Understanding the capability of Indonesian shrimp producers to participate in Iucrative export markets; using the integrated sustainable livelihoods approach (SLA) and global value chain (GVC) analyses
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Aquaculture is the fastest growing animal-based, food-producing sector. Over the past 20 years it has experienced an average annual growth of almost 10 per cent per year. Furthuremore, brackishwater aquaculture for shrimp has been rapidly expanding over the last few decades, particularly in Asia. Advances in aquaculture technology have enabled developing countries to substantially increase production; this has stimulated growth in the seafood trade globally, especially in the flow of commodities from developing to developed regions and countries such as Europe, the US and Japan. Moreover, there has been a rise in standards to control food safety such as eco-label certifications required by governments and buyers from the importing countries. Compliance with these requirements is imposed on developing country shrimp producers by the importing countries. In Indonesia, the shrimp aquaculture sector has also attracted transnational companies who have invested heavily in shrimp farming. This has resulted in the formation of three groups of shrimp producers based on their business scale. The three types of producers are: (1) household-scale, which are small, family-run businesses and dominate the sector; (2) industrial-scale, which are characterised by a business organisational structure; there are approximately 400 of these in Indonesia; and (3) transnational-scale, of which there is only one in Indonesia; it is foreign owned and operates across a number of countries. The scale of the production can potentially affect the ability to participate in lucrative export markets because of the different abilities to comply with the importing requirements. This might lead to the exclusion of Indonesian household-scale producers from the export markets. To understand the ability of household-scale producers to comply with the food safety and eco-labelling certification requirements, this study determined the capabilities of household-scale producers and then compared them with the capabilities of industrial- and transnational-scale shrimp producers. This study is important for the development of appropriate industry support programs and to address any potential inequalities that might lead to market exclusion. The study combined the sustainable livelihood approach (SLA) and the global value chain (GVC) to evaluate the capabilities of the three scales of shrimp producers; past studies have usually used one method or the other. The SLA approach enabled this study to evaluate the capabilities from the perspective of human, financial, social, natural and physical capitals in relation to the abilities to comply with export market requirements. The GVC approach allowed this study to evaluate capabilities from the perspective of how shrimp producers access their production inputs and markets. The combined method more effectively determined the effect of livelihood capitals on Indonesian shrimp global value chains. This study showed that capabilities between different scales of Indonesian shrimp producers were stratified based on the level of endowment of the livelihood capitals and the types of global value chain shrimp that they could access. Household-scale shrimp producers do not have sufficient capabilities, both from the perspective of livelihood capitals and the type of global value chain which can be accessed, to enable them to comply with the export market requirements. They have low competency of necessary human capital, a lack of social networks, limited access to formal banking and lack the uptake of technology that could support their ability to comply with food safety, eco-label certification and traceability. Household-scale shrimp producers also have very fragmented and lengthy value chains which increase the complexities around complying with the requirements. In contrast, the transnational-scale shrimp producer was the most capable to comply with the export market requirements. It had a high accumulation of the livelihood capitals and was able to establish very efficient vertically integrated supply chains which favoured its capability. The industrial-scale shrimp producers have levels of capability in between household-and transnational-scale shrimp producers. This shows that the business scale of shrimp producers determines capability to comply with the export market requirements. This leads to the ability to participate in lucrative markets. Accordingly, household-scale shrimp producers are at risk of being excluded from the lucrative markets. External interventions from government and non–government organisations are necessary to enhance the capabilities of household-scale shrimp producers. The interventions would need to have greater emphasis on developing human and social capitals. Parallel to such development interventions, it is also critical to develop governance related to seafood global trades which can protect and enhance household-scale shrimp producers’ participation in the most lucrative markets for a fairer globalised world.
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