By Razin Iqbal Kabir1, Sudha Narayanan1, Nahian Bin Khaled2, and Shahidur Rashid1
1 International Food Policy Research Institute
2 Michigan State University
The onset of the Covid-19 pandemic and its accompanying lockdowns disrupted agri-food value chains across South Asia, affecting transport, labor, and input supplies. Despite this, as many have noted, South Asian agri-food value chains recovered quickly and were largely resilient. Yet there is limited understanding of the drivers that enabled such recovery. We studied two important but often overlooked sectors of Bangladesh’s economy—the fish and shrimp value chains—which are key for food security and forex earnings, respectively. In January and June 2021, we implemented two rounds of telephonic surveys of 1,751 fish and shrimp value chain actors—farmers, traders, hatcheries, feed mills, processors, and exporters—to map impacts and investigate six resilience aspects—business closures, resumptions, profits, incomes, and food security.
Impacts
Unlike studies documenting early impacts of Covid-19, our survey was conducted a year into the pandemic, letting us investigate business continuity after prolonged stress. As expected, while many firms initially withstood the financial shocks accompanying Covid-19 disruptions, fewer could hold out for several months of stress. We found a first set of closures in March-June 2020—right after the enforcement of government lockdowns—but a second, larger, spike in closures came almost a year into the pandemic. More shrimp farms closed in January and fish farms in March 2021—on the cusp of the second wave of Covid-19 in the region—than in the immediate aftermath of Covid-19. Importantly, “recent” closures more often reported Covid-19 as the main reason than older closures, suggesting a threshold beyond which the financial stress made firms unviable.
For those who remained open, we found widespread negative impacts on expected profits and household incomes, with the effects more pronounced among shrimp value chain actors than fish. Both fish and shrimp farmers reported greater food insecurity than other actors. Value chain actors facing export markets or heavily dependent on transport and hired workers were also more likely to be affected negatively.
Predictors of business continuity and resilience
Given the heterogeneity of experiences, we explored firm and farm resilience and its predictors. Literature on enterprise and household resilience suggest several correlates—the more that economic actors diversify and expand their scope of activities, the more resilient they are, since they can turn to focus on less risky activities; the larger the scale of operations and extent of vertical integration, the greater their ability to withstand external shocks. Belonging to clusters is also regarded as promoting resilience on account of cooperation among cluster members.
Our findings suggest that these correlations are not straightforward. First, we find that observable characteristics of respondents correlate differently with different proxies of resilience; and second, that there is significant heterogeneity across value chains and segments.
For fish farmers, clusters appear to negatively impact resilience, indicating greater competition than cooperation during the pandemic. Remittance income and fish-crop systems are, conversely, along predicted lines and correlated with resilience. However, product diversification (number of species farmed) is seemingly associated with lower profits and incomes, indicating tradeoffs in profitability. Fish traders and enterprises relying more on household family labor and part-time labor were likelier to be resilient, while having off-farm work and being involved in other downstream activities than farming also cushioned against closures and lowered incomes. Overall, while diversification might aid business continuity, there is an associated cost in terms of lower profitability.
For shrimp, combining fish business apparently predicts greater resilience and remaining in business, albeit at the cost of lowered profits. Neither the scale of operations nor clusters appear to have any systematic relationship with resilience. We found that vertical integration itself did not correlate with resilience, but conditioned on vertical integration, the more intensive the control over other segments of the value chain, the greater was the self-reported resilience.
These results indicate that factors influencing resilience vary across value chains, segments, and contexts, and defy simplistic generalizations.
Conclusions
Our research underscores resilience as multidimensional and cautions against relying on any single metric as the barometer of performance during a crisis. A high survival rate of business, for example, might come at the expense of profitability. Policies during a crisis should address multiple pain points concurrently and must be tailored to address specific vulnerabilities along the value chain.
Bangladesh’s shrimp sector is both celebrated as a private sector-led export success story and criticized for policy support to large exporters. Our findings suggest that even in sectors driven by private enterprise and dependent largely on social networks or informal sources of support, government assistance appears crucial in a crisis. At the same time, it warrants further scrutiny on the nature of government support to the fish and shrimp sectors.
Journal Citation:
Kabir, Razin Iqbal, Muhammad Nahian Bin Khaled, Sudha Narayanan, and Shahidur Rashid. 2023. “Shocks and the determinants of resilience: Fish and shrimp value chains in Bangladesh after Covid-19.” Applied Economic Perspectives and Policy 1-28. https://doi.org/10.1002/aepp.13356.
Link to the full text:
https://onlinelibrary.wiley.com/share/author/37K33IK82ZFIXM4K8WIT?target=10.1002/aepp.13356
AEPP link (abstract):