Frontiers in Aquaculture OPEN ACCESS EDITED BY Neaz A. Hasan, Bangabandhu Sheikh Mujibur Rahman Science and Technology University, Bangladesh REVIEWED BY Mahmoud Eltholth, University of Edinburgh, United Kingdom Md. Mehedi Alam, Khulna Agricultural University, Khulna, Bangladesh *CORRESPONDENCE Hazrat Ali h.ali@cgiar.org RECEIVED 09 May 2023 ACCEPTED 27 June 2023 PUBLISHED 18 July 2023 CITATION Ali H, Belton B, Haque MM, Murshed-e-Jahan K and Ignowski L (2023) The structure, conduct, and performance of the hatchery segment of the aquaculture value chain in Bangladesh. Front. Aquac. 2:1219458. doi: 10.3389/faquc.2023.1219458 COPYRIGHT © 2023 Ali, Belton, Haque, Murshed-e-Jahan and Ignowski. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). 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TYPE Original Research PUBLISHED 18 July 2023 DOI 10.3389/faquc.2023.1219458 The structure, conduct, and performance of the hatchery segment of the aquaculture value chain in Bangladesh Hazrat Ali 1,2*, Ben Belton3,4, Mohammad Mahfujul Haque1, Khondker Murshed-e-Jahan2 and Liz Ignowski5 1Department of Aquaculture, Bangladesh Agricultural University, Mymensingh, Bangladesh, 2WorldFish, Bangladesh and South Asia Office, Dhaka, Bangladesh, 3Department of Agricultural, Food & Resource Economics, Michigan State University, East Lansing, MI, United States, 4International Food Policy Research Institute, Dhaka, Bangladesh, 5WorldFish, Phnom Penh, Cambodia Introduction: Seed production has experienced significant growth in Bangladesh over the last decade, driven by the increasing number of hatcheries. The hatchery segment plays a crucial role in the overall growth and development of aquaculture in the country. Understanding its structure, conduct and performance is essential for assessing its impact on the productivity and profitability of aquaculture farms. However, there is a limited number of methodologically rigorous studies focusing on the hatchery segment in Bangladesh. The study aimed to fill the gap in the exiting literature by conducting a methodologically analysis of the hatchery segment of aquaculture value chain in Bangladesh. Methods: This study was conducted in seven of the main aquaculture producing districts in southern Bangladesh. A comprehensive structured survey was conducted between May and August 2022 with 66 enterprises, including 42 carp+catfish, 16 tilapia, and 8 crustacean hatcheries. Results and discussion: The major findings and their implications are as follows. (1) The number of hatcheries increased by 15% over the past decade, with a 27% increase in fish hatcheries and a 47% decrease in crustacean hatcheries. (2) Carp and tiger shrimp were the most commonly produced fish and crustacean seeds, contributing 67% and 99% of volume and 66% and 97% of sales value, respectively. (3) The hatcheries were family-owned and operated enterprise, and generated a total 2,491 full time equivalent (FTE) jobs. (4) Hatcheries used 86% of their broodstock annually and replaced them regularly for improving quality and avoiding inbreeding. (5) 18% of hatcheries reported facing diseases and/or water quality problems, but mean economic loss was only 0.71% of seed sales value, which is a low level of loss and waste. (6) Average annual net profit margin was relatively modest, averaging 54% of the gross revenue, which suggests the existence of competitive seed production and marketing. The results showed that the hatchery segment in southern Bangladesh appears to be dynamic, well developed, efficient, and relatively competitive. KEYWORDS structure, conduct, performance, hatchery, Bangladesh frontiersin.org01 https://www.frontiersin.org/articles/10.3389/faquc.2023.1219458/full https://www.frontiersin.org/articles/10.3389/faquc.2023.1219458/full https://www.frontiersin.org/articles/10.3389/faquc.2023.1219458/full https://www.frontiersin.org/articles/10.3389/faquc.2023.1219458/full https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org http://crossmark.crossref.org/dialog/?doi=10.3389/faquc.2023.1219458&domain=pdf&date_stamp=2023-07-18 mailto:h.ali@cgiar.org https://doi.org/10.3389/faquc.2023.1219458 http://creativecommons.org/licenses/by/4.0/ http://creativecommons.org/licenses/by/4.0/ https://www.frontiersin.org/journals/aquaculture#editorial-board https://www.frontiersin.org/journals/aquaculture#editorial-board https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture Ali et al. 10.3389/faquc.2023.1219458 1 Introduction A growing body of recent research has focused on actors in the midstream of agrifood value chains, such as traders and input suppliers, and their role facilitating commercialization and improving aquaculture farm productivity (Bremer et al., 2016; Liverpool-Tasie et al., 2020; Haque et al., 2021; Barrett et al., 2022). While the literature on aquaculture value chains has grown (e.g., Bush et al., 2019), many segments of aquaculture value chains remain understudied, including the upstream segments supplying inputs such as seed to farms. Seed is the most critical input for aquaculture, and ensuring good quality seed is crucial for the intensification and improvement of aquaculture production globally, including Bangladesh (Haque, 2007; Haque et al., 2012; Belton et al., 2018; Anderson et al., 2019; Jamabo et al., 2019; Wang et al., 2023). The use of hatchery produced fish seed in aquaculture is increasing in Bangladesh (Hasan and Arthur, 2015; Jahan et al., 2015; Hernandez et al., 2018; Shikuku et al., 2021). Fish seed production increased from 276 MT in 2002 to 671 MT in 2021 (DoF, 2022). This increase in seed production facilitated the expansion of aquaculture output in the country, which increased from 786,604 MT to 2.64 million MT (DoF, 2022). The greater use of fish seed, along with higher levels of feed use, contributed to higher productivity, which rose from 2,580 kg/ha in 2002 to 5,129 kg/ha in 2021 (DoF, 2022). The use of fish seed is therefore associated with expansion of aquaculture production both at the extensive and intensive margins. The production of fish seeds primarily occurs in hatcheries, making the hatchery segment a crucial component of the aquaculture value chain that influences the overall growth and profitability of aquaculture farms (Hasan and Arthur, 2015; Karim et al., 2016). The hatchery segment of the aquaculture value chain can be analyzes with respect to: 1) structure (e.g., the number, size, geographical location, and asset ownership of hatcheries); 2) conduct (e.g., type of seed production and sales, services offered to clients, seed delivery to clients, and credit provision); and 3) performance (e.g., employment generation, profit margins, competitiveness, seed quality). These factors play an important role in understanding the dynamics and functioning of hatcheries and their impact on the productivity and profitability of aquaculture farms. However, there is a limited number of methodologically rigorous studies focusing on the hatchery segment in Bangladesh. Previous research has primarily focused on seed marketing channels, disease management, water quality, length-weight relationships, transportation, and technology diffusion (Bui et al., 2010; Sabbir et al., 2010; Belton, 2012; Bui et al., 2013; Islam et al., 2015; Uppanunchai et al., 2015; Hemal et al., 2017; Debnath et al., 2020). While these studies provide valuable insights into different aspects of hatchery segment, there has been relatively little attention given to seed production, trade, and distribution - though see Lewis et al. (1996) for an exception. The few studies that address seed production and distribution have often focused on management practices in specific locations or individual hatcheries and have not used statistically representative sampling techniques (e.g., Islam et al., 2017a; Islam et al., 2017b; Khanom et al., 2020; Biswas et al., Frontiers in Aquaculture 02 2021). This lack of rigorous research makes it difficult to generalize results. There are four main characterizations often referenced in the literature on the fish hatchery segment of the aquaculture value chain. First, fish seed production within hatcheries is often said to be inefficient, with poor broodstock management and spawning practices (Hasan and Arthur, 2015; Debnath et al., 2020; Biswas et al., 2021). This inefficiency may be due to lack of resources and low technical capacity among hatchery staff, leading to the collection of cultured fish species from the local market for breeding (Hasan and Arthur, 2015). Second, challenges such as lack of capital, poor water quality, and disease can interrupt seed production in hatcheries. Diseases are the most significant challenge due to the abrupt mortality of seed in hatcheries, which may lead to economic losses (Islam et al., 2015; Islam et al., 2017b; Debnath et al., 2020). Third, hatcheries