Main markets and trade characteristics
In the past decade, in line with the increased growth of global aquaculture production, there has been an impressive development of trade in many aquaculture products based on both low- and high-value species, at all levels of market. In addition, consumers’ tastes and preferences for aquaculture products also vary, with markets catering to demand for live aquatic animals to a variety of processed products. While the demand for aquaculture products continues to increase, there is a growing recognition of quality and safe products by consumers. In response to such concerns, issues such as food safety, traceability, certification and ecolabelling are becoming increasingly important and are thus considered a high priority by countries engaged in aquaculture.
Globally, fish is a valuable traded commodity, representing a significant source of foreign exchange earnings, in addition to its important contributions to employment creation, income generation and food security. In 2008, about 39 per cent (live weight equivalent) of world fish and fishery products was internationally traded as various food and feed products, compared with 25 per cent in 1976 (FAO, 2010a). In general, this increase in volume is a reflection of the sector’s growing degree of openness to, and integration in, international trade. Some of the specific factors that have contributed to this rise are: growing globalisation of the fisheries and aquaculture value chain; outsourcing of processing to countries where comparatively low wages and production costs provide a competitive advantage; increasing consumption of fishery commodities; favourable trade liberalisation policies; and technological innovations, including improvements in processing, packaging, transportation and changes in distribution and marketing that have significantly changed the way fishery products are prepared, marketed and delivered to consumers.
In 2008, world exports of fish and fishery products reached a record value of US$102.0 billion, which was nine per cent higher than in 2007 and nearly double the corresponding value in 1998 (FAO, 2010a). Trade in fish and fishery products was affected by the financial crisis that began in late 2007 and erupted into a full-blown economic crisis in late September 2008. Preliminary estimates indicate that fish trade declined by seven per cent in 2009 compared with 2008. However, there have been increasing signs that in 2010 fish trade began to recover in many countries and the long-term forecast remains positive (Box 8).
The top-ten exporters of fish and fishery products in 1998 and 2008 are shown in Table 4. China, Norway and Thailand are the top three exporters, with China alone contributing almost 10 per cent, or about US$10.1 billion. A growing share of China’s fishery exports consists of reprocessed raw material. China’s fishery imports have registered a significant increase, up from US$1 billion in 1998 to US$5.1 billion in 2008, when it was the sixth-largest importer. Viet Nam, the sixth-largest exporter of fish and fishery products in the world, has also experienced significant growth, up from US$0.8 billion in 1998 to US$4.6 billion in 2008.
Viet Nam’s export growth has been triggered by its flourishing aquaculture industry, in particular in the production of striped catfish and of both marine and freshwater shrimp and prawns. Developing countries, including China, Thailand and Viet Nam, accounted for 50 per cent (US$50.8 billion) of world exports of fish and fishery products in value terms and 61 per cent (33.8 million tonnes in live weight equivalent) in terms of quantity. Net exports of fish and fishery products (i.e. the total value of fish exports less the total value of fish imports) by developing countries are higher than those of several other agricultural commodities, such as rice, meat, sugar, coffee and tobacco.
Net exports increased significantly from US$9.8 billion in 1988 to US$17.4 billion in 1998 to US$27.2 billion in 2008. In 2008, world imports also reached a new record of US$107.1 billion, up nine per cent on the previous year and up 95 per cent with respect to 1998. Japan, the United States of America and the EU are the major markets, accounting for about 69 per cent of world imports in 2008. Developed countries as a whole are responsible for about 78 per cent of all imports by value and 58 per cent by volume, indicating the higher unit value of commodities imported. About 50 per cent of the import value of developed countries originated from developing countries.
|United States of America||2400||4463||6.4|
|Netherlands||1 365||3 394||9.5|
|Top Ten Subtotal||23225||51695||8.3|
|Rest of World Total||28226||50289||5.9|
|United States of America||8576||14135||5.1|
|Germany||2 624||4 502||5.5|
|Republic of Korea||569||2928||17.8|
|TOP TEN SUBTOTAl||39534||67377||5.5|
|REST OF WORld TOtAl||15517||39750||9.9|
|Note: APR refers to the average annual percentage rate of growth for 1998–2008.
source: FAO (2010a).
