ANNEX I. LIST OF PARTICIPANTS
ANNEX II. PROGRAMME
ANNEX III. SELECTED PAPERS PRESENTED AT THE WORKSHOP
ANNEX IV. WORKING GROUP REPORTS, CONCLUSIONS AND RECOMMENDATIONS
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Nation or |
Name |
Address |
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APRACA |
Mr. Shrestha Bishnu |
Managing Director |
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APRACA |
Mr. Yong-Jin |
Secretary-General, APRACA |
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APRACA |
Mr. Benedicto S. |
MICROSERV Programme Expert, APRACA |
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Bangladesh |
Mr. Ansar Uddin |
General Manager/Agricultural Credit Department |
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Egypt |
Dr. Ashraf Sabet |
Arab Academy of Science and Technology |
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FAO |
Dr. E. Ruckes |
Senior Fishery Industry Officer |
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FAO |
Mr. I. Feidi |
Chief |
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FAO |
Dr. U. Tietze |
Fishery Industry Officer |
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Fiji |
Mr. Malakai |
Principal Fisheries Officer |
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INFOFISH |
Dr. K.P.P Nambiar |
Director |
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India |
Mr. M.A. Upare |
Deputy General Manager |
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Indonesia |
Mr. Abdul Azis |
Deputy Director of Credit Department |
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Indonesia |
Mr. Ali Supardan |
Director |
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Japan |
Dr. Masahiro |
Professor/Hiroshima University |
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Republic of Korea |
Dr. Young-Chul Kim |
Professor |
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Republic of Korea |
Dr. Seong |
Senior Research Fellow/ |
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Republic of Korea |
Dr. Seong-gul |
Research Fellow/ |
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Republic of Korea |
Dr. Sun-Pyo Kim |
Associate Research Fellow/ |
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Republic of Korea |
Dr. Jihyun Lee |
Senior Researcher/Marine Eviron. & Safety Div.,
KMI |
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Republic of Korea |
Ms. Hae-Young Lee |
Researcher/Aquaculture Division, NFRDI |
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Republic of Korea |
Mr. Hyun-Su Jo |
Fisheries Scientist/Deep Sea Resources Division |
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Papua |
Mr. Moale Vagi |
Rural Development Bank of |
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Philippines |
Ms. Ma. Glenda |
Credit Supervision Division, Branch Banking Sector |
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Thailand |
Ms. Phattareeya Suanrattanachai |
Graduate School Student/Hiroshima Univ. |
KMI/FAO/APRACA
Regional Workshop on the Effects of Globalization and Deregulation on Marine Capture Fisheries in Asia
Shilla Room, The Westin Chosun Beach Hotel, Pusan,
Republic of Korea
11-15 October 1999
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Monday, 11 October |
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REGISTRATION AND OPENING CEREMONIES |
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9.00 - 9.45 |
Registration of participants |
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9.45 - 10.30 |
Opening ceremonies |
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10.30 - 11.15 |
Photo Session and refreshments |
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11.15 - 11.30 |
Introduction to programme and organizational
arrangements |
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PRESENTATION OF PRINCIPAL TECHNICAL PAPERS |
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Chaired by Mr. Bishnu Shrestha, APRACA |
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11.30 - 12.30 |
Dr. E. Ruckes, Fishery Industries Division, FAO Rome: the
effects of globalization on marketing of fishery products |
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12.30 - 14.00 |
Lunch break |
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Chaired by Mr. Yong-Jin Kim, Republic of
Korea |
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14.00 - 15.00 |
Prof. Dr. Masahiro Yamao, Japan: impact of economic crisis on
export - oriented fishing industry in Asia - towards a new phase of
globalization. |
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15.00 - 16.00 |
Dr. U. Tietze, Fishery Industries Division, FAO Rome: economic
and financial viability of marine capture fisheries - a global
comparison |
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16.00 - 16.15 |
Tea break |
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Chaired by Mr. Benedicto Bayaua, the
Philippines |
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16.15 - 17.15 |
Mr. Izzat Feidi, Chief, Fish Utilisation and Marketing
Service, FAO Rome: Code of Conduct for Responsible Fisheries: a contribution to
global regulations of fish trade |
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19.00 |
Welcoming Dinner |
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Tuesday, 12 October |
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Chaired by Dr. Seong K. Park, Republic of
Korea |
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9.30 - 10.30 |
Dr. U. Tietze, Fishery Industries Division, FAO Rome: global
trends in fishing technology and their effect on fishing power and
capacity. |
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10.30 - 11.00 |
Tea break |
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11.00 - 12.00 |
Dr. Seong-Geol Hong, Dr. Jung-Gon Ryu & Dr. Sun-Pyo Kim,
Fisheries Economics Research Division, KMI: adjustment of fishing fleet capacity
in Korea to sustainable resource exploitation: programmes and
achievements |
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12.00 - 14.00 |
Lunch break |
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Chaired by Mr. Moale Vagi, Papua New Guinea |
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14.00 - 15.00 |
Mr. Bishnu P. Shrestha, APRACA Consultancy Services: changes
of credit support to fishery sectors in Asia in the context of structural
adjustment programmes |
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15.00 - 16.00 |
Prof. Young-Chul Kim, Kon - Kuk University and Dr. Seong K.
Park, KMI: the role of subsidies, fiscal and credit policies in fisheries and
agriculture and livestock development in Korea |
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16.00 - 16.15 |
Tea break |
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Chaired by Dr. Sun-Pyo Kim, Republic of Korea |
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16.15 - 17.15 |
Dr. Jihyun Lee, Marine Environment & Safety Research
Division, KMI: coastal area and fisheries management and environmental
conservation in Korea |
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19.00 |
- Dinner Reception |
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Wednesday, 13 October |
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PRESENTATION OF PAPERS OF INTER-GOVERNMENTAL
ORGANIZATIONS |
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Chaired by Mr. Izzat Feidi, FAO |
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9.00 - 10.00 |
Dr. K.P.P. Nambiar, INFOFISH: the present and future role of
INFOFISH with special reference to globalization in fisheries in Asia |
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10.00 - 11.00 |
Dr. Ruckes, FAO Rome: International Trade in Fishery Products
and the New Global Trading Environment |
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11.00 - 11.15 |
Tea break |
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PRESENTATIONS OF COUNTRY PAPERS ON THE EFFECTS OF
GLOBALIZATION AND DEREGULATION ON FISHERIES INDUSTRIES |
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11.15 - 17.00 |
Japan: Prof. Dr. Masahiro Yamao, Faculty of Applied Biological Faculty of Biological Science, Hiroshima University, Hiroshima Lunch break Chaired by Dr. K.P.P. Nambiar, INFOFISH Indonesia: Mr. Ali Supardan, Fishery Enterprises and Processing Development, Directorate General of Fisheries, Jakarta Philippines: Ms. MA Glenda A. Biboso, Credit Supervision Division, Development Bank of the Philippines, Manila Tea break India: Mr. M.A. Upare, Technical Services Division,
National Bank for Agriculture and Rural Development, Bombay |
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Thursday, 14 October |
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Chaired by Mr. Benedicto S. Bayaua, APRACA |
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9.00 - 10.00 |
Bangladesh: Mr. Ansar Uddin Ahmad, Agricultural Credit
Department, Bangladesh Bank, Dhaka |
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10.00 - 11.00 |
Egypt: Dr. Ashraf Sabet, Arab Academy of Science and
Technology, Alexandra |
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11.00 - 11.15 |
Tea break |
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11.15 - 12.15 |
Fiji: Mr. Malakai Tuiloa, Capture Fisheries
Development, Fisheries Division, Ministry of Agriculture, Fisheries and
Forestry |
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12.15 - 13.15 |
Papua New Guinea: Mr. Moale Vagi, Rural Development
Bank |
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13.15 - 1400 |
Lunch break |
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WORKING GROUPS: FORMULATION OF RECOMMENDATIONS AND
FOLLOW-UP PROPOSALS |
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14.00 - 14.30 |
Plenary session on terms of reference and election of chairs
and rapporteurs of working groups. |
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14.30 - 16.00 |
Working group sessions: formulation of workshop
recommendations and follow-up proposals |
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16.00 - 16.15 |
Tea break |
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16.15-18.00 |
Continuation of workings groups sessions and preparation of
working group reports |
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Friday, 15 October |
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9.30 - 12.30 |
Field trip |
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12.30 - 14.00 |
Lunch break |
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14.00 - 15.30 |
Plenary session for adoption of workshop recommendations and
draft report |
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15.30 - 15.45 |
Tea break |
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15.45 - 16.30 |
Closing session |
ANNEX III.1 The Impact of the Asian economic crisis on fisheries: the expansion and decline of export-oriented fisheries in Thailand (by Prof. Masahiro Yamao)
ANNEX III.2 The Code of Conduct for Responsible Fisheries: a contribution to global regulations of fish trade (by Mr. Izzat Feidi)
ANNEX III.3 Adjustment of fishing fleet capacity in Korea for sustainable resource exploitation: programs and achievements (by Seong-gul Hong, Jeong-gon Ryu and Sun-pyo Kim)
ANNEX III.4 The role of subsidies, fiscal and credit policies in fisheries development in Korea (by Prof. Young-Chul Kim and Dr. Seong K. Park)
ANNEX III.5 The present and future role of INFOFISH with special reference to globalization in fisheries in Asia (by Dr. K.P.P Nambiar)
ANNEX III.6 The effects of globalization and deregulation on fisheries industries in Indonesia (by Mr. Ali Supardan)
Prof. Masahiro Yamao1
Faculty of Applied Biological Sciences
Hiroshima University
THE ISSUE
The Asian economic crisis has seriously damaged the developing economy of Southeast Asia. Domestic consumption of fisheries products has fallen and, consequently, their market prices. Export of fish has declined and prices of production materials have risen sharply. Fishers, traders and processors are suffering from this situation. In reality, however, there is a significant difference in the degree of the effect of the economic crisis on export-oriented and on domestic-oriented fisheries. In Thailand, the devaluation of the baht has caused a boom in the export market for shrimp and tuna, thereby increasing investment in production and processing. On the other hand, the recession of the Japanese and Asian economies has had a negative effect on Thai exporters and producers, who depend heavily on their markets. At the outset of the economic crisis, Thailand successfully recovered marketing power in the production of low value-added commodities. At present, however, neighboring competitors have once more caught up with Thai fisheries, aquaculture and fish processing. Thai export-oriented fisheries face stiffer than ever competition with other exporters. There is a strong incentive to overexploit marine resources and processors are compelled to develop production technology of preserved and ready-to-eat high value-added products. The Asian economic crisis may turn out to be a decisive factor in transforming and renovating the existing framework of fisheries.
1. INTRODUCTION
The 1997 Asian economic crisis has seriously damaged Southeast Asia. After the baht float of July 1997, a number of other Asian currencies also fell sharply. Financial institutions became totally paralyzed. Many Asian countries were forced to restructure their stymied industries and review various aspects of their economic policies. Because of the suffering industry and the currency crisis, the Government relied on the agricultural sector (agriculture can absorb a tremendous number of unemployed), and public funds in both urban and rural areas to strengthen and revive the economy.
The intent of this report is to discuss the effect of the Asian economic crisis on fisheries, mainly export-oriented fisheries (including the food business) in Southeast Asia. It may be premature to discuss this, since the latest statistical data and information have yet to be published. This report has three objectives: (1) to review the development of export-oriented fisheries in recent years; (2) to clarify what has happened to export-oriented fisheries under the economic crisis; (3) to discuss future directions of the fisheries industry. To clarify these objectives, case studies were conducted (mainly in Thailand) in 1998-1999. The economic crisis has had an extreme impact and response in Southeast Asia. The estimates and observations of the case studies may be conjectural. Some lessons, however, can be drawn from experiences gained in Thailand.
2. FISHERIES IN THE 1990s: THAILAND
Despite the rapid development of the Thai economy, the fisheries sector deteriorated after the mid 1980s. There were dynamic changes in production structure of marine capture fisheries. Overcapitalization and overfishing caused a severe depletion of marine resources, particularly in the Gulf of Thailand. The total volume of catch fluctuated severely - it had been stagnant since the beginning of the 1990s - (see Figure 1). Production of marine capture fisheries in Thai territorial waters had decreased in coastal areas. Many fishers involved in coastal fisheries still employ a wide variety of small-scale fishing gears and are suffering from the depletion of coastal resources and the over explotation of fisheries resources. Moreover, the socioeconomic environment of coastal fisheries is deteriorating annually.
During the period from 1985 to 1995, the number of fisheries establishments decreased steadily. The figures of the Marine Fisheries Census indicate that establishments classified as small-scale fisheries (owning inboard-powered boats with a weight of less than nine gross tonnes) decreased in number. According to the Marine Fishery Census, the total number of establishments fell from 51 245 in 1985 to 50 176 in 1995, of 1985-1995.
Commercial fishing vessels found it difficult to hire crews at lower wages after the mid 1980s. The farmers who had migrated as boat crews from the northeastern part of Thailand moved to Bangkok and other large inland cities, preferring urban jobs to those in fisheries. Thai marine capture fisheries, characterized as labour-intensive and resource-exploitative, were obliged to adopt labour-saving technology. Moreover, an increasing number of commercial fishing vessels that employ boat crews have migrated from neighbouring countries.
As in other Asian countries, aquaculture in Thailand has developed rapidly. Capital-intensive shrimp farming has expanded throughout the country. Aquaculture industries have been firmly established and organized in nationwide networks to cover all of the processes of collection, production and distribution. Several of the large companies, and a number of medium and small-scale companies actively encourage new investors to exploit areas in shrimp culture by offering effective technology and providing feed and fertilizers. The shrimp culture industry has been beset by environmental related diseases and water quality problems. In recently developed areas, the environment for shrimp culture has deteriorated as a result of bad management, the expansion of industrial zones, housing projects and pollution. Production areas have continually been relocated to new areas in the south, the east and even in central areas of the country. In the 1990s, aquaculture accounted for the greater portion of the total value of fisheries production.
3. FISHERIES EXPORT IN THE 1990s: TOWARD STRUCTURAL CHANGE
(1) The rapid increase in fisheries export
As shown in Figure 2, fisheries export in Thailand has passed through three stages from the mid 1980s. The first stage spans from the mid 1980s to 1991, and is regarded as one of rapid growth. Strong inducement to this expansion came mainly from Japanese fish markets. After the Plaza Agreement in 1985, the Japanese yen was highly appreciated against the US dollar, and the cost of imported fish fell sharply. There seemed to be an increasing demand for imported products. Fisheries around the world were encouraged to increase their export of all fish species to Japan.
In order to survive, fisheries-based and food industries in Japan began to relocate their production and processing facilities to other Asian nations. Large quantities of cheaper products, including high value-added products, were imported and sold in markets throughout the country. Many Japanese fisheries and seafood companies rushed to transfer their investment and technology to Southeast Asia, particularly to Thailand.
There are several substantial reasons why Japanese companies chose to relocate their production plants and processing facilities to Thailand. The Japanese Board of Investment (BOI) launched a promotion policy designed to attract investors to export-oriented industries. In the early stages of its economic boom, the Thai Government placed great emphasis on the development of agro-based industries, and infrastructure was made available for both domestic and foreign investors. More importantly, companies were able to employ a vast number of workers at relatively low wages. Therefore, companies successfully gained high labour productivity which resulted in Japanese capitalists becoming more attracted to investing in labour-intensive, export-oriented food industries. Furthermore, food processing companies collect their raw materials through nationwide distribution networks. When Japanese food processing companies rushed into Thailand in the 1980s, it caused a “Thailand boom” among foreign investors.
During the period from the mid 1980s to the beginning of the 1990s, a new era for fisheries trade and investment in Asia was initiated. The international division of labour in fisheries was changing rapidly, allowing Thailand to catch up with fisheries developed countries such as Japan, Korea and Taiwan. When the economic structure changed drastically, fisheries-based industries faced a severe shortage of labour. Labour-intensive capture fisheries and fish processing in the countries were hardly surviving. As a result, Thailand became the centre of the Asian fisheries industry.
Under the new regime of fisheries production and trade in Southeast Asia, Thailand expanded its shrimp culture by adopting highly effective technology and increasing its export of frozen and processed shrimp. It also developed tuna fisheries and tuna canneries. Thailand became the largest exporter of canned tuna, gaining the highest share of the market in the United States. All of these industries had relocated to Thailand from other countries through tough international competition.