often suffer from a shortage of well-qualified staff due to lack of institutional support to develop trained hatchery operators. This can result in low technical capacity among hatchery staff, with many learning breeding techniques on the job (Hasan and Arthur, 2015; Islam et al., 2015; Khanom et al., 2020). Fourth, the hatchery segment of the aquaculture value chain is known to provide substantial employment opportunities (Bhuiyan et al., 2011; Hamid and Haque, 2012; Siddika et al., 2016; Hernandez et al., 2018), but the scale of employment in seed production has rarely been evaluated. Moreover, hatcheries sometimes help their customers by providing services that reduce transaction costs such as packaging, transportation, or providing information (Islam et al., 2017a; Hernandez et al., 2018). Considering the above context, a comprehensive structured survey was conducted to address the gap in the literature on the hatchery segment of aquaculture value chain in Bangladesh. The remainder of the paper is organized as follows. First, we analyze the structure of the hatchery segment in southern Bangladesh – including the number and types of hatcheries, scale of operations, geographical location, socio-demographic characteristics, and asset ownership. Second, we analyze the hatchery conduct, with reference to the types and quantities of seeds produced, procurement and sales behavior, utilization of working capital and credit, and service provision to clients. Third, we analyze value chain performance in terms of employment generation, the impacts of COVID-19 on business operations, and business profitability. Fourth, we triangulate the data derived from hatcheries survey against farm-level data on seed procurement and use by farmers. 2 Data and methods 2.1 Study area and types of hatchery This study was conducted in seven of the main aquaculture producing districts in southern Bangladesh (Figure 1). The aquaculture production in this area comprises a variety of fish species (Indian major carps, Chinese carps, tilapia, catfish, brackish frontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 water fish species and others), as well as black tiger shrimp (Penaeus monodon) and giant freshwater prawn (Macrobrachium rosenbergii). Crustaceans are mainly produced in polyculture with fish, and in some cases integrated with other crops such as rice or vegetables (Jahan et al., 2015), reflecting the diversity of farming practices in the region. The aquaculture farming systems in this region are diverse, ranging from improved extensive shrimp culture, to semi-intensive farms, and a handful of intensive operations (Ali et al., 2022). During the pre-survey scoping, three distinct categories of fish hatcheries were identified based on common fish species produce and sell. They are as follows: 1 O (Hyp (Mylo Fron (1) Carp+catfish. These hatcheries primarily focus on producing carp species (rohu, Labeo rohita; catla, Catla; mrigel, Cirrhinus cirrhosus; bata, Labeo bata; silver carp, Hypophthalmichthys molitrix; common carp, Cyprinus carpio, other carp1) and catfish species (pangasius, Pangasianodon hypophthalmus; walking catfish, Clarias ther carp includes grass carp (Ctenopharyngodon idella), bighead carp ophthalmichthys nobilis), kalibaus (Labeo calbasu) and black carp pharyngodon piceus). tiers in Aquaculture 03 batrachus; stinging catfish, Heteropneustes fossilis; pabda catfish, Ompok pabda and long whiskers catfish, Mystus gulio). However, a few of them also produce some other fish like climbing perch (Anabas testudineus) and silver barb (Barbonymus gonionotus). Most of the seed are sold as fertilized spawn or hatchlings. Some hatcheries with nursery ponds also stock spawn to produce fries and/or fingerlings for sale to customers. Carp+catfish hatchery practices induced breeding by using pituitary gland (87%), synthetic hormone (11%) and human chorionic gonadotropin (2%) hormones. (2)Tilapia hatcheries, which produce only Nile tilapia (Oreochromis niloticus) seed and sell them as fry after nursing them for 18-22 days in hapa using 17a- methyltestosterone (17a-MT) hormone to produce mono-sex male tilapia. (3)Crustacean hatcheries, that produce black tiger shrimp or freshwater prawn post larvae (PL) for sale to farmers or seed traders. These hatcheries buy black tiger shrimp nauplii from hatcheries located in the Cox’s Bazar in southeastern Bangladesh, and nurse them from nauplii to PL stage. Freshwater prawn broodstock is collected from rivers through suppliers and the hatcheries produce nauplii themselves. FIGURE 1 Map of location of surveys hatcheries in Southern Bangladesh. frontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 2.2 Survey methods and data The data used in this paper were collected between May and August 2022 through a comprehensive survey of 66 enterprises, including 42 carp+catfish, 16 tilapia, and 8 crustacean hatcheries. This survey was part of a larger ‘stacked survey’ that covered multiple segments of the aquaculture value chain, including 721 aquaculture farms. The stacked survey approach allows for collection of more comprehensive and accurate data than conventional value chain research methods, which often rely on small, non-representative, or qualitative samples across a few value chain nodes (Reardon et al., 2012). Survey weights were created by dividing the total number of hatcheries of each type in surveyed districts by the number of sampled hatcheries in each hatchery group. These weights were then applied where applicable during analysis to adjust for over/under sampling. The 2022 stacked survey was a follow-up to a survey originally conducted in 2013. In the first survey, the initial selection of seven districts was done purposively based on their importance for aquaculture production. All upazilas (sub-districts) with significant aquaculture production were included in the initial sample frame and then, a random selection was made using proportional probability to size (PPS) technique, resulting in 13 upazilas being chosen for the final sample.Within each selected upazila, a process of trimming took place during the second stage. Mouzas with fewer than 20 aquaculture farms, as reported in the national agricultural census of 2008, were eliminated from the sample. Subsequently, two to three mouzas were randomly selected from each upazila to be included in the farm survey. In each selected mouza, a list of aquaculture farms was compiled during a pre-survey farm census and 20 aquaculture farms were randomly chosen from census list for interview, constituting the farm household sample. A census of fish hatcheries was conducted in all upazilas included in the farm household sample. Respondents were randomly selected for interview from the census list of fish hatcheries. In 2022, we replicated the sampling approach used in the 2013 survey. This involved conducting a new complete listing fish hatcheries in each area surveyed in 2013. All hatcheries surveyed in 2013 that were still operating in 2022 (43%) were resurveyed. Replacements for respondents from the 2013 survey whose businesses had closed or who were not available to participate in the resurvey were selected at random from the 2022 census list of hatcheries. Interviews were conducted face to face by trained enumerators using a structured questionnaire implemented using a tablet. The 66 hatcheries surveyed in 2022 represented 34% of the total number of hatcheries operated in the seven southern districts of Bangladesh, based on a complete list of hatcheries operating in southern Bangladesh collected by the Bangladesh Aquaculture and Nutrition Activity (BANA) project (Personal communication, Bappy Shahrier). In addition to the structured micro-scale survey of individual hatcheries, we conducted 12 key informant interviews (KIIs) to collect meso-scale information about changes in the number of hatcheries operated, types of fish species produced, and volumes sold over the last 10 years prior to the survey. The KIIs provided valuable insights into temporal trends in the hatchery business. Frontiers in Aquaculture 04 The final section of the paper presents data on seed procurement and use by farmers, drawn from a survey of 721 fish farmers. The selection methodology for the farm survey was similar to that described above. Farmers were categorized into four groups for analysis, based on the combination of species cultured, which were only fish (N=284), prawn + fish (N=165), shrimp + fish (=65) and prawn + shrimp + fish (N=211). 