Production Risk of Pangas Pangasius hypophthalmus Fish Farming in Bangladesh

Production is inherently risky in agricultural, aquaculture and fisheries sector where farmer faces several types of risk in the production process. Especially fish production is more volatile than other agricultural biological production, and production variability is often observed from farm to farm. Beside the biophysical factors such as temperature, diseases and oxygen concentration, differences in production practice and use of input among the producers may create different risk profiles among the framers. It is well known that different inputs has different affect the production risk, where some input may reduce the level of output risk, other may increase risk. Therefore, there is considerable scope for controlling the level of output risk through input quantities. Beside this, the labor quality is very much important for the degree of risk. High skilled labor, with educated and trained workers, as well as access to institutional factors such as extension service may cause the production variability to drop. Access to credit is also important for the production risk. Especial in developing countries, credit restriction makes it difficult to optimize the production process. Considerable amount of investment is needed for feed and farm management. Lack of money to buy commercialized inputs, such as supplementary feed, fingerlings and medicine, force especially small scale farms to settle with homemade alternatives, where the degree of risk is much higher. The large differences in the socioeconomic condition between small-scale and large framers are hence responsible for the input use variation in the fish production process. Larger farms are also often more specialized in terms of labor, and has the ability to train their workers.

This study investigates production risk of pangas farming in selected areas of Bangladesh. Pangas fish is a relatively new and fast growing fish species which has great potential for expansion and export earnings in Bangladesh. However, production or output variability is observed from farm to farm and location to location, and indicates that production risk may be a problem in pangas farming. This is especially a problem for small scale farmers that live on the margin, and are the reason that small-scale farmers traditional are found to be more risk averse averse. Research on production risk is therefore of great importance, and especially on small-scale farming system for developing countries.

The Just-Pope model is used to investigate the influence of input use on production and risk level among pangas farmers using cross sectional data collected from Mymensingh district in Bangladesh. Test result shows that significant production risk exists in pangas farming, and that the risk differs between small and large farms. Increased usage of fingerling increases the production risk in the studied area. Feed usage is found to have a risk-increasing effect on production for large farms, while it is opposite for small farm. This may be a result of credit restrictions small farms often suffer from, which makes them unavailable to buy the optimal amount of supplementary feed. Further, access to credit and training is found to be risk reducing in the case of small farm and medium farms. Therefore, to reduce production risk and hence increase the utility of small scale pangas farmers in Bangladesh, government should work to make credit more available also for small scale farmers, as well as arrange for adequate training programs.