An increasing trend in global fisheries trade is the emergence of new markets for some of the relatively low-value species. While the focus of trade in global markets is mainly on high-value species such as shrimp, salmon, tuna, seabass and seabream, a number of high-volume but relatively low-value species such as tilapia and catfish are also traded in large quantities, not only nationally and within major producing areas (such as Asia and South America), but also at the international level. Many of these species are farmed (FAO, 2009a). The striped catfish industry in Viet Nam provides an interesting story of the successful development of a market for such a species (Box 9).
On the other hand, demand for high-value farmed species such as salmon is also increasing and opening up new markets in both developed, transition and developing countries. The increase in demand for farmed salmon, as in the case of other farmed species, is facilitated by the expansion of modern retail channels and supermarkets and by the availability of product throughout the year in various processed forms (e.g. fillets or loins). In the past two decades, the growth of supermarkets in the developing world, especially in several countries in Asia and Latin America, has been considered a “supermarket revolution”, targeting not only higher-income consumers but also lower- and middle-income consumers. Indeed, the rapid growth in the early 2000s in China, Indonesia, Malaysia and Thailand has continued, and the “newcomers” – India and Viet Nam – have grown even faster (FAO, 2010a; Reardon, Timmer and Minten, 2010). Supermarkets offer consumers a wider choice, reduced seasonal fluctuation in availability and, often, safer food.
In order to gain wider access to export markets, there is a clear need for aquaculture farmers to improve the quality and safety of their products. However, it also needs to be emphasized that, alongside quality and safety issues, supermarkets and retailers around the world, largely in developed and importing countries, are demanding, on behalf of their customers, increasingly detailed requirements based on environmental and ethical criteria. With the more stringent requirements of export markets, small-scale farmers are facing difficulties in producing for export. As they strive to meet such consumer requirements, they may become uncompetitive owing to the high cost of compliance. This lack of competitiveness could lead to their marginalisation or exclusion from markets. Thus, empowering small farmers to become competitive in global trade is becoming urgent and, perhaps, a significant corporate social responsibility.
As a consequence, there is a need for policy-makers to emphasise these aspects when improving governance of the trade sector. They must be aware that policies can be much more effective if producers participate in decision-making and regulatory processes. Such recognition has already led many governments to build national capacities to assist producers and processors in complying with mandatory food safety regulations, while empowering farmers and their associations for greater self-regulation. This move is contributing to improving the management of the sector at the farm level, typically through the promotion of BMPs and “codes of practice” of well-organised associated producers, as well as collaboration between producers, government agencies and expert (R&D) institutions.
In this regard, several approaches are being tried to link small farmers to supermarkets, for example, by establishing collection centres and forming farmer companies. In the past decade, with the entry of China into the World Trade Organisation (WTO) in 2001 and that of Viet Nam in 2007, all major fishing or fish-farming countries, other than the Russian Federation (which is at an advanced stage of negotiations to join the WTO), are now members of the organisation.
Along with the growing membership of the WTO, both bilateral and multilateral trade agreements have played an increasingly important role in international trade in aquaculture products. Notwithstanding WTO rules and regulations that are meant to level the international trading field, an issue of growing concern to the global aquaculture export market is the use of different trade barriers to protect local markets from foreign competition. Cases cited as an example refer to the United States of America’s application of antidumping tariffs on exports of striped catfish from Viet Nam, salmon from Chile and Norway, and shrimp from Brazil and Ecuador (FAO, 2006c; FAO/NACA, 2011; Olin, Smith and Nabi, 2011; Wurmann, 2011).
However, a recent impact assessment (Duc, 2010) of antidumping measures on the export of catfish from Viet Nam has shown that the tariff raised the United States domestic price of processed catfish and lowered the Vietnamese export price, but this lowering caused by the United States tariff raised market demand outside the United States of America and consequently boosted the Vietnamese export volume of catfish.9 The study concluded that the antidumping measures were not favourable to United States consumers and in fact harmed the United States catfish industry.
In all regions except Western Europe and North America, the lack of adequate and quality infrastructure support remains a constraint on further development of both domestic and international markets for aquaculture products. This type of support broadly falls into two categories: support that is internal to the sector, such as establishment of quarantine facilities; and support that is external to the sector but benefits the sector as well, such as transportation and power facilities. For domestic markets, a network of quality roads that connects rural producers, particularly small-scale producers, to urban and peri-urban market centres is essential to increase profitability and competitiveness of business and to stimulate aquaculture growth.