2.3 Data analysis Data were downloaded from the KoBo Collect platform in Excel format and exported to Stata 17.0 (StataCorp LLC, College Station, Texas 77845 USA). Descriptive results from the data analysis were used to characterize hatcheries in combination with qualitative information from KIIs. One-way analysis of variance (ANOVA) was used for statistical analysis of the surveyed data, followed by a Bonferroni Multiple Range Test to determine the significance of variations among the hatchery categories averages. A probability of less than or equal 5% (p ≤ 0.05) was considered as significant in all instances, except where stated otherwise in the text. 3 Results and discussion 3.1 Hatchery and business characteristics All survey respondents were men, with an average age of 51 years (Table 1). The mean level of formal education of 12 years was much higher than the national average in Bangladesh of 6 years (World Economics, 2022). Tilapia hatchery owners had been in business for significantly less time (11 years; p ≤ 0.05) compared to crustacean hatcheries (16 years) and carp+catfish (24 years) hatcheries, indicating that many new tilapia hatcheries have opened in the last decade prior to the survey. Saengnoree and Lebel (2003) reported that education and experience on fish farming technologies improved skill and knowledge to maintain intensive production and made the system sustainable. The majority of hatchery owners (81%) had attended short training courses on hatchery operation organized by Department of Fisheries or non-governmental organizations (NGOs). These training programs may have contributed to increasing their skills, knowledge, and social capital. Most hatchery owners (90%) specialized in hatchery business as their primary occupation (Table 1). However, most had multiple sources of household income. Almost all (99%) farmed fish and/or crustaceans, and a significant portion (66%) cultivated agricultural crops. This reflects the rural location of many hatcheries and may indicate that the hatchery owners were originally successful farmers prior to venturing hatchery enterprises. Moreover, 36% of carp +catfish and 9.4% of tilapia hatchery owners have worked in table fish trading. Additionally, 8% of carp+catfish owners also worked in fish feed trading as well. All hatchery owners in the study owned land, with an average size of 4.3 ha, which is significantly larger (13 times) than the average land size in southern Bangladesh (BBS, 2019), reflecting the high socio-economic status of the hatchery owners. frontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 Almost all hatcheries (96%) had obtained trade licenses from local government (Table 1). Trade license is a mandatory requirement to establish any type of enterprise in Bangladesh. Additionally, 83% of hatcheries obtained a license from Department of Fisheries (DoF), which is required to operate a hatchery in Bangladesh (Code of Conduct, 2015). Furthermore, 51% of crustacean hatcheries had acquired a license from the Department of Environment in accordance with the Code of Conduct 2015 for the shrimp aquaculture industry in Bangladesh Frontiers in Aquaculture 05 (Table 1). This is because these hatcheries produce PL of exportable crustaceans, which require different types of licenses to maintain traceability requirements. Officials frequently visited these hatcheries to ensure compliance, while implementation was less strict in other hatcheries. Hatchery operations in Bangladesh are mostly family-based on small-scale enterprises. Nearly all hatcheries (96%) operated their business individually. The average annual volume of seed sold by carp+catfish and tilapia hatcheries was 4,737 kg and 5,728 kg, TABLE 1 Demographic and basic information of fish hatchery business. Variables Hatchery category Carp+catfish (N=42) Tilapia (N=16) Crustacean (N=8) Overall (N=66) Average age (years) 52 ± 1.8 48 ± 2.8 56 ± 4.2 51 ± 1.4 Average schooling (years) 11 ± 0.61 12 ± 0.78 14 ± 0.75 12 ± 0.46 Experience of fish hatchery business (years) 24 ± 1.9a 11 ± 1.2b 16 ± 1.9c 21 ± 1.5 Received training on hatchery operation (%) 90 59 63 81 Department of Fisheries (DoF) 78 24 50 64 Non-government organization (NGO) 49 47 13 46 Member of seed trading association (%) 52 36 13 46 Primary occupations (%) Hatchery business 88 95 88 90 Fish farming 6 4 Government/NGO job 2 5 12 3 Other self-employed 4 3 Business ownership type (%) Single 96 92 87 94 Joint 4 8 13 6 Received certification/license (%) Local government 94 100 100 96 Department of Fisheries (DoF) 83 80 100 83 Department of Environment (DoE) 4.4 9.1 51 8.7 Other assets/businesses Household own land (%) 100 100 100 100 Household own land area (ha) 4.4 ± 0.56 4.4 ± 1.2 2.8 ± 0.35 4.3 ± 0.47 Household practiced crop farming (%) 74 48 50 66 Household practiced aquaculture (%) 100 100 87 99 Household aquaculture area (ha) 3.0 ± 0.35a 2.8 ± 0.34a 0.92 ± 0.13b 2.9 ± 0.26 Household worked in feed trading (%) 8.0 0 0 5.6 Household worked in fish trading (%) 36 9.4 0 28 Business scale & composition Average working capital (USD/year) 19,927 ± 1,724a 21,755 ± 2,479a 178,317 ± 63,004b 30,843 ± 7,333 Average volume of fish seed sold (kg/year) 4,737 ± 940 5,728 ± 898 4,646 ± 680 Average volume of crustacean seed sold (million/year) 117 ± 33 8 ± 4.5 Different subscripts within row indicate significant differences (p ≤ 0.05). frontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 respectively (Table 1). Crustacean hatcheries sold 117 million PL on average during the survey year. The average annual volume of working capital was significantly higher (p ≤ 0.05) in the crustacean hatcheries (USD 178,317) than carp+catfish (USD 19,927), and tilapia (USD 21,755) hatcheries, reflects the larger scale of the former. 3.2 Structure The number of hatcheries increased by 15% over the 10 years preceding the survey. The primary driver of this increase was the growth in fish hatcheries, while the number of crustacean hatcheries has decreased over the same period. The intensification of aquaculture, which refers to the increased productivity and scale of aquaculture operations, has created a higher demand for fish seed. This demand has been a key factor leading to the establishment of new fish hatcheries (Belton et al., 2018; Hernandez et al., 2018). The new fish hatcheries are located beyond the original core clusters in Jashore, where ideal iron-free water conditions and technical training were initially provided by a government hatchery in the 1970s (Lewis et al., 1996; Hernandez et al., 2018). The first hatchery in the sample was established in 1980, but more than half (55%) started between 2006 and 2017 (Figure 2). Growth over this period was fastest for tilapia hatcheries (62%) and slowest for carp+catfish hatcheries (13%), indicating the growth rate of tilapia production outstripping that of carp production. This observation is consistent with the growth of tilapia production in Bangladesh, which has increased four times over the past 10 years (DoF, 2022). The meso-scale survey revealed growth in the production of indigenous catfish species’ seed, with existing hatcheries expanded their facilities, and new hatcheries were established to meet the growing demand. This finding is consistent with a previous study (Shamsuzzaman et al., 2020), Frontiers in Aquaculture 06 which reported a tripling of seed production for local catfish species over the past decade. Although some new hatcheries were established recently, the total number of crustacean hatcheries in the survey areas has fallen by 47% over the past decade, indicating a downward trend in the establishment and operation of crustacean hatcheries. The decline in crustacean hatcheries is attributed to a drop both seed (PL) production and lower demand from farms. This finding is consistent with data from farm household surveys conducted in the same zone as well as with data from DoF (2022), which reported a 42% decrease in the number of crustacean hatcheries and a 16% decrease in PL production. 