(2) Stagnation and restructuring
At the beginning of the 1990s, Thai fisheries exports began to stagnate. Thailand was in fierce competition with other Asian exporters for the sector of the Thai export-oriented fisheries that provided low value-added products such as frozen shrimp and fish. The higher appreciation of the baht prevented Thai companies from further expanding their exports. Wages and prices rose. The labour-intensive fish processing industry had great difficulty employing cheap labour. Higher labour costs pushed up production costs. The lack of prime quality raw materials was another obstacle in the production of high value-added products. Thus, the economic incentive of export-oriented fisheries and food processing suddenly declined. Foreign investors were increasingly attracted to China and other Asian countries.
As seen in Figure 3, Thai shrimp products declined in volume in Japanese fish markets. After 1993, the annual growth rate of the amount of shrimp imported from Thailand fell into deficit. The growth rate of 1995 had a deficit of 30 percent. Indonesia became the largest exporter of shrimp in 1992. Thailand was also outsold by India. The ranking of shrimp exporters in Japanese markets changed drastically. Only the devaluation of the baht enabled Thailand to recover its share of the Japanese market.
In the mid 1990s, Thai fisheries and food processing industries began to seek new strategies to expand their exports, by attempting to diversify export destinations and commodities. (See Figure 4). Exports of new commodities such as canned, ready-to-eat, and live fish increased in both volume and value. In Japanese markets, Thai processed shrimp, such as prepared and preserved sushi ebi, gained a higher share of the market. Thai exporters enjoyed an increasing demand from chain restaurants, supermarkets and convenience stores, and also provided original equipment manufacture (OEM) products to large-scale buyers. Thailand has always sought new markets apart from Japan. Asian fish markets of growing economies such as Korea, China, Hong Kong, Taiwan, Singapore and Malaysia are becoming major destinations for Thai fisheries products. EU markets also absorb a huge volume of Thai fisheries products.
Food processing companies are located in specific industrial zones in the central southern regions of Thailand. In food production industries, successful amalgamations between food-related companies have enabled cost-effective transactions. Economies of scale are effective in various kinds of products such as seasoning, flour, bread crumbs and trays. Necessary prime quality materials for prepared and preserved products are supplied at lower costs than in other Asian countries. Cold storage plants and distributors have also expanded, encouraging current investors in the processing of high value-added products. As a result, a large gap in productivity appeared between Thailand and other competitors.
Not surprisingly, Thailand has become a thriving importer of fisheries products. Processing companies that produce prepared and preserved products on an OEM-basis are able to import prime quality raw materials at a lower cost from around the world. They can depend on a wide variety of imported raw materials to develop new prepared or preserved commodities. Not having to rely on domestic materials has allowed Thai food processing industries to prosper.
Thailand, therefore, has become a centre for the food industry in Asia, while it has gradually transferred capital and technology to neighbouring countries.
4. THE IMPACT OF THE ECONOMIC CRISIS ON FISHERIES
(1) Outline of the economic crisis in fisheries
Generally speaking, the Asian economic crisis has had a negative impact on fisheries and fisheries-related industries. In domestic fish markets, as the demand for fisheries products sharply declined, wholesale and retail prices fell drastically. The export of Thai fisheries products, mainly to Asian markets, was in a severe slump. Exporters, processing companies and all other fish dealers suffered heavily from the deteriorating financial situation, which reduced cash flow into production areas. Fishers and fish farmers who depended on local fish traders, found it difficult to raise capital for investments and management. The cost of productive materials rose sharply, pushing up overall production costs to levels much higher than prior to the economic crisis.
In the early stages of the economic crisis, the devaluation of the baht had a favourable effect on export-oriented fisheries. The high appreciation of the baht prevented Thailand from increasing its export of lower value-added commodities before the economic crisis. Owing to the effect of the depreciation of exchange rates, exports of certain products increased (see Table 1). Export of frozen shrimp and fish began to increase in volume. Traders encouraged producers to increase their export-oriented production, which brought about a boom in fisheries exports. In contrast, domestic-oriented production remained depressed.
It would appear that there is quite a variance regarding the impact of the economic crisis on different industries.
(2) Increase in the export of canned tuna
Having been stagnant from 1991, the tuna canning industry has been on the rise since 1997. This is because it depended heavily on imported raw materials, and because neighbouring countries became serious competitors. Production costs for canned tuna have increased.
Because of the baht crisis, free on board (FOB) prices of canned tuna in US dollars are relatively low. Invoices are paid in US dollars by importers. Imported raw materials are also paid in US dollars. Therefore, tuna canners probably did not experience much loss in exchange rates caused by the depreciation of the baht. Although not much canned tuna is sold domestically, tuna canners are not suffering from sluggish consumer markets. Purchase prices of imported raw materials have declined and production costs, including labour expenses, are sufficiently competitive against other large international exporters. Moreover, because export prices of canned tuna in US dollars are declining, companies have successfully recovered competing power and increased profits (see Table 2).
The tuna canning industry in Thailand has regained its market share in the USA, which is the largest importer of canned tuna in the world. Naturally, the industry is also diversifying, expanding its export destinations to the EU and the Middle East.
(3) The boom and collapse of shrimp export
Immediately after the baht was floated in July 1997, export of shrimp thrived throughout the country. Figure 5 shows that the wholesale price of Black Tiger shrimp (cultured) in the Bangkok fish market rose sharply in September 1997. This may indicate that the shrimp export boom lasted until July 1998. In recent years, the wholesale price reached its peak in March and April 1998. Before 1977, cultured shrimp diminished as a result of the deteriorating environment and economy. Frozen shrimp from Thailand became less competitive. However, the exceptional demand of foreign markets stimulated investors and owners of shrimp farms to expand their shrimp ponds, particularly in south and central Thailand. As a result, there was an increase in the harvest of cultured shrimp at the beginning of 1998.
Sale prices of most species were very low in fishing communities. Small-scale fishers suffered from a price hike in materials such as nets and fuel for fishing boats. Naturally, they increased their catch effort for marine shrimp. In fishing communities facing the Phannga Bay, for example, prosperous fishing of marine shrimp provided a wide variety of investment opportunities for small traders and fishers. Trading and processing companies located in large terminuses began to buy large quantities of shrimp. This drove up the sale price of shrimp in the communities. A new category of trader profited from this by collecting marine shrimp in fishing communities and selling it to cold storage companies and large-scale distributors. These newcomers were not the conventional fish traders who had exclusive business relationships with small-scale fishers by paying advances. They are the so-called “Kamoi Taoke (thief traders)” (see Figure 6), who offered higher purchase prices to fishers than the “Taoke” who had the exclusive rights to collect their catch. As a result, new marketing channels of marine shrimp appeared during the shrimp export boom.
The boom of shrimp production and marketing absorbed a large amount of savings in rural areas. Because of the higher returns than expected, many of the new traders invested in both production and distribution sites. The export boom led to a mini bubble economy of shrimp in fishing communities (see Table 3).
However, Figure 5 shows that the flourishing market in shrimp export plunged in August 1998. Wholesale prices of the Black Tiger species have severely fluctuated since then. The end of the boom was damaging to fishers, distributors, processors and exporters.
There are two reasons why the boom in shrimp export ended so abruptly. In mid 1998, the exchange rate of the baht against the US dollar began to rise. The baht is now higher against the dollar than the currencies of Thailand’s competitors. This makes its export of shrimp and cheaper fisheries products less attractive to foreign markets. The second reason is that Indonesia and other countries have rebuilt workable networks of distribution. Thailand again faces severe competition in both international and regional fish markets. It has reduced its volume of export to the USA and Japan. The recession in the Japanese economy is another decisive factor in the stagnation of Thai shrimp export. It has been reported that cold storage and processing plants have had a reduction in operations and have cut purchase prices of raw materials.
In fishing communities, the sale price of shrimp has fallen sharply since mid 1998. Traders have reduced their volume of dealings and are offering much lower purchase prices to fishers. New traders such as the “Kamoi Taoke” are constrained by a shortage of capital. They can hardly collect shrimp at a higher price than the conventional trader. Fishers again depend heavily on conventional traders who advance cash, but they forego the chance to sell their catch on a cash basis. This means that there is now less cash flow in fishing communities.
(4) The depression of grouper culture
In Thailand, grouper culture was profitable for more than ten years. Thailand exports a large volume of cultured grouper mainly to Hong Kong and China. It is estimated that 85-90 percent of cultured grouper is exported. In Hong Kong fish markets, Thailand has become the largest volume supplier of grouper.
Nationwide networks for the export of live grouper have already been established. These networks have been the incentive for the expansion of grouper culture in pens and ponds. A rapid increase in the production of grouper culture has brought an increasing demand for fry and young fish. Small-scale fishers who use various types of small traps are the major suppliers of these fish. In coastal communities, this profitable fishery provides them with additional income. It has been reported that as a result of the excessive demand for fry, grouper resources are already overexploited.
Figure 7 shows the major distribution channel of grouper in the provinces facing the Andaman Sea. Fry and young grouper are now distributed through nationwide networks. Bangkok-based exporters collect live fish (weighing around 1.2 kg per tail) throughout the country, and then export it by airfreight. Both the grouper culture and the live fish export industry are very profitable, and always attract new traders. The number of Bangkok-based exporters has recently increased. However, after the Asian economic crisis, the demand for live grouper declined in foreign markets. In Hong Kong, the wholesale price of live grouper imported from Thailand has fallen. FOB prices for Thai grouper is at its lowest level in the last ten years. Exporters and collectors have had to downsize their scale of transactions and reduce the purchase price of live grouper. Farm gate prices are at almost half of the highest peak price. In many areas, farmers often struggle with outbreaks of diseases because of an overabundance of grouper farms. Both in economic and biological terms, grouper culture is very risky. Therefore, the number of grouper farms has declined in some areas. Many of the grouper farms have begun pen culture of oysters and other crustaceans. Naturally, the slump in grouper culture is damaging to small-scale fishers who are also dealing in fry and young fish.
5. CONCLUSIONS
(1) Positive and negative impacts of the economic crisis
In the process of economic globalization, Thailand was formerly in a favourable position in the Asian export-oriented industries. By depending on the technology and capital investment from developed nations, Thailand was able to prosper in export-oriented fisheries and food-related industries. However, these industries are characterized as labour-intensive and resource-exploitative in nature. Along with the rapid growth of the Thai economy, the industries suffered from a labour shortage and a price rise for raw materials. These factors pushed up production costs, and Thailand lost competing power against neighbouring countries.
With the sudden decline in the exchange rate of the baht, Thailand has recovered its competing power in export-oriented fisheries and fish processing. Exports of canned tuna and frozen shrimp have increased rapidly. Moreover, labour-intensive food processing has employed a number of skilled workers at lower wages. Thailand therefore, has enjoyed the profitable exporting of fisheries products and regained a higher international market share.
However, there are negative impacts to fisheries production in Thailand. The domestic consumption of fish has declined, and the wholesale prices of most species have fallen. In Asian fish markets, the demand for imported fish is still at a deficit. In order to avoid a decrease in income, fishers are obliged to increase their catch effort for particularly profitable species and seek new types of fisheries. Anchovy fishery and its processing, for example, have continued to spread rapidly throughout the country. In coastal communities, it is thought that anchovy fisheries will provide job opportunities and income sources. This leads to the expectation that anchovy fisheries will expand in their area, even if overfishing is widespread. The deterioration of the socioeconomic environment in fishing communities has caused a severe depletion of marine resources.
In the 1990s, the Thai Government made a concerted effort to establish sustainable fisheries and aquaculture through adoption of community-based approaches. The Government organized a number of community-based projects for coastal resource management, rehabilitation of fishing grounds, construction of effective infrastructure, establishment of cooperative financial systems and the organization of fishers’ groups. However, because of the economic crisis, people may be less sensitive to the problem of the sustainable use of marine resources.
(2) The new direction of export-oriented fisheries and food industry
Although Thailand has successfully developed its fisheries and food industry and has become a large exporter of fisheries products, processing companies may find it difficult to purchase sufficient quantities of prime quality raw materials. As already mentioned, processing companies tend to depend increasingly on imported raw materials. Domestic producers cannot afford to supply enough prime quality material at lower prices. In other words, there may be a large gap between the demand of processing companies and the supply of domestic producers.
By depending on a wide variety of imported raw materials, fisheries have gained a higher market share, particularly in Japanese markets. Processing companies are major suppliers of OEM products to large-scale Japanese buyers. However, because of the severe recession in the Japanese economy, new marketing strategies have had to be adopted. The Japanese market demands preserved and prepared value-added products, at very low prices. Moreover, buyers tend to move toward other suppliers. Thai companies should develop their own brands and diversify export destinations, while reducing the production of OEM.
Thai export-oriented fisheries and food processing industries have reached a turning point. They will become food suppliers and production centres that export production materials and technology to other countries. Currently, therefore, Thailand is the leading employer in the fisheries sector in Asia.
After the beginning of the 1990s, competitors overtook Thailand in the production of low value-added fisheries products. Thai fisheries and processing companies suffered from stiff competition before the economic crisis. They temporally recovered competing power after the crisis, but they may face the same problems as before. Just as Thailand had caught up with competitors in fisheries developed countries such as Korea, Taiwan and Japan, it has been overtaken by its competitors. Export-oriented fisheries and food processing, regarded as labour-intensive and resource-exploitative, must successfully undergo structural transformation in order to sustain development.
(Note) This report was written over the period July-August 1999. The data and information are as of March 1999. The situation of export-oriented fisheries is in continual rapid transition.
REFERENCES:
Mr. Izzat Feidi
Chief, Fish Utilization and Marketing
Service
FAO, Rome
1. INTRODUCTION
The FAO Conference adopted the Code of Conduct for Responsible Fisheries (the Code) in October 1995.2 Aware of the generally poor state of many of the world’s major fisheries, ineffective conservation and management practices, and the need to ensure long-term sustainable development in the fisheries sector led to the adoption of the Code. The Code is intended to be implemented on a voluntary basis by FAO members with the assistance of the Organization as and when requested and possible. As a consequence, the Conference called on all countries and those involved in fisheries to collaborate in the fulfilment and implementation of the objectives and principles contained in the Code. Moreover, the Conference requested FAO to make provision in its Programme of Work and Budget to: provide advice to developing countries on implementing the Code; elaborate an inter-regional programme for external assistance to support the implementation of the Code; elaborate technical guidelines in support of the implementation of the Code; and, monitor and report on the Code’s implementation.
At the same time, the Conference urged FAO to strengthen regional fishery bodies so that they might deal more effectively with fisheries conservation and management, which is the Code’s primary objective.
The resolution of the FAO Conference laid the basis for the FAO Fisheries Department (FAO-FI), with the assistance of the Legal Office, to promote further and assist in the implementation of the Code. To this extent FAO-FI has put in place, directly and indirectly, a range of initiatives to facilitate the creation of an enabling environment at national, sub-regional, regional and global levels, to elicit and facilitate the structural changes required to improve the fisheries sector and its contribution to food security. These initiatives, together with their anticipated results and impact, are considered in subsequent sections of the document.
The Code in its entity may be considered a substantial contribution to global regularization of fish trade in spite of being implemented on a voluntary basis. The fact that different interest groups including governments, non-governmental organizations and international, regional and national organizations are formulating laws and regulations to govern fish trade based on the various aspects of the Code, makes these regulations guiding principles which become part and parcel of international trade in fish and fishery products.
2. DESCRIPTION OF THE CODE
The Code consists of 12 Articles and two Annexes. The last seven Articles lay down the General Principles and address six substantive technical areas covering fisheries management, fishing operations, aquaculture development, integration of fisheries into coastal area management, post-harvest practices and trade and fisheries research. Moreover, the Agreement to Promote Compliance with International Conservation and Management Measures by Fishing Vessels on the High Seas (the Compliance Agreement)3, proved by the FAO Conference in November 19934, an integral component of the Code. Binding in nature, the Agreement will enter into force as from the date of receipt by the Director-General of FAO of the twenty-fifth instrument of acceptance.
To assist those concerned with the implementation of the Code, technical guidelines are being developed by FAO-FI, as called for by the FAO Conference. The guidelines so far published focus on fishing operations, the precautionary approach to capture fisheries and species introductions, integration of fisheries into coastal area management, fisheries management, and aquaculture development and post-harvest practices. Other technical guidelines including those on trade are under preparation.