Harvest and post-harvest services
An important feature of the global fish-processing industry is that there is enormous diversity within and between the regions in terms of species processed, product forms supplied and processing techniques used (Box 10). Fish is one of the most versatile food commodities and can be utilised in a variety of ways and product forms. It is generally distributed as live, fresh, chilled, frozen, heat-treated, fermented, dried, smoked, salted, pickled, boiled, fried, freeze-dried, minced, powdered or canned, or a combination of two or more of these forms (FAO, 2009a). In the past decade, fuelled by changing consumer tastes and concerns for food quality and safety, there have been significant advances in technology (e.g. refrigeration, ice making and other fish-processing equipment), packaging and logistics, making the processing sector more efficient in terms of higher yields and financial returns.
In developed countries, sophisticated production equipment and methods are used and the focus is on convenience foods such as ready and/or portion-controlled, uniform-quality meals. In many developing countries, there is a trend towards increased processing, ranging from simple gutting, heading or slicing to more advanced value-addition, such as breading, cooking and freezing, depending on the commodity and market value. Some of these developments are driven by increasing demand in the domestic retail industry or by a shift in cultured species, for example, the introduction of Litopenaeus vannamei in Asia.
There has been an increasing globalization of the fisheries value chain, with more and more processors in developing countries being contracted by firms that are mostly located in developed countries. The increasing practice of outsourcing processing depends on the species, product form, and cost of labour and transportation. There are many cases where processors in developed countries are facing reduced margins because of increased competition from low-cost processors in developing countries. Another parallel development is the integration of processing and producing activities. For example, large producers of farmed salmon, catfish and shrimp in developing countries have established advanced processing plants to improve the product mix, obtain higher yields and respond to evolving quality and safety requirements in importing countries.
At the regional level, in the EU, the value of processed fishery products was about €18 billion a year, almost twice the value of landings and aquaculture production combined (Váradi et al., 2011). The processed products include preparations and canned fish (€6.7 billion), followed by fresh, chilled, frozen, smoked or dried fish (€5.2 billion). According to an EU resolution, the main challenges the processing sector faces are: growing competition regarding final products because of the general WTO policy of reducing tariff barriers; and unfair competition owing to a lack of instruments to ensure the traceability of imported fish. In terms of employment, more than 135 000 people are engaged in the processing sector, many of whom work in firms with 20 employees or fewer.
There has, however, been a decreasing trend in employment owing to closures of inefficient small firms or the merger of small firms with large firms. In the Asia–Pacific region, the processing sector is largely labour-intensive and consequently provides significant employment opportunities, contributing to food security and general well-being. The processing sector is also contributing to the empowerment of women as, in most instances, the majority of the employees are females. The spectacular development of export markets for three freshwater finfish species groups (catfish, tilapias and carps) has created ancillary developments in the processing sector as well. Another major development in Asia has been the practice of outsourcing processing of fish. For example, whole fish from European and North American markets are sent to Asia (China in particular, but also India and Viet Nam) for filleting and packaging, and are then re-imported.
A study of the market chains for a number of low-value cultured aquatic commodities (catfish, snakehead and roho labeo) in the Asia region (De Silva, 2008) found that, in all cases, the profit margin at each stage of the value chain was 10–12 per cent on average, except at the retail point in the importing country. For example, roho labeo exported at approximately US$1.2–1.3 per kilogram costs the consumer in Rome, Italy, US$8–9 per kilogram. The wide difference in margins raises the issue as to how farmers, particularly small-scale farmers, could obtain higher farmgate price, in other words a higher share of the retail price. In this regard, FAO and the Norwegian Agency for Development Cooperation (NORAD) have initiated a comprehensive value-chain analysis of the international fish trade and food security, with a focus on arriving at policies that will safeguard the interests of small-scale producers. Case studies covering small-scale sectors in ten developing and two developed countries will analyse the factors that determine prices and margins throughout the value-chain, as well as the distribution of benefits among the various stakeholders.
