Globalization and Its Impact On Fisheries - Edited
Globalization and Its Impact On Fisheries - Edited
Globalization and Its Impact On Fisheries - Edited
Roehlano M. Briones
Brain Trust, Inc.
Knowledge and Options for Sustainable Development
Unit 18, Antonio Bldg., Caruncho Avenue
Pasig City, Philippines
Telephone Nos. (632) 641-4175
roehlbriones@yahoo.com
Madan Dey
Mahfuzuddin Ahmed
WorldFish Center, Jln. Batu Maung, Batu Maung,
11960 Bayan Lepas, Penang, Malaysia
m.dey@cgiar.org
m.ahmed@cgiar.org
Abstract
Global market integration has accelerated in recent decades, and with it the
shift in supply of exported fish from developed to developing countries. Fish is also
important in the diets and livelihoods of the poor in developing countries. Hence,
concerns have been raised about the impact of export-oriented fisheries on the poor.
The first concern is that, on the demand side, export-oriented fisheries are diverting
objection from the viewpoint of the nine top fish producers in developing Asia, based
fisheries. Over the next 15 years, fish consumption per capita is projected to rise in
most of the countries, even as export prices are expected to climb. However a decline
in export price growth may cause a minor to dramatic fall in net exports growth, with
disincentives or restrictions on exports may forfeit large gains on the supply side, with
fisheries are reaped mostly by big, commercial producers. It is true that poor fishers,
fish farmers, and traditional processors are marginalized in the export chain, due to
the technical and financial requirements of meeting modern quality and food safety
standards. However, rather than restrict globalization, the response should be to make
1. Introduction
Global markets have become more closely integrated in the past few decades.
countries. Exports from developing countries has risen steadily by about 8% per year
from 1976 – 2002 (FAO, 2005). Half of all fish exports now originate from these
countries.
of livelihoods and food for poor households in many low income countries. Fishing is
a primary occupation for nearly 40 million people worldwide; this may represent a
total of 200 million individuals who are dependent on fisheries. Poverty incidence
among poor fishing communities (based on the dollar-a-day threshold) has been
estimated to range from 16 percent in Latin America to 46% in Africa, with Asia
(accounting for the bulk of fish producers worldwide) at 26% (FAO, 2002).
fatty acids for many developing countries. It provides at least one-fifth of animal
protein intake per capita for more than 2.6 billion people. This share reaches one-half
or even more for some poor countries such as Bangladesh, Cambodia, the Congo,
Gambia, Ghana, Equatorial Guinea, Indonesia, Sierra Leone, Sri Lanka, and small
range of these impacts is beyond the scope of this paper. Given the importance of
instead focus in this paper on the issue of trade on household welfare. This is
between fish exports and food security, and between fish exports and equity. First, it
is suspected that fish export has diverted food from domestic consumption to satisfy
foreign consumption, thus undermining food security. Second, rising trade in fish is
global trade, beginning with review of related studies on the subject, to determine
whether the literature provides a sound verdict on these objections. The rest of this
paper is organized as follows: Section 2 deals with global trends in fish trade. Section
3 addresses the issue of trade and food security, while Section 4 addresses the issue of
Global fish trade has been expanding at a remarkable pace in the last few
decades. Both value and volume of world exports have been rising since the 1976,
with export value increasing sharply starting from the mid-1980s (Figure 1). Fisheries
exports now stand at nearly 60 billion dollars, far in excess of traditional crop exports
from developing countries, such as sugar, banana, rubber, coffee, and cocoa.
global trade. The share of developing countries in world fish exports increased from
37% in 1976 to nearly 50% in 2002. Meanwhile developed countries account for the
bulk of fish imports (about 82%), over the same period the developing countries’
share in imports had gone from 13% to 18% (Table 1). In 2002, four developing
4
countries numbered in the top ten fish exporters, including the top two (respectively,
Figure 2 breaks down world fish exports by fish categories. Note that the
categories lump together food fish and reduction fish, i.e. fish meals and oils, most of
which are used as feed for livestock or aquaculture. The top export product is
crustaceans, which accounted for a quarter of world fish exports in 2002 (Figure 2).
freshwater fish.
over the past 20 years (Figure 3). Earlier it was dominated by cephalopods, pelagics,
and other types of fish; currently, while pelagics continue to be important (thanks to
the large fisheries in Latin America and China), the top export is now crustaceans
(mostly shrimp). Miscellaneous marine fish have also observed noteworthy increases
in share.
lower transaction costs, improved airfreight facilities, and the formation of supply and
distribution systems, culminating in the supermarket chain. Trade policy has also been
instrumental. First, food safety standards are becoming more transparent and realistic.