Article 4 of the Code recognizes, inter alia, FAO Secretariat responsibility to monitor the implementation of the Code and to report to the Committee on Fisheries (COFI) on progress and related developments concerning implementation. It also establishes the possibility for FAO, through its competent bodies, to revise the Code on the basis of developments in fisheries and the reports made to COFI. Consequently, the approach to implementing the Code should be seen as dynamic, and subject to modification as global circumstances in fisheries warrant.
3. PRIORITY ISSUES FOR IMPLEMENTATION OF THE CODE
The Code reflects those issues and topics that were considered by FAO Members to be particularly important for responsible fisheries when the Code was elaborated, and these are summarized in Article 6 of the Code: General Principles.
The headings of the articles and sub-articles of the Code provide insight into the diverse areas requiring particular attention (Table 1). Within these areas, the priority activities for FAO-FI action discussed later in this paper have been identified by the Fisheries Department. A common issue considered fundamental to progress towards implementing responsible fisheries practices is that of awareness, education and training. The field experiences of FAO staff have indicated an unacceptably low level of awareness of the Code, its background, and action required amongst those involved in fisheries, particularly of medium and lower levels. This problem requires that considerable emphasis be given to creating awareness and to education.
3.1 Participation, Information and Transparency
Article 7 of the Code (Fisheries Management) emphasizes the greater need, in almost all instances, for consultation among stakeholders, greater participation by stakeholders and interest groups in decision-making, and greater transparency in the decision-making process. Hence, participation by interest groups, the use of formal decision-making approaches, and the cooperative development of acceptable and transparent management plans for all fisheries are stressed as priority issues within this article. Similarly, in Article 11 (Post-harvest Practices and Trade), the need for greater participation by the different interest groups in formulating laws and regulations governing trade is stressed, as is the need for greater transparency in the formulation of measures related to international trade. Within Article 9 (Aquaculture Development), the needs for enhanced collaboration and consideration of the rights of local communities are listed as priorities.
Table 1. The substantive technical articles and sub-articles of the Code of Conduct for Responsible Fisheries, indicating the scope of the Code
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SUB-ARTICLES |
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6. General Principles |
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7. Fisheries Management
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7.1 General |
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7.2 Management objectives |
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7.3 Management framework and procedures |
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7.4 Data gathering and management advice |
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7.5 Precautionary approach |
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7.6 Management measures |
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7.7 Implementation |
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7.8 Financial institutions |
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8. Fishing Operations
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8.1 Duties of all States |
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8.2 Flag State duties |
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8.3 Port State duties |
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8.4 Fishing operations |
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8.5 Fishing gear selectivity |
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8.6 Energy optimization |
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8.7 Protection of the aquatic environment |
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8.8 Protection of the atmosphere |
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8.9 Harbours and landing places |
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8.10 Abandonment of structures and other materials |
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8.11 Artificial reefs and fish aggregation devices |
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9. Aquaculture Development
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9.1 Responsible development of aquaculture, including culture-based fisheries,
in areas under national jurisdiction |
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9.2 Responsible development of aquaculture including culture-based fisheries
within transboundary aquatic ecosystems |
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9.3 Use of aquatic genetic resources for the purposes of aquaculture
including culture-based fisheries |
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9.4 Responsible aquaculture at the production level |
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10. Integration of Fisheries into Coastal Area Management
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10.1 Institutional framework |
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10.2 Policy measures |
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10.3 Regional cooperation |
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10.4 Implementation |
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11. Post-harvest Practices and Trade
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11.1 Responsible fish utilization |
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11.2 Responsible international trade |
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11.3 Laws and regulations relating to fish trade |
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12. Fisheries Research |
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(Source: Code of Conduct for Responsible Fisheries)3.2 Sources of Management Information
Also related to decision-making is the call within the Code for the greater use of the ‘best scientific information available’ in any decision-making, as requested by UNCLOS. Arising from this are the priority issues related to the use of sound and relevant biological, economic and social information in fisheries management, which requires the collection of statistically valid data in these and other relevant areas, and their appropriate analysis. This can be greatly facilitated by improved cooperation in data exchange, in turn improved by progress towards comparable and complementary approaches to, and systems of, data collection and analysis. In addition to the obvious need for this in terms of fisheries management, Article 8 (Fishing Operations) stresses dissemination of information on best fishing gear and practices and greater cooperation, and the same theme appears in Article 11 (Post-harvest Practices and Trade). Under Article 9 (Aquaculture Development), there is a reference to the need for the evaluation of the impact of developments on the surrounding environment and resources, and for exchange of information. Within Article 10 (Integrated Management), impact on resources from economic, social and cultural perspectives in decision-making should be considered, clearly requiring suitable information.
3.3 Fisheries Impact
A significant feature of the Code is recognition of the potential negative impact that fishing can and does exert in addition to its direct impact on target stocks. This leads to the need to assess and minimize environmental impact; minimize capture of unwanted bycatch species (Article 7: Fisheries Management), prevent destructive fishing practices, and minimize ghost fishing. Similarly, the impact of aquaculture development on the environment needs to be assessed and appropriately minimized (Article 9: Aquaculture Development), while consideration also needs to be given to the implementation of environmentally sound processing, transporting and storage methods (Article 11: Post-harvest Practices).
Obviously, the direct impact of fisheries on the targeted stocks has not been neglected in the Code, and the need for implementation of the precautionary approach, whereby greater caution under greater uncertainty is established as a guiding principle in fisheries management, is emphasized in Article 7 (Fisheries Management).
3.4 Excess Capacity
The problem of excess fishing capacity and the pressure this imposes to maintain high fishing mortality rates independently of the status of the stocks is an important theme in the Code. Arising from this consideration, the need to reduce fleet capacity to appropriate levels is seen as a priority issue, and is closely linked to limitations on entry into fisheries, in turn associated with various forms of property or user rights (Article 7 (Fisheries Management) and Article 10 (Integration of Fisheries into Coastal Area Management, IFCAM)).
3.5 Monitoring, Control and Surveillance (MCS) Systems
It has been widely recognized that inadequate compliance with laws and regulations is a critical concern in many fisheries, and the need to remedy this situation is addressed in the Code. Amongst the priority issues related to promoting compliance is the need for developing appropriate legal and administrative frameworks and effective monitoring, control and surveillance (MCS) systems in all fisheries (Article 7: Fisheries Management), education on the Compliance Agreement and promotion of compliance with international conventions (Article 8: Fishing Operations). Moreover, the need for effective regulation of responsible farm and fish health practices, chemical inputs to aquaculture and disposal of wastes are recognized as priorities (Article 9: Aquaculture Development), as is the need for appropriate legal frameworks, and greater public awareness about and compliance with laws and regulations pertaining to integrated management. The importance of a mechanism to promote voluntary adherence to regulations and responsible practices should be stressed in efforts to achieve long-term sustainable fisheries.
3.6 Transboundary Stocks
In recent decades, the importance and special requirements of fisheries utilizing transboundary stocks have become the focus of considerable attention, including within the Code. The additional requirements for management of these stocks largely relate to the need for improved international cooperation in monitoring and research, determining suitable management measures, implementing management plans, and enforcing regulations, which together add substantial technical and political complexity to the task of achieving responsible fisheries. All the priority issues referred to above are particularly relevant in this case, such as the need for interest-group participation in decision-making; common standards and formats in data collection and analysis; improved data exchange; and cooperation in MCS. There is great need in this issue to improve mechanisms for scientific collaboration at the sub-regional and regional levels.
3.7 The Particular Situation of Developing Countries
Finally, the particular situation of developing countries is addressed in Article 5 of the Code which recognizes that some developing countries may lack the capacity to implement all the requirements of the Code, and hence will require assistance from other countries and organizations to make progress in this direction. This issue is reflected as a priority under the Code’s General Principles, and is implicit in many of the priority issues listed under the other articles.
3.8 Other Issues
There are several other issues included under the headings and sub-headings of the Code (Table 1), falling outside the major fields considered above, that are regarded as requiring urgent attention from all responsible governments and other agencies concerned with fisheries management and development, if real progress towards responsible fisheries is to be realized. Some of these fields, and some of the issues discussed in the preceding paragraphs, have been identified by FAO-FI for the direct involvement of the Department
4. FAO STRATEGY FOR THE IMPLEMENTATION OF THE CODE
Article 5 of the Code states that its application in developing countries will be gradual. It then calls on all concerned to support developing countries in introducing the Code.
FAO Fisheries Department elaborated a comprehensive programme of implementation of the Code. The aims of the programme include:
The strategy to effectively promote the activities appropriate for the implementation of the Code at global, regional, sub-regional and national levels, a systematic approach was put into action to monitor progress, coordinate the required activities at these levels and assist regional initiatives. The strategy included the changes introduced to FAO normative programme to assist member countries, especially developing countries in the implementation. Also, in the Twenty-second Session, the Committee on Fisheries (COFI) strongly endorsed the need for effective regional fisheries organizations and management in the framework of the Code if fish stocks were to be managed in a sustainable and responsible manner.
With this mandate endorsed by COFI, the activities to support regional fisheries organizations and arrangements can be clearly identified. It also confirmed that the regionalization of the Code would be promoted as one of the core activities related to the strengthening of regional fisheries bodies.
The implementation strategy included three main steps:
1. Enhancement of international awareness of the Code5. ADAPTATION OF THE CODEFAO promotional activities under step 1 included:
- Publication of the Code in all official languages (English, Spanish, French, Arabic, Chinese);
- Encouragement of translation of the Code into other languages;
- Wide distribution and dissemination of the Code by mail, on the FAO Fisheries Department Home Page on the INTERNET and through other forms of the media;
- Publication of technical guidelines for selected thematic chapters as global level including the guidelines for the Post-harvest Practices and Trade (Article 11);
- Inclusion of the Code in the agendas of sessions of all FAO regional fisheries bodies, meetings, seminars, workshops, as well as non-FAO fisheries meetings to enhance the understanding of the Code and accelerate its effective implementation.
2. Application of the Code at regional and sub-regional level
In carrying out step 2, although the emphasis of the Code is mainly global, there was a need to convene regional and sub-regional workshops under the aegis of the FAO and non-FAO regional fisheries bodies with the aim of identifying “local” priorities in order to focus an additional guideline that may only apply to certain provisions of the various articles. The regions themselves could, therefore, undertake further elaboration to suit their specific needs.
This approach was also used to identify target areas in order to provide more clarification of specific regional issues, which may require further elaboration when implementing the Code.
The intention of these regional and sub-regional workshops was to gain more knowledge on these areas in order to help review the current text of the Code which could be regarded as “a convincing process” to key regional personnel who would facilitate the implementation in their regions or at national and local levels.
3. Monitoring the implementation of the Code
In the process of the implementing the above two steps, FAO would receive significant feedback from the regions/sub-regions, which would enable:
- a comprehensive review and analysis on the progress of implementation;
- assessment of the extent of implementation;
- identification of the areas of the Code which require further elaboration; and,
- identification of the constraints in the implementation.
In order to reflect the particular needs and situations of different regions and fisheries, sub-regional, regional and sectoral adaptation of the Code may be desirable in some instances. Such adaptation could foster greater national, sub-regional, and regional acceptance of the Code and further facilitate the implementation of the policy changes necessary in the different fisheries sub-sectors. Adaptation should therefore be encouraged as far as it is consistent with the objectives and principles of the Code.5
5.1 Regional Adaptation
Following the 1992 Cancún Conference, three years of intensive effort by FAO Members resulted in consensus on a comprehensive text for the Code. During the negotiation process, some local, national, sub-regional and global issues were diluted, or perhaps even avoided in the negotiation process, with a view to finding acceptable global compromises, and ultimately consensus, on a wide range of difficult and controversial issues. Therefore, when considering the implementation of the Code, which must be geared to meet particular national circumstances and requirements, adaptation is likely to be needed in many instances. Such adaptations should not violate the spirit of the Code.
Fisheries may differ widely by region, country and locality within a country, not only from the point of view of resources or harvesting technology but also from a social and economic perspective. In some countries and in some sub-regions and regions, particular fish distribution systems have evolved over a long period of time in order to meet the needs of consumers. These differences affect the level and nature of the contribution that fisheries make to national, sub-regional and regional food security and economies, as well as affecting relative priorities or most appropriate choices of action.
Popular participation in adapting the Code to suit national, sub-regional and regional conditions may lead to enhanced national acceptance of the Code. This is because stakeholders are more likely to regard a locally adapted Code as being ‘home grown’ and somewhat their ‘own’ Moreover, regional adaptation will assist those developing countries that lack the financial and technical capacity to undertake their own national adaptation of the Code.
5.2 National Adaptation
Since the implementation of the Code is intended to improve current practices in all aspects of fisheries activities and to achieve long-term sustainable and responsible fisheries, a range of corrective measures will have to be implemented, principally at the local and national levels. Moreover, taking account of the fact that current practices in harvesting and enhancement technology, aquaculture production, marketing and consumption patterns have historically developed within certain socio-economic parameters, greater emphasis in the adaptation process should be placed on these aspects in order for stakeholders to understand better the need to improve and change their current practices (where appropriate) and the socio-economic implications of such change.
5.3 Sectoral Adaptation
Because of its all-embracing nature, the Code remains insufficiently explicit in some areas. For instance, issues of inland fisheries are not comprehensively addressed in the Code. Inland fisheries are a special case requiring careful interpretation of the articles of the Code directed at conservation of the resource. Most inland waters are controlled by interests other than fisheries, such as power generation, navigation, agriculture or urban demand. This means that much of the policy for allocation of the aquatic resource and its physical context are subject to decisions taken outside the fisheries sector. Under these circumstances, countries aiming at sustainable inland fisheries should take such measures as are necessary to protect them, in conformity with the Code, by enlarging the framework to Integrated Basin Management (IBM).
6. MONITORING, EVALUATION AND UPDATING
6.1 Monitoring and Evaluation
FAO-FI will, with the resources it has available for the task, monitor the implementation of the Code on a regular and ongoing basis in order to assess progress and, where progress is found to be unsatisfactory, the constraints to successful implementation. The core of the monitoring programme must and will depend on national reporting, including reporting to COFI. FAO-FI will coordinate this and will distribute and analyze questionnaires designed to allow valid evaluation of progress. These questionnaires will be sent to a range of stakeholders and interest groups in each country, not just to the fisheries authorities.
The national reports that will be consolidated by FAO-FI for presentation to COFI, will form the basis for an assessment of implementation, including both achievements and difficulties, and for decisions to be taken by COFI concerning changes that may be required periodically to update and adjust the Code to ensure that it is generally consistent with fisheries developments taking place. The questionnaire distributed to countries by FAO-FI for the compilation of reports for submission to COFI may be modified from time to time to take account of expected results and impact. As far as possible, countries should provide in their reporting quantified and verifiable information on results and impact with respect to the implementation of the Code.
However, previous experience has shown that national reports are often incomplete both in number and coverage, and therefore independent FAO-FI assessments will also be undertaken. With resources currently available, it will not be possible to undertake such independent assessments for the whole Code in every country, and a means of sub-sampling will be required. It should be noted that for complete and rigorous evaluation, additional resources will be required and a “Monitoring and Evaluation” project is being developed, for which funds will be sought from outside donors. In addition to relying on national reporting, FAO-FI will foster, through its normative and field programmes, broad collaboration in evaluation and follow-up on implementation of the Code. These will include regional and sub-regional workshops to address common problems. Some workshops will be arranged specifically for this purpose, but other meetings of regional and sub-regional fisheries organizations may also provide opportunities for collecting information on progress and problems in implementing the Code.
The Inter-regional Programme will also provide opportunities to monitor, evaluate and follow-up on implementation. It will include regional and sub-regional workshops as well as field projects, all of which will enable collection of relevant information. This will be used in the independent FAO-FI assessments and will be incorporated in the dedicated “Monitoring and Evaluation” project, should it be successfully implemented.
6.2 Updating
In accordance with its Article 4, the Code may be revised through COFI as and when required. Where significant changes are made to the Code, the implementation strategy will be adjusted as necessary.