In Latin America and the Caribbean, larger producers often process their own products, as in the case of salmon, and transfer them to “brokers”, even in the country of destination. For larger outputs, products are sent to the nearest cities that have cold storage facilities and processing plants.
In the African context, the scale of processing, both in technical and value terms, is significantly smaller. In response to the preference of urban consumers for more standardised produce and “easy/ready to prepare” commodities, there has been a growth in artisanal-type fish dressing industries at farmgates and markets. There are also instances of wholesale sellers handling produce in coolers and minivans for sale in distant markets. In some cases, to add value to their products, sellers, essentially women, sell larger pieces of smoked or dried fish. Post-harvest handling and packaging are limited to molluscs and crustaceans that are exported.
Food safety requirements
An encouraging trend is that governments, along with the private sector, are paying greater attention to consumers’ and other stakeholders’ growing concerns about fish food safety (e.g. antimicrobial residues and harmful micro-organisms). Consequently, compliance with international food safety standards has improved. There is, however, a need for support to further capacity building in many developing countries to meet the increasingly stringent requirements for export.
Exporting countries recognise that such continuous capacity-building support is critical as, based on past experience, the economic impact of the presence of human health hazards in aquaculture products can be devastating. Cases of detentions or rejections of consignments of aquaculture products under the EU alert system for food and feed highlight the magnitude of such impact. For example, in 2005, 177 consignments were detained or rejected, representing 48 per cent of the total and an estimated cost of US$9.3 million. The main causes of detentions/rejections were microbial hazards (38 per cent), nitrofuran (27 per cent), malachite green (20 per cent), sulphites (13 per cent) and other residues (three per cent)(Subasinghe and Ababouch, 2009).
In terms of regional status and performance with regard to food safety issues, a core objective of the 2002 European strategy for sustainable aquaculture development – to “assure the availability to consumers of products that are healthy, safe and of good quality, as well as promoting high animal health and welfare standards” – is generally being successfully implemented. In North America, the Canadian Food Inspection Agency (CFIA) regulates food safety and food quality of fish and seafood exported from and imported into Canada. Processors engaged in exports are required to register with the CFIA and should have an in-plant Quality Management Programme.
For inspection of imports, which consists of risk-based sampling and management, the CFIA also uses the services of other countries having reliable inspection systems. The regulatory arrangement in the United States of America is similar, with the responsibility shared between the Food and Drug Administration and the National Oceanic and Atmospheric Administration (NOAA).
Most Latin American and Caribbean countries have plant certification programmes run by their health authorities, two of which stand out – the Standard Sanitary Operation Procedure (SSOP) and the Hazard Analysis and Critical Control Point (HACCP) system – and are applied for exports, including those to the United States of America and the EU markets. Institutions in some countries also have the capacity to carry out residue control programmes in aquaculture operations and in plants through traceability, and their certification guarantees the quality of aquaculture products (FAO, 2006c).
The Asia–Pacific region, having a number of leading exporters and importers, also attaches great importance to food safety issues and compliance with international standards. For example, in China, the recent report of unacceptable levels of drug residues occurring in some exported products has received the highest attention of policy-makers. Some of the measures taken to strengthen the “quality and safety” management work include improvements in the Quality and Safety Standard System and the Examination and Test and Certification System, and improvements in the related laws and regulations. The Government’s commitment to address quality and safety issues is further reflected in the Ministry of Agriculture’s Action Plan on Transformation Growth Mode of Aquaculture, which aims to promote the transition from the “high productivity” mode to the “quantity and quality” and “profit and ecology” mode of aquaculture development (Zhou, 2007).
Thailand and Viet Nam, two of the other top-ten exporters of fish and fishery products in the world, have also taken initiatives with regard to compliance with food safety standards (FAO, 2006c). In 2003, Thailand launched a comprehensive food safety and quality (“farm to plate”) programme, and declared 2004 as “Food Safety Year” to increase awareness and improve systems for safe aquaculture production. In 2004, Viet Nam also intensified its efforts towards improving the food safety and quality of its products, particularly those for export, through a wide-ranging programme including farmers’ education. Based on experience gained over the years, the countries continue to build on these initiatives.