Standards are harmonized under the agreement on SPS measures under the WTO, and
the Codex Alimentarius standards of the FAO for food. Cumbersome and arbitrary
inspection procedures have given way to a process-based certification system, i.e. the
Hazards Analysis and Critical Control Points system (Delgado et al, 2003).
Second, tariffs on fisheries products in the main importing countries have been
greatly reduced under the framework of the World Trade Organization (WTO) and
developed countries stands at only 4.5%. However this low average conceals some
remaining tariff walls and escalation patterns against processed products (FAO,
2003). Similarly tariffs in developing countries have been declining, though at a much
probably continue into near future. FAO projections forecast increasing fish exports
from developing countries, from 7.2 million tons in 1999 to 10.1 million tons by
2015. This is accompanied by increasing demand for fish: annual average growth in
per capita consumption for developing countries is expected to reach 1.3% per annum,
above the global figure of 0.8%. Fish production from developing countries will also
grow (by 2.7% per year), but by only half the growth rate achieved in the previous 20
continuous expansion in China, India, and Latin America. However, net exports are
expected to fall (or net imports to rise) in other developing regions, such as Southeast
Asia, other South Asia, and Sub-Saharan Africa. Because of this, total food fish
exports from developing countries are expected to fall by 30% from 1997 to 2020
quite remunerative to export, it may become more attractive to sell abroad than on the
proteins”(Abgrall, 2003, p. 38). However one should consider the flipside: a broader
from both domestic and foreign sources. Hence, selling goods to the export market in
order to procure food increase purchasing power to from other countries may actually
increases in consumption, then the net effect on food security is ambiguous at best.
study) is however problematic, given data constraints, measurement problems, and the
slower rate of growth of export price for fisheries exports (equivalent to a slower
improvement or a faster deterioration in the fisheries terms of trade). The results for
consumption in the long-run are then the basis for drawing implications for food
security.
Second, increasing trade has also exposed domestic producers to more intense
global competition. This has allegedly favored commercialized farming and fishing,
conducted on a large scale. Hence concerns have been raised about the adverse
proportion are poor. For the second issue, there is unfortunately a dearth of
quantitative or empirical work relating trade with equity. Instead we shall fall back on
a review of conceptual issues, combined with some stylizations about trade and
fish consumption is undertaken for Bangladesh, China, the Philippines, and Sri Lanka.
disaggregated supply-demand model of the fish sector. The following provides a brief
description of the model; the specialist is referred to Dey et al (2004) for the details.
The demand and supply equations follow the pattern suggested by Martin and
Alston (1994). Supply equations for fresh fish are derived from the normalized
functions for capture and culture categories, as well as introducing processed fish as a
product of fresh fish under fixed proportions technology. The demand equations are
based on the Almost Ideal Demand System, as in Martin and Alston; however this
system appears in quadratic form at the last stage of a three stage budgeting
incorporates a trade core which follows the Armington approach (Armington, 1969),
The AsiaFish introduces another innovation in allowing fish types for demand
and supply to differ initially (to maintain flexible treatment of available data), with a
matching scheme to harmonize the fish types and enforce model closure. Domestic
8
prices in the model are determined with the aid of equilibrium conditions. These
conditions require, for each fish type, equality of demand for domestically produced
goods (total consumption net of imports) with domestic supply for each fish type.
Model parameters are calibrated from elasticities and data values. For the
AsiaFish, a serious effort was mounted to estimate demand and supply elasticities for
each fish type and country from available data. Where the estimated elasticities are
elasticities, either from other countries in the AsiaFish model, or by other values in
The model contains exogenous variables whose values must be supplied from
outside the model, i.e. the index of technological change, urban and rural populations,
income, input prices, non-fish commodity prices, and foreign prices. By projecting
these exogenous variables for each period, one is able to solve the model over a
a different set of exogenous variable projections. In this study the experiment takes
the form of a change in the growth rate in the price for all exported products, meant to
represent a dynamic change in the terms of trade for exported products. (The rest of
the exogenous variable trends remain identical.) The change in growth rate is very
hundreds of numerical results. For this paper we limit the presentation to results for
consumption, exports, and imports. All figures are in terms of annual growth rates.