7. THE CODE AS A CONTRIBUTOR TO GLOBAL FISH TRADE
REGULATIONS
Although the Code is voluntary and was formulated as a non-compulsory binding agreement, certain parts of it, however, are based on relevant rules of international law. In the Code, it is said that its provisions should be interpreted and applied in accordance with the principles, rights and obligations established in the World Trade Organization (WTO) Agreement. The provisions also request member countries to liberalize trade in fish and fishery products in accordance with the principles, rights and obligations of the Agreement which is binding on all WTO members. Furthermore, the Code demands member countries to notify interested parties as well as WTO on the development of and changes to laws, regulations and administrative procedures applicable to international trade in fish and fishery products. The November 1999 WTO Ministerial Conference in Seattle, U.S.A. (The Millennium Round) will open a new round of negotiations over extending the WTO’s powers into new areas of world trade.
The Code therefore, constitutes an important contribution to the implementation of relevant international instruments, since it was formulated to be interpreted and applied in conformity with such relevant rules of international law. These rules are reflected in the 1982 United Nations Convention on the Law of the Sea (UNCLOS), 1995 Agreement for the Implementation of the Provisions of UNCLOS of 10 December 1982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, and in the light of, inter alia, the 1992 Declaration on Environment and Development (UNCED) and, in particular, Chapter 17 of Agenda 21, including the United Nations Convention on the Law of the Sea. The outcome of these recent global conferences, as well as the Kyoto Conference and the World Food Summit and the various deliberations of the FAO Committee on Fisheries (COFI) and its Sub-Committee on Fish Trade, have impacts on fishery governance and the perception of the international community concerning world fishing resources and, in particular, their sustainable management and utilization. Furthermore, at the FAO Ministerial meeting in March 1999, the Ministers responsible for fisheries in over 100 countries signed the Rome Declaration on the implementation of the Code. In the Declaration they agreed to work together with FAO and others to secure the contribution of fisheries to national, economic and social goals. They have also declared that they will address aspects of trade and environment related to fisheries and aquaculture within the framework of the Code.
In more practical terms several governments around the world, in their efforts to implement the Code, have stated during the Ministerial meeting that they already incorporated the Code, or at least some of its provisions as seen appropriate, in their national plans for fisheries such as Mexico. The EU advised that most of the principles of the Code were already included in the Common Fishery Policy. Furthermore, Canada has undertaken a number of activities, in particular in the area of fishing operations.
In Asia, Thailand translated the Code in Thai and has applied provisions such as those related to reduction of capacity and fishing effort, establishment of a sustainable shrimp farming model and guidelines and various other measures to ensure food safety and quality as well as regulations of trade in endangered species.
In India, the Code is being implemented through translation and dissemination, meetings, training programmes, legislation and guidelines on aquaculture, capacity building to promote fishing of under-exploited offshore stocks and reduce pressure on inshore stocks, limitation of bycatch discarding, etc. Pakistan considers the Code the centrepiece for sustainable development of fish resources and is committed to its implementation. The Chinese government supports, in principle, the three International Plans of Action adopted by COFI and it has already taken steps to reduce fishing efforts.
In the Republic of Korea, the Code has been instrumental in guiding fishery activities and drawing an international fishery framework. It has emphasized the importance of quality management in the processing industry to ensure safe products and that it has firm belief in ecolabelling. The Philippines emphasized the fishing capacity issue and participation in the regionalization of the Code’s provisions on fishing operations and is taking appropriate steps at the national level. Likewise, in Indonesia, the government is determined to take all possible measures to ensure sustainable utilization of fisheries resources. Relevant elements of the Code have been incorporated in Indonesian Law.
Other countries in Asia are taking steps to regulate their fisheries along the various provisions of the Code. Sri Lanka, Malaysia, Cambodia, Vietnam and others are each taking different measures to limit fishing capacities, introduce principles for sustainable fisheries management and enact new legislations for the management of aquatic resources.
8. CONCLUSION
The adoption of the above international instruments and the implementation by a considerable number of countries provisions from the various Articles of the Code into their national legislation and their introductions of relevant laws and regulations into their fisheries activities, including fish trade, confirms that the Code of Conduct for Responsible Fisheries has already made a major contribution, and is expected to continue to add to these contributions in the years to come as a global regulator of fish trade. The initial motivations for these new directions are actually found in the Code. In Article 11.2.15 it requests states and other organizations to “...ensure that their policies and practices related to the promotion of international fish trade and export promotion do not result in environmental degradation or adversely impact the nutritional rights and needs of people for whom fish is critical to their health and well-being and for whom other comparable sources of food are not readily available or affordable.” In other words, linking food needs from one part of the globe to another is more than a proposition of organizing international trade between these regions.
REFERENCES
FAO, Code of Conduct for Responsible Fisheries. FAO. 1995. Rome. 41 p.
FAO, The State of World Fisheries and Aquaculture. 1998. FAO. Rome. 112p.
FAO, Proceedings of the FAO E-Mail Conference on Fish Trade and Food Security. 19 October - 12 December 1998. March 1999.
FAO, Into the Next Millennium: Fishery Perspective. FAO Regional Office for Asia and the Pacific. Bangkok, Thailand. May 1999. 43 p.
FAO, The Rome Declaration on Implementation of the Code of Conduct for Responsible Fisheries. FAO Ministerial Meeting on Fisheries. Rome. 10 - 11 March 1999.
Ruckes, E. Agreements Regulating International Fish Trade: SOFIA. FAO. Rome. 1998.
Seong-gul Hong, Jeong-gon Ryu and Sun-pyo
Kim
Fisheries Economic Division, Korea Maritime
Institute
1. INTRODUCTION
The need for management of the fisheries resources arises due to the very nature of the fisheries resources. In other words, biologically fisheries resources are self-regulating density-depended renewable resources (Schaefer, 1957, 1959), and socio-economically fisheries resources are a common property. It is a well-known fact from the history that human beings can deplete fisheries resources or incur huge economic losses from mismanagement of fisheries resources. Nowadays coastal states all over the world are looking for ways to properly manage the fisheries resources.
According to OECD (OECD, 1996), methods of fisheries management are divided into three categories: input control, output control and technological control. Input control is control on fishing licenses, fishing gear and number of fishing vessels. Output control is control on quantity of catches such as TAC (Total Allowable Catch). Technological control is control on fishing period, fishing areas, mesh size, size and sex of captured fishes. Mainly Asian countries such as Korea and Japan use input control. Mainly western countries such as US, Canada and New Zealand employ output control. Technological control is employed by almost all of the coastal states in the world because it is regarded as highly effective ways of preventing over-catching.
Reduction of fishing fleet capacity is a way of input control through implementation of buyback program of fishing vessels and their fishing licenses by a government. Even if the reduction program is sometimes employed along with an output control, the reduction is usually implemented under the input control scheme.
This paper is intended to overview a theoretical background of adjustment program, background of Korean reduction scheme, and its achievements and prospect.
2. THEORETICAL BACKGROUND FOR ADJUSTMENT OF FISHING FLEET
The objective of the adjustment is twofold: first, conservation of fisheries resources and second, enhancement of economic efficiency.
First, let’s turn to the issue of conservation of fisheries resources. Reduction of fishing fleet will decrease the total capture efforts and level of fishing intensity and thus reduce total catches of the fishes. The buyback program is conductive to prevention of over-catch and realization of MSY (Maximum Sustainable Yield). Second, let’s turn to the issue of enhancement of economic efficiency. Reduction will reduce the total fishing efforts and thus raise the economic efficiency of the remaining fishing fleet. Theoretically, downsizing will make MR=MC where MEY (Maximum Economic Yield) is realized. Figure. 1 illustrates this.
Figure 1. Optimum Fishing Efforts for Sustainable Fisheries
In the figure, TR stands for total fishing revenues and TC stands for total fishing cost. Let's suppose that current fishing efforts are at the point of Eo. Since Eo is beyond Em at which fishing efforts is optimum level realizing MSY, current fishing is at the level of over-catching, namely biological over-catching. It means from the biological point of view that fishing efforts should be reduced from Eo to Em. From the economic point of view, at the point of Eo, the amount of total fishing revenue is same as that of total fishing cost because MR=AC (or TR=TC). In other words, at the point Eo, economic over-catching is occurring as much as Ee-Eo.
If the fishing is at the point of over-catching, the total amount of fishing efforts should be reduced to prevent over-catching. Level of reduction will be decided between Eo and Ee. For a biologically sustainable fishing, the fishing efforts should be reduced to the level of Em. In terms of economics, the level of fishing efforts should be reduced to the point of Em for maximized economic gains. However, in practical terms the level of reduction will be somewhere between Em and Ee, where conservation of fisheries resources can be maintained.
3. BACKGROUND OF REDUCTION OF FISHING FLEET IN KOREA
The background for downsizing of fishing fleet in Korea can be explained from the biological and economic viewpoints as the general theory of downsizing also applies to the Korean case.
Coastal and offshore fisheries began to develop in the late-1950s. In the late-1950s, the fishing efficiency was dramatically enhanced because the non-powered vessels were replaced by powered-vessel and the cotton fishing nets were changed into nylon nets. Until 1960s, however, the overall amount of catch did not increase much because low level of national capital of Korea at that time allowed only a small number of fishing vessels.
However, as the inflow of capital into the fishery industries showed dramatic increase along with the fast-moving economic development of Korea in 1970s, the number of fishing vessels, total tonnage of vessel and total horsepower of fishing vessels increased by 25%, 45% and 70% respectively.
The number of fishing vessels showed overall upward trend since 1970s (Table 1 and Figure 2). In 1982 the Korean government began to set the limits of fishing permits for each fishing sector with a view to controlling the ever-increasing number of fishing vessels. Due to the limits of fishing permits by the government, the number of fishing vessels engaged in coastal and offshore fishing has not increased since 1983 (Table 2).
The total tonnage of fishing vessel in adjacent fisheries began to increase since the late-1970s. Three factors can be identified for this. First, the development of heavy industry in Korea made it easier to build bigger fishing vessel. Second, the need to exploit far-away fishing grounds such as East China Sea made the need for bigger vessels. Third, government's ceiling on the number of fishing vessels made fishermen to look for high fishing intensity per vessel. As the fishing intensity per vessel showed dramatic increase, the Korean government began to regulate the total tonnage of offshore fisheries sector in 1987. Thanks to the introduction of limits on the tonnage, the total tonnage of offshore fisheries has decreased since 1990s (Table 2).
Korean fishermen chose to increase the horsepower of fishing vessels in the face of government's regulation on the tonnage and number of fishing vessels. In 1983, the total horsepower of offshore fishing vessels was 1.2 million and became 2 million in 1991. Now as of 1998, it is 4.5 million.
Figure 2. Trend of Coastal and Offshore Fishing Vessels and their Catches in Korea
Table 1. Trend of Coastal and Offshore Fishing Vessels and their Catches in Korea
|
|
Vessel No. |
Vessel G.T. |
Vessel H.P. |
Fishing Catches (M/T) |
|
1970 |
45,625 |
236,891 |
436,635 |
567,217 |
|
1971 |
42,229 |
230,382 |
480,025 |
575,545 |
|
1972 |
41,602 |
236,663 |
486,439 |
722,287 |
|
1973 |
38,811 |
235,955 |
519,727 |
695,004 |
|
1974 |
36,796 |
241,012 |
577,953 |
791,020 |
|
1975 |
35,583 |
233,383 |
625,181 |
773,640 |
|
1976 |
35,362 |
252,731 |
694,805 |
703,149 |
|
1977 |
36,090 |
274,004 |
859,385 |
706,405 |
|
1978 |
37,223 |
323,668 |
1,158,978 |
863,472 |
|
1979 |
39,391 |
366,612 |
1,367,500 |
792,621 |
|
1980 |
39,601 |
372,500 |
1,437,480 |
714,372 |
|
1982 |
44,373 |
387,102 |
1,629,687 |
788,115 |
|
1983 |
46,502 |
406,114 |
1,765,821 |
1,419,797 |
|
1984 |
47,963 |
425,909 |
1,990,766 |
1,443,332 |
|
1985 |
48,856 |
427,810 |
2,132,199 |
1,401,515 |
|
1986 |
50,687 |
437,484 |
2,314,135 |
1,664,852 |
|
1987 |
51,836 |
447,276 |
2,655,050 |
1,457,265 |
|
1988 |
56,129 |
453,708 |
3,133,440 |
1,425,528 |
|
1989 |
55,308 |
442,386 |
3,310,874 |
1,432,310 |
|
1990 |
55,444 |
445,850 |
3,617,265 |
1,477,236 |
|
1991 |
54,436 |
449,408 |
4,118,207 |
1,243,093 |
|
1992 |
52,951 |
444,566 |
4,732,924 |
1,221,783 |
|
1993 |
52,402 |
444,630 |
5,189,397 |
1,448,985 |
|
1994 |
49,441 |
440,772 |
5,886,152 |
1,425,010 |
|
1995 |
50,729 |
436,129 |
6,470,537 |
1,345,191 |
|
1996 |
50,324 |
436,127 |
6,685,387 |
1,520,134 |
|
1997 |
55,771 |
436,327 |
9,978,816 |
1,243,633 |
|
1998 |
63,625 |
435,078 |
10,002,502 |
1,211,398 |
* Source: Statistical Yearbook of Maritime Affairs and Fisheries, Ministry of Maritime Affairs and Fisheries.Table 2. Powered Fishing Vessels of Coastal and Offshore Fisheries in Korea* Notes: Aquaculture, Inland Fishing, Catch of Marine Algae are excluded.
(Unit: No., G.T., H.P.)
|
|
Total |
Costal Fisheries |
Off-Shore Fisheries |
||||||
|
No. |
G.T. |
H.P. |
No. |
G.T. |
H.P. |
No. |
G.T. |
H.P. |
|
|
1983 |
46,502 |
406,114 |
1,765,821 |
39,645 |
99,950 |
564,573 |
6,857 |
306,164 |
1,201,248 |
|
1991 |
48,008 |
439,956 |
4,118,207 |
41,111 |
102,360 |
2,193,842 |
6,897 |
337,596 |
1,924,364 |
|
1992 |
47,271 |
436,164 |
4,732,924 |
40,672 |
104,426 |
2,692,768 |
6,599 |
331,738 |
2,040,156 |
|
1993 |
46,675 |
436,717 |
5,189,397 |
40,171 |
107,141 |
3,042,894 |
6,504 |
329,576 |
2,146,503 |
|
1994 |
46,187 |
435,385 |
5,886,152 |
39,811 |
107,784 |
3,530,091 |
6,376 |
327,601 |
2,356,061 |
|
1995 |
47,913 |
650,430 |
6,470,537 |
41,516 |
116,372 |
4,021,739 |
6,397 |
321,580 |
2,448,798 |
|
1996 |
46,942 |
432,788 |
6,685,387 |
40,791 |
114,862 |
4,291,543 |
6,151 |
317,926 |
2,393,844 |
|
1997 |
51,074 |
432,809 |
9,978,816 |
44,853 |
119,095 |
5,235,044 |
6,221 |
313,714 |
4,743,772 |
|
1998 |
57,950 |
431,242 |
10,002,502 |
51,904 |
130,433 |
5,452,911 |
6,046 |
300,809 |
4,549,591 |
* Source: Statistical Yearbook of Maritime Affairs and Fisheries, Ministry of Maritime Affairs and Fisheries.
Figure 3. CPUE of Coastal and Offshore Fisheries in Korea
* Note: The unit of Catch/G.T./No. is 10-4M/T.According to the data published by the National Fisheries Research and Development Agency, almost all of the offshore fisheries are beyond the level of MSY (Table 3).
* Source: National Fisheries Research and Development Agency
Table 3. Biological Over-Catch of Offshore and Coastal Fisheries in Korea
(Unit: %)
|
Fisheries |
Over Exploitation |
Fisheries |
Over Exploitation |
|
Large Powered Purse Seine |
8 ~ 17 |
Large Stow Net |
34 ~ 53 |
|
Large Otter Trawl |
13 ~ 17 |
Off-shore Trap |
10 ~ 14 |
|
Trawl Large (Two Boat) |
31 ~ 50 |
Anchovy Drag Net |
13 ~ 70 |
|
Trawl Large (One Boat) |
25 ~ 42 |
Off-shore Angling |
3 ~ 5 |
|
Trawl Medium |
25 ~ 30 |
Off-shore Gillnet |
5 ~ 8 |
|
Eastern-sea Trawl |
4 ~ 25 |
Off-shore Long Line |
15 ~ 30 |
* Source: National Fisheries Research and Development Agency.The profitability of Korea fisheries is getting worse. The declining profitability is due to declined revenues and increased cost. The declined revenue is caused by overcapitalization, reduced fisheries resources and catches, declined fish prices since liberalization of imports of fisheries products (1997) and shrinking of fishing ground after Korea-Japan Fisheries Agreement (1999). The elevated fishing cost is caused by increased labor cost and increase of other production factors.
