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Economic and market analysis of the live reef fish food trade in Asia-Pacific
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Project ID
FIS/2002/105
Commissioned Organisation
Australian National University, Australia
Project Leader
Dr Brian Johnston
njvj@iimetro.com.au
Phone:
02 6125 6555
Fax:
02 6125 0767
Project Budget
$413,070.00
Start Date
01/07/2004
Finish Date
31/12/2006
Extension Start Date
01/01/2007
Extension Finish Date
31/03/2007
ACIAR Research Program Manager
Mr Barney Smith
Related publications
Overview Objectives
This project aims to enhance the sustainable economic development of the live reef food fish trade, through economic analysis of policy options for improved market performance.
Project Background and Objectives
The fish markets of Hong Kong and southern China place a price premium on live fish. This trade is now worth an estimated $US350 million a year. Fish are in demand for a number of factors; type, colour, taste and rarity. With population and economic growth continuing in southern China and Hong Kong and demand for live fish spreading beyond these markets it is anticipated that demand will rise substantially.
For many coastal communities the potentially lucrative returns from tapping into these markets have not been matched by the realities. A number of developing countries; Indonesia, Papua New Guinea, Vietnam, Fiji and other Pacific Islands are involved in the trade. For smallholder suppliers prices received for fish are usually low, reflecting the risk carried by those moving live fish from these areas to Hong Kong and China.
These low prices often result in overfishing to ensure greater returns. This threatens the sustainability of wild fisheries particularly where destructive practices are used. Another factor contributing to overfishing is a lack of knowledge of what fish species are desired by consumers. Knowing consumer preferences would allow more targeted fishing helping to alleviate stresses on wild fisheries through the development of sustainable management plans. It would also provide a focal point for aquaculture and mariculture enterprises and research to enhance productivity in these. Policy options to support the trade, including improving existing market supply chains, would also be possible.
Progress Reports (Year 1, 2, 3 etc)
Year 1:
Substantial progress has been made on the project in the first twelve months. Key tasks completed include data collection and analysis of the live reef fish trade in the Asia-Pacific, preparation and execution of a Pacific workshop and completion of a number of research papers. The project has developed collaborative partnerships with a number of key players including the Agriculture, Fisheries and Conservation Department of the Hong Kong Government, which has assisted with data provision, the ACIAR researchers working on grouper aquaculture, the World Fish Centre based in Penang, Malaysia, the Indonesian Center for Marine and Fisheries Product Processing and Social Economics and the Marine Resource Economics Department of Bogor University. Six Pacific countries with an involvement in the trade (Fiji, PNG, Kiribati, Solomon Islands and the Federated States of Micronesia) and the Indonesian representatives participated in the Workshop held in Noumea, New Caledonia in March 2005. The participants were highly supportive of the project and indicated a strong willingness to participate in future stages of the project, including provision of data on their fisheries. The Workshop proceedings are currently being edited prior to publication.
The key research tasks completed include :
Overview of the live reef fish market in Hong Kong
Johnston, BG 2004 Researching the economics and marketing of live reef fish for food in the Asia-Pacific, APEC Economies Newsletter 8(9), Asia-Pacific School of Economics and Government, September
Johnston, BG 2004 "Issues in the Live Reef Fish Food Trade into Hong Kong", seminar presented to the Asia-Pacific School of Economics and Government, Australian National University, Canberra , September.
Johnston, BG 2005 Economic and Market Analysis of the Live Reef Fish Food Trade in Asia-Pacific, paper presented to the Noumea Workshop, New Caledonia, 2-4 March.
Muldoon, G, Peterson, E. and Johnston, B. 2005. Economic and Market Analysis of the Live Reef Food Fish Trade in the Asia-Pacific. Presentation to joint ACIAR projects meeting (FIS/2002/077 and ADP/2002/105), Hanoi, Vietnam, 4-5 June 2005
Pacific Workshop on Live Reef Fish
Johnston, BG and Yeeting, B. Live Reef Fish Trade in the Asia-Pacific : Workshop Outcomes. Prepared for the Live Reef Fish Information Bulletin, SPC, Noumea (forthcoming)
Johnston, BG and Yeeting, B (Editors) "Workshop on Live Reef Fish Trade in the Asia-Pacific", ACIAR Workshop Series, (forthcoming)
An analysis of the demand for live reef fish in the Hong Kong market :
Petersen, E.H. 2004. Finding Nemo: Estimating import demand for live reef food fish. Paper presented at the 7th Asian Fisheries Forum, 29 November to 3 December 2004, Penang, Malaysia.