9
Due to the differences in fish types across countries, each of the country cases is
discussed separately.
Bangladesh
In the most likely case, Bangladesh is expected to have only a slow aggregate
consumption growth for fish, with a shift away from traditional species such as the
Indian carps, Pangus, and Hilsha, to newer species such as other carps, high value
marine fish, and even tilapia. Bangladesh fish imports are negligible and omitted in
the simulation. Exports are concentrated on Hilsha, Shrimp, and Dried fish, all of
which are projected to grow rapidly, particularly Dried fish (which is beginning from
a small base). As expected, the export price growth shock causes a demand increase,
though the effect is hardly perceptible on the average; for individual fish types, the
slowdown in the decline of Indian major carps and dried fish is quite clear from the
simulation. Slower export price growth does slow down export growth, though only
mildly.
China
For the baseline, consumption growth is fairly rapid, particularly for Tilapia;
consumption per capita. Imports and exports are also growing. A one-percentage
point shock in export price growth has a minor impact on exports and imports; the
Philippines
consumption growth across fish types, i.e. decreasing for processed fish and others,
while increasing for the rest, especially for milkfish and tilapia. Import declines across
10
the board, while export growth is weak. The export price shock makes a serious dent
on overall exports, turning a small positive growth into a small negative growth over
Sri Lanka
For the baseline in Sri Lanka, projected growth for consumption, imports, and
exports are quite high, greater than even the optimistic outlook for China. Only other
expected for processed fish, followed by freshwater fish and pelagic fishes. Even
more than the Philippines, a one percentage point drop in export price growth inflicts
provides a stimulus for imports (in fact a strong one for large pelagics). Consumption
growth however rises only for freshwater fish and other fish; for other items, and on
average, consumption growth falls. This is unexpected, but perfectly possible given
fish type.
small to imperceptible, relative to the original shock. What seems more obvious is the
therefore, food security does not seem to be a good argument to resist the trend of
packing, and handling, to meet quality and safety concerns (Unnevehr, 2000).
Otherwise they are exported in processed form; in either case expensive modern
producers, face higher costs of assuring product quality. Small processors often
importing countries. For WTO members this falls under the Agreement on Sanitary
and Phytosanitary (SPS) measures, which for food is regulated by the Codex
Alimentarius. The Codex mandates the HACCP certification system. These safety
standards are actually the more significant form of trade barriers facing developing
costs due to HACCP compliance (Table 6). Due to prior economies of scale, the
additional investment implies a greater increase in unit costs for smaller processors.
(Wessels and Anderson, 1995), thus assuring some return on the investment, smaller
12
financing.
Recently attention has been drawn to the organizational dimension of the new
for lowering costs, and producing goods that fit consumer needs and processor’s
food supply chain, rather than the the traditional spot market of competitive
requires analysis of business organization and contract choice. The “new institutional
economics” provides a set of concepts useful for the analysis. These include
transaction cost, and the economics of information and choice under uncertainty
(Kherallah and Kirsten, 2001). The central thesis of this theoretical approach is that
owned business firm. The classic example is the export crop plantation, often having
its own processing plant; in fisheries, a counterpart would be the commercial fish
However this is not sole organizational form governing agricultural supply chains.
Other modes are contract farming, joint ventures, and producer organizations (ranging
of small producers.
due to the inherent difficulties of investigating the premises and hypotheses of the
organization and contract theory. Economists remain highly ignorant about the origins
framework has emerged within the paradigm (Kherallah and Kirsten, 2001). The
dearth of research is more severe for the narrower field of fisheries and aquaculture.
Hence, the design and facilitation of collective institutions to allow small producers to
Karaan (2002) points the way in his case study of contract farming in oyster
culture in South Africa. His conceptual framework uses the concepts of asset
markets, and access to finance. To improve contract farming, at the industry level he
pricing, and provision of extension services. He also points to the need for third-party
the latter.
and technical assistance would also be beneficial for establishing institutions and
domestic systems for quality control and assurance. Finally, aside from these industry
market information.