Table 4 shows that profit/total revenue ratio of offshore fisheries except the offshore trap fisheries is decreasing due to the decreased revenues and pushed-up cost.
Table 4 also shows that Total cost/total revenue ratio of offshore fisheries except offshore trap Gillnet fisheries are more than zero. It implies that the increase of fishing cost exceeds the increase of revenues. In other words, it means that financial condition of fisheries is getting worse.
Tables 4. Trend of profitability of offshore fisheries in Korea
(Unit: %)
|
|
Profit/Total Revenue |
Total Cost/Total Revenue |
||||
|
1987(A) |
1997(B) |
B-A |
1987(A) |
1997(B) |
B-A |
|
|
Large Powered Purse Seine |
20.0 |
-1.5 |
-21.5 |
81.6 |
103.8 |
22.2 |
|
Large Otter Trawl |
22.6 |
10.5 |
-14.3 |
78.2 |
91.4 |
13.2 |
|
Trawl Large (Two Boat) |
20.9 |
-1.0 |
-21.9 |
79.9 |
102.3 |
22.4 |
|
Trawl Large (One Boat) |
20.1 |
14.3 |
-5.8 |
81.4 |
87.6 |
6.2 |
|
Trawl Medium |
24.5 |
11.0 |
-13.5 |
77.0 |
91.8 |
14.8 |
|
Eastern-sea Trawl |
28.7 |
14.4 |
-14.3 |
72.6 |
88.1 |
15.5 |
|
Large Stow Net |
18.2 |
-6.7 |
-24.9 |
83.5 |
106.3 |
22.8 |
|
Offshore Trap |
17.6 |
28.2 |
10.6 |
83.3 |
73.0 |
-10.3 |
|
Offshore Angling |
18.6 |
0.1 |
-18.5 |
83.9 |
102.3 |
18.4 |
|
Off-shore Gillnet |
23.5 |
3.4 |
-20.1 |
78.6 |
68.0 |
-10.6 |
* Source: Korea Fisheries CooperativesAs was shown above, Korean coastal and offshore fisheries has no option but to reduce the fishing intensity as it is faced with poor status of marine resources, worsening financial condition and challenging international fisheries environment.
There are two ways to attain reduction of fishing fleet. One is let the inefficient fishermen exit the market on the basis of market principle, and the other is through buyback of fishing vessel and fishing permits by the government. It is hard to expect that the fishermen exit the production market on voluntary basis. Korean government adopted buyback program for adjustment of fishing fleet.
4. IMPLEMENTATION OF BUYBACK PROGRAM IN KOREA
The total number of fishing vessel engaged in coastal and offshore fisheries is 63,625 as of 1998. Among those vessels, the number of net fisheries is 23,796, representing 37%, the number of line fisheries is 27,361, representing 43%, and others are 20%, 12,468. Among the total number of adjacent fisheries vessels, coastal fisheries vessels are 57,572 taking 90%, whereas the offshore fisheries vessels are only 6,053, representing 10% (Table 5).
Table 5 shows that majority of the vessels are young as 45%(28,393) of the vessels are less than 5 years old but still 8,737 vessels are more than 16 years old. In other words 14% of the vessels are old as much as more than 16 years. By and large coastal fishing vessels are younger than offshore fishing vessels as 47% of coastal fishing vessels are less than 5 years old, whereas only 23% of offshore fishing vessels are less than 5 years old. As much as 27% of the coastal fishing vessels are more than 16 years old. (Table 5).
Table 5. Numbers of Fishing Vessels by Age in Korea (The year of 1998)
(Unit: Vessel)
|
|
Total |
<5 |
6~10 |
11~15 |
16~20 |
21< |
|
Total |
63,625 |
28,393 |
15,539 |
10,956 |
4,967 |
3,770 |
|
Net Fisheries |
23,796 |
9,547 |
5,742 |
4,206 |
2,317 |
1,984 |
|
Line Fisheries |
27,361 |
13,479 |
6,790 |
4,268 |
1,668 |
1,156 |
|
Others Fisheries |
12,468 |
5,367 |
3,007 |
2,482 |
982 |
630 |
|
Costal Fisheries |
57,572 |
27,030 |
14,176 |
9,260 |
4,207 |
2,906 |
|
Net Fisheries |
20,495 |
9,036 |
5,104 |
3,270 |
1,782 |
1,310 |
|
Line Fisheries |
25,345 |
12,949 |
6,216 |
3,673 |
1,498 |
1,009 |
|
Others Fisheries |
11,732 |
5,045 |
2,856 |
2,317 |
927 |
587 |
|
Offshore Fisheries |
6,053 |
1,363 |
1,363 |
1,696 |
760 |
864 |
|
Net Fisheries |
3,301 |
511 |
638 |
936 |
535 |
674 |
|
Line Fisheries |
2,016 |
530 |
574 |
595 |
170 |
147 |
|
Other Fisheries |
736 |
322 |
151 |
165 |
55 |
43 |
* Source: Statistical Yearbook of Maritime Affairs and Fisheries, Ministry of Maritime Affairs and Fisheries.In terms of tonnage, 81% of vessels are less than 5 G.T. and most of them are engaged in coastal fisheries. The average weight of coastal fisheries vessels are more than 10 G.T. and vessels of less than 10 G.T. are employed in offshore gill net fishing, offshore angling, offshore long line fishing and offshore trap fishing (Table 6).
Table 6. Numbers of Fishing Vessels by Tonnage in Korea (The year of 1998)
(Unit: Vessel)
|
|
Total |
<1 |
1~5 |
5~10 |
10~20 |
20~50 |
50~100 |
100~200 |
200< |
|
Total |
63,625 |
20,904 |
30,917 |
6,096 |
1,361 |
2,005 |
1,820 |
495 |
27 |
|
Net Fisheries |
23,796 |
6,307 |
11,525 |
2,755 |
556 |
893 |
1,310 |
423 |
27 |
|
Line Fisheries |
27,361 |
10,316 |
12,720 |
2,403 |
667 |
907 |
278 |
70 |
- |
|
Others Fisheries |
12,468 |
4,281 |
6,672 |
938 |
138 |
205 |
232 |
2 |
- |
|
Costal Fisheries |
57,572 |
20,902 |
30,683 |
5,909 |
71 |
7 |
- |
- |
- |
|
Net Fisheries |
20,495 |
6,306 |
11,509 |
2,680 |
- |
- |
- |
- |
- |
|
Line Fisheries |
25,345 |
10,316 |
12,720 |
2,309 |
- |
- |
- |
- |
- |
|
Others Fisheries |
11,732 |
4,280 |
6,454 |
920 |
71 |
7 |
- |
- |
- |
|
Offshore Fisheries |
6,053 |
2 |
234 |
187 |
1,290 |
1,998 |
1,820 |
495 |
27 |
|
Net Fisheries |
3,301 |
1 |
16 |
75 |
556 |
893 |
1,310 |
423 |
27 |
|
Line Fisheries |
2,016 |
- |
- |
94 |
667 |
907 |
278 |
70 |
- |
|
Others Fisheries |
736 |
1 |
218 |
18 |
67 |
198 |
232 |
2 |
- |
* Source: Statistical Yearbook of Maritime Affairs and Fisheries, Ministry of Maritime Affairs and Fisheries.Let's take a look at the composition of vessels in terms of material of which the vessels are made. In coastal fisheries, steel vessels are 101 (0.2%), wooden vessels are 32,794 (57%), F.R.P. vessels are 24,677 (43%). In coastal fisheries, steel vessels are 45%, wooden vessels are 35% and F.R.P. vessels are 20%.
It was 1994 when Korean government embarked on the reduction of fishing fleet by buyback program. Two factors influenced the government's initiative of buyback program. One is the fact that fish prices was pushed down by the liberalization of fisheries products after the conclusion of UR, and the push-down fish prices caused profitability of fishery industries to decrease. The other is the realization by the government of the fact that responsible fisheries are indispensable for conservation of ever-decreasing fisheries resources.
As a result of implementation of reduction program, 614 vessels which is 22654 G.T were scraped during the period of 1994 to 1998. In this process 93,644 million Won was spent (Table 8).
Table 7. Numbers of Fishing Vessels by Construction Material in Korea (The year of 1998)
(Unit: Vessel)
|
|
Total |
Steel |
Wood |
F.R.P. |
|
Total |
63,625 |
2,815 |
34,908 |
25,902 |
|
Net Fisheries |
23,796 |
2,357 |
12,507 |
8,932 |
|
Line Fisheries |
27,361 |
326 |
14,690 |
12,345 |
|
Others Fisheries |
12,468 |
132 |
7,711 |
4,625 |
|
Costal Fisheries |
57,572 |
101 |
32,794 |
24,677 |
|
Net Fisheries |
20,495 |
71 |
11,785 |
8,639 |
|
Line Fisheries |
25,345 |
20 |
13,648 |
11,677 |
|
Others Fisheries |
11,732 |
10 |
7,361 |
4,361 |
|
Offshore Fisheries |
6,053 |
2,714 |
2,114 |
1,225 |
|
Net Fisheries |
3,301 |
2,286 |
722 |
293 |
|
Line Fisheries |
2,016 |
306 |
1,042 |
668 |
|
Others Fisheries |
736 |
122 |
350 |
264 |
* Source: National Fisheries Research and Development Agency, and Statistical Yearbook of Maritime Affairs and Fisheries, Ministry of Maritime Affairs and Fisheries.Among the vessels removed, there are as much as 397 vessels (15%) in coastal fisheries sector. The vessels represents 64% in terms of number but it is only 15% in terms of tonnage. This is because the average size of coastal fishing vessels is smaller than that of offshore fishing vessels. The most of the removed vessels are those, which are potentially damaging to the juvenile fishes as they have small mesh size such as stow net.
In offshore fisheries sector, government is targeting over-catching, low profiting and resource-destructive fisheries. So far, 217 vessels were removed. That is 19,251 G.T. In the process 53,732 million Won was spent. Over-catching and low-profiting fisheries are large powered purse seine, large two-boat trawl, and large stow net fisheries. Offshore trap fisheries are destructive to marine resources. Large otter trawl fisheries are over-catching and destructive to resources.
Table 8. Implementation of Buyback of Fishing Vessel Program in Korea
(Unit: No., G.T., Million Won)
|
Fisheries
|
Total |
Year |
|||||||
|
1994 |
1995 |
||||||||
|
No. |
G.T. |
Amount |
No. |
G.T. |
Amount |
No. |
G.T. |
Amount |
|
|
Total |
614 |
22,654 |
93,644 |
54 |
1,001 |
4,910 |
117 |
2,131 |
12,718 |
|
Costal Fisheries |
397 |
3,403 |
39,912 |
54 |
1,001 |
4,910 |
111 |
1,329 |
11,421 |
|
Offshore Fisheries |
217 |
19,251 |
53,732 |
|
|
|
6 |
802 |
1,297 |
|
Large Stow Net |
71 |
4,645 |
16,671 |
|
|
|
|
|
|
|
Offshore Angling |
3 |
150 |
614 |
|
|
|
|
|
|
|
Offshore Trap |
2 |
90 |
338 |
|
|
|
|
|
|
|
Trawl Large (Two Boat) |
80 |
8,119 |
20,358 |
|
|
|
|
|
|
|
Trawl Large (One Boat) |
4 |
408 |
749 |
|
|
|
|
|
|
|
Large Powered Purse Seine |
41 |
5,438 |
10,202 |
|
|
|
6 |
802 |
1,297 |
|
Large Otter Trawl |
3 |
355 |
1,829 |
|
|
|
|
|
|
|
Diving |
13 |
46 |
2,971 |
|
|
|
|
|
|
|
|
Year |
||||||||
|
Fisheries |
1996 |
1997 |
1998 |
||||||
|
|
No. |
G.T. |
Amount |
No. |
G.T. |
Amount |
No. |
G.T. |
Amount |
|
Total |
136 |
2,053 |
16,252 |
135 |
7,282 |
28,426 |
172 |
10,187 |
31,338 |
|
Costal Fisheries |
110 |
471 |
9,988 |
48 |
232 |
5,453 |
74 |
370 |
8,140 |
|
Offshore Fisheries |
26 |
1,582 |
6,264 |
87 |
7,050 |
22,973 |
98 |
9,817 |
23,198 |
|
Large Stow Net |
|
|
|
42 |
2,730 |
11,236 |
29 |
1,915 |
5,435 |
|
Offshore Angling |
|
|
|
3 |
150 |
614 |
|
|
|
|
Offshore Trap |
|
|
|
2 |
90 |
338 |
|
|
|
|
Trawl Large (Two Boat) |
|
|
|
38 |
3,876 |
10,411 |
42 |
4,243 |
9,947 |
|
Trawl Large (One Boat) |
|
|
|
2 |
204 |
374 |
2 |
204 |
375 |
|
Large Powered Purse Seine |
12 |
1,421 |
2,685 |
|
|
|
23 |
3,215 |
6,220 |
|
Large Otter Trawl |
1 |
115 |
608 |
|
|
|
2 |
240 |
1,221 |
|
Diving |
13 |
46 |
2,971 |
|
|
|
|
|
|
* Source: Ministry of Maritime Affairs and Fisheries.Of 63,625 vessels engaged in the adjacent fishing, 2,421 vessels (3.8%), will be curtailed in accordance with Korean government’s adjustment program. That is equivalent to 92,365 G.T. (21.2%) out of total 435,078 G.T.
In coastal fisheries, 762 vessels (1.3%) will be removed out of 57,5789 vessels. In offshore fisheries, about 27% of vessels will be taken out.
It is estimated that 348,549 million Won will be needed for implementation of reduction of coastal and offshore fisheries. Among the 348,549 Won, 16%, that is 56,462 million Won, will go to the coastal fisheries, and the remaining 84% portion of the budget, that is 292,084 million Won, will be given to the offshore fisheries.
5. CONCLUSION
It is a lesson from the human history that irresponsible fisheries can deplete fisheries resources.
The number of fishing vessels began to increase since mid-1970s in Korea. The resource-destructive fisheries began to develop along with the increase of fishing vessels in Korea. In 1982, Korean government introduced regulation on the limits of fishing permits to control the ever-increasing trend of fishing vessels. In 1987, Korean government began to control the total tonnage of each fishing sector.
There are two ways to attain reduction of fishing fleet. One is let the inefficient fishermen exit the market on the basis of market principle, and the other is through buyback of fishing vessel and fishing license by the government. As it is hard to expect that the fishermen exit the production market on voluntary basis, Korean government turned to buyback program for adjustment of fishing fleet.
Reduction of fishing capacity program is a way of input control through buyback of fishing vessels. The Buyback program of Korea has two objectives: First one is conservation of fisheries resources, and second one is enhancement of economic efficiency of fishery industry.
In 1994, Korean government started reduction scheme through buyback program. During the period of 1994 to 1998, Korean government has spent 93,644 million Won to scrap 614 fishing vessels. Korean government’s main target is resource-destructive fishing pattern. Korean government has planned to spend 348,549 Million Won to remove 2, 421 vessels engaged in adjacent fisheries.
REFERENCES
Campbell, H. F., (1989), “Fishery Buy-back Programs and Economic Welfare,” Australian Journal of Agricultural Economics, Vol. 33, No. 1.
Ching-Ta Chuang and Xiaolong Zhang (1998), “Review of Vessel Buyback Schemes and Experience in Chinese Taipei,” Workshop on the Impact of Government Financial Transfers on Fisheries Management, Resource Sustainability, and International Trade Manila, Philippines, 17-19 Aug.
Gordon, R. Munro (1998), “A Theoretical Framework for Examining Interactions between Subsidies, Overcapitalization and Resource Over-exploitation: Short Term and Long Term Consequences”, Workshop on the Impact of Government Financial Transfers on Fisheries Management, Resource Sustainability, and International Trade Manila, Philippines, 17-19 Aug.
Gordon, H. S. (1953), “An Economic Approach to the Optimum Utilization of Fishery Resources,” Journal of Fisheries Board of Canada, Vol. 10, No. 7.
Gordon, H. S. (1954), “The Economic Theory of a Common Property Resources: The Fishery,” The Journal of Political Economy, Vol. 62, No. 2.