Market chain analysis
Muldoon, G. 2005. Market chain analysis for the trade in live reef food fish. Paper presented at the 1st Workshop of ACIAR Project ADP/2002/105: "Economics and Marketing of Live Reef Fish for Food in the Asia-Pacific", Noumea, New Caledonia, 2-4 March 2005.
Muldoon, G. and Johnston, W. 2005, Development of a spreadsheet model of the market chain for live reef food fish trade. Unpublished paper.
Bioeconomic modeling approaches
Muldoon, G. 2005. Bio-economic model development issues applications to coastal fisheries, Paper presented at the 1st Workshop of ACIAR Project ADP/2002/105: "Economics and Marketing of Live Reef Fish for Food in the Asia-Pacific", Noumea, New Caledonia, 2-4 March 2005.
A Masters student studying at the Asia-Pacific School of Economics and Government (APSEG), Australian National University, Canberra is developing a consumer survey to be implemented in Hong Kong in September 2005. The purpose of the survey is to ascertain consumer attitudes to the role of aquaculture product to substitute for wild-caught fish in the market, and the implications of this for future labeling of the source of live reef fish sold in the market.
Year 2:
Further substantial progress has been made on the project in the second twelve months. Key tasks completed include the publication of the proceedings of the first workshop which was held in Noumea, New Caledonia, 2-5 March 2005 (Johnston and Yeeting 2006). The first workshop brought key researchers from around the Asia-Pacific together for the first time in order to present the project to the Pacific Island countries involved in the trade. The workshop was successful in gaining their participation, including the sharing of information among fishery managers and discussion of the potential usefulness of the modeling approaches being developed for the project. The first workshop also secured the ongoing participation of Indonesian fishery researchers.
A second workshop for the project was hosted by the World Fish Centre (WFC) in Penang in March 2006. This provided the opportunity researchers to present the major findings of their research for peer group review and to identify critical gaps in the research to date.
The workshop covered five key areas :
Demand for Live Reef Food Fish
Developments in Aquaculture
Analysis of the Market Chain
Regulation and Management of the Trade
The participants at the second workshop agreed that the final stages of the project needed to focus on developing projections on further development of the LRFF trade, taking into account likely constraints on growth in the wild-caught sector which in many cases was already fully or over-exploited. In contrast, scope for expansion exists in the aquaculture sector of the LRFF trade, particularly as the technology of hatchery production of higher value species becomes more widely adopted. The aquaculture sector dependent on juvenile fingerlings or young fish caught from the wild is also likely to be highly constrained due to reduced stocks of wild fish.
The model developed by the WorldFish Center has considerable potential to provide projections of supply and demand of LRFF from the major Asian countries already participating in the trade or developing major aquaculture capacity, such as China. It was agreed the model be extended to include all major Asian producers (Indonesia, Malaysia, Philippines, Thailand), China and 'Other' (which includes Australia and Pacific Island countries). There is a need to include both the wild capture and aquaculture sectors in each country and two categories of production, low priced species and high priced species. Demand would be modeled for Hong Kong and China. The market chain model also has considerable scope for further development, to include case studies of Asian and Pacific Island country fisheries and to include risk analyses. The information collected on the Indonesian fishery would provide a strong basis for a case-study, for example.
A key challenge for the future is to identify management arrangements that would effectively constrain fishing effort in many wild-caught fisheries and stamp out unsustainable practices that damage coral reefs, such as cyanide and use of explosives. The team will focus on these issues in the next stage of the project, to identify potential benefits and costs of improved management arrangements for the wild-caught fisheries across Asia and the Pacific. The potential for aquaculture to meet the rising demand for live reef fish as incomes grow across Asia and China is promising, but there are many issues warranting ongoing research. This economics and marketing project is closely integrated with the ACIAR marine finfish aquaculture project being co-ordinated by Dr Rimmer. Key issues for further research and development are focused on improving the long-term sustainability of aquaculture to support the LRFF trade as well as other markets. These include improving the quantity and quality of seedstock supply from hatcheries, developing sustainable grow-out feeds, documenting and promoting best management practices and addressing market issues. The growing affluence of China is a key demand issue to be studied, as is the current stated consumer preferences for wild-caught over aquaculture product. Consumers also seem to have a growing awareness of the negative impacts of both capture fisheries and aquaculture, and demand is increasing for sustainably-produced products. Improving the sustainability of the LRFF trade through both capture fisheries and aquaculture remains a significant challenge for fishers, traders, merchants and governments.
