Comparing Asian shrimp farming: the domestic resource cost approach
1999
Ling, B.H. | Leung, P.S. | Shang, Y.C.
The technological advances of Asian shrimp farming systems have not only contributed to a rapid expansion of Asian shrimp culture, but have also created greater opportunities for foreign exchange earnings in the 1980s and 1990s. Current trends, however, indicate significantly increased competition in world shrimp markets with many Asian countries initiating or expanding shrimp culture. Oversupply of cultured shrimp products in the global market has already occurred in the early 1990s. Consequently, market prices of shrimp have dropped and profit margins have been squeezed by expand markets. The purpose of this study is to estimate the degree of comparative advantage of Asian cultured shrimp countries in producing and exporting shrimp to Japan, the US and the EU (European Union) in 1994. First, cost comparisons of Asian shrimp farming technologies using intensive, semi-intensive and extensive systems among Thailand, Indonesia, Philippines, Malaysia, Viet Nam, India, Bangladesh, Sri Lanka, China and Taiwan are discussed. Next is an analysis of comparative advantage using the domestic resource cost (DRC) method, taking into account opportunity costs of not only input factors, but also the foreign exchange rate and the price of shrimp in the foreign market. Results show that nearly all Asian shrimp producers have greater comparative advantage in exporting shrimp to Japan than to the US and the EU markets, largely because of the premium shrimp prices received in the Japanese market. Moreover, Thailand, Indonesia and Sri Lanka have stronger comparative advantage relative to the other Asian contries studied. On the other hand, with high input costs, Bangladesh has a comparative disadvantage in exporting shrimp to the EU and US markets.
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