3.3 Assets All surveyed hatcheries operated from fixed premises (Table 2), the majority (86%) of which were owned rather than rented (14%). The average floor space for hatchery infrastructure was 1,984 m2. Crustacean hatcheries had more floor space (p ≤ 0.05) compared to tilapia and carp+catfish hatcheries, likely due to the need for sophisticated management practices that require different types of infrastructure equipment. Most hatcheries (82%) had well- constructed business premises to prevent theft and provide protection from the weather. The meso-scale interviews indicated that hatchery infrastructure has improved over the past decade, with some hatcheries converting their earthen floors to cement or concrete, which required significant capital investment. Additionally, the overall hatchery area has increased by 24%, from 2.1 ha in 2011 to 2.6 ha in 2021, reflecting larger operational scale to increase seed production. All tilapia and 96% of carp+catfish hatcheries had their own broodstock ponds to rear their own broodstock, with the share of land dedicated to ponds being 59% and 54% for tilapia and carp+catfish hatcheries, respectively. All tilapia, and 63% of carp+catfish hatcheries had frontiersin.org FIGURE 2 Cumulative share of carp+catfish, tilapia, and crustacean hatcheries established by year, 1980-2020. https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 one of more nursery ponds in which to produce fries and/ or fingerlings. The types of production equipment used in hatcheries included overhead tanks, reservoir tanks, larvae rearing tanks, hatching jars, and spawning hapas (Table 2). The average value of production equipment increased from USD 5,267 in 2013 to USD 7,676 in 2021, suggesting that hatcheries invested in new and more advanced equipment to improve their seed production. In addition to Frontiers in Aquaculture 07 production equipment, hatcheries owned equipment water pumps, furniture, scales, calculators, mobile phones, and oxygen cylinders (Table 3). The ownership of computer desktops/laptops increased from none in 2013 to 5% in 2021, likely due to adoption of technology that has made it easier to maintain accounts. The ownership of CCTV cameras has also increased, with 13% of crustacean hatcheries using them for business security. Similarly, the ownership of mobile phones has increased from 75% in 2013 to TABLE 2 List of assets used for fish hatchery operation. Variables Hatchery category Carp+catfish Tilapia Crustacean Overall Hatchery Operating hatchery with fixed premises (%) 100 100 100 100 Hatchery ownership (%) Owned 82 100 87 86 Rented 18 0 13 14 Hatchery infrastructure floor space (m2) 1,539 ± 188a 2,200 ± 454a 6,011 ± 1,442b 1,984 ± 245 Hatchery infrastructure physical condition (%) Building 51 23 49 45 Tin shaded building 30 56 38 37 Tin shaded room 18 21 13 18 Total hatchery operation area (ha), 2021 2.6 ± 0.39 2.9 ± 0.43 1.3 ± 0.49 2.6 ± 0.28 Total hatchery operation area (ha), 2016 2.5 ± 0.39 2.9 ± 0.43 1.1 ± 0.53 2.5 ± 0.29 Total hatchery operation area (ha), 2011 2.2 ± 0.40 2.0 ± 0.49 1.0 ± 0.55 2.1 ± 0.29 Pond Hatchery used broodstock pond (%) 96 100 24 92 Broodstock pond owned area (ha) 0.71 ± 0.15 0.68 ± 0.33 0.07 ± 0.05 0.66 ± 0.13 Broodstock pond rented area (ha) 0.60 ± 0.15 0.48 ± 0.15 0.00 ± 0.00 0.53 ± 0.11 Hatchery used nursery pond (%) 63 100 24 69 Nursery pond owned area (ha) 0.25 ± 0.06 0.29 ± 0.16 0.13 ± 0.11 0.25 ± 0.06 Nursery pond rented area (ha) 0.34 ± 0.10 0.64 ± 0.16 0.00 ± 0.00 0.38 ± 0.08 Production equipment (% of hatchery owning) Overhead tank 96 100 88 96 Reservoir tank 96 95 100 96 Spawning hapa 42 100 0 52 Hatching jar 43 58 0 43 Larvae rearing tank (LRT) 44 24 100 43 Broodstock maturation or spawning tank 11 5 24 10 Water treatment tank 6 0 87 10 Artemia hatching tank 0 0 100 7 Aerator 2 5 0 2 Mean value of production equipment in USD 7,519 ± 768 7,848 ± 979 8,779 ± 1,057 7,676 ± 589 fr Different subscripts within row indicate significant differences (p ≤ 0.05). ontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 91% in 2021, with the average value of mobile phones increased from USD 68 to USD 120 over this period, reflecting the shift from analog phones to more sophisticated smartphones. These phones are not only useful for maintaining connections between hatcheries and clients, but also for learning hatchery operation-related activities online. None of the hatcheries owned any large vehicles such as trucks. Vehicle ownership is limited primarily to motorbikes (5.9% of carp+catfish and 4.5% tilapia) for personal transportation and ‘engine vans’ (2% of carp+catfish) to transport inputs. The value of vehicles owned is relatively low, averaging USD 86 across hatchery categories (Table 3). Therefore, hatcheries relied heavily on rented vehicles, particularly small electric and motorized vehicles such as engine vans (65%) and autorickshaws (30%) for transporting inputs and seed. Most crustacean hatcheries (63%) rented 1-ton trucks, while 13% rented half-ton trucks for moving large loads for longer distances. The average annual expenditure per hatchery on transport increased from USD 135 in 2013 to USD 1140 in 2021 (Table 3). The Frontiers in Aquaculture 08 low level of vehicle ownership and consequent dependence on rented transport services (i.e., hired vehicle plus driver), reflects the wider availability of third-party logistics firms (transport rental providers) in the study area, highlighting the crucial role that these play in enabling the movement of hatchery inputs and outputs between buyers and sellers. 3.4 Conduct 3.4.1 Seasonality Fish hatcheries have a seasonal operation with peak and lean periods for seed production. The peak season runs from March to June, corresponding to the primary period for stocking grow-out farms. In contrast, the lean season for hatchery activities is during January-February and July-August. The spawn produced in the later months is mainly stocked in nursery ponds to produce over- wintered fingerlings, which are used to stock grow-out ponds early TABLE 3 Value and ownership of equipment and vehicle, and used by hatcheries. Variables Hatchery category Carp+catfish Tilapia Crustacean Overall Equipment (% of hatchery owning) Water pump (electric and diesel) 100 100 100 100 Weighing scales 98 100 100 99 Furniture 96 100 100 97 Mobile phone 87 100 100 91 Calculator 70 83 100 75 Oxygen cylinder 53 70 50 57 Generator 46 69 100 54 Computer desktop 2 9 26 5 CCTV camera 0 0 13 1 Mean value of equipment in USD 2,831 ± 343a 6,909 ± 2,162a 21,696 ± 6,511b 4,997 ± 973 % of respondents owning vehicles Motorbike 5.9 4.5 0.0 5.2 Engine van 2.0 0.0 0.0 1.4 Mean value of owned vehicles (USD), conditional 1,339 ± 263 1,074 ± 431 0.00 ± 0.00 1,298 ± 215 Mean value of owned vehicles (USD), unconditional 106 ± 60 49 ± 58 0.00 ± 0.00 86 ± 42 % of respondents renting vehicles Engine Van 70 62 24 65 Autorickshaw 30 34 13 30 Half-ton pick-up 0 9.1 63 6.2 1 ton truck 0 0 13 0.9 Mean annual outlay on vehicle rentals (USD), conditional 405 ± 36a 1091 ± 651a 9,248 ± 2783b 1,157 ± 394 Mean annual outlay on vehicle rentals (USD), unconditional 397 ± 37a 1,091 ± 651a 9248 ± 2783b 1,140 ± 389 fr Different subscripts within row indicate significant differences (p ≤ 0.05). ontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 in the following season. Hatcheries were not operated during the months of September to December and this period was considered an off-season or business off for the hatcheries. 3.4.2 Composition, volume, and value of fish seed sold The surveyed hatcheries produced a total of 20 different species, of which 18 fish species and 2 crustaceans (Table 4). Carp was the dominant species group (with concentration in a few carp species), followed by tilapia and crustaceans. Other species were produced in smaller quantities. These findings are consistent with our farm Frontiers in Aquaculture 09 survey conducted at the same time, which identified carp, tilapia, and crustaceans as the main species farmed in the region. The volume offish seed production has increased 1.3 times from 2013 to 2021. This increase was largely attributed to the production of tilapia seed, which saw a volume increase of 43% over the same period (DoF, 2022). Tilapia hatcheries produced only a single species, which contributed to 28% of the total fish seed production but only 17% of the total sales value, indicating relatively low unit price of tilapia seed in Bangladesh. Carp represent the largest share of fish seed, accounting for 67% of the volume and 66% of the sales value. The share of carp seed TABLE 4 Share of seed sold by species, and average and total sales volume and value. Variables Hatchery category Carp+catfish Tilapia Crustacean Overall % of volume % of value % of volume % of value % of volume % of value % of volume % of value Species composition Fish Tilapia 0.8 0.5 99 94.0 28 17 Rohu 22 22 0.4 1.9 16 19 Mrigal 16 14 0.3 1.0 12 11 Catla 14 12 0.1 0.8 10 10 Silver carp 13 7.9 0.1 0.5 10 6.6 Other carp 12 11 0.1 0.3 8.3 9.5 Common carp 7.3 6.9 0.3 1.0 5.4 5.9 Bata 6.6 4.3 0.1 0.5 4.8 3.6 Other fish 5.0 5.6 3.6 4.6 Catfish 3.3 16 2.4 13 Crustacean Shrimp 99 97 99 97 Prawn 1 2.5 1 2.5 Fish Average hatchling sales (kg/year) 1,380 ± 181a 84 ± 73b 998 ± 143 Average hatchling sales (USD/year) 38,358 ± 3,870a 2,007 ± 1,763b 27,653 ± 3,341 Average fry sales (kg/year) 1,631 ± 426a 5,644 ± 920b 2,424 ± 417 Average fry sales (USD/year) 8,578 ± 1,444a 31,702 ± 5,079b 13,201 ± 1,965 Average fingerling sales (kg/year) 1,726 ± 552 1,224 ± 382 Average fingerling sales (USD/year) 2,766 ± 887 1,962 ± 614 Average fish seed sales (kg/year) 4,737 ± 940 5,728 ± 898 4,646 ± 680 Average fish seed sales (USD/year) 49,702 ± 4,229a 33,709 ± 4,751b 42,815 ± 3,442 Total seed sales (kg/year) 658,499 252,025 910,524 Total seed sales (USD/year) 6,908,568 1,483,207 8,391,775 (Continued) frontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 production increased by 13% from 2013 to 