Like any other commercial transaction, the ornamental (or “tropical” or “aquarium”) fish trade answers the law of offer and demand. Being a non-essential luxury commodity, ornamental fish respond very quickly to fluctuations in the world economic situation. The trade immediately reflects downward pressures from a general economic slump or recession but responds more slowly to upward trends of an economic recovery.
The demand for ornamental fishes has grown in countries with a high standard of living, and exports have developed in countries endowed with a warm climate and a rich aquatic fauna. Thus exporting countries are located in the tropical belt and are often developing nations of the Third World, whilst all the importing countries are the industrialized nations of the western hemisphere.
Technically and financially, it is easier to collect and export ornamental fishes than to acclimatize and store species from different areas of the world. The exporters often lack experience and a sound technical background, and are many; the large-scale importers in the western world are technically more sophisticated, but very few.
Even the leading fish collectors and exporters have accumulated their knowledge through trial and error more than by a systematic approach to their trade.
Because of the excess of offer over demand, the long-term evolution of prices shows a steady decline over the past 25 years. Profit margins have shrunk, for exporters and importers alike, due to inflation and high overhead expenses. This explains the considerable number of business failures in a trade by essence already very volatile.
Recent developments in the organization of the trade have brought about a further erosion of rentability. There has been a rapid increase in the number of small-scale exporters and importers; the latter, mere retailers trying to shunt the traditional importers and their profit margins, order directly from exporters in the Far East. Such importers are illequipped to deal with fishes needing sophisticated care and have neither the facilities nor the financial stability required for such a venture.
The ornamental fish trade is thus being increasingly de-stabilized by fierce competition, leading to a collapse of price structures, mediocre quality of the fishes and indiscriminate exploitation of the natural biotopes.
In order to sustain the market the best and largest dealers in ornamental fishes, both collectors and importers, have tried to remain competitive by increased technical sophistication and by exploitation of new sources of supply, which has demanded substantial investments. At the same time they streamline their operations to compensate for inflated overhead expenses and refrain from costly ventures whose rentability is not expected to be favourable and immediate.
The supplies of ornamental fish to the markets come from:
There are important differences between wild-caught and tank-or pool-raised fishes. For the same species, these differences influence the quality and the cost of making the fish available to the market.
These are often but not systematically:
Damages to the biotopes through ornamental fish collecting have, as a rule, been grossly exaggerated, especially in areas which have been exploited by a single collector. They are bound to increase whenever competition between several collectors for identical fishing grounds or fish species bring about reckless methods of capturing the fish. Regardless of the biotope size, competition between fish collectors will inevitably result in a decline in prices, in total yield from the biotope, and damage the biotope more than if a single collector had been given a fishing permit. This competition will exist not only for the fishing grounds but also for the sales outlets.
The decline in yield will be compensated by:
These factors will lead to the unavoidable decline of the sales volume from a biotope and the concurrent loss of revenue for the exporting countries.
To protect the export potential and the ecology the only reliable way is to grant sole fishing rights to a single fish collector who has a clear understanding of the ecological problems and marketing aspects of the trade.
A fish collector protected by these monopolistic rights has no interest in depleting his fishing grounds and using destructive collecting methods; and, provided his fishing licence has been granted for several years, he can invest in the sophisticated equipment needed for the acclimatization and conditioning of his fishes. He is also in the best position to extract from his customers the most favourable sales terms, and work out with them a sensible and profitable approach to marketing problems.
On the contrary, collectors competing against each other are entirely at the mercy of their buyers, who can impose price cuts against which the collectors are defenceless.
Those countries which, by accident or foresight issued sole-fishing-rights licences, are the only ones to have fully preserved the export potential of the biotopes and maintained a steady volume of exports at prices which have remained constant or even increased, for sample, Zaire and Burundi.
Those countries which chose to fully exploit their export potential and diverted from sole rights to multiple fishing licences, have seen the value of their exports gradually eroded and mean price per fish decline sharply, at the cost of a progressive depletion of their natural stocks, for example, Malawi.
In those instances where the issue of multiple fishing licences initially increased the total volume of exports as more species were made available and extended collecting facilities increased the yield, the drop in prices over a brief period more than compensated the increase of the quantities exported until the markets became saturated at the cost of any further expansion.
These are often but again not systematically:
Many fish exporters from the Far East do not breed all the fish they export but buy from small-scale breeders on receiving an order. This explains the uneven quality of some shipments as some of the sub-contractors do not supply fish meeting normal trade standards.
Fish exporters from the Far East do not only breed species of fish from the biotopes found locally, but also many species from South and Central America and Africa. They can thus offer a much wider variety at much cheaper prices than any of the original biotopes can produce. Consequently many species of South and Central America and Africa are no longer exported by their countries of origin (Characidae and Cichlidae especially).
