Productivity improvement to sustain small-scale fish production in developing countries: The case of Bhutan

Would productivity improvement in small-scale aquaculture “kill two birds with one stone” by simultaneously reducing the tendency to exit production and increasing output? While resource limitations restrict smallholders' involvement in aquaculture, their exit from production is among the factors threatening the sustainability of the aquaculture industry in developing countries. Against this backdrop, the productivity of small-scale aquaculture producers and the ways in which productivity improvement influences their behavior remains insufficiently understood. Based on survey data of 202 fish farmers in Bhutan, this study examined how productivity improvement impacts likelihood of exiting small-scale fish production. Data envelopment analysis was used to compute a slacks-based measure of efficiency as an estimate of productivity. The effect of the resultant estimate of productivity on likelihood of exiting fish production was examined using regression analysis. Results showed that a 10-percentage point increase in productivity among small-scale fish farmers in Bhutan reduced the likelihood of them exiting fish production by 2 percentage points. It is likely that surplus output from productivity improvement and the resultant revenue in the lucrative domestic market motivate Bhutanese farmers to continue fish production. We also found that Bhutan's current aggregate output of farmed fish could be increased by 63% by enabling farmers to produce more efficiently using existing pond sizes and production technologies. Further, it became clear that while subsistence-oriented fish farmers in Bhutan are likely to transition to commercial production, the use of non-cash inputs may be a deterrent. Our findings suggest that productivity improvement has substantial potential to be employed as a policy instrument to reduce the likelihood of farmers exiting small-scale aquaculture and simultaneously increase the aggregate output of farmed fish.