2021. Rohu, one of the most important aquaculture fish in Bangladesh, ranked second in terms of production volume, contributed the largest share (24%) of carp seed production (DoF, 2022). Catfish accounted for only 3.3% of total seed production in carp +catfish hatcheries, but contributed to 16% of total sales value. Among catfish seed, pangasius contributed to 51% of volume but only 13% of sales value. This suggests the higher per unit value of local indigenous catfish seed compared to pangasius. The production of local indigenous catfish seed increased by 62% over the last 10 years before the survey (DoF, 2022), indicating the potential for the development of catfish farming in southern Bangladesh. Crustacean seed/PL production decreased by 23% from 2013 to 2021 in surveyed hatcheries. This finding is consistent with national PL production data for Bangladesh, which reported a 16% drop of crustacean seed production over the same period (DoF, 2022). Black tiger shrimp dominated the production (99% of volume) and sales value (97% of sales value) of crustacean PL. Freshwater prawn contributed only a small portion (1% of volume) of PL produced in 2021, and production has decreased by 98% from 2013 to 2021 due to problems with unidentified disease in freshwater prawn hatcheries, as reported by Briggs (2013). Fish seed were mostly sold as hatchlings, except for tilapia that was sold as fry. The hatcheries also kept some hatchlings to nurse in their own nursery pond and sold them as fries and/or fingerlings. The average annual sales volume and value of seeds were 4,737 kg and USD 49,702 for carp+catfish, 5,728 kg and USD 33,709 for tilapia, and 117 million PL and USD 245,606 for crustacean hatcheries, respectively. The population-weighted estimates of annual sales volume and value for all hatcheries operated in southern areas were significant, totaling 910 MT and USD 8.4 million for fish seed and 1,523 million and USD 2.2 million for crustacean PL. 3.4.3 Hatchery procurement behavior Almost all fish hatcheries (96%) used their owned broodstock to produce seed (Table 5) and recruited new broodstock every 2.3 years to improve quality and avoid inbreeding. The new broodstock were primarily sourced from their own farms (78%), followed by Frontiers in Aquaculture 10 farms in the same district (25%), farms in other district (16%) and others (4.9%). The collection of broodstock from own farm is common practice in fish hatcheries in Bangladesh (Khanom et al., 2020). Most matured broodstock (86% of volume) were used annually, and each broodstock was used 2.6 times per year, suggesting a high level of efficiency in the hatchery operations. In contrast, crustacean hatcheries collected black tiger shrimp nauplii from other hatcheries in Cox’s Bazar district and freshwater prawn broodstock from wild sources from suppliers. The average number of total suppliers and regular suppliers of broodstock was 4.5 and 3.4, respectively (Table 5) and were significantly higher (p ≤ 0.05) in the carp+catfish and crustacean hatcheries compared to tilapia hatcheries. 3.4.4 Hatchery sales behavior Hatcheries sold seeds to an average of 243 customers (Table 6) and the number of customers was significantly higher (p ≤ 0.05) in tilapia and carp+catfish hatcheries than crustaceans. About 69% of the clients were regular customers who bought 73% of the volume of seed sold, indicating the importance of social relationships and trust in determining the choice of hatcheries. Carp+catfish and tilapia hatcheries sold 50% and 30% of total seed directly to nursery owners, who then nurse them to produce fries and fingerlings to resell to farmers. This reflects a lengthening of the seed supply chain. In contrast, crustacean hatcheries primarily sold their seed directly to farmers (45% of volume) or large traders (53% of volume). The meso-scale data also indicates that the share of seed sold directly from hatcheries to farmers increased from 20% in 2013 to 30% in 2021, indicating a trend towards more direct sales and potentially shorter supply chains in the seed industry. Hatcheries sold seed to customers within various geographic ranges, including within the same union (11-22%), the same upazila (16-32%), same district (16-19%), and other districts (25-38%). The share of seed sold to customers in other districts decreased from 40% in 2013 to 27% in 2021, likely due to the establishment of new hatcheries in more remote areas, which allows for seed sales closer to the point of production. None of the hatcheries surveyed provided any cash credit to their customers. However, 20% of hatcheries (carp+catfish and tilapia) reported providing in-kind credit to well-known and TABLE 4 Continued Variables Hatchery category Carp+catfish Tilapia Crustacean Overall % of volume % of value % of volume % of value % of volume % of value % of volume % of value Crustacean Average sales (million/year) 117 ± 33 8 ± 4.5 Average sales (USD/year) 245,606 ± 62,211 16,290 ± 9,178 Total sales (million/year) 1,523 1,523 Total sales (USD/year) 3,192,879 3,192,879 Different subscripts within row indicate significant differences (p ≤ 0.05). frontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 trusted regular customers, with an average value of 28% of the volume of seed sold. Additionally, a quarter of tilapia and 17% of carp+catfish hatcheries reported receiving short-term delayed payment from regular clients, averaging 29% of the value of seed sold. Only 5% hatcheries reported receiving advanced payment from clients, amounting to 48% of total sales value. All hatcheries surveyed received payment in cash, but most carp+catfish (83%) and tilapia (86%) hatcheries also received payment via mobile phone based financial service. In contrast, crustacean hatcheries were more likely to receive payment by bank transfer (64%). This electronic payment may help to facilitate long-distance trade and improve the ease of conducting business across different locations. 3.4.5 Services offered by hatcheries to clients Hatcheries offered a variety of services to their clients beyond seed production and sales, as presented in Table 7. The most commonly provided service was packing at the time of sale, Frontiers in Aquaculture 11 which was provided by 94% of the hatcheries. Sorting or grading seeds by size prior to sale was reported by 70% of hatcheries in 2021, which is an increase from 50% in 2013. In addition to these services, 20% of hatcheries reported providing in-kind credit to customers, and a smaller proportion (9%) offered seed delivery services. These additional services can help to develop a good relationship between buyers and sellers, ultimately leading to increased sales volume. Most hatcheries (71%) provided technical advice to clients, covering topics such as stocking seeds, application of feeds, chemicals and fertilizers, disease control, and seed prices. However, the quality of this technical information is unknown. Key informant interviews suggest that hatcheries regularly provide seed price information to farmers, nursery owners, and mobile seed traders, which is beneficial for all parties involved. Most respondents (49%) reported getting technical information from non-governmental organizations, followed by the Department of Fisheries (43%), chemical companies (23%), and feed companies (13%). TABLE 5 Hatcheries broodstock procurement and production behavior. Variables Hatchery category Carp+catfish Tilapia Crustacean Overall Average number of suppliers 5.2 ± 0.7a 1.0 ± 0.3b 4.2 ± 1.3a 4.5 ± 0.6 Average number of regular suppliers 3.9 ± 0.5a 0.7 ± 0.3b 2.6 ± 0.5a 3.4 ± 0.4 Procured from regular suppliers (% of volume) 53 ± 4.7a 42 ± 12a 96 ± 2.9b 53 ± 4.3 Source of broodstock or nauplii (%) Own farm 78 96 0 78 Same district other farm 30 4.2 0 25 Other district other farm 17 15 0 16 Wild (river and sea) 0 0 100 3.8 WorldFish 1.7 13 0 3.2 Bangladesh Fisheries Research Institute (BFRI) 2.1 0 0 1.7 Broodstock used (% of total volume) 86 ± 1.8 87 ± 3.9 86 ± 1.6 Female used for single male (no.) 3.1 ± 0.2 3.5 ± 0.2 3.1 ± 0.1 No. of time used broodstock per year 2.6 ± 0.1 2.7 ± 0.2 2.6 ± 0.1 Broodstock recruited interval (year) 2.2 ± 0.2 3.1 ± 0.5 2.3 ± 0.2 % of respondents providing advanced payment 0 6.6 0 0.9 % of purchase value provided with advanced (conditional on experiencing advanced) 30 30 % of respondents providing delayed payment 1.0 0 0 0.7 % of purchase value provided with delay (conditional on experiencing delay) 10 10 Mode of payment (%) Cash 100 94 88 98 Bank transfer 2.4 12 63 8.3 Mobile money 6.0 18 0 7.3 Different subscripts within row indicate significant differences (p ≤ 0.05). frontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 3.4.6 Financial management The average annual working capital was USD 30,843 across hatchery categories (Table 8), with crustacean hatcheries having significantly higher (p ≤ 0.05) working capital compared to others, reflecting their larger scale of operation and higher operational costs. Most working capital came from reinvestment of business earning (84%) and own savings (4.3%). Bank loans were found to be a more important source of working capital for crustacean hatcheries (28% of funds) than for tilapia (14% of funds), and carp+catfish (6%). More than 27% of respondents borrowed from at least one lender, with borrowing more common for crustacean compared to tilapia and carp+catfish hatcheries. All respondents who borrowed money took loans from government (56%) or private (44%) banks, suggesting widespread access to formal credit (e.g., Sabur et al., 2010; Sarwer, 2021). None of the hatcheries reported receiving any loans from microfinance institutions or informal moneylenders, and reported interest rates were relatively low across hatchery categories at 9.6% per annum, indicative of high levels of access to formal financial institutions (e.g., Jahan et al., 2015). 