Organization for Economic Cooperation and Development (1996), Synthesis Report for the Study on the Economics Aspects of Marine Living Resources, AGP/FI (96), 12, Paris.
S. Cunningham, M. R. Dunn and D. Whitmarsh (1985), Fisheries Economics, Mansell Publishing Limited, London.
Schaefer, M. B., (1957), “Some Consideration of Population Dynamics and Economics in Relation to The Management of the Commercial Marine Fisheries,” Journal of Fisheries Board of Canada, Vol. 14, No. 5.
Schaefer, M. B., (1959), “Biological and Economic Aspects of the Management of the Commercial Marine Fisheries,” Transaction of the American Fishery Society, Vol. 88, No. 1.
|
Young-Chul Kim |
Professor Young C. Kim |
|
|
|
|
Senior Research Fellow Seong K. Park |
Research Associate Myung |
Government financial transfers (i.e. subsidies6) to the fishery sectors in Korea represent a significant intervention. It is estimated that 333.75 billion won was spent on support to the harvesting and post-harvesting sectors, fishing port and village development, price stabilization and others in 1997. However, it is not quite clear at this point whether government financial transfers in Korea have positive or negative effects on fishery resource conservation. In fact, small-scale fisheries and associated fishermen and fishing villages are widely scattered around the coastal regions of the Korean peninsular and a variety of fishery policies are targeted to such fishery components.
Economic theory suggests that government financial transfers are at best benign from a resource conservation perspective. At worst, they push fishing effort beyond normal rates of exploitation and fish stocks towards depletion. Theory suggests that transfers perform poorly in terms of generating economic rent, make adjustment more painful than necessary and only benefit a selected group of participants in the expansion of fishing activity.7
In recent years, this view on the relationship between government financial transfers and fishery resources conservation have facilitated OECD, APEC, FAO and other international organizations to discuss government financial transfer issues.8 The FAO Code of Conduct for Responsible Fisheries provided a background driving force to encourage such international debates - elimination of subsidies. However, it seems apparent that there are mixed reactions from many coastal states that have a spectrum of government support policies to their fishery sector. This implies that the acceptance level is quite different from one coastal state to another, depending on socio-economic political aspects of government financial transfers.
In this regard, the main objectives of this paper are threefold: to define and classify government financial transfers, to analyze financial aid programs of Korean fishery sector, and to examine current fishery status resulting from government financial support policies.
2. DEFINITION AND CLASSIFICATION OF GOVERNMENT FINANCIAL TRANSFERS
Government financial transfers to the fishery sector can be defined as the monetary value of support associated with government policies.9 These may be received entirely by a fisherman, as in the case of a grant, or a government intervention that artificially inflates the price of fishery product or reduces the private cost of input. In general, financial transfers relate to two broad types of economic good: private goods and public goods.10
Private goods: They are characterized by excludability and rival consumption. In this case fishers can exclude others from enjoying the benefits of the good. They may also reduce (or rival) the amount of the good that is available for consumption by others. It is important to note two characteristics of this conceptualization. First, a good created by government funds may be a private good and not necessarily a public good. Second, the extent of the rival consumption of the goods depends upon the way in which particular transfer policy is implemented. A grant, once allocated to a particular good, depletes the amount of money available for other goods. The policy of tax exemption means that the rival nature of consumption of the good is limited by some estimation of a government’s fiscal revenues available for financing other policies.
Public goods: It is not possible to exclude people from the use of public goods.
Furthermore, consuming a public good does not reduce (or rival) the amount available for others. These characteristics, which are often described as a form of market failure, are used as a rationale for the government funded provision of public good. In theory, if the government does not fund the provision of such goods, it is likely that a smaller amount will be provided than is desired by society as whole.
Many of these goods are not pure public goods because the primary beneficiaries of these goods are a restricted group of individuals (i.e., fishermen). The general public may derive some utility from these goods. For example, fish stock assessment may generate existence or option value11 for the general public as they now know that fish stocks are being used in a sustainable manner.
But almost all fisheries conducted within EEZs are subject to some form of restriction on entry. Government financial transfers related to monitoring, research and enforcement create goods that primarily benefit fishermen. So while these consumption of the benefits of these goods may be non-rival in nature, enjoyment of their benefits is in fact limited to a select group within society.
Many government services can therefore be considered to be club good12, implying that access to the benefits of most management and many research services - commercial or recreational. Several advanced coastal states, recognizing the club good component in government fisheries services, have begun charging commercial fishers for costs associated with fisheries management and research activities.
For analyzing the effects of government financial transfers, it is useful to categorize them. Categorization according to how a transfer is implemented might be helpful, as it is the eligibility conditions that might affect fishermen’s behaviours. From this, impacts on fishing, production and sustainability can then start to be considered. For a given policy measure, implementation criteria are defined as the conditions under which the associated transfers are provided to fishermen, or the conditions of eligibility for payment.13
To be consistent with the objectives of this study, which is to analyze the effects of government support policies, government financial transfers may be classified as follows:14
3. GOVERNMENT FINANCIAL TRANSFERS IN KOREAN FISHERIES
Since 1960s ever increasing proportion of government financial support has tended to be provided with the objective of the developing fishing industries. The incentives of these policies stemmed from desires for adjacent water fisheries promotion, distant water fisheries development and stable food supplies.
In particular, small-scale coastal fisheries in Korea have long sustained, but rarely enriched, generations of Koreans living on its coast. They were raison d’etre for the settlement of fishing villages in coastal areas. They have been the economic backbone of a number of fishing communities for several thousand years.15
People settled to fish or, if they settled for other reasons, they soon turned to fishing in conjunction with their other work. This practice usually involved the exploitation of the surrounding natural resources. They did some farming (if the land would support it), cut some wood (if they had access to wood worth cutting), and hunted and trapped animals (if any were available). In effect, they cobbled together a living, and were not easy. They lived in a difficult environment and worked within natural resource economic system that gave little power to workers or small producers.
From its beginnings, the fishery was the basic of a conventional staple economy. For large areas of the coast, fish was the major product sold to outside markets, and the only substantial source of income. The living provided by the fishery was continually buffeted by the vagaries of nature and markets. People whose existence depended upon the fishery, took as a matter of course its roller coaster nature, as boom and bust alternated every few years. Cyclical economic adjustment was a fact of life.
Along the Korean coast, more than 2,000 grass-root fishing village organizations (i.e. so called Euchon-gae) and hamlets with small ports are dependent on small-scale coastal fishing activities. Some 85% of those subsist mainly on small-scale coastal fisheries, in which people use engine-powered vessels of less than five tons to engage in various pursuits. They include angling, long-line fishing, small-scale bottom trawling, mariculture in shallows and seashores for culturing laver, oyster, scallop, shellfish and seaweed collecting, and small-scale set-net fisheries.
These forms of fishery are, for the most part, run by family labour with a few members. There are still a considerable number of Korean coastal regions that are economically dependent on the small-scale fisheries sector and communities with few if any economic alternatives to fishing. Thus, they have long been of social, political, and economic importance and have been major target of government financial aids.
In addition, the declaration of extended jurisdictions in the late 1970s provided new opportunities for improved fisheries management, but also lead to a change in the nature of transfer policies. The available resources for distant water fleets began to shrink as coastal states expanded their capacity to match the available resources. Faced with declining opportunities, Korea used a combination of policies, including: (i) purchasing access rights in coastal state waters, (ii) providing transfers to improve the fleet profitability, and (iii) paying for the reduction of fishing capacity.
Fishery Production Value: Total Sales Value
During the last 28 years, the total sales value of the Korean marine fisheries, including adjacent, distant-water and mariculture fisheries, has increased almost 70 times, from a total of 65.6 billion won in 1970 to a total of 4,742.2 billion won
Table 1. Production and Landing Values
(Unit: thousand M/T, 00 million won)
|
Yr.
|
Distant |
Adjacent |
Mariculture |
Inland |
Total |
|||||
|
Q |
V |
Q |
V |
Q |
V |
Q |
V |
Q |
V |
|
|
1970 |
90 |
123 |
725 |
427 |
119 |
106 |
1 |
- |
935 |
656 |
|
75 |
566 |
1,283 |
1,209 |
1,508 |
351 |
366 |
9 |
- |
2,135 |
3,157 |
|
80 |
458 |
2,190 |
1,372 |
4,737 |
541 |
1,083 |
39 |
396 |
2,410 |
8,406 |
|
85 |
767 |
5,065 |
1,494 |
8,564 |
788 |
2,263 |
53 |
856 |
3,102 |
16,748 |
|
90 |
925 |
8,204 |
1,542 |
14,959 |
773 |
4,199 |
34 |
908 |
3,275 |
28,270 |
|
91 |
874 |
8,134 |
1,304 |
17,285 |
775 |
5,155 |
30 |
1,175 |
2,983 |
31,749 |
|
92 |
1,024 |
7,816 |
1,295 |
18,632 |
936 |
6,023 |
34 |
1,249 |
3,289 |
33,720 |
|
93 |
741 |
6,941 |
1,526 |
22,835 |
1,038 |
5,690 |
30 |
1,195 |
3,335 |
36,661 |
|
94 |
887 |
9,475 |
1,486 |
25,206 |
1,072 |
7,205 |
31 |
14,141 |
3,475 |
56,027 |
|
95 |
897 |
8,860 |
1,425 |
24,794 |
997 |
6,480 |
29 |
1,090 |
3,348 |
41,224 |
|
96 |
715 |
9,178 |
1,624 |
27,351 |
875 |
6,433 |
30 |
1,253 |
3,244 |
44,215 |
|
1997 |
830 |
13,370 |
1,367 |
24,834 |
1,015 |
9,218 |
32 |
1,097 |
3,244 |
48,519 |
Source: Ministry of Maritime Affairs and Fisheries, Fishery Administrative Basic Statistics, 1998.In 1997. The values of the distant-water fisheries showed some fluctuation since the late 1980s. Adjacent-water fisheries have been pretty much stagnated. The mariculture sales value has been on an increasing trend.Note: Q represents quantities. V denotes landing values.
Transfers through Fisheries Structural Adjustment
There is a need for a profound restructuring so as to adapt fishing capacity to the conservation of resources. One way is to control the fleet number through buyback programs although they have been received with mixed reaction from both theoretical and practical perspectives.
When introduced, buyback programs can be implemented easily and quickly reduce the fleet number of a targeted fishery in the short run, they are an appealing instrument for reducing fishing capacity. The control of fleet capacity may appear straightforward and preferable to a control of the catch, since excess fishing capacity is the fundamental problem to be dealt with by fisheries management.
Over all fishing effort of the Korean fisheries has already exceeded the optimal level in the adjacent waters. In particular, the recent fishery agreements between Korea and Japan, Korea and China and Japan and China tend to facilitate delimitation of the Far East Seas, resulting in each party’s narrower fishing ground. This new fishery orders surrounding Korean peninsular intensify fishing activities within the Korean EEZ, which leads to necessity for reducing fishing capacity. It is estimated that the number of Korean fishing boats except for squid fishery be reduced by 25.2% of the current level of off-shore fishing effort in order to achieve maximum sustainable yields.
Participation in buyback programs is usually voluntary and fishermen make a decision based on their economic circumstances. Boat owners evaluate the total benefits offered by the program and choose to give up a boat and fishing licenses as they see fit. The opportunity cost of selling the boat is simply the profit that could have been realized if the boat continues fishing operation.
For a rational individual, the comparison of the opportunity cost and the program benefit determines the decision. If the buyback offer is greater than the profit that a boat can generate over the remainder of its life, the fisherman will forgo the boat and participate in the program. Conversely, if the benefit offered is less than opportunity cost, the fisherman will reject the program.
The buyback programs in Korea are carried out under the two schemes even though participation in the programs is voluntary and involves a take-it - or leave-it offer. The total number of adjacent boats, reduced from 1994 to 1997, was 442 and associated expenditure amounted to 65.7 billion won.16
Table 2. Reduction of Adjacent Fishing Vessels
(Unit: No. of vessels, 00 million won)
|
|
Total |
1994 |
1995 |
1996 |
1997 |
||||||
|
N |
E |
N |
E |
N |
E |
N |
E |
N |
E |
||
|
Total |
442 |
657 |
54 |
49 |
117 |
129 |
136 |
171 |
135 |
308 |
|
|
323 |
317 |
54 |
49 |
111 |
114 |
110 |
100 |
48 |
54 |
|
|
119 |
340 |
- |
- |
6 |
15 |
26 |
71 |
87 |
254 |
|
|
|
Large purse seine |
18 |
47 |
- |
- |
6 |
15 |
12 |
32 |
- |
- |
|
Large Otter Trawl |
1 |
9 |
- |
- |
- |
- |
1 |
9 |
- |
- |
|
|
Diving |
13 |
30 |
- |
- |
- |
- |
13 |
30 |
- |
- |
|
|
|
Trawl large (two boat) |
38 |
113 |
- |
- |
- |
- |
- |
- |
38 |
113 |
|
Trawl large (one boat) |
2 |
4 |
- |
- |
- |
- |
- |
- |
2 |
4 |
|
|
Large staw net |
42 |
126 |
- |
- |
- |
- |
- |
- |
42 |
126 |
|
|
Angling |
3 |
7 |
- |
- |
- |
- |
- |
- |
3 |
7 |
|
|
Trap |
2 |
4 |
- |
- |
- |
- |
- |
- |
2 |
4 |
|
Source: Ministry of Maritime Affairs and Fisheries.However, it is difficult to signify positive effects of the buyback programs on stock recoveries. A positive evidence can be observed from the fact that in recent years overall catch per unit effort (CPUE) in terms of vessel tonnage does not decline, but is stagnated (Table 3).17Note: N represents the number of reduced vessels. E denotes expenditure including both central/local governments’ financial transfers and self-finance.
Table 3. CPUE of Overall Adjacent-Water Fisheries
|
Year |
Production (M/T) |
Gross tonnage (G/T) |
CPUE (MT/GT) |
|
1970 |
724,365 |
240,147 |
3.0 |
|
‘75 |
1,209,361 |
253,063 |
4.7 |
|
‘80 |
1,372,347 |
379,295 |
3.6 |
|
‘85 |
1,494,940 |
434,511 |
3.4 |
|
‘86 |
1,725,820 |
444,001 |
3.8 |
|
‘87 |
1,525,999 |
452,220 |
3.3 |
|
‘88 |
1,512,481 |
458,530 |
3.2 |
|
‘89 |
1,510,262 |
447,336 |
3.3 |
|
‘90 |
1,542,013 |
451,272 |
3.4 |
|
‘91 |
1,303,913 |
455,386 |
3.0 |
|
‘92 |
1,295,396 |
450,340 |
3.0 |
|
‘93 |
1,526,139 |
448,409 |
3.4 |
|
‘94 |
1,486,357 |
444,109 |
3.4 |
|
‘95 |
1,425,213 |
444,676 |
3.2 |
|
1996 |
1,623,822 |
439,261 |
3.7 |
Source: Ministry of Maritime Affairs and Fisheries, Fishery Administrative Basic Statistics, 1998Revenue-Enhancing Transfers: Market Price Support
The effects of revenue-enhancing market price support and direct payments are normally characterized by high unit prices relative to the harvesting costs and, as such, are often vulnerable to long term biological exploitation.
The revenue and cost functions are such that economic rent can be made from the fishery at relatively high level of effort. When managed under an open access regime, the level of fishing effort will trend toward the point where economic rent is dissipated. Note that this is a level of effort in excess of that associated with the maximum sustainable yield (MSY), signified by the effort level associated with the peak of the total revenue curve. Rent from the fishery is actually maximized at the effort level of MSY.
When introduced, a revenue-enhancing transfer increases the total revenue received at each level of effort. The introduction of such a subsidy will shift the total revenue curve upward. In an open access fishery, this may have the short-run effect of creating economic rent for existing fishermen. However, increased effort by incumbents, will increase effort to a new equilibrium where no rent is yielded. An important effect is that fishing effort is shifted even further away from the levels associated with the maximum sustainable and economic yields. If effort is effectively controlled, the transfer represents a straight wealth transfer from taxpayers to fishermen.
Korea started the government purchase/storage/release policy in 1962 as a price stabilization scheme of fisheries products,18 which is a kind of revenue-enhancing instrument. This policy includes 10 fishery products, which are dried, salted and frozen. Recently, squids with one-year-life cycle have occurred throughout the entire Korean adjacent waters.
