Role of market interlinkages in coping with fishing and climate related risks in small scale fisheries

MINISTRY OF EDUCATION AND TRAINING NHA TRANG UNIVERSITY MOHOTTI MUDIYANSELAGE DULANI SHIWANTHIKA DHARMASIRI ROLE OF MARKET INTERLINKAGES IN COPING WITH FISHING AND CLIMATE RELATED RISKS IN SMALLSCALE FISHERIES: EVIDENCE FROM SOUTHERN SRI LANKA MATER THESIS KHANH HOA – 2019 MINISTRY OF EDUCATION AND TRAINING NHA TRANG UNIVERSITY MOHOTTI MUDIYANSELAGE DULANI SHIWANTHIKA DHARMASIRI ROLE OF MARKET INTERLINKAGES IN COPING WITH FISHING AND CLIMATE RELATED RISKS IN SMALLSCALE FISHERIES: EVIDENCE FROM SOUTHERN SRI LANKA MASTER THESIS Major: Marine Ecosystem-based Management and Climate Change Topic allocation Decision Decision on establishing the Committee: Defense date Supervisor 1: Signature Supervisor 2: Signature 04 August 2019 Professor Oscar Amarasinghe Dr Nilantha De Silva Chairman Assoc Prof Nguyen Thi Kim Anh Signature Faculty of Graduate Studies: Signature KHANH HOA - 2019 UNDERTAKING I undertake that the thesis entitled: “Role of Market Interlinkages in Coping with Fishing and Climate Related Risks in Small-Scale Fisheries: Evidence from Southern Sri Lanka” is my own work The work has not been presented elsewhere for assessment until the time this thesis is submitted 30.05.2019 Mohotti Mudiyanselage Dulani Shiwanthika Dharmasiri iii AKNOWLEDGEMENT I would like to express my deepest appreciation to the Faculty of Graduate Studies, Nha Trang University and NORHED project for giving best conditions for me to carry out and finish my Master study My unfeigned gratitude should go to both of my supervisors, Prof Oscar Amarasinghe and Dr Nilantha De Silva for their continuous support of my M.Sc study and research, for their patience, motivation, enthusiasm, and immense knowledge Their guidance helped me in all the time of research and writing of this thesis Also my gratitude is always there with all the lecturers and the coordinators of the Norhed Master’s Programme Moreover, my special appreciation goes to Gandara and Kottegoda people for making this research a success Last but not the least, I would like to thank all my family members for supporting me spiritually throughout writing this thesis Thank you all! 30.05.2019 Mohotti Mudiyanselage Dulani Shiwanthika Dharmasiri iv TABLE OF CONTENT UNDERTAKING iii AKNOWLEDGEMENT iv TABLE OF CONTENT v LIST OF ABBREVIATIONS viii LIST OF TABLES ix LIST OF FIGURES xi APPENDICES xii ABSTRACT CHAPTER INTRODUCTION 1.1 Statement of problem 1.2 Research questions 1.3 Objectives CHAPTER LITERATURE REVIEW .10 2.1 Current status of small-scale fisheries 10 2.2 Small Scale Fisheries in Sri Lanka .11 2.3 Risks and uncertainties / shocks and there impacts on the fisheries sector 12 2.4 Fishers’ response to risks and uncertainties: Role of Insurance and Credit .15 2.4.1 Fisheries Insurance .15 2.4.2 Credit 17 CHAPTER METHODOLOGY 20 3.1 Study Area 20 3.2 Data Collection 22 3.2.1 Collection of Primary Data 22 3.2.1.1 Key Informant Discussions 22 3.2.1.2 Focus Group Discussions 23 3.2.1.3 Questionnaire Survey .23 3.2.2 Collection of secondary data 24 3.3 Data Analysis 24 3.3.1 Data obtained from Focus Group Discussion (FGDs) 24 3.3.2 Analysis of data obtained from the questionnaire survey 25 3.3.2.1 Use of Descriptive statistics .25 v 3.3.2.2 Inferential statistics 25 3.3.3 Theoretical Underpinnings 25 3.3.3.1 Market Interlinkages: 25 3.3.3.2 Patron-Client Relations 27 3.3.3.3 Indicative Cost of Market Interlinkage (ICMIs) 27 3.3.4 Analytical Framework 30 CHAPTER RESULTS AND DISCUSSION 32 4.1 Demographic and socio economic profile of the respondents 32 4.2 Fishing and climatic-change related risks and uncertainties and, their impacts on livelihoods 41 4.2.1 Fishing related risks & uncertainties and their impacts on livelihoods 42 4.2.2 Climatic- change related risks & their impacts on livelihoods .45 4.3 An assessment of the functioning of different credit and insurance markets in fisheries as a hedge against risks and uncertainties 52 4.3.1 Different credit and insurance schemes used by fishers in coping with fishing and climatic related risks and uncertainties in