5. Conclusion
negative impact of these export trends on food security and equity are discussed. First
benefit flows, particularly with the advent of food safety regulations. Unlike the first,
there are good reasons to find this objection credible. However thee is a need to
15
opportunities. The vertically integrated, large scale operation does tend to exclude the
poor; it is not however the only organizational form in practice. In many instances,
key to widening the flows of benefits from export-oriented fisheries. This requires
nothing less than an institutional and technological transformation, at the level of the
firm, the industry, and international trade regulation, one which governments and the
References
Abgrall, J.-F. 2003. Fisheries, food security and trade: governance a key to success.
In: Report of the Expert Consultation on International Fish Trade and Food Security,
Casablanca, Morocco, 27-30 January. FAO Fisheries Reports - R708.
Briones, R., U-P. Rodriguez, and M. Dey. 2005. Projections for fish supply and
demand. In: Fish Supply and Demand in Asia. M. Dey, R. Briones, Y. Tan-Garcia,
and A. Nissapa, eds. WorldFish Center (forthcoming).
Delgado, C., N. Wada, M. Rosegrant, S. Meijer and M. Ahmed, 2003. Fish to 2020:
Supply and Demand in Changing Global Environments, International Food Policy
Research Institute and the WorldFish Center.
Dey, M., M Ahmed, M A Rab, A Kumar and A Nisapa. 2004a. WTO, Food Safety
Standards and Regulatory Barriers: Implications for Selected Fish Exporting Asian
Countries. Aquaculture Economics and Management (forthcoming).
Dey, M. M., R. Briones and M. Ahmed. 2004b. Projecting supply, demand and trade
for specific fish types in Asia: baseline model and estimation strategy. Aquaculture
Economics and Management (forthcoming)
16
Food and Agriculture Organization. 2003. Input for the WTO Ministerial Meeting in
Cancún. FAO Fact Sheets.
Food and Agriculture Organization. 2004. State of Fisheries and Aquaculture 2004.
Food and Agriculture Organization. 2005. Fishstat. Downloaded April 2005 from
http://www.fao.org/fi/statist/FISOFT/FISHPLUS.asp.
Karaan, M. 2002. Transaction costs in contract farming models for mussel and oyster
farming in South Africa: organisational and management implications. Aquaculture
Economics and Management 6(5/6):397 – 409.
Kheralla, M. and J. Kirsten. 2001. The new institutional economics: applications for
agricultural policy research in developing countries. Discussion Paper No. 41.
Markets and Structural Studies Division, International Food Policy Research Institute.
Martin, W., and J. Alston. 1994. A dual approach to evaluating research benefits in
the presence of trade distortions. American Journal of Agricultural Economics
76(1):26-35.
Unnevehr, L. 2000. Food safety issues and fresh food product exports from LDCs.
Agricultural Economics 23(3): 231 – 240.
Wesells, Cathy R. Joan Gray Anderson, 1995, Consumer Willingness to Pay for
Seafood Safety Assurances, Journal of Consumer Affairs, 29(1):85-107
1
70,000,000
60,000,000
50,000,000
in mt and '000 dollars
40,000,000
30,000,000
20,000,000
10,000,000
0
1976 1981 1986 1991 1996 2001
mollusks, 4.9
Export shares
Developed
countries 63.1 60.4 56.9 56.7 49.6 49.6 50.9
Developing
countries 36.9 39.6 43.1 43.3 50.4 50.4 49.1
Import shares
Developed
countries 86.6 83.2 83.5 86.9 84.4 83.0 81.5
Developing
countries 13.4 16.8 16.5 13.1 15.6 17.0 18.5
35.0
32.3
29.2
30.0
25.0
21.8 21.5
20.0
19.7 17.5
16.2
15.0
0.0 3.3
Cephalopods
Crustaceans
Demersals
1982
Freshw ater
fish
Misc marine 2002
Mollusks
fish Pelagics
Other
2002 1982
Figure 3: Shares in developing country fish exports, by fish type, 1982 and 2002
Consumption
Total 3.05 3.08
Other finfish 2.66 2.73
Shrimp 3.78 3.81
Other fish 3.09 3.13
Tilapia 10.07 10.05
Carps 1.22 1.23
Exports
Total quantity 2.82 2.70
Other finfish aquaculture 9.67 9.57
Shrimp aquaculture 9.97 9.87
Other aquaculture 2.89 2.70
Other finfish capture -0.52 -0.66
Shrimp capture -0.51 -0.70
Other capture -0.34 -0.46
Tilapia 9.56 9.37
Carp 1.13 0.92
Table 6 Average processing cost/kg for sample enterprises in Asia, with and
without HACCP compliance