Annual production since 1992 amounts to more than 200 thousand M/T, which glutted domestic squid market. Distant-water squid equivalent to adjacent production, which is also brought into domestic market, has made a further contribution to lowering squid prices. This invited frequent government open market operations to maintain squid prices at a certain level higher than unit production cost. In 1997 the government spent 62,888 million won in purchasing and storing fishery products, of which frozen squid accounted for some 52% and lost a total of 15,790 million won (Table 4).
Cost-Reducing Transfers
Cost-reducing transfers will reduce the costs at each level of fishing effort. A downward shift in the total cost curve is expected when this support is introduced. The revenue and cost functions are such that profits can be made from the fishery at relatively high level of effort. This level of effort in excess of that associated with the maximum sustainable yield, signified by the effort level associated with the peak of the total revenue curve. Rent from the fishery is maximized at effort level of maximum sustainable yield.
In an open access fishery, this may have the short-run effect of creating rent for existing fishermen. However, entry of new participants attracted by the rent, or increased effort by incumbents, will increase fishing effort. Effort will increase to a new equilibrium where no economic rent is exploit from the fishery. As with revenue-enhancing transfers, an important effect is that fishing effort is shifted even further away from the level associated with the maximum sustainable and economic yield.
In a fishery where effort is effectively controlled, economic rent will increase. Where effort is constrained adequately by fisheries management instruments the increased economic rent will not be dissipated. New participants wishing to enter the fishery will have to buy effort units that will include the capitalized value of the transfer. The transfer is thus a windfall gain and transfer of wealth from taxpayers to incumbent fishermen.
The Korean government supported fishing industries through a variety of direct and/or indirect cost-reducing transfers, amounting to 55.87 billion won. Of this the support for subsidizing the difference between lower government lending interest rate and market interest rate accounts for the largest part of about 54%.
Table 4. Government Financial Transfers Related to Fisheries policies
(Unit: billion won)
|
Policies |
1996 |
1997 |
|
|
Total |
303.94 |
333.75 |
|
|
Price support |
25.24 |
15.79 |
|
|
Direct payment to fishing boat reduction |
16.25 |
28.43 |
|
|
Cost-reducing transfers |
51.90 |
55.87 |
|
|
|
|
1.84 |
2.91 |
|
0.52 |
0.44 |
|
|
4.70 |
9.02 |
|
|
26.35 |
30.11 |
|
|
18.49 |
13.39 |
|
|
Aquaculture |
5.44 |
5.65 |
|
|
|
|
5.44 |
5.65 |
|
Marketing and Processing |
2.64 |
3.01 |
|
|
|
|
2.64 |
3.01 |
|
General services |
203.47 |
225.00 |
|
|
|
|
141.00 |
156.00 |
|
56.19 |
62.95 |
|
|
0 |
1.20 |
|
|
6.28 |
4.85 |
|
Source: Ministry of Maritime Affairs and Fisheries.Transfers through General Services
Transfers through general services are made to expand fisheries infrastructures, which mainly make an important contribution to promoting production efficiency and living conditions of people in the coastal regions: fishing port and village development, R&D, fish and shellfish seedling purchase and release, improvement of fisheries cooperatives management, etc.
Fishing port and village development: In spite of Korean fishermen’s long association with fishing activities, commercial fisheries have existed only for the last four decades. During the period, there have been remarkable changes in Korean fisheries (i.e. vessel modernization and technology development). Development policies of fishing ports and associated fishing villages have also played critical roles in reshaping the entire fisheries and coastal communities.
The government invested 156 billion won in fishing port and village development in 1997. WTO Multilateral Trade Agreements (Part IV Article 8) consider this transfer as non-actionable subsidies. It reads as follows: Assistance to disadvantaged regions within the territory of a Member given pursuant to a general framework of regional development and non-specific (within the meaning of Article 2) within eligible regions provided (i) each disadvantaged region must be a clearly designed contiguous geographical area with a definable economic and administrative identity, (ii) the region is considered as disadvantaged on the basis of neutral and objective criteria, and (iii) the criteria shall include a measurement of economic development which shall be based on at least one of the factors (which the Agreements set).
In addition, fishery resources enhancement, improvement of fisheries cooperatives management, R&D also belong to the category of non-actionable subsidies, which WTO allows. In 1997 these financial transfers were 62.95, 1.2, and 4.85 billion won, respectively. The total transfer through general services was 225 billion won which accounted for 4.6% of the total landing value.
Supply of Fishery Credit
Achievement of credit supply in the fishery sector has been remarkable during the last decade. This is mainly due to a rapid development of fishery cooperatives which are multi-functional and two-tiered federal system. Not only do they provide credit, but they also deal with all the other supporting services such as input supply, marketing, purchasing and even mutual insurance. National Federation of Fisheries Cooperatives (NFFC) is an apex with 75 member cooperatives throughout the country.
It is pointed out that on an average a fishery household borrowing from cooperatives has increased from 59.3 percent of total borrowing in 1985 to 81 percent in 1998. Accordingly fishery household's dependence on private money market decreased from 36.1 percent of total borrowing to 13.6 percent during the same period (Table 5).
Table 5. Fishery Household Debt Outstanding by Source
|
Year |
Debt Outstanding (000 won) |
Institutional Credit (%) |
Private Money Lender (%) |
|||
|
|
|
Subtotal |
Fishery Coop’ |
Agri Coop’ |
Others |
|
|
1985 |
3,378 |
63.9 |
44.1 |
15.2 |
4.5 |
36.1 |
|
1990 |
5,985 |
75.4 |
34.4 |
35.9 |
5.2 |
23.6 |
|
1995 |
11,033 |
82.6 |
38.7 |
39.5 |
4.4 |
17.4 |
|
1997 |
11,906 |
86.4 |
40.9 |
40.1 |
5.4 |
13.6 |
Source: Ministry of Agriculture & Forestry, “Major Statistics of Agriculture and Forestry”, 1999.A large expansion of the institutional credit is the main factor, which has contributed to a rapid decrease in private money market in the Korean fishery sector. There have been two main sources of increasing supply of institutional credit: a supply of credit funded by government budget on the one hand and expansion of cooperative credit or the mutual financing program (MFP) on the other. The mutual financing program is the banking activity in the rural/coastal societies. Government credit loans increased at a rate of 16.1% on the average during the same period.
Accordingly, such high annual growth rate of the prime deposit from fishermen has made continuous loans possible to members who need credit. Expansion of deposit mobilization through the mutual financing program of the cooperatives has been substantial, showing an annual growth rate of 28.7% during the period of 1992-1998 whereas it is 14.5% in the case of the commercial banks. Supply of credit by the fishery cooperatives and government to the fishing industry has also increased very rapidly, showing 23.5% in the primary societies and 12.3% in the commercial banks as in (table 6).
Table 6. Average Annual Growth Rate of Deposit and Loans (1992-1998)
(Unit: %)
|
Item |
Fishery Cooperatives |
Gov’t Credit |
Commercial Banks |
|
|
|
MFP |
NFFC |
|
|
|
Deposit |
28.7 |
23.1 |
- |
14.5 |
|
Loans |
23.5 |
13.7 |
16.1 |
12.3 |
Source: National Federation of Fisheries CooperativesImportant factors affecting the deposit mobilization through the primary cooperatives may include, among others,
Subsidized interest rate may warrant profitability of adopting a new technology. It has been also contended that lower interest rate policy for fishery credit may be a mechanism for income transfer to especially fishing households. In addition, subsidized credit to fishery sector may compensate adversely affected fishing households in the process of economic development through pricing, fiscal and foreign exchange policies.
However, there has been a hot debate against cheap credit policy for fishery sector. One of the important arguments in this line is the proposition that cheap loan policy may distort efficient resource allocation and result in inequitable distribution of benefit. Larger fishing firms tend to borrow more money from credit institutions mainly because of their easy access to credit market with socio-economic influence.
It is further argued that lower interest rate policy favors large fishing households rather than small ones mainly because of interest-elastic nature of large fishing household's demand for credit. Moreover, the cheap credit policy may adversely affect the savings market, reducing volume of institutional credit through its negative impact on savings mobilization. Accordingly, fishery financial institutions would find difficult to mobilize resources from the rural money markets.
Higher interest rate policy has been applied to the mutual financing program of Korean fishery cooperatives. Differential interest rate policy has been used between the mutual financing program of primary societies and its apex (i.e. National Federation of Fisheries Cooperatives). Interest rate of the former is higher than that of the latter.
4. FISHING CAPACITY AND ACTIVITIES
Number of Fishing Vessels
The total number of fishing vessels in Korea increased during the period 1970-1989 and declined during the period 1990-1996 (Table 6). In fact, the number of fishing boats reached a peak of 99,658 in 1989. Two inferences from the 1990-1996 change can be drawn: (i) buyback programs introduced in this period were effective and (ii) internal/external fisheries environments got rapidly worse.
From now on the bilateral fishery agreements recently concluded/adopted in the Far East region will restrict significantly fishing freedom of Korea, China and Japan and thus accelerate fishing vessel reduction to realize profitable fisheries within the narrowed exclusive fishing grounds.
Table 7. The Number of Vessels
(Unit: vessel, 000 G/T)
|
Yr.
|
Total |
Distant |
Adjacent |
Others |
||||
|
No. |
G/T |
No. |
G/T |
No. |
G/T |
No. |
G/T |
|
|
1975 |
67,655 |
648 |
825 |
353 |
66,284 |
280 |
546 |
15 |
|
‘80 |
77,574 |
771 |
654 |
318 |
76,379 |
518 |
541 |
35 |
|
‘85 |
90,970 |
858 |
651 |
340 |
89,734 |
481 |
385 |
37 |
|
‘86 |
93,037 |
884 |
676 |
357 |
91,994 |
491 |
367 |
36 |
|
‘87 |
94,155 |
912 |
710 |
377 |
93,096 |
500 |
349 |
35 |
|
‘88 |
99,024 |
948 |
761 |
404 |
97,916 |
506 |
347 |
35 |
|
‘89 |
98,455 |
963 |
799 |
434 |
97,339 |
496 |
317 |
33 |
|
‘90 |
99,658 |
977 |
783 |
406 |
98,536 |
500 |
339 |
71 |
|
‘91 |
103,848 |
983 |
771 |
401 |
101,020 |
505 |
2,057 |
77 |
|
‘92 |
94,135 |
959 |
734 |
389 |
90,496 |
490 |
2,905 |
80 |
|
‘93 |
87,473 |
959 |
734 |
389 |
83,064 |
483 |
3,863 |
103 |
|
‘94 |
77,391 |
940 |
616 |
321 |
74,045 |
473 |
2,730 |
146 |
|
‘95 |
76,801 |
959 |
625 |
352 |
73,662 |
475 |
2,514 |
132 |
|
1996 |
75,244 |
972 |
623 |
357 |
72,395 |
466 |
2,226 |
149 |
Source: Ministry of Maritime Affairs and Fisheries, Fishery Administrative Basic Statistics, 1998.Number of FishermenNote: Adjacent fishing vessels include inland fishing boats. “No.” denotes the number of vessels.
The number of fishermen who received all or a major part of their income from fisheries shows somewhat different tendency as the total number of fishing vessels - a continuous decline during the period 1970-1996. Table 8 shows that the number of fishermen decreased from 367.6 thousand in 1970 to 171.8 thousand in 1996.
The group of younger than age 49 has continued to decline at a rapid rate, while the relative proportion of older than age 50, especially older than 60, is getting larger. Change in age structure tends to cause Korean fisheries to delay structural adjustments.
Since, however, fishing capacity of the entire Korean fisheries (in particular, off-shore fisheries) is going to be curtailed to large extent, substantial reduction of associated fishermen and crews would occur between 1999 and 2003.
Table 8. The Number of Fishermen by Age
(Unit: thousand persons)
|
Yr. |
Total |
15~19 |
20~29 |
30~39 |
40~49 |
50~59 |
Above age 60 |
|
1970 |
367.6 |
41.3 |
76.5 |
102.9 |
80.0 |
46.4 |
20.5 |
|
‘75 |
322.9 |
36.2 |
61.8 |
72.5 |
75.2 |
51.4 |
25.8 |
|
‘80 |
294.9 |
22.2 |
55.0 |
62.0 |
78.1 |
49.7 |
27.9 |
|
‘85 |
260.3 |
4.6 |
42.7 |
57.9 |
74.9 |
55.2 |
25.0 |
|
‘90 |
211.8 |
1.5 |
21.1 |
47.0 |
57.9 |
57.0 |
27.3 |
|
‘91 |
204.6 |
1.4 |
16.9 |
44.8 |
54.1 |
58.2 |
29.2 |
|
‘92 |
206.6 |
0.9 |
14.5 |
42.1 |
52.5 |
60.9 |
35.7 |
|
‘93 |
206.6 |
0.7 |
12.6 |
41.4 |
51.8 |
60.9 |
39.2 |
|
‘94 |
197.8 |
0.4 |
9.9 |
37.3 |
49.8 |
58.8 |
41.6 |
|
‘95 |
176.1 |
0.4 |
7.9 |
30.1 |
47.1 |
52.5 |
38.1 |
|
1996 |
171.8 |
0.2 |
5.8 |
26.3 |
44.0 |
53.6 |
41.8 |
Source: Ministry of Maritime Affairs and Fisheries, Fishery Administrative Basic Statistics, 1998.5. STOCK STATUS
Almost Korean fisheries (in particular, off-shore stow nets and trawls) are in excess of optimal fishing effort level (Table 9).19 Stow nets and trawl gears are non-selective and thus mixed catch rates are very high. Only off-shore angling fishery of mainly exploiting squid, hair tail and puffers operates under the optimal fishing intensity. Abundant occurrences of squids in the entire Korean waters may be considered as a signal of significantly changing marine environment and/or composition of fish species.
For the next several years it is anticipated that fishing effort of off-shore fisheries will be reduced to almost 50% of the current number of vessels.20 Now, fishing boat retirements are carried out in two ways: special and ordinary buyback programs.
Table 9. Fishing Effort Assessments
|
Fisheries |
% |
Target species |
|
Large Trawl |
16 |
Squid, hair tail, filefish, pomfret, spanish macherels, common
sea bream |
|
Large Otter Trawl (Two Boat) |
47 |
Corvenias, redlip croaker, mackerel, monk fish, blue crab,
skateray |
|
Trawl Large (One Boat) |
24 |
Flounder, corvenias, sea eel, sandfish, white croaker, redlip,
pomfret, monk fish, common sea bream |
|
Large Powered Purse Seine |
21 |
Mackerel, sardine, jack mackerel, squid, spanish
mackerel |
|
Off-Shore Stow Nets |
60 |
Hair tail, corvenias, redlip croaker, pomfret, monk fish, blue
crab, shrimp large |
|
Off-Shore Angling |
Optimal |
Squid, hair tail, puffers |
|
Off-Shore Drift Gillnets |
6 |
Anchovies, blue crab, mackerel, redlip croaker, squid, red
horse head |
|
West-Southern Pair Trawl |
28 |
Sea eel, corvenias, blue crab, skates, monk fish, flounders,
tongue fish |
|
West-Southern Danish Seine |
22 |
Sea eel, corvenias, flounders, tongue fish, monk fish, skates,
Alaska pollock, sandfish, brown croaker |
|
Eastern Sea Trawl |
29 |
Alaska pollock, flounders |
|
Eastern Sea Danish Seine |
16 |
Alaska pollock, sandfish, flounders |
|
Off-Shore Trap |
3 |
Red large crab, sea eel, blue crab, baitop shell |
|
Off-Shore Longline |
30 |
Squid, hair tail, red horse head, puffers |
Source: National Fisheries Research and Development Agency, “Catch Outlook and Evaluation in Relation to EEZ,” 1996.In particular, special buyback program is directly related to Korea-Japan/Korea-China Fishery Agreements.21 For the limited period (i.e. five years from 1999 to 2003) the program will be carried out under the special law recently passed the Assembly.22Note: % denotes portion of fishing effort in terms of percentage in excess of MSY fishing effort level.
Since this special buyback program is targeting exclusively off-shore vessels covering at least 13 fisheries, it will make a great contribution to speeding up vessel retirements and adjusting off-shore fishing intensity to new fishery orders in the Far East region.