2 A full-time equivalent (FTE) is a unit of measurement used to figure out the number of full-time hours worked by all employees in a business. 3.5 Performance 3.5.1 Employment generation The characteristics of employment by type of labor (family, permanent hired or causal hired) are presented in Table 9. Almost all hatcheries (96%) used family male labor for operational activities, with an average of 1.6 male family members employed. Additionally, 10% of hatcheries (carp+catfish, and tilapia) also employed female family labor, with an average 1.1 female family members employed. The majority of hatcheries (78%) hired permanent male labor, with an average of 3.7 workers, and crustacean hatcheries employed significantly higher workers (p ≤ 0.05) than other hatcheries. Moreover, 68% of the hatcheries employed casual male workers, with an average of 5.8 workers, for general manual activities. However, none of the respondents employed any casual or permanent female workers. Themajority of family (95%), permanent (92%), and casual (99%) workers employed by hatcheries were ≥ 30 years old, indicating the challenges for young people to enter the hatchery business due to various factor such as lack of access to financing, limited knowledge and skills, and preference for other types of employment (Arulingam et al., 2019). The average daily wage earned by casual workers was USD 3.45/day, which is higher than the national average daily wage rate of Bangladesh (USD 2.14/day) for agricultural work (BBS, 2022). The average monthly wage of USD 102 paid to permanent workers did not differ significantly (p ≥ 0.05) between hatchery categories. However, the monthly wage rate was 55% higher than national minimum wage rate in Bangladesh (BBS, 2022). This suggests that employment in the hatchery sector may provide better wages and working conditions than many other agricultural jobs in Bangladesh. Hatchery business created an average of 543 days of employment per MT of fish seed or per million of PL sold across hatchery categories. The 66 surveyed hatcheries appointed an average 7.5 Frontiers in Aquaculture 12 workers each, and created 943 full time equivalent (FTE)2 jobs, assuming 2080 working hours per year. These FTEs included 17% family, 23% casual and 60% permanent labor (Table 9). Hatchery industry created employment opportunities mainly for men (99.7%), with only 5% of workers being aged ≤29 (i.e., youth). This reflects the family-owned and operated nature of many hatchery businesses, which may limit the opportunities for young people and women to enter the sector. These findings are consistent similar studies conducted in other aquaculture producing countries, which have also reported a high degree of family involvement and limited opportunities for youth and women in the fish seed production segment (Nasr-Allah et al., 2014; Joffre et al., 2021; Shoko et al., 2022). The total FTE jobs created by hatcheries in the seven southern districts of Bangladesh were estimated (Table 10). Therefore, the total volume of fish and crustaceans seed produced in these districts was estimated using population weighted total for all hatcheries operated in surveyed districts. Total FTE jobs created by hatcheries were estimated by each hatchery by multiplying the mean labor days per unit of seed sold by the total quantities sold. These estimates are disaggregated for each hatchery group by family, casual, and permanent labor, youth and non-youth, and male and female employment. The total number of FTE jobs created by hatcheries in southern region was 2,491, with 421 FTEs from family labor, 584 FTEs from casual labor, and 1,486 FTEs from permanent labor. The majority of employment created was non-youth (2,376) andmale (2,484). Fish seed production and sales created the majority (79%) of the employment, with crustacean hatcheries contributing the remaining 21%, or 530 FTEs. Carp and catfish hatcheries created the most employment (1,719 FTEs or 69% of the total), followed by crustacean hatcheries (530 FTEs or 21%), and tilapia hatcheries (241 FTEs or 10%). 3.5.2 Impacts of COVID-19 on the hatchery sector The hatchery production and sales were negatively impacted by COVID-19, similar to other segments of aquaculture value chain in Bangladesh. Key informant interviews indicated that the interruptions in hatchery operations resulted in lower seed production and sales in 2020 and 2021 compared to 2019. The hatchery survey results show a 17% decrease in seed sales in 2021 compared to 2019, which was a significant decline. The reduction in sales volumes reflects fewer customers, and has resulted lower quantities of seed sold at a lower price than usual, and lower incomes for hatchery owners (Figure 3). These findings are consistent with other research on the impacts of COVID-19 on the aquaculture sector in Bangladesh that reported lower sales volume due to lockdowns and travel restrictions (Belton et al., 2021). 3.5.3 Financial performance Average annual hatchery operating costs were substantial, at USD 22,996 (Table 11), and significantly higher (p ≤ 0.05) for crustacean hatcheries compared to tilapia and carp+catfish frontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 hatcheries. Variable costs account for 85% of total costs. Production inputs including feed, and salaries were the most important cost items across all types of hatchery, comprising 32% and 16% of variable costs, respectively, except for crustacean hatcheries. In crustacean hatcheries, transportation was the single largest cost item, accounting for 23% of variable costs. This result may reflect the need to collect inputs (e.g., nauplii, salt water) from suppliers located far away. Almost all hatcheries (95%) reported a positive profit. The mean annual gross profit margin was significantly higher (p ≤ 0.05) in the crustacean (USD 111,563) than the carp+catfish (USD 35,589) and tilapia (USD 15,458) hatcheries. The average annual net profit margin, which accounts for all annual fixed and operating costs, was USD 32,159, and differed significantly (p ≤ 0.05) between Frontiers in Aquaculture 13 hatchery categories. Across all hatcheries, the average annual net profit margin was 54% of the gross revenue, which is relatively modest considering the total annual working capital investments. These findings suggest the existence of competitive seed markets in Bangladesh. None of the hatcheries reported any loss or waste at the time of sales or delivery of seed. However, 18% of hatcheries (26% of carp +catfish, and 13% of crustacean) reported facing disease and/or water quality problems such as white spot disease, fungal disease, tail and fin rot, gill rot, argulosis and lernaeasis. The average annual mortality rate was 13% and 10% for carp+catfish and crustacean hatcheries, respectively. Despite these challenges, the average annual economic loss due to mortality was only 0.71% of the total seed sales values, which is quite low. TABLE 6 Hatcheries sales behavior. Variables Hatchery category Carp+catfish Tilapia Crustacean Overall Average number of clients 246 ± 11a 261 ± 15a 106 ± 28b 243 ± 9.3 Average number of regular clients 171 ± 8.1a 172 ± 13a 82 ± 18b 168 ± 7.0 Sales to regular clients (% of volume) 73 ± 1.3 71 ± 2.6 84 ± 3.3 73 ± 1.1 Distribution of clients (% of fish volume) Farmer 29a 34a 45b 30 Nurserer 50a 30b 3c 46 Mobile seed trader 18a 24a 0b 18 Large trader 3a 12a 53b 6 Location of clients (% of fish volume) Same village 16 10 7 15 Same union 22 21 11 21 Same upazila 21 16 32 21 Same district 16 16 19 16 Other districts 25 38 31 27 % of respondents providing cash credit to client 0 0 0 0 % of respondent provided in-kind credit support to client 19 28 0 20 % of fish (volume) sold as in-kind credit to client 26 34 28 Number of client received in-kind credit support 46 60 51 % of respondents receiving advanced payment 3.9 13 0.0 5.0 % of sales value received with advanced (conditional on experiencing advanced) 59 30 48 % of respondents receiving delayed payment 17 26 0.0 18 % of sales value received with delay (conditional on experiencing delay) 28 34 29 Mode of payment (%) Cash 100 100 100 100 Bank transfer 12 11 64 13 Mobile money 83 86 12 81 Different subscripts within row indicate significant differences (p ≤ 0.05). frontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 TABLE 7 Type of services provided by fish hatcheries to clients. % of respondents who… Hatchery category Carp+catfish Tilapia Crustacean Overall Provide in-kind credit support to client 19 28 0 20 Sort/grade seed by size prior to sales 57 88 100 70 Packing/packaging supports to client at the time of sales 98 81 100 94 Deliver seed to client base 2.4 31 0 9.1 Provide advice to client 69 69 88 71 Provide advice on subject (conditional on providing any advice) for Feed use 48 55 71 53 Seed stocking 86 100 86 89 Fertilizer use 48 55 29 47 Chemical use 66 55 14 55 Disease control 76 55 100 74 Fish marketing 17 9.1 14 15 Seed price information 6.9 9.1 14 8.5 Not specific to any issue 3.4 0 0 2.1 Collect technical information for hatcheries from Department of Fisheries 38 45 57 43 Non-government organization 31 82 71 49 Chemical company 34 9.1 0 23 Feed company 21 0 0 13 Research institute 0 9.1 0 2.1 F rontiers in Aquaculture 14 TABLE 8 Hatchery business access to finance. Variables Hatchery category Carp+catfish Tilapia Crustacean Overall Working capital (USD/year) 19,927 ± 1,724a 21,755 ± 2,479a 178,317 ± 63,004b 30,843 ± 7,333 Sources of working capital (% of value) Earning from hatchery business 87 81 57 84 Government bank 5.3 4.3 8.1 5.2 Own saving 4.2 5.2 2.8 4.3 Private bank 1.0 9.3 20 4 Revenue budget (DoF) 2.1 0.0 11.5 2.2 Others 0.6 0.0 0.0 0.4 % of respondents receiving financial credit 22 29 76 27 Amount of credit received (USD) 5,468 ± 1,969a 11,293 ± 4,671ab 23,472 ± 5,658b 10,211 ± 2,495 Average interest rate/year (%) 9.9 ± 0.3a 9.7 ± 0.5a 8.4 ± 0.3b 9.6 ± 0.2 (Continued) frontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 TABLE 8 Continued Variables Hatchery category Carp+catfish Tilapia Crustacean Overall Sources of credit (%) (conditional on borrowing) Government bank 63 32 68 56 Private bank 37 68 32 44 Purpose of credit use (%) Renting pond or hatchery 45 25 17 35 Increasing seed production and sold 64 100 83 76 Employing more staff 17 0 68 23 Collateral for credit (%) Land 100 100 100 100 F rontiers in Aquaculture 15 Different subscripts within row indicate significant differences (p ≤ 0.05). TABLE 9 Characteristics of labor use by hatchery business. Variables Hatchery category Carp+catfish Tilapia Crustacean Overall % of hatcheries using family labor (male) 96 91 77 94 Average number of male family workers employed (conditional on using) 1.7 ± 0.1 1.3 ± 0.1 2.0 ± 0.5 1.6 ± 0.1 % of hatcheries using family labor (female) 12 7.1 0 10 Average number of female family workers employed (conditional on using) 1.2 ± 0.2 1.0 ± 0.1 1.1 ± 0.1 Family labor (person-days/year) 253 ± 19a 155 ± 33b 74 ± 25c 222 ± 16 Age of family workers (%) ≤29 years (youth) 5 4 0 5 ≥ 30 years (non-youth) 95 96 100 95 Permanent hired male labor used (% of hatchery) 72 95 87 78 Number of permanent hired male labor work 3.3 ± 0.3a 3.3 ± 0.4a 8.6 ± 2.1b 3.7 ± 0.4 Monthly wage rate for permanent hired male worker (USD/month) 94 ± 3.8 99 ± 4.7 105 ± 11 96 ± 2.8 Permanent hired female labor used (% of hatchery) 0 0 0 0 Permanent hired labor (person-days/year) 656 ± 85a 718 ± 103a 2,145 ± 533b 783 ± 94 Age of permanent hired workers (%) ≤29 years (youth) 9 4 10 8 ≥ 30 years (non-youth) 91 96 90 92 % of hatcheries using casual hired labor (male) 66 71 76 68 Average number of male casual hired workers employed (conditional on using) 5.9 ± 0.2 5.6 ± 0.3 6.3 ± 0.3 5.8 ± 0.1 Daily wage rate for casual hired male worker (USD/day) 3.50 ± 0.1 3.32 ± 0.2 3.38 ± 0.4 3.45 ± 0.1 % of hatcheries using casual hired labor (female) 0 0 0 0 Causal hired labor (person-days/year) 297 ± 43a 234 ± 56a 643 ± 168b 307 ± 37 Age of casual hired workers (%) ≤29 years (youth) 0 0 7 1 (Continued) frontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 3.6 Farmers seed procurement and use We analyzed fish seed procurement and use by farmers in the same locations where hatcheries surveyed. All farmers stocked carp fish seed, and most of them (72%) stocked tilapia seed (Table 12). Additionally, 16% of farmers particularly only fish and prawn+fish farmers also stocked catfish seed along with carp and tilapia. All farmers, except those stocking only fish, stocked freshwater prawn Frontiers in Aquaculture 16 and/or tiger shrimp PL. The average annual fish stocking density was 498 kg/ha and it was significantly higher (p ≤ 0.05) in only fish farms, followed by prawn+fish, shrimp+fish, and prawn+shrimp +fish farms. The mean annual stocking density of crustacean was significantly higher (p ≤ 0.05) in shrimp+fish and prawn+shrimp +fish farms than prawn+fish farms. The mean seed stocking cost was USD 791 ha-1 and did not differ significantly (p ≥ 0.05) between farm categories. TABLE 9 Continued Variables Hatchery category Carp+catfish Tilapia Crustacean Overall ≥ 30 years (non-youth) 100 100 93 99 Mean number of labor 6.9 ± 0.4a 7.0 ± 0.4a 15 ± 3.1b 7.5 ± 0.5 Mean labor (person-days/year) 911 ± 82a 992 ± 82a 2,414 ± 570b 1029 ± 88 Mean labor days per MT seed (fish) or million PL (crustacean) sold 679 ± 145 249 ± 43 91 ± 47 543 ± 101 Total FTE jobs created by sample traders 519 88 326 934 FTE job created for… Family labor (%) 21 14 3 17 Permanent labor (%) 54 65 75 60 Casual labor (%) 25 21 22 23 Men (%) 99.6 99.8 100 99.7 Women (%) 0.4 0.2 0.0 0.3 Youth (%) 4 4 10 5 Non-youth (%) 96 96 90 95 Different subscripts within row indicate significant differences (p ≤ 0.05). TABLE 10 Estimated total FTE jobs created by hatcheries in the surveyed seven districts. Variables Hatchery category MCarp+catfish Tilapia Crustacean Overall Total FTE jobs created 1,719 241 530 2,491 FTE job distribution by fish types Fish 1,719 241 1,961 Crustacean 530 530 FTE job distribution by type of labor Family labor 361 34 14 421 Casual labor 935 157 397 1,486 Permanent labor 423 51 119 584 FTE job distribution by gender Men 1,713 241 530 2,484 Women 6 0.4 0 7 FTE job distribution by age ≤29 years (youth) 73 11 51 115 ≥ 30 years (non-youth) 1,647 231 479 2,376 frontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 0 10 20 30 40 50 60 70 80 90 100 Business affected by COVID-19 Sold lower quan��es of seed Difficul�es to sale seed Hired fewer workers Sold different seed Sold seed at lower price Earned lower income Fewer customer than usual detroperseirehctahfo % Carp + ca�ish Tilapia Crustacean FIGURE 3 Share of hatcheries facing COVID-19 related challenges in 2021. TABLE 11 Annual cost and profit margin of business operation. Cost items Hatchery category Carp+catfish Tilapia Crustacean Overall Cost (USD/ year % cost Cost (USD/ year % cost Cost (USD/ year % cost Cost (USD/ year % cost Variable cost (VC) Feed and non-feed input 6,080 ± 373 36 8,724 ± 762 40 34,624 ± 5,832 22 8,567 ± 783 32 Salaries 3,257 ± 426 19 3,691 ± 477 17 16,118 ± 4,164 11 4,207 ± 610 16 Transportation 381 ± 44 2.3 1,150 ± 715 5.3 35,715 ± 14,704 23 2,897 ± 1658 11 Rent of hatchery or pond 2,111 ± 523 12 2,109 ± 511 9.8 688 ± 678 0.5 2,016 ± 373 7.5 Brood fish or nauplii 147 ± 53 0.9 64 ± 59 0.3 27,032 ± 9,172 18 1,912 ± 1,137 7.1 Electricity and fuel 1,193 ± 138 7.1 1,533 ± 572 7.1 10,176 ± 2,987 6.7 1,865 ± 406 6.9 Packaging 585 ± 50 3.5 538 ± 40 2.5 2,396 ± 373 1.6 695 ± 73 2.6 Salt water 0.0 ± 0.0 0.0 0.0 ± 0.0 0.0 6,437 ± 3,006 4.2 427 ± 322 1.6 Others 188 ± 47 1.1 284 ± 156 1.3 7 ± 6.8 0.0 197 ± 48 0.7 Entertainment 99 ± 8.6 0.6 85 ± 15 0.4 652 ± 213 0.4 133 ± 26 0.5 Communications 71 ± 3.2 0.4 73 ± 5.5 0.3 199 ± 78 0.1 80 ± 8.1 0.3 Sub-total 14,112 ± 1,123 84 18,251 ± 2,780 85 134,043 ± 32,099 88 22,996 ± 4,674 85 Fixed cost (FC) Depreciation – interest on working capital 1,793 ± 155 11 1,958 ± 223 9.1 16,049 ± 5,670 11 2,776 ± 660 10 Depreciation – equipment 605 ± 30 3.6 821 ± 82 3.8 1509 ± 180 1.0 713 ± 38 2.6 Depreciation– hatchery infrastructure 359 ± 52 2.1 472 ± 58 2.2 954 ± 215 0.6 424 ± 46 1.6 Taxes and license fees 25 ± 2.5 0.1 39 ± 6.0 0.2 88 ± 19 0.1 33 ± 3.3 0.1 Depreciation – vehicle 6 ± 3.3 0.04 4 ± 4.3 0.02 0.0 ± 0.0 0.0 5 ± 2.5 0.02 (Continued) F rontiers in Aquaculture 17 front iersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 TABLE 11 Continued Cost items Hatchery category Carp+catfish Tilapia Crustacean Overall Cost (USD/ year % cost Cost (USD/ year % cost Cost (USD/ year % cost Cost (USD/ year % cost Sub-total 2,788 ± 220 16 3,294 ± 334 15 18,599 ± 5,959 12 3,951 ± 718 15 Total (TC=VC+FC) 