measureable relationship between quality and price in international markets. An exporter who improves his quality will not immediately obtain higher prices. However he will gradually increase the confidence of his customers, reduce the risk of rejections and improve his longterm market opportunities. He may indeed be able to find new customers who would not previously handle his product.

Table 11: Prices of peeled and deveined shrimp IQF, ax-warehouse New York

US$ per lb

Count

Hong Kong

Origin

Mexico

16/20

7.50


9.45

26/30

6.50


8.25

Source: Infofish Trade News, 2 March 1987

The price that an individual shipper can obtain for good quality product is also constrained by the reputation of the country and of Asian suppliers in general. At present peeled shrimp from Asia sells at lower prices than Mexican shrimp of this type, as the example in Table 11 shows.

For a country or for an entire region to improve its relative price level may require a sustained effort over a long period of time to improve quality, in order to change buyers' perceptions of particular origins.

In spite of difficulties in appraising Bangladesh's losses there is plenty of evidence of the harm done by poor quality shipments. Bangladesh shrimp was 'blocklisted' in the United States in 1979, i.e. every shipment of shrimp from Bangladesh was automatically detained until the importer could prove that it met United States requirements. Saudi Arabia and Italy have stopped buying from Bangladesh, and United Kingdom buyers rejected six full containers of peeled shrimp during the first 7 months of 1987 (approximate value £300,000).

The method used to overcome United States objections has not been to improve handling and transportation but to wash the shrimp repeatedly. Shrimp is washed during processing at least three times and sometimes five times, with one wash under pressure, using 50 parts per million of chlorine (compared to a recommended maximum of 10 ppm). Although this reduces the bacteria load, it causes a weight loss of at least 2%, makes the product unnaturally white and is believed to adversely affect taste. If it is assumed that 2% of Bangladesh's shrimp exports are lost through this form of processing, the resulting quantitative loss for 1985/86 would be approximately 280 tonnes worth US$ 2 million.

Some indication of qualitative loss incurred can be gained by comparing prices for sea-caught shrimp, sold through Japanese joint-ventures, and other shrimp of the same species sold to Japan. The difference is about US$ I per kg according to an informed source, which if applied over 50% of Bangladesh's entire exports for 1985-86 (this excludes sea-caught shrimp and freshwater shimp) suggests that Bangladesh was then loosing about US$ 7 million. However, for reasons stated above and in view of the special trading channels enjoyed by the joint-venture companies, it is not expected that such gains from quality improvement would arise immediately, but would materialise gradually as a result of the improved reputation of Bangladesh shrimp against competitors.

Qualitative losses of freshwater shrimp are probably less important than for marine shrimp. Bangladesh already has a good reputation compared to other supplying countries and the product is destined to price-conscious, but less quality-conscious, markets.

The record in international markets indicates that Bangladesh is already experiencing heavy losses and runs the risk of further exclusions/blocklisting, etc., in major markets. The risk is greater if an oversupply develops in the 1990s resulting from the development of aquaculture around the world. Under conditions of oversupply, importing countries are likely to apply stricter quality standards. For these reasons Bangladesh urgently needs to introduce improved quality control measures (see next section).