Because of the favourable features of tank- or pool-raised fishes, trade of wild-caught fished would have been since long supplanted were it not for certain shortcomings of fishes bred in artificial conditions.
The competition between the many ornamental fish breeders has had similar effects on the exporter's markets as that between fish collectors, viz.:
As a result the importers in the industrialized nations have found that for many species they can ask top prices for wild-caught specimens, in contrast with tank-raised fish, and feature them as such on their price lists.
However many wild-caught species have resisted all attempts to breed them artificially (e.g., South American Corydoras and African Synodontis) and have thus maintained or increased their markets.
The results of the very fierce competition between fish breeders have lead to a more sophisticated approach to fish-breeding and marketing, and certain products are now of outstanding quality. The effects of competition are thus not all negative with regard to quality, but they have undoubtedly decreased the yield as prices reverberated from the importers to the salaries of the fishermen and sub-contracting breeders.
If fluctuations in prices with a downward trend reflect the economic depression in industrialized nations, they also stem from a change in habits during the last twenty years. The ornamental fish trade peaked during the early seventies and has since levelled off or even contracted in absolute value and number of hobbyists.
There is a consensus between dealers that:
These factors combined have reduced the number of people likely to become interested in keeping aquariums at a time when the availability of ornamental fishes from many sources has never been as high.
As in any trade there are fashions and trends in ornamental fishes.
The mainstream body, perhaps 95 percent of all hobbyists, is interested in the decorative and relaxation aspects of an aquarium, as a small landscape in their home.
The highly experienced remaining 5 percent is interested more in the behaviour of fish and often specializes in a given fish family,
The former usually want as many varieties as can be permitted by ecological requirements in what is called the “community tank”.
The latter will try to duplicate, often at great cost and with mixed results, the original habitat of the fish in which he specializes. He is dedicated, knowledgeable in his field, and willing to spend. This interest covers a variety of fish families, such as:
In assessing the export potential and market stability for any given biotope, the difference between the community-tank type and the specialized interest species of ornamental fishes cannot be overlooked. Those biotopes with a natural fish fauna suited for the average community tank will have a larger and more stable market than those whose ecology demands seclusion in special tanks. The size of the market will also depend on the variety of the fish fauna as only a small fraction will be acceptable as ornamental fish.
Determining the criteria by which a fish can be identified as suited for aquarium life and exploited as an ornamental species is beyond the scope of this report; but the author drawing from his 30 years of experience with African fish fauna, calculated that a maximum of 10 percent of the total fish fauna in a biotope will prove suitable for export as ornamental fishes. Even if the proportion is initially higher when the exports are new to the market and their defects not yet detected (e.g., predatory instincts, plant-eating habits), it will later fall below 10 percent.
Thus a biotope with very few species - unless they are of exceptional value - will not be able to sustain a substantial volume of exports, and particularly so if the species in this biotope are very similar to those from other biotopes already on the market, even if they come from another continent. The fact that the species involved belong to a family whose species are easily bred in captivity is another negative feature of the assessment to be made.
The problem is compounded for the species which are of interest to the small number of advanced and specialized hobbyists. As the market for such fishes is limited, sales policies will be especially important as any mishandling of the market will have immediate results. Judging the capacity of the markets to absorb production, the running costs, setting price levels, and manipulating the markets will be the main factors leading to success or failure. In order to keep prices and sales volume at optimal levels, it is essential in this trade to strictly adapt offer to demand, refrain from flooding the market with unwanted quantities, and choose the most experienced importers. The offer must be lower than the demand so that prices tend to go up and interest is maintained at a high level; a solefishing-rights system is required to achieve this control.
Inexperienced exporters believe that they can compensate for an eventual drop in average prices by increasing the quantities they export. This policy can only be successful when the drop in prices would bring the fish into reach of an increased number of hobbyists. However, for most fishes intended for the specialized markets this is not the case, and the result will be that the species will be sold in the same quantities as before but at lower prices. It is also erroneous to believe that a drop in prices is only a temporary fallback. It takes months, if not years, to build back a market for species whose price structure has been damaged by unsound sales practices.
Tropical fish exports from Africa started around 1952 and were developed in Zaire by the consultant from 1954. All species came from soft and acid waters and most were suited to the community tank and average hobbyist. They could thus be sold by retailers along with South American and Far East ornamental fishes.
Included in the 60 or so species which were exported at that time and at present, were half a dozen so-called “dwarf cichlids” belonging to the genera Pelvicachromis, Steatocranus and Nanochromis, all having a maximum size not exceeding 10 cm.
By the early sixties the average price for these fishes was around US$ 0.20 and in line with prices for other fishes from Africa. Between 1 000 and 1 500 specimens of each species were exported monthly during the sales season.
Twenty years later prices have kept pace with inflation and most species have kept their appeal. However, since they have been bred by professional breeders, the market for wild-caught fishes has not expanded.