Southern Sri Lanka 52 4.3.1.1 Comparing the different credit sources 53 4.3.2 Role of credit and insurance in helping fishers to cope with fisheries and climatic-change related risks in the study area .55 4.3.3 Accessibility of different sources of insurance and credit to cope with fishing and climate-change related risks and uncertainties 59 4.4 The formation of credit-product market interlinkages and their role in hedging against fishing and climate related risks and uncertainties 61 4.4.1 Marketing of Fish 61 4.4.3 Formation of Credit-product market interlinkages: the boat tying arrangements 66 4.4.3.1 Marketing Strategy of the lender fish merchant 67 4.4.3.2 Market Interlinkage and Indebtedness among craft owners 69 4.4.4 Advantages and disadvantages of boat tying arrangements for participating agents 71 4.4.4.1 Advantages .71 4.4.4.2 Disadvantages 75 4.4.5 Factors affecting the Indicative Cost of Market Interlinkages- Regression analysis 77 4.4.5.1 Pearson Correlation Coefficient 77 4.4.5.2 Coefficient of correlation 79 vi 4.4.5.3 Hypothesis Analysis 81 4.4.5.4 The effect of predictor variables on the Indicative Cost of Market Interlinkages 82 4.4.6 Incorporating Climate Change into the Analysis of ICMI: Scenario Analysis 84 4.4.7 Fishers’ relationship to fish merchant 87 4.4.8 Opting to borrow from the fish merchant as against other credit sources 88 4.4.9 Dealing with imperfection to effectively cope with fishing and climate related risks .90 CHAPTER CONCLUSIONS AND RECOMMENDATIONS 94 vii LIST OF ABBREVIATIONS ANOVA : Analysis of Variances CC : Climate-Change CCD : Coastal Conservation Department CFC : Ceylon Fisheries Cooperation CMI : Cost of Market Interlinkage CSO : Civil Society Organization FAO : Food and Agricultural Organization GDP : Gross Domestic Production ICM : Integrated Coastal Management ICMIs : Indicative Cost of Market Interlinkage MTRB : Motorized Traditional Boats MFARD : Ministry of Fisheries and Aquatic Resources Development NARA : National Aquatic Resources Research and Development Agency NBSB : Beach Seines (Madel) NTRB : Non-motorized Traditional Boats OFRP : Fibre Reinforced Plastic craft with Outboard Motor RFO : Rural Fisheries Organization RFLP : Regional Fisheries Livelihood Programme SPSS : Statistical Package for the Social Sciences SSF : Small-Scale Fisheries SSL : Southern Sri Lanka viii LIST OF TABLES Table 2.1: Commonly found informal insurance mechanisms in fishing communities 17 Table 3.1: The sample of craft owners for the study 25 Table 4.1: Composition of the boat owners in the sample 32 Table 2: Age distribution of the sample boat owners .33 Table 3: Fishing Experience (Years) of the boat owners 34 Table 4: Efficiency of fishing unit 34 Table 5: Number of and kind of fishing gears owned .36 Table 6: Average quantity of fish landed/Year 36 Table 7: Average Gross Profits from fishing 37 Table 8: Alternative income other than fisheries 38 Table 9: Average income from diverse livelihood activities and their distribution 39 Table 10: Average family income/year .40 Table 11: Asset position of the boat owners .41 Table 12: Fishing related risks & and their impacts on livelihoods at Gandara – Results of Pair-wise Ranking exercise 42 Table 13: Fishing related risks & and their impacts on livelihoods at Kottegoda- Results of Pair-wise Ranking exercise .43 Table 14: Climate change related risks & and their impacts in Gandara–Results of the Preference scoring exercise 46 Table 15: Climate change related risks & and their impacts in Kottegoda– Results of Preference scoring exercise 47 Table 16: Annual number of incidences of damage and loss of crafts and gear due to climate change 49 Table 17: Average number of non-fishing days due to climatic change related factors (days / year) .50 Table 18 :Different credit and insurance systems used by fishers in coping with fishing and climatic related risks and uncertainties in Southern Sri Lanka 52 ix Table 19: Comparison of Terms and Conditions of loans from different lenders .53 Table 20: Accessibility of different strategies used for fishing and climaticchange related risks and uncertainties in Gandara- Results