The Kerpan shrimp farm, half an hour’s drive from Alor Setar in Kedah, sits rather incongruously in the middle of vast rolling plains of green and gold padi fields that are dotted with traditional Malay village houses.

Here, we find a juxtaposition of the old and the new.

While many people in Kerpan are still dependent on rice farming and fishing for their livelihood, the shrimp farm is being developed into a fully integrated and innovation-based operation by Blue Archipelago Bhd, a unit of Khazanah Nasional.

Today, the Kerpan shrimp farm is beginning to net in the harvest, and employs about 500 people. Most of them come from the surrounding six villages. Many were landowners and paddy farmers before, but are now fully employed in the shrimp farm.

Take Ishak Hanafiah, a former landowner, for example. At 43, he has been working on the shrimp farm for several years now and takes home about RM2,100 every month. This does not include the bonus payment from a production incentive scheme that management put in place about two years ago.

Before working on the farm, Ishak says typically he could earn about RM1,000 from rice farming in six months, and RM9,000 only when the harvest was good. Working on the Kerpan farm, he says, has also enabled him to acquire technical skills.

The employees are given a chance to move up value chain through upgrading their skills. The Kerpan farm has introduced the Certificate in Shrimp Culture (CISA), a joint effort with UPM to provide a fully accredited skills training programme targeted at shrimp operators.

Yet, this has not always been the case.

The Kerpan shrimp farm, which was set up in the early 1990s as a joint venture between the Kedah state government and the Bin Ladin group of companies from the Middle East, did not really take off in the early days. Indeed, in the several years prior to 2008, Kerpan was almost an abandoned farm.

Two things worked against the farm during the initial years.

One was the timing  – at the time, the industry was still struggling to find a solution to one of the most challenging production problems – disease control. “At the time, knowledge was an art, not a science,” notes Dr Shahridan Faiez, the CEO of Blue Archipelago, which took over management of the farm in 2008. It has a 30-year concession to operate the shrimp farm.

Two, establishment of the farm involved the use of the Land Acquisition Act, incurring the ire of the local landowners who were forced to sell in the early 1990s.

And, 15 years after it was established, the Kerpan shrimp farm did not accomplish what it set out to do, which was to build one of most advanced shrimp farms in the country and to provide the people with an alternative and lucrative employment.

The farmers’ livelihood had not improved, their income was barely above the poverty line, and many of them had to employ multiple livelihood strategies.

The entry of Blue Archipelago changed all that. It engaged with the villagers, and at the same time, ensured that the farm met all the global best practices on shrimp farming, including protection of the environment.

Today, barely two years since the entry of Blue Archipelago, Kerpan is beginning to yield results. It has 226 grow-out ponds with the capacity to produce 1,500 tonnes of black tiger prawns or 4,000 tonnes of whiteleg prawns.

Kerpan is also big on technology and innovation, while R&D is given priority. The farm has a laboratory to test, among other things, diseases, the growth rate of the shrimps, and cleanliness of the ponds.

In fact, many of Blue Archipelago’s key management personnel do not have a track record in shrimp farming but  come from the manufacturing sector, including multinational corporations such as Goodyear and Philips.

Efforts are ongoing to put in place a hatchery and processing plant to bring about vertical integration of the operations, and these are expected to be in place by the middle of this year. The shrimp farm is expected to take off in a big way once it is fully integrated, with the ability to supply shrimp to markets in the European Union, Japan and the US.

Already, Kerpan has begun to attract the attention of some of the biggest buyers of shrimp in the world. These include  Mitsubishi Corp, Japan’s largest general trading company and Darden Restaurants Inc, a US-based multi-brand restaurant operator.

According to news reports, Mitsubishi has expressed interest to work with Blue Archipelago to develop shrimp farming on an industrial scale in Malaysia. “There is potential to develop a partnership with Mitsubishi, especially in terms of marketing … that is market the shrimp under the Mitsubishi brand,” an industry observer says.

This article appeared in Corporate page, The Edge Malaysia, Issue 796, Mar 8-14, 2010.