In 1964 exports of Lake Nyasa cichlids began and in 1971 the consultant started exporting Lake Tanganyika species from Burundi. Attempts to export Haplochromis from Lake Victoria were destined to fail since the species breeds very easily in captivity.
The Lake Nyasa cichlids, when first introduced on the market, created quite a sensation by their unusually bright colours and behavioural features (bucal incubation of the fry). These qualities overshadowed their defects, such as average large size, plant diet, need for roomy quarters and alkaline water, which made them unsuited for community tank life.
A large-scale diversion of interest occurred when the specialized cichlid hobbyist shifted his attention from all previously known cichlids to the “Lake Malawi cichlids”. The very high prices asked for these cichlids were in line with the costs involved in collecting them which were considerable due to the small quantities of each species which the limited markets could absorb. Collecting involved long-range vessels, charter planes, SCUBA gear and high salary SCUBA-divers, etc.
The high prices were maintained for 5 or 6 years by the following circumstances:
All exports from Lake Nyasa were handled by a single collector from Malawi, who could thus request and control the quantities exported and the importers' policies. As a result he changed clients several times when they did not adhere to his instructions.
The first professional breeders in the Far East, who had been attracted to the Lake Nyasa cichlids by their high selling price, had neither the facilities nor at the time the training to raise those fishes to maturity, and marketed only juvenile fishes which could not compete with the quality of adult wild-caught fishes.
As only one fishing licence had been issued by the Government of Malawi, the collector could manage the natural stocks to the best advantage, exporting new varieties to keep the market alive, but not in such numbers to rapidly flood the market and dilute the interest of the potential buyer. As the fish were costly to fish and export it was essential that their price remain high.
By the early seventies, the market for the “Malawi cichlids” had already started to deteriorate for several reasons:
Several fishing permits had been issued by the Government of Malawi and by two collectors from Mozambique. From then on, no collector, not even the first, had any influence in the sales policies for the Lake Nyasa cichlids. The collectors were manipulated by the importers, and the latter competed against each other by substantial cuts in sales prices in order to gain or keep a hold on the market.
Professional breeders developed more sophisticated techniques, and by the end of 1979, large numbers of better quality adult fishes were arriving from Florida farms at very low prices.
The Lake Nyasa collectors fished and shipped unwarranted quantities and new species which the market could not absorb at hitherto prevalent prices.
The Lake Tanganyika cichlids appeared on the market and attracted the attention of some of the specialized hobbyists toward fishes with a different behaviour.
At the same time the general economic situation made the specialized hobbyist more reluctant to pay high prices for fishes which he knew would be available from professional breeders at lower prices in a few months time. This attitude reverberated from the buyer to the retailer, the importer and finally the fish collector.
As collecting was expanded to cover new fishing grounds the number of new species and varieties on the market was such that they diluted the interest of the buyers whose number had remained static.
This situation was complicated by the fact that the newly introduced species were not so different from the old ones, and were unable to boost an already depressed market.
Experience has shown that any new species or variety of African Rift Valley cichlids put on the market supplants one or more established exported species.
In view of the above - rising costs due to inflation and long-range collecting - several collectors have discontinued their activity.
Even when, in early 1975, exporters from Mozambique stopped their exports, it was already too late for the collectors remaining in the Republic of Malawi to reverse the trend.
By the end of 1978 the sales, which had peaked at more than US$ 500 000 for the whole of the lake area in the early seventies, had dropped to about US$ 100 000, in 1979 probably did not exceed US$ 60 000–70 000.
The decline thus occurred at a time when the choice of fishes from Lake Nyasa had never been so wide. It was inevitable in view of the fact that the limited market for Cichlidae had been flooded in 15 years with more than 200 species and varieties from the Rift Lakes, when originally there had been only half a dozen which meant a thirtyfold increase in the variety offered on the market.
The decline could have been slowed down if the collectors and the exporting countries had been experienced in the handling of the markets and had adopted conservative policies for the exploitation of the biotopes.
In a broad market such as that devoted to the so-called “community tank” fishes, the impact of excess in offer over demand will have depressing effects on prices and the impact of excessive imports of fishes, such as cichlids which are of interest to perhaps only 100 000 hobbyists in the whole world, will be immediate and have long-term effects.
2.4 SURVEY OF EUROPEAN MARKETS FOR LAKE NYASA CICHLIDS FROM MOZAMBIQUE
The survey of the European markets, the Federal Republic of Germany, Sweden, United Kingdom and Belgium, covered those countries which in the past or at present have shown an interest for the Rift Lake cichlids and imported substantial quantities from the area.
The author approached dealers who could be depended upon to give reliable information from which valid conclusions could be drawn. A list of about forty questions was put to each dealer to ascertain his share of the local market, the volume, nature and trends of sales, past and present interest in African fishes in general and Rift Valley cichlids in particular.