16,901 ± 1,252 100 21,546 ± 3,026 100 152,643 ± 36,509 100 26,947 ± 5,293 100 Mean gross revenue (USD/year) 49,702 ± 4,229a 33,709 ± 4,751a 245,606 ± 61,251b 59,105 ± 8,638 Mean gross profit margin (USD/ year) 35,589 ± 3,589a 15,458 ± 2,352a 111,563 ± 30,299b 36,109 ± 4,460 Mean net profit margin (USD/year) 32,801 ± 3,442a 12,164 ± 2,173b 92,964 ± 25,905c 32,159 ± 3,936 Annual net profit margin (%) 66 36 38 54 F rontiers in Aquaculture 18 front Different subscripts within row indicate significant differences (p ≤ 0.05). TABLE 12 Fish seed procurement and use practices reported by farmers. Variables Farmer category Only fish Prawn+ fish Shrimp + fish Prawn + shrimp + fish Overall Farmers stocked seed by type (%) Tilapia 79 50 90 74 72 Carp 100 100 100 100 100 Catfish 32 10 1.6 1.9 16 Crustacean 0 100 100 100 67 Seed stocking density Fish (kg/ha) 761 ± 64a 429 ± 51b 290 ± 61b 259 ± 23b 498 ± 30 Crustacean (no./ha) 0.0 ± 0.0 19,163 ± 1,495a 223,336 ± 30,004b 196,197 ± 21,564b 80,698 ± 7,664 Seed stocking cost (USD/ha) 703 ± 39 797 ± 69 883 ± 91 880 ± 58 791 ± 29 Nursing crustacean seed prior to stock (%) 17 11 23 19 Farmers stocking PCR tested crustacean PL (%) 11 16 15 Average volume PCR tested PL stocked (%), conditional 52 57 57 Reason for not stocking PCR tested PL (%) Never heard of PCR tested PL 7 28 24 Too expensive 46 27 31 Ineffective at preventing disease 7 6 6 Not available here 21 26 25 Do not know 20 11 13 Farmers stocking SPF tested crustacean PL (%) 1.5 1.4 1.5 Average volume SPF tested PL stocked (%), conditional 10 19 17 Reason for not stocking SPF tested PL (%) Never heard of PCR tested PL 16 37 33 (Continued) iersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 More than 19% of crustacean farmers nurse PL prior to stock in grow-out farms. The use of PCR and SPF tested shrimp PL is crucial for disease prevention, biosecurity, improved growth and survival rates, quality assurance, and market access. However, only 15% of farmers stocked PCR tested PL, while 1.5% stocked SPF tested PL, with the average volume being 57% and 17% of the total PL stocked, respectively. The reasons given by respondents for not stocking PCR or SPF tested PL included high cost, ineffectiveness at preventing disease, unavailability, and no knowledge of PCR or SPF tested PL. Most fish seed used by farms (86%) was purchased from mobile seed traders, locally known as patilwala, and the remaining from hatcheries (7.7%), large seed traders (4.4%), nurseries (1.1%), and other sources (0.9%). In contrast, most crustacean seed (75%) was purchased from large seed traders, followed by mobile seed traders (22%), hatcheries (2.0%), and nurseries (0.9%). These findings were consistent with the hatchery surveys, which showed that most fish seed was sold to nursery operators who then sold to farmers through mobile seed traders, while crustacean seed was sold to large seed traders who then sold directly to farmers. Frontiers in Aquaculture 19 More than one-fourth (27%) of farmers reported having received seed as in-kind credit from traders and the in-kind credit arrangement was more prevalent for crustacean seed (27% of total volume) compared to fish seed (9.5% of total volume). However, only 5.7% of farmers doing so reported being obligated to sell their produce to these traders, suggesting very little use of tied credit by seed traders. Key informant interviews suggested that in some cases, the price of seed purchased as in-kind credit was 3-5% higher than that of seed purchased immediately in cash, but interest was not always charged, based on the relationship between farmers and traders. 4 Conclusion The hatchery segment of aquaculture value chain in Bangladesh has experienced significant growth in the last decade, with an overall increase in the number of hatcheries and the volume of seed produced. Carp and tiger shrimp were the most commonly produced fish and crustacean species, amounting 67% and 99% of TABLE 12 Continued Variables Farmer category Only fish Prawn+ fish Shrimp + fish Prawn + shrimp + fish Overall Too expensive 30 22 24 Ineffective at preventing disease 3 6 5 Not available here 41 37 38 Do not know 23 14 16 Share of fish seed purchase by suppliers (%) Hatchery 14 3.9 12 2.1 7.7 Nursery 1.0 2.2 1.8 0.1 1.1 Mobile seed trader 83 87 85 89 86 Large seed trader 1.9 4.4 1.0 8.4 4.4 Others 0.4 2.1 0.2 0.7 0.9 Share of crustacean seed purchase by suppliers (%) Hatchery 1.1 1.0 2.4 2.0 Nursery 0.0 2.1 0.5 0.9 Mobile seed trader 6.5 11 28 22 Large seed trader 92 86 69 75 Others Farmers getting seed as in-kind credit (%) 11 24 43 46 27 Share of fish seed getting as in-kind credit (%) 5.5 10 6.8 15 9.1 Share of crustacean seed getting as in-kind credit (%) 16 29 30 27 Farmers obligated to sell produces to in-kind credit provider (conditional) (%) 9.7 7.7 3.8 4.1 5.7 f Different subscripts within row indicate significant differences (p ≤ 0.05). rontiersin.org https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org Ali et al. 10.3389/faquc.2023.1219458 volume, respectively. Hatcheries used a high volume of their matured broodstock annually and replaced them at an average interval of 2.3 years, indicating a level of efficiency in their operation and broodstock management. Around 18% of hatcheries faced disease or water quality problems and reported to loss only 0.7% of total sales value, which is quite low. Hatcheries were family- owned and operated business that created a total 2,491 full time equivalent (FTE) jobs, predominantly for men. The mean annual net profit margin was relatively modest considering the investments, suggesting the existence of competitive seed production and marketing. The overall findings suggest that the hatchery segment of the aquaculture value chain in southern Bangladesh is dynamic, well developed, efficient, and relatively competitive. This contradicts the conventional perception of inefficiency and problems in the hatchery segment in Bangladesh. Data availability statement The original contributions presented in the study are included in the article/supplementary material. Further inquiries can be directed to the corresponding author. Ethics statement The research design was reviewed by Michigan State University Institutional Review Board (MSU Study ID: STUDY00003689). The study was determined to be exempt from IRB review on July 10, 2020. Author contributions HA, BB, MMH and KM-e-J designed research. HA performed research, HA analyzed data. HA and BB wrote paper, MMH, KM-e- J and LI edited paper. All authors contributed to the article and approved the submitted version. Frontiers in Aquaculture 20 Funding This research was made possible by the Feed the Future Innovation Lab for Fish, through the United States Agency for International Development (USAID). The Feed the Future Innovation Lab for Fish is managed by Mississippi State University through an award from USAID (Award No. 7200AA18CA00030; M. Lawrence, PI) and provides support to this project (Grant No. 193900.312455.12B; Belton, PI; Haque, PI). This work was also implemented as part of the CGIAR Initiative on Securing the Food Systems of Asian Mega‐Deltas for Climate and Livelihood Resilience (INIT-18), which is carried out with support from funders through their contributions to the CGIAR Trust Fund. (https://www.cgiar.org/funders/). We also grateful to National Science and Technology (NST) fellowship, Bangladesh fo r prov id ing financ i a l suppor t s t o comple t e fie ld works successfully. Conflict of interest The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest. The authors HA, BB, MMH, KM-e-J declared that they were editorial board members of Frontiers, at the time of submission. This had no impact on the peer review process and the final decision. 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https://doi.org/10.1088/1748-9326/acab16 https://www.worldeconomics.com/ESG/Social/Bangladesh.aspx https://www.worldeconomics.com/ESG/Social/Bangladesh.aspx https://doi.org/10.3389/faquc.2023.1219458 https://www.frontiersin.org/journals/aquaculture https://www.frontiersin.org The structure, conduct, and performance of the hatchery segment of the aquaculture value chain in Bangladesh 1 Introduction 2 Data and methods 2.1 Study area and types of hatchery 2.2 Survey methods and data 2.3 Data analysis 3 Results and discussion 3.1 Hatchery and business characteristics 3.2 Structure 3.3 Assets 3.4 Conduct 3.4.1 Seasonality 3.4.2 Composition, volume, and value of fish seed sold 3.4.3 Hatchery procurement behavior 3.4.4 Hatchery sales behavior 3.4.5 Services offered by hatcheries to clients 3.4.6 Financial management 3.5 Performance 3.5.1 Employment generation 3.5.2 Impacts of COVID-19 on the hatchery sector 3.5.3 Financial performance 3.6 Farmers seed procurement and use 4 Conclusion Data 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