In Africa, food safety is an issue that is receiving increased attention from many countries, including those that are working to meet EU regulations on safety and quality control, which will be a requirement for their emerging export sector (Satia, 2011). While several countries in the region have adopted SSOP and HACCP programmes in the context of capture fisheries, few countries have aquaculture-specific facilities. The countries are, however, taking measures to address this shortcoming, including significant capacity building and training of producers, exporters and other stakeholders, often with technical assistance provided by FAO. While this approach to enhance export capacity is no doubt desirable, governments simultaneously need to develop strategies to safeguard small-scale producers from the impacts of compliance with stringent international trading standards.
Certification and organic aquaculture
Driven by concerns that some forms of aquaculture are environmentally unsustainable and socially inequitable, there have been various attempts in recent years to respond to the consequent public perceptions and market requirements. Policy and regulations governing environmental sustainability have been put in place in many countries, requiring aquaculture producers to comply with more stringent environmental mitigation and protection measures. Food safety standards have been raised and international trade regulations tightened. In some countries, these changes were initiated by the aquaculture sector itself, usually within the more organized private industry sector to ensure its sustainability and protect operations from poorly managed activities. Both government and the private sector in all regions have made significant advances in the management of aquaculture, and there are many examples of improved and better management that have reduced environmental impacts and improved efficiency, including profitability.
The need to respond to environmental and consumer concerns on aquaculture production and the drive to secure better market access have led to increasing interest in certification of aquaculture production systems, practices, processes and products. For example, recent legislation in both Europe and the United States of America requires mandatory certification to identify whether aquatic products are produced from aquaculture or are wild caught. These markets increasingly recognize that some form of certification is a way of assuring buyers, retailers and consumers that fishery products are safe to consume and originate from aquaculture farms adopting responsible management practices. FAO’s programme to provide capacity-building support in the area of food safety to developing countries is focused on food standards linked to the Codex Alimentarius and developed in close collaboration with the World Health Organisation. The Codex Alimentarius includes standards for all principal foods (whether processed, semi-processed or raw) for distribution to the consumer, with provisions related to food hygiene, food additives, pesticide residues, contaminants, labelling, presentation, methods of analysis and sampling. The Codex Secretariat, housed in the FAO Nutrition and Consumer Protection Division, has primary responsibility for normative work on food safety.
There is, however, a need for harmonization of product quality and safety standards within aquaculture, implying increased development and wider use of internationally accepted, scientifically based standards. The principles of achieving harmonization of standards and equivalence in food control systems and the use of scientifically based standards are embodied in two binding agreements of the WTO: the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement). The SPS Agreement confirms the right of WTO member countries to apply measures necessary to protect human, animal and plant life and health. The objective of the TBT Agreement is to prevent the use of national or regional technical requirements or standards in general as unjustified technical barriers to trade.
In several countries, aquaculture producers are introducing environmental certification of aquaculture products, either individually or in a coordinated manner, in order to demonstrate credibly that their production practices are non-polluting, non-disease transmitting and/or non-ecologically threatening (FAO, 2006a). The success of these certification schemes, however, is yet to be demonstrated. Some countries are attempting to introduce State-mediated certification procedures to certify that aquaculture products are safe to consume and farmed in accordance with certain environmental standards (Subasinghe and Phillips, 2007). However, most of the work done on improved management leading to better production practices and products has been on salmon and shrimp, mainly because of their high commodity value, cost absorption capacity and the importance attached to them as the most internationally traded products.
Socially responsible aquaculture is also high on the agenda in certain markets, and certification is one way to verify the effort put into working towards a more socially sustainable aquaculture sector. It is now widely accepted that aquaculture should be conducted in a socially responsible manner, within national rules and regulations that benefit the workers, small-scale farmers, local communities, investors and the country, and in a way that contributes effectively to rural development, poverty alleviation and food security and delivers benefits to the local community and surrounding resource users.
Another important issue in aquaculture certification is animal health and welfare. In essence, aquaculture should be conducted in a manner that assures the health and welfare of farmed aquatic animals by minimizing stress, optimising health, reducing aquatic animal disease risks and maintaining a healthy environment at all phases of the culture cycle.