If, in the past, most dealers in African fishes had specialized in imports from the Rift Valley area, most now have broadened the scope of their imports to include freshwater fishes from the Far East and South America and also started to import large quantities of marine species from the Indo-Pacific Ocean. At the present time there are very few who now restrict their imports to a limited number of species.
Confronted with inflated overhead expenses and a depressed market, all dealers have stopped specializing in a few expensive and (commercially) slow-moving fishes and have tried to reenter the community-tank fish market.
There are several reasons for this, including change in fashions, recession and inflation of costs. In the Federal Republic of Germany for example, several dealers said that only 1 or 2 hobbyists out of 100 are interested in Rift Lake cichlids, and will inquire about such fishes from their retailer. As a result the demand from retailers to importers is very low, and shipments from the lake area take about a month to be sold out. This is in strong contrast with the market for marine species (coral reef fishes and invertebrates) which is now in full boom.
Whereas an established dealer can sell between 150 and 200 boxes of marine species within a few days, it will take between 3 and 4 weeks to dispose of a shipment of 20 to 25 boxes of Rift Lake cichlids. As a result, the overhead expenses for slow-moving fishes (heating, staff salaries, etc.) are much higher and since their appeal is low, the profit margins are lower than for fast-moving fishes.
Marine fishes and invertebrates are not considered by dealers as community tank fishes, of which they import from 250 to 300 boxes a week (at a much higher density of fish per box), but the difference in sales volume between marine species and the Rift Lake cichlids shows how trends and fashions govern the trade.
If at first the Rift Lake cichlids sold much better than marine species, at competitive prices, the trend was reversed as soon as technical advances in keeping marine species and the availability of hundreds of very colourful fishes and life forms at very low prices made the latter much more appealing. At present the Rift Lake cichlids are the most costly of all freshwater fishes to produce and sell; as such they are the most sensitive to downward pressures from the general economic situation and professional breeding.
The figures put forward by the top dealers in Europe show that the African fishes represent about 5% of their total sales, marine life about 15%, and 80% of their sales consist of community fishes. For Lakes Tanganyika and Nyasa evaluation of sales was between 1 and 2% of the gross. Most admitted that their gross profit margin for marine fishes was about 100% of the “landed cost” (including f.o.b. price, packing, freight and eventually custom duties or V.A.T.) against about 50% for community tank fishes and African cichlids. From their profit margins, one has to deduct the losses during storage, overhead expenses (which are very high) and financial losses due to customers' bad debts which are also high due to the number of bankrupcies in the trade.
The University of Cologne made a study of financial returns of the main importers in the Federal Republic of Germany a few years ago, which showed that the pre-tax returns were seldom higher than 10% of the gross sales. When the dealers were asked why, under such conditions, they were still importing fishes from the Rift Lake area, they answered that because of their standing they could suspend imports even if the profits were low or non-existent. Their reply to the suggestion that some cichlids from the untapped part of the coastline of Lake Nyasa might be made available was cautiously positive, and they put forward the conditions under which they would be willing to import such fishes. These were:
the first prerequisite, that the species or varieties made available should be different from those which had been exported previously, and were still exported from Malawi
that their price should be in line with market conditions, and the number of outlets in Europe be very low, to prevent unfair competition. They insisted on the fact that the collapse in prices witnessed by previous exports had in part been brought about by the handling of the exports by people with wrong sales practices
that the quality and variety of the shipments should be in line with the trade standards
They expressed doubts and grave reservations on learning that the fishing grounds were in a remote area of Mozambique far from the international airport of Maputo and felt that this required the setting-up of a transit station in Maputo to acclimatize the fishes before they were shipped abroad. After the negative experiences they had suffered when dealing with inexperienced exporters, they were willing to import the Rift Lake cichlids from the Mozambique coastline of Lake Nyasa only if they were to be collected and handled by people who had a long experience with fish collecting in Africa and especially the Rift Lakes. They also expressed serious reservations about the outlook of the undertaking; the distances between the fishing grounds and the export facilities at Maputo would bring serious problems in keeping the collecting station properly supplied with essential equipment and maintenance facilities and could create problems in forwarding the consignments safely from the lake to Maputo. With the market under stress, they would not accept to bear the brunt of the first mistakes and they would retreat from their present cautious optimism and refrain from repeat orders if the first shipments were unsatisfactory.
Importers who, under good market conditions, are willing to venture into new sources of supply, now refrain from high risks and concentrate their orders on safe and profitable traditional sources of supply.
The assessment by the consultant of the potential market for the Mozambique cichlids, based on dealers' individual estimates, shows that the annual potential would be between US$ 140 000 and 150 000 for the first two or three years. No dealer consented to hazard an estimate for further years and explained this reluctance by two factors over which they had little control:
