Jan 21

Written by: Godfrey Smith
Sunday, January 21, 2007 

The Politics of Shrimp

Who needs Prospero?
The controversy over the proposed Aquaculture Development Bill smacks of a laboratory-manufactured tempest in a teapot. A good understanding of the proposed piece of legislation should serve to debunk many of the misperceptions about the Bill. Perhaps the most unfortunate thing about the Bill is its timing. It comes after government depleted (not wasted) its fiscal largesse on the “Cruise Port Project”, the “Belcogen project” and the “Airport project” all of which have similarly generous legislation-backed fiscal provisions. The Bill is being promulgated at a time of fiscal austerity and in an atmosphere pervaded by calls for financial reform and populist rhetoric.

Ironically, the fledgling shrimp industry’s $300 million already invested in the ground is more than any of the other three projects. The shrimp farmers are prepared to invest another $100 million but feel – rightly - that the dynamics of the international shrimp market necessitates the Government of Belize throwing the full force of its weight behind the industry by enacting the Aquaculture Development Bill.

The Bill has been on and off the legal drafting table for about three years. It’s now finally got legs. The Cabinet approved the Bill for introduction into parliament whereupon, after the first reading, the Bill became mired in ex post facto opposition from within the same government that had sponsored it. It has been languishing for the past four months.

Hard Currency & Jobs
In 2003, shrimp farming was the largest foreign currency earner in the productive sector with over USD $45 Million in earnings in 2003, surpassing sugar, citrus and bananas. While admittedly it has not held onto this position, it certainly has the potential to do so. Belize’s shrimp farmers export to USA, Mexico and a few of the local processing plants are now certified for the European market. Exports to European countries such as Spain and Italy have already begun.

Belize’s shrimp industry directly employs close to 2,000 workers with payroll earnings of about Bz 20 million dollars. By way of comparison, the banana industry directly employs about 3,100 workers but has limited capacity for expansion. Increased employment in the shrimp industry is expected with industry expansion.

Competing and surviving in the world shrimp market means being able to hold one's own alongside nations like the China and Brazil that overtly subsidize their farmers. Notwithstanding these behemoths, Belize has managed to carve out for itself a niche in the global shrimp market. With additional investments in improved technology and enhanced farm management practices Belize’s shrimp farmers feel they can remain competitive.

Jumbo Misconceptions
Much of the outcry and criticism of the Bill focuses on the so-called self-policing provisions. In its newscast of November 2nd 2006, for example, Channel 7 stated that the Bill “essentially parcels out to private interests what are and have always been public sector responsibilities to create, essentially, a self-regulating industry.” The newscast went on to state that “The [Aquaculture] Authority will have broad ranging, far reaching and sweeping powers of regulation, licensing and self-policing powers that would traditionally rest with BAHA, the Department of the Environment and the Fisheries Department.”

A good many people, including a couple CEOs of ministries, have interpreted those provisions of the Bill as putting the shrimp industry beyond the jurisdiction of (and in conflict with) regulatory agencies such as BAHA, DOE and Coastal Zone. They misapprehend. In fact, the Bill specifically preserves the supervisory powers of these authorities.

Sadly, in the poisoned debate a simple but salient point has been missed. For an industry to self-police and self-regulate is actually a good thing. The Bar Association, for example, regulates itself. It has a Code of Ethics that governs the profession and sets out guidelines of appropriate conduct by attorneys. This is done to safeguard the standards of the profession and to protect the public, breach of which can be met by disciplinary action. But the fact of this self-regulation does not put attorneys beyond the reach of any other law or the courts for any civil or criminal misdeeds. The same is true of other associations.

To similar effect, the aquaculture industry, by formulating, disseminating and enforcing best practices to its members and recommending policies to the Minister, would be aiding the government in the regulation of the industry. This does not put anything the industry does beyond the reach of the laws of BAHA or DOE. Think about it, if associations, industries – if merchants – regulated themselves, the job of the government would be so much easier. In terms of its regulatory provisions, this is essentially what the Bill is trying to achieve. Precious time, energy and goodwill have been needlessly burnt up because of misconstruing this point.

Inarticulate premise, clumsy debate
Bigger still than the wrangle over whose turf the Bill should fall in has been the wrangle over tax exemptions. The debate has evolved to the where it seems accepted that the industry should have tax exemptions. Thence, it has been a dizzying to-ing and fro-ing over how much, for what period of time, with what conditionalities, what constitutes a waiver and such sundry matters. That may all be well and good. But it’s inefficient and clumsy. The clumsiness flows naturally from having an inarticulate premise.

The debate should have opened by first addressing the question of whether it considers the shrimp industry to be an industry of national priority. The answer to that question involves, for example, analyzing, in contrast to other industries, the extent to which the industry brings in hard currency, its job creation capability, its stability, data-based forecasts for its sustainable competitiveness and growth. If the answer to the question is “No”, that puts a different light on the Bill.

Rest of the World perspective
If however the answer is “yes”, then we might ask: how do other competing countries treat their shrimp industries? This month, the Portuguese government announced 45 million euros in subsidies for a Portuguese aquaculture plant. In Myanmar, the government plans to set up a full-fledged shrimp research laboratory. In Brunei, in addition to subsidies, the government will supply the shrimp farms with roads, electricity, seawater, freshwater and telephone service. Pakistan expects foreign direct investment of $2-3 billion from Kuwait in the next two to three years.

In short, most of the countries with which Belize’s shrimp production competes provide direct subsidies to their producers. Countries like Brazil, Ecuador, China, Thailand and India have been known to dump shrimp (exporting at less than production cost) on the US market. Combined, these countries represent almost 80% of the shrimp entering the US market, the primary destination for Belize’s shrimp production.

Sleeping shrimp is washed away
This is not to say that nothing in the Bill as presented to the House of Representatives should be changed. In fact there is a short list of relevant amendments to be made to the Bill. What is here advocated is avoiding being bogged down in the picayune aspects of the Bill. Let’s not miss the forest for the trees. The debate on the future of Belize’s shrimp industry must be squarely framed around the brutal dynamics of the shrimp market. If the debate in Belize remains inert, our competitors will slice forward. While the debate waxed academic if inarticulate, the waves of the global marketplace washed in the flotsam of the Nova Shrimp Farm. If the shrimp industry is considered an industry of national priority, the full raft of tax exemptions should be accorded to it.