A number of follow-up actions were initiated from the workshop. The WorldFish Center is being contracted to extend the Live Reef Fish model to include China and Thailand as supplying countries, to include two broad categories of LRFF - higher and lower value species and to allow welfare effects to be captured in the model output. The market chain model is to be further developed to include risk analysis and to develop two possible case studies - one for a Pacific country and one for Indonesia. The demand analysis is to continue, to incorporate later data where this is available. All authors are continuing to develop their papers in preparation for publication in the final report for the project, due in 2007.
Project Outcomes
The project has provided a comprehensive analysis of the key factors driving the future sustainability of the live reef food fish trade (LRFFT) across the Asia-Pacific and has provided a future blueprint for the key issues that need to be tackled by governments and fishers if future sustainability is to be assured. It has also developed a number of key analytical tools that can be used by economists and scientists to analyse the sustainability of live reef fish for food (LRFF) in the countries of the Asia-Pacific that currently supply the trade. Researchers from Pacific and Asian countries who participated in the work are now in a position to take the work forward in response to government requests for advice on the sustainability of supply and trade from their countries.
The research found that there were the following four critical areas where sustainability of the trade needed improvement:
1. Better governance of wild-caught fisheries: In general, live reef fisheries provide valuable export commodities for small-scale fishers throughout Asia-Pacific. However, these livelihood benefits are threatened due to poor governance and management of these fisheries leading to over-exploitation and the dissipation of fishery rents. Numerous strategic plans and actions have been initiated throughout Asia-Pacific such as banning the use of cyanide and explosives, advocating responsible fishing practices and encouraging aquaculture. However, many of these initiatives have not been legislated, preventing their enforcement. If they have been legislated, implementation and enforcement have been poor. Strong engagement by policy makers, fishing communities and other decision makers is required to assess and reform current governance structures to ensure economic, environmental and social sustainability of the fisheries.
2. Sustainable development of reef fish aquaculture: Culture production and technology of reef species has improved significantly since its inception in the late 1990s. There are two significant opportunities for aquaculture of live reef fish species. The first is to ensure the regional poor can benefit from the wider adoption of this technology. The second is to reduce stress on coral reefs from captured supply. The ability of the aquaculture sector to realise these opportunities depends on how well it relieves its dependence on wild-stocks for fry, fingerlings and food; minimises the impact of disease and deformity; reduces the interest costs on borrowed capital for aquaculture investments; minimises pollution from nutrient discharge and markets the acceptability of cultured fish as a substitute for wild-caught LRFF.
3. Integrated policies for assisting low-income fishing communities: Demand for live reef fish, especially in Hong Kong and mainland China, is expected to increase due to income growth, population growth, and the change in preferences towards fish prepared in this way. As a result the trade is expected to increase in the future. Trade volumes of cultured fish are expected to increase as production expands, particularly in China. The trend is the opposite for wild-caught fish, for which trade volumes are expected to decrease because of over-utilisation of the resource. There is scope to improve the management of reef fisheries by controlling overfishing, but this may require restricting current fisher access to the reefs, causing disruption of their livelihoods. It is therefore important that aquaculture development be closely integrated with existing wild-caught fisheries to provide new economic opportunities to these relatively low income fishing families.
A coordinated policy response in each live reef fish exporting country to simultaneously improve the governance of reef fisheries and sustainable development aquaculture technology will help ensure that no section of the community is excluded from benefiting from expansion in the live reef fish trade. Without this coordinated policy, there is a risk that low-income fishing communities or fish farmers will not benefit from the livelihood benefits of the live reef fish trade.
4. More informed consumer choices: Consumers currently seem to have definite preferences for wild-caught product over cultured product, and express a willingness to pay significantly higher prices for these fish. Preferred characteristics of wild-caught produce include better freshness, better smoothness, a stronger flavour, improved 'mouthfeel' texture, more elastic skin and more tender flesh. However, little is known about consumer preferences for cultured reef fish that have been fed on different diets and further research on consumer tastes is required.
Consumers in Hong Kong exhibit a high willingness to change consumption behaviour if given sufficient conservation information regarding their live reef fish purchases. The Hong Kong aquaculture industry is currently trialling a Certified Fish Tag Scheme for aquaculture producers to comply with certain environmental standards.
A successful ecolabelling system is expected to have positive effects on the supply of live reef food fish by encouraging consumers to purchase them, improve the biological sustainability of reef fisheries, and provide ongoing employment opportunities and incomes for fishers, fish farmers and those supplying to input markets of these products.
Location
There are no project locations defined for this project.