of Preference Scoring Exercise 59 Table 21: Accessibility for the different strategies using for the fishing and climatic-change related risks and uncertainties at Kottegoda- Results of Preference scoring exercise 60 Table 22:Percentage distribution of fishers who use different methods to sell their fish catches .65 Table 23: Experience of fishers with boat tying arrangements 67 Table 24: Maximum to minimum loan amount received by borrower fisher 69 Table 25: Extent of indebtedness of the borrower to fish merchant 69 Table 26: Variation in ICMI (Indicative Cost of market Interlinkages) among fishers in the study area 70 Table 27: Advantages of boat tying arrangements- Preference Scoring 72 Table 28: Non- accountable goods and services receiving from merchantGandara 74 Table 29: Disadvantages of boat tying arrangements - Outcome of the Preference Scoring at Gandara 76 Table 30: Estimated correlation matrix results 78 Table 31: Table for coefficients .79 Table 32: Model Summary 80 Table 33: Model Summary .81 Table 34: Increase in non-fishing days under climatic-change scenarios 85 Table 35: The estimated values of ICMI response to the non-fishing days due to three Climatic-change scenarios .85 Table 36: Type of social relationship of borrower fishers with the lender-fish merchant 87 Table 37: The suggestions of fishers to improve the insurance and credit market for fisheries sector .93 x Appendix FGD Outcome - PR tools Table 3: Fishing related risks &and their impacts on livelihoods at Gandara–Results of Pair-wise Ranking exercise 134 Table 4: Fishing related risks & and their impacts on livelihoods at Kottegoda-Results of Pair-wise Ranking exercise 140 Table 5: Climate change related risks & and their impacts in Gandara–Results of the Preference scoring exercise 141 142 Table 6: Climate change related risks & and their impacts in Kottegoda–Results of Preference scoring exercise 143 144 Table 7: Accessibility of different strategies used for fishing and climatic-change related risks and uncertainties in GandaraResults of Preference Scoring Exercise 145 Table 8: Accessibility for the different strategies using for the fishing and climatic-change related risks and uncertainties at Kottegoda- Results of Preference scoring exercise 146 Can get credit on time Provide credit over the counter No need of collateral Can get credit any time Can borrow any amounts Can borrow for many/all purposes No fixed repayment periods Absence of interest Absence of documentation Do not require to participate for a auction and it is saving the time There are other non-accountable goods and services providing by the Mudalali Group 95 95 95 90 95 80 95 95 90 80 95 70 80 90 Group Group Group Group 90 95 85 95 90 95 90 80 90 85 90 85 90 95 90 90 85 80 85 90 70 75 70 75 90 95 85 90 90 80 90 75 85 80 75 80 75 70 80 75 90 90 95 95 65 70 75 60 70 75 70 60 90 90 95 80 Total marks 460 450 445 455 435 370 455 430 410 380 465 340 355 445 Average marks 92 90 89 91 87 74 91 86 82 76 93 68 71 89 Rank 11 10 13 12 147 Don’t have to put ice to the fish when handover fish to the merchant, because he is doing it by himself Can get credit while having previous indebtedness Easy to access Participant Table 9: Advantages of boat tying arrangements- Gadara- Preference Scoring Advantages of boat tying arrangements Average marks Rank 75 80 75 70 70 95 95 90 90 90 90 95 80 95 90 70 75 70 75 60 90 95 85 90 95 80 85 90 95 85 80 60 75 60 80 60 65 75 70 65 370 460 450 350 455 435 355 335 74 92 90 70 91 87 71 67 148 Need to perform other services to him free of charge Need to assist him in handling his disputes (non-fishing related) Having limited possibility to shifting debt Accept lower price than the auction price Fish merchants’ involvement as owner manager over the fishers’ assets Pressure exerted for loan repayment if fisher tried to handover catch to other one than fish merchant Total marks Have to provide all the catches only to the fish merchant, until fisher repaid all the debts Group Group Group Group Group Restricted freedom to make production decision Participant Table 10: Disadvantages of boat tying arrangements- Gandara- Preference