Shrimp farming commenced in mid 80’s as an export oriented activity in the north western province of Sri Lanka. Shrimp is a high value sea food, with a global market especially in Japan, the USA and Europe. With the development of shrimp aquaculture in Sri Lanka, the quantity of shrimp exports remarkably increased but subsequently indicated a drastic drop in both quantity and value due to frequent outbreaks of diseases. Sri Lanka experienced three major shrimp disease outbreaks in 1988-1990, 1996 and in 1998, intermittently which resulted in a severe collapse of the industry. A sample survey was conducted to examine the economic viability of the industry with the measures taken by National Aquaculture Development Authority (NAQDA) to counter further disease out breaks. This paper presents a comparison of economic performance of shrimp farming under desirable and undesirable conditions. Major inputs; the imported feed and energy costs per hectare incur a considerable amount of foreign exchange as the inputs are solely or partially consist of imported items. Operational costs were taken separately. The importance of disease control in an effective manner is imperative for optimization of value addition of exported shrimp products.