Economic impact of chitin production from shrimp shell waste in Kerala using economic surplus method

Abstract

Indian seafood export has been sustained largely by its shrimp exports. The total quantity of frozen shrimp exports during the two-decade of 1995-96 to 2015-16 was 34.35 lakh tones valued at about ₹1.43 lakh crores. In 2015-16, frozen shrimp contributed 40 per cent to the quantity exported and 66 per cent to its value. It is estimated that during the past two decades, the shrimp shell waste generated from the pre-processing units in Kerala was 13.74 lakhs tonnes. One of the products that can be produced from this waste is chitin, the technology of which has been standardized by ICAR-CFIT, Cochin. Chitin is the base material for chitosan which has wide applications in the pharmaceutical and other industries. Chitin production began in the year 1989. The quantity of shrimp shell waste generated depends on the shrimp export from Kerala and this waste forms the raw material for the seven chitin production units in the state. Based on the handling capacity of existing plants and availability of shrimp shell waste, the chitin production was estimated at around 630 tonnes during the study period (2016) valued at Rs.12 crores. In this paper, the Economic Surplus (ES) approach has been applied to study the chitin production in Kerala over 20 years. It has been estimated that the total surplus generated was ₹4798 crore, which is again divided into consumer surplus and producer’s surplus estimated at 42 per cent & 58 per cent respectively. It was evident that the producer’s surplus was higher than the consumer surplus in chitin production from the aggregate social benefit. This indicates that the enterprise is profitable even if there is increase in the production levels.