Scoring Disadvantages of dealing with boat tying arrangements Appendix Tabulation sheet Data for Gandara No 10 11 CMIs (Rs) 0 37 0 0 38 0 Experience Availability Asset position of the Efficiency of of the borrower borrower of fishing alternative fisher fisher unit Income (Years) sources than fisheries 53 52 51 50 49 48 47 14 46 45 1 1 1 1 1 2 2 2 2 2 149 1629000 3830000 3787000 3699500 6009000 4096000 4212500 4537000 3952500 3829500 3630000 Average number of non-fishing days due to climaticchange related factors per year (Number) 91 90 107 90 92 89 90 90 108 90 90 Extent of repayment of debts to the lender merchant (%) 0 0 0 0 Kinship/friendship/ personal knowledge of the agents 2 2 2 2 Nonaccountable goods and services received from the lender merchant 0.8 2.8 0.4 1.2 0.8 0.8 0.4 3.1 0.8 0.8 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 0 0 0 0 0 34 0 35 16 36 10 12 0 0 44 43 42 41 40 39 38 37 36 35 34 16 33 26 18 10 15 15 17 31 22 23 25 30 24 29 23 1 1 1 1 1 1 7 7 7 7 7 7 2 2 2 1 2 2 1 2 2 150 3495000 3847000 4167000 3960000 3585000 10051000 4059000 7389500 4004500 4393000 3749000 4359500 6677000 14128000 5824500 3937500 4701000 4256000 4942000 10508000 4783000 5018500 9760000 4675000 4114000 5947000 6400000 90 90 90 90 90 90 90 90 90 90 90 105 90 90 92 105 96 106 93 89 93 92 90 90 90 90 90 0 0 0 0 0 0 0.166667 1 0.625 0.6 0.166667 0 0 2 2 2 2 4 3 3 2 0.8 0.4 0.4 0.4 0.4 0.8 0.4 0.4 0.4 0.4 0.4 3.2 0.4 0.4 1.4 3.1 1.8 1.5 0.4 1.6 1.5 0.4 0.4 0.4 0.4 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 13 17 0 18 20 25 0 40 15 26 28 30 32 28 16 22 20 27 21 14 26 19 13 20 25 19 21 24 18 12 17 11 3 3 4 4 4 4 4 2 1 2 2 1 1 2 2 151 6223000 4694000 4590000 4185000 4304000 4544000 4256500 4860000 4260000 4261000 4345000 5373000 4515500 5342000 4607000 4745000 4648000 4193500 4361000 4217000 90 94 90 96 90 90 96 90 98 98 90 88 108 90 94 90 98 102 103 103 0.769231 0.977778 0 0.9 0.714286 0 0.666667 0.991111 0.857143 0.8 0.769231 3 3 3 2 2 3 0.4 1.6 0.4 1.9 0.4 0.4 0.4 2.1 2.2 0.4 0.4 3.2 0.4 1.7 0.4 2.3 2.4 2.5 2.8 Data for Kottegoda No 10 11 12 13 14 15 16 17 18 19 CMI s (Rs) 0 10 0 0 0 0 0 0 0 Experienc e of the borrower fisher (Years) 36 53 59 62 50 46 38 36 33 34 35 38 36 34 38 35 36 41 46 Efficie ncy of fishing unit Availability of alternative Income sources than fisheries 1 1 1 4 4 4 4 1 2 2 2 2 2 2 152 Asset position of the borrower fisher 2797000 3782500 2698000 3643000 3965500 3269200 6614000 5635000 4855000 4736000 6079000 5222000 35136000 7986000 5802000 5305000 4033000 4706000 4096000 Average number of non-fishing days due to climatic-change related factors per year (Number) 90 90 90 94 90 90 90 93 90 90 90 90 90 90 90 92 90 93 90 Extent of repayment of debts to the lender merchant (%) 0 0.533 0 0 0 0 0 0 0 Kinship/friends hip/ personal knowledge of the agents 2 2 2 2 3 3 2 2 Nonaccountable goods and services received from the lender merchant 0.2 0.2 0.2 0.4 0.1 0.1 0.1 0.2 0.1 0.2 0.2 0.2 0.2 0 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 0 0 0 10 0 0 0 0 10 0 0 0 10 0 47 16 21 11 13 10 14 19 19 18 16 10 17 13 18 20 12 7 31 14 22 17 8 4 4 4 4 4 4 4 4 2 2 2 2 2 2 2 2 2 2 153 31975000 4570000 21825000 4288000 5075000 2882000 4039000 4457000 3071000 4604000 4065000 13447000 3983000 4748000 3975000 5151500 4051000 4724500 4020000 28635000 4882000 4060000 3021500 5712000 3955000 36346000 90 90 90 90 90 90 93 90 90 90 90 90 90 90 90 93 90 89 90 88 90 90 94 90 92 90 0 0 0 0.533 0 0 0 0 0.333 0 0 0 0.167 0 2 2 2 2 2 2 2 2 2 0.2 0 0 0.4 0 0.2 0.1 0.2 0.4 0 0.1 0.1 0.4 0.2 0 ... role of market interlinkages in coping with fishing and climatic related risks and uncertainties Specific objectives  To identify the diverse fisheries and climate- related risks and uncertainties... adapted as at Chandio (2017) with few modifications, describing as follows in figure 3.2 30 Role of Market Interlinkages in Coping with Fishing and Climate Related Risks in SmallScale Fisheries: Evidence... their role in coping with fishing and climate- related shocks, with a view to suggest means of correcting inefficiencies in the insurance and credit market in small- scale fisheries, aiming at