At the global level, there have been two significant developments in the area of aquaculture certification. The first is FAO’s work on the development of international guidelines on aquaculture certification (Chapter 4). The second is the ongoing initiative of the World Wide Fund for Nature (WWF) to develop global standards for the responsible aquaculture of 12 species (shrimp, salmon, abalone, clams, mussels, scallops, oysters, Pangasius, tilapia, trout, Seriola and cobia) that have the highest market value and/or the heaviest trading in the world market. The standards, which are expected to be finalised in 2011, focus on minimising or eliminating the key negative environmental and social impacts. It is expected that the certification process for these standards will be overseen by a new organisation, the Aquaculture Stewardship Council (WWF, 2010).
In support of the environment, some producers in the food sector in general have been promoting the sale of organic products and, in the process, earning a premium by differentiating themselves from other producers. Organic aquaculture is relatively new and limited to relatively few countries and species. In Europe, there were initial obstacles related to its introduction, one of which was the lack of common standards for the markets of the EU and the United States of America. Globally, there are about 30 non-governmental certifiers, 18 of them in the EU. Salmon and trout are the main organic species in the EU (Váradi et al., 2011). In North America, there is at present no legal definition of what constitutes organic aquaculture (Olin, Smith and Nabi, 2011). The National Organic Standards Board established an Aquatic Task Force and Aquaculture Working Group in 2000 to examine issues and formulate recommendations, and the work is progressing well. In Canada, there is currently only one company that holds ecocertification – the company certifies Atlantic salmon. Another company practises organic farming, raising only chinook salmon. In 2008, the industry initiated the Canadian Aquaculture Standards Forum to promote common understanding and capacity building with regard to standards and certification.
Role of producer associations
From the aquaculture self-help groups, including women’s groups in developing countries, to the more formal regional and international producer associations (PAs) in developed countries, PAs have been playing a major role in the development of markets and trade. At a special session on PAs at the second meeting of the COFI-AQ, the Sub-Committee acknowledged PA contributions towards aquaculture development and suggested that they (particularly small-scale farmers associations) be provided with appropriate support to strengthen their capacity.
While there are varying degrees of accomplishment among the PAs, some of the common ones are: shaping and influencing policy and regulations; facilitating access to markets; and developing and promoting codes of conduct, certification schemes, BMPs and self-regulatory practices. In the case of countries with market distortions and weak governance, there is emphasis on “getting organized to resist exploitation by middlemen and local pressure groups” and on mobilizing credit (Hough and Bueno, 2003).
Generally, in developed regions, PAs are not actively engaged in product marketing and supply; they are more involved in improving farm-level practices and in representing industry in national and international fora on policy and technical areas. However, there are exceptions, as in North America, where two associations (The United States of America Catfish Institute and the Mussel Industry Council of North America) are engaged in promoting and marketing of the species they represent. In the Asia–Pacific region, there are best practice cases of involvement in marketing activities by small-scale farmers associations, clusters or self-help groups that are often supported by NGOs and operate as a single unit following BMPs (Box 3).
In Africa, fish farmer associations representing particular species function in a number of countries at the regional, national and local levels. Overall, these associations have been useful in the advancement of aquaculture in the region, including contributing to setting regional and national aquaculture policy agenda, as was evident in their participation at the New Partnership for Africa’s Development (NEPAD) Fish for All Summit in Nigeria in 2005. Operationally, the associations are engaged in a range of activities, such as providing extension and marketing support, facilitating input supply and serving as a conduit for obtaining assistance from government and financial institutions.
Potential for increase in demand
World aquaculture production is dominated by species at the lower end of the food chain. Carp and shellfish account for a significant share (more than 70 per cent by volume) of species cultivated in developing countries for human consumption. However, in response to a ready market for these species in both developed and developing countries, the production of species at the higher end of the food chain (in particular, carnivorous species) has, in recent years, been growing rapidly compared with that of species at the lower end of the food chain. The demand for fish as a healthy and nutritious food commodity is increasing, even in the developing world, particularly in China, India and Indonesia, i.e. countries with a large population and increasing disposable income.
The demand for low-value species for national consumption is currently met primarily through national production; however, this may not be the case in the coming decades. In regions and countries where the cost of production is low and production conditions are better, low-value fish may be farmed and shifted for local consumption, while nationally produced high-value fish may enter the global market.