6. CONCLUDING REMARKS
Today many fishery experts and international fishery organizations perceive that ineffective management is a fundamental obstacle against fisheries sustainability, and that this problem has not yet been dealt with successfully or at all in the vast majority of countries, including most of the large fishing nations.
In the latter half of the 1980s, negotiations on agriculture and shipbuilding respectively served opportunities to craft much stricter and more comprehensive rules for subsidies. In both instances, however, the fisheries sector was excluded. The 1994 Uruguay Round Agreement on Agriculture excluded fisheries products from its scope.
The OECD Shipbuilding Agreement exempted fishing vessels and was not even ratified by all the signatories, and therefore did not go into effect. As a result, the rules governing the use of subsidies in the fisheries sector are only the provisions in the WTO’s basic subsidies agreement - the Agreement on Subsidies and Countervailing Measures.23
OECD fisheries committee, at the 79th session in April 1997, agreed to study government financial transfers (subsidies) that affect the transition to responsible fisheries. A method also was agreed for the study that involves Member countries submitting information on government financial transfers, levels of fishing capacity and activity, and fish stock status.24 In fact, government policies and programs in most cases tend to be associated with government financial transfers that can affect fishing capacity. In turn fish stock status can be affected by fishing capacity and activities.25
Korean government has provided a variety of financial supports associated with fishery policies, including price support, direct payment to fishing boat reduction, cost-reducing aids, supports to aquaculture, marketing and processing, general services (i.e. R&D), and relatively cheap credit supply through fishery cooperatives. The Total transfer accounted for about 7% of the total fishery sales value.
In particular, credit policy still plays a very significant role in Korean fisheries. However, it tends to favor large fishing households rather than small ones mainly because of interest-elastic nature of large fishing household's demand for credit. Moreover, the cheap credit program may adversely affect the savings market.
Higher interest rate policy is applied to the mutual financing programs of fishery cooperatives in Korea. Differential interest rate policy has been used between the mutual financing program of primary societies and its apex - National Federation of Fisheries Cooperative. In fact, interest rate of the former is higher than that of the latter.
Even though there are few systematic investigations of the relationship between fisheries management and government-funded and -directed economic incentives in the Korean fisheries sector, there exists a wide social consensus that economic incentive policies have to be redirected towards programs decoupled with fishing effort (or production) expansion.
The role of economic incentive policies associated with government financial transfers will be gradually redirected towards non-actionable subsidy programs, following a newly developed strategic fishery plan.
The strategic fishery plan was made to provide a framework for moving forward on such major fishery priorities as environment-friendly fisheries development, balanced world-class science and technology promotion, fishing community development, and new market arrangements. The broad objective of the Korean Fisheries Strategy is to secure maximum social, economic, scientific and sovereignty benefits for Koreans from Korea’s marine living resources.
In pursuit of this national objective, the government commits itself to achieve four basic goals:
To accomplish these goals, there would be a necessity for a strategic plan of following overall approaches:
Finally, Korea’s new fisheries strategy should be implemented in conformation with the internationally adopted principle that “sustainable fisheries development and responsible practices” depend on significant advances in the management of the marine living resources and maximizing value added by efficient post-harvest practices and marketing and trade, while maintaining the integrity of the ocean environment.
REFERENCES
Barg, Stephan, “Eliminating Perverse Subsidies: What’s the Problem?” In OECD, Subsidies and Environment - Exploring the Linkages, 1996.
Donga Ilbo, Korea Herald, “New Korea-Japan Fishery Agreement,” September 26, 1998.
Freeman, A. Myrick, The Measurement of Environmental and Resource Values: Theory and Methods, Resources for the Future, Washington, D.C., 1993.
Hyman, David N., Public Finance-A Contemporary Application of Theory to Policy, The Dryden Press, 1987.
Kim, Young-Chul, “Small Farm Credit Program and Agricultural Development in Korea” paper presented to International Seminar, FFTC/NACF, June. 1989.
Kim, Young-Chul, “Main Policy Issues for Small Farmer’s Savings Mobilization”, Paper presented to International Seminar, APRACA/IFAD, Dhaka, 1998.
Ministry of Maritime Affairs and Fisheries, Annual Export/Import Statistics, 1998.
Ministry of Maritime Affairs and Fisheries, Fishery Administrative Basic Statistics, 1998.
National Fisheries Research and Development Agency, Catch Outlook and Evaluation in Relation to EEZ, 1996.
OECD, “Impact on Fisheries Resource Sustainability of Government Financial Transfers,” 1997.
OECD, “Governmental Financial Transfers to the Norwegian Fishing Industry: 1997-1996”, AGR/FI/RD (98)33, 1998.
OECD, Agricultural Policies in OECD Countries-Background Information, 1999.
OECD, “The Economic Impact of Responsible Fisheries on Production and Management: The Impact on Fisheries Resource Sustainability of Government Financial Transfers,” 1999.
Park, Seong K. and Jeong G, Ryu, “New Policy Paradigm for Korean Fisheries’ Transition to Responsible Practices,” Marine Resource Economics, Vol. 14, pp. 79-93. 1999.
Pearse, Gareth, “Euro-African Fishing Agreements: Over-fishing in African Waters,” Case Study 1 in Subsidies and Depletion of World Fisheries, Paper Prepared for the WWF/UNEP workshop, June 1997, 1997.
Steenblik, Ronald P. and Gordon R. Munro, “Current International Work on Subsidies in Fisheries: A Survey,” Presented for the First Workshop of the EU Concerted Action on Economics and the Common Fisheries Policy, 28-30 October 1998, Portsmouth, U.K., organized by the Center for the Economics and the Management of Aquatic Resources (CERMARE) of the University of Portsmouth, 1998.
Uruguay Round Multilateral Trade Negotiations, Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, Agreement on Subsidies and Countervailing Measures, Marrakesh, Morocco, April 15, 1994 (Washington: USTR, 1994).
Dr. K.P.P Nambiar
Director
INFOFISH
1. INTRODUCTION
INFOFISH is an Intergovernmental Organization providing marketing and technical advisory services to the fishery industries in the Asia-Pacific region. While it also offers similar services and information to developing and developed countries elsewhere, the main focus of INFOFISH is on Asia which accounts for a major share of world fishery production. Over forty countries contribute towards fish production and fishery trade in Asia. On the other hand, Asia accounting for nearly sixty per cent of global population also provides 83 per cent of the total fishery workers in the world.
Among the leading fishing nations in Asia is China, the world’s top fish producer and fishing fleet operator as well as the second biggest seafood exporter. Japan, the biggest importer and consumer of fish and fishery products along with other economically advanced Asian nations like Singapore and Brunei enjoy an average per capita gross national product (GNP) above US$20,000 while it is less than US$1,000 per annum for the majority of Asian nations. Seventeen of them including China, India, Indonesia and the Philippines, some of the most populated countries in the world are grouped under the Low Income Food Deficit Countries (LIFDC’s).
The services provided by an organization like INFOFISH are of more relevance to these LIFDC’s, rather than their affluent neighbours. However, the fact that INFOFISH has been receiving requests for information not only from its member countries which are mostly LIFDC’s, but from others as well, underlines the pressing need for its services.
INFOFISH has been helping to serve the market information needs of fisheries sector from its very inception as a regional project executed by the Food and Agriculture Organization of the U.N. in 1981. Thus it was promoting the concept of global market even before the idea of globalization in marketing was put forth by the Harvard Business Review in 1983.
2. ORIGIN OF INFOFISH
The global fishery scenario underwent radical changes during late seventies and early eighties, as a result of the U.N. Conference on the Law of the Sea and the subsequent 200-mile Exclusive Economic Zone (EEZ) regime. Resources of enormous value came under the control of a large number of third world countries with this move. Until FAO began supplying marketing information through INFOPESCA, the Latin-American Spanish forerunner of INFOFISH in 1977, the developing countries were mostly handicapped by insufficient market intelligence essential for export marketing of their extra catch from the EEZ. It was well recognized that to succeed in world market for fish products, these countries needed the required marketing and technical information to ensure their products were at the right price in the right form and quality. Only a handful of large trading companies in developed countries could afford to maintain market intelligence to fill in the communication gap that existed between the buyers and the sellers of fish and fishery products world over. FAO took the initiative to build up a “world network of cooperative fish marketing services” - first, INFOPESCA (1977) and then INFOFISH (1981). The basic objectives as defined by Krone, 198126 were:
Hosted by Malaysia in Kuala Lumpur, INFOFISH project covered seventeen countries. These were Bangladesh, Brunei, Cook Islands, Fiji, Hong Kong, Indonesia, India, Korea (ROK), Malaysia, Maldives, Papua New Guinea, Philippines, Singapore, Solomon Islands, Sri Lanka, Thailand and Tonga. Each member country was represented by a National Liaison Office and one or two contact persons. The project was funded by Norway.
Within a few months of its beginning, INFOFISH issued two regular publications for the fishery industry from the project headquarters: INFOFISH Trade News, a fortnightly market news bulletin and INFOFISH Marketing Digest, bimonthly magazine. Forerunner of the present INFOFISH International, the Digest carried feature articles and news items focusing on marketing and market opportunities including handling, distribution and new ventures. These periodicals were not meant for general circulation but mainly for those who could use the information in their fishery related activities.
The project activities were successfully completed in 1987 when INFOFISH got established as an Intergovernmental Organization. The current members are Bangladesh, India, Indonesia, Korea DPR, Malaysia, Maldives, Papua New Guinea, Solomon Islands, Sri Lanka and Thailand, altogether ten (Fig. 1). Since 1997 the organization is open to Associate Members such as private companies, other organizations and individuals engaged in fishery related work.
3. FISH INFO-NETWORK
Even before INFOFISH became an independent Organization in Asia-Pacific, FAO had launched two more similar projects, INFOPECHE (1995) in Africa and INFOSAMAK (1996) in the Arab World. As these names imply, INFOPECHE operates in French while INFOSAMAK uses Arabic for its services. With these measures a firm foundation for the present FISH INFO-NETWORK was laid.
Subsequently in 1996, FAO-EASTFISH project was started for Central and Eastern Europe, based in Copenhagen, hosted by Denmark. INFOYU, the Chinese counterpart, is the only national project of its nature in the Network. The Rome based FAO-GLOBEFISH, an important link in the network acts as the centralized databank for fishery information and coordinates several common activities carried out by the Network (Fig. 2).
3.1 INFOFISH Publications
INFOFISH International, the flagship publication of Fish Info-Network, incorporating INFOFISH Marketing Digest since 1987 is published in cooperation with the other Network partners. Issued once every two months, INFOFISH International carries regular articles and news items focusing on fishery management, markets, quality control, processing, products, aquaculture, harvesting and industry structure. With an estimated readership of around 25,000 worldwide, the magazine carries summary of articles in Spanish, French, Arabic and Chinese in every issue with the active involvement of the Network.
INFOFISH Trade News is a fortnightly bulletin covering news items, price and market data and Fact Sheets of topical interest to the industry and trade as well as financial agencies and policy makers. The contents are produced in cooperation with the Network and with the inputs from market reporters based in different parts of the world including major markets and supply sources.
Fishing Technology Digest for Asia-Pacific and The Fish Inspector are two quarterly newsletters published by INFOFISH jointly with FAO Fisheries Department. These are distributed on complimentary basis among the industry and professionals all over the world.
INFOFISH reproduces GLOBEFISH Highlights, a quarterly review of global fish markets, and monthly European Fish Price Report compiled by FAO-GLOBEFISH, to make up a FULLNET Package together with INFOFISH Trade News and INFOFISH International.
Warta Akuakultur, or Aquaculture News is the only publication brought out by INFOFISH in a regional language. This Indo-Malay language quarterly magazine is meant for the aquaculture industries and workers in the field spread out in Malaysia, Indonesia, Brunei and Southern Thailand.
In addition to the periodicals, INFOFISH has been publishing a series of Commodity and Market Studies, Technical Handbooks, Conference/Workshop Proceedings, Registers and Manuals useful for fishery industry everywhere. This is often made possible through cooperation with international and national funding agencies and by organizing world commodity conferences more or less on a regular basis.
4. IMPACT ON ASIAN FISHERIES
Activities of INFOFISH having a direct impact on fisheries not only in Asia but elsewhere as well, are of a wide ranging nature. These can be broadly divided into four categories in accordance with the present organizational structure of INFOFISH:
At an average, INFOFISH Advisory Services both marketing and technical, handle from 5,000 - 6,000 enquiries a year on a wide ranging issues from all over the world. While most of these are from member countries, the non-member nations in the region and beyond are not far behind in using INFOFISH services as seen from Fig. 3.
5. OVERVIEW OF ASIAN FISHERIES
The share of Asia in world fishery production has steadily increased from 47 per cent in 1993 to 52 per cent in 1997 (Table 1). While global fish supply reached an all time high of 122 million MT led by China in 1997, the share of LIFDC’s in total Asian fish production was up from 54 per cent in 1990 to 72 per cent in 1997. Fig. 4 shows the twelve fishing nations in the world, together forming about 68 per cent of world capture fishery production. Six of these, including China, Japan, Indonesia, India, Thailand and Korea (ROK) are in Asia. Tables 2 and 3 show fish production trend in INFOFISH member countries against that of the world. The total aquatic production from ten INFOFISH member countries in 1997 was 18.3 million MT or 15 per cent of the global total for the year.
On the other hand, the top six nations contributing 82 per cent of the total 29 million MT farmed fish and shellfish production in the world in 1997 were from Asia. These are China, India, Japan, Indonesia, Thailand and Bangladesh, in that order. Value-wise, their share was 62 per cent.
Asian aquaculture provided 24 per cent of global fish production in 1997. Value-wise, the increase in the share of Asian farmed fish and shellfish production in the world during 1990 to 1996 was from 76 per cent to 82 per cent.
China, Japan, Indonesia, India, Thailand, Korea (ROK), Taiwan PC, and the Philippines are the leading fishing nations in Asia. Of these, China with an estimated fleet of 6 million gross tonnage is the biggest fishing nation in the world. Fishing fleets of Japan, Korea (ROK) and Taiwan PC are quite advanced in terms of productivity. Modernization of fishing operations is evident in China, Thailand, Malaysia, Indonesia, the Philippines and in some of the Arab countries.
Per capita food fish supply in Asia increased from 9.7 Kg in 1981 to 17.2 Kg in 1995 against the corresponding figures of 11.7 Kg and 15.3 Kg for the world, as a whole. During this period total fish production, exports and imports in Asia went up by 95 per cent, 134 per cent and 153 per cent respectively. Comparable data for the world show 56 per cent, 96 per cent and 109 per cent respectively (Table 4).
5.1 International Trade
The top four groups of fish and shellfish species traded globally are shrimp/prawns, tuna, salmon and cephalopods such as squid, cuttlefish and octopus. These groups together contribute to about 40 per cent of world fishery export value of which some 20 per cent is from shrimp/prawns alone. Tuna at 9 per cent, salmon 6 per cent and cephalopods 5 per cent follow in that order.
Except for the salmon group, the rest of the species are dominant in Asian supplies while Japan as well as emerging market in China are leading importers of salmon.
Thailand is the biggest producer and exporter of shrimp in the world followed by other Asian nations such as Indonesia, India, China, Vietnam, the Philippines, Bangladesh and so on. Japan is the top importer of this commodity despite its slide to second position in 1997 and 1998 when US was the leader. Though the prevailing economic recession led to a fall in Japanese imports, the situation is expected to reverse to the post 1997 levels during the current year.
Asia also leads in exports and imports of tuna and tuna products. Though US is the top importer of canned tuna, Japan imports and consumes the largest quantity of fresh, chilled tuna. Taiwan PC, Korea (ROK) and Indonesia are leading exporters of fresh/chilled/frozen tuna whereas Thailand continues to be the top exporter of canned tuna despite negative impacts of the economic downturn on the region.
Thailand is also the leading exporter of frozen squid and cuttlefish followed by India, Indonesia and several other Asian suppliers. On the other hand, Japan is the world’s biggest importer and consumer of cephalopods, especially octopus, followed by the European Union.
There are several other promising items of seafood such as lobster, crab, bivalves, fin fishes as well as tilapia traded in considerable quantities in Asia. Tables 5 and 6 give export and import trend in Asia during the 1993-1997 period. Despite the prevailing economic downturn, fish trade has been relatively less affected due to bilateral currency agreements among ASEAN member countries. Intra-regional trade has increased as a result. In terms of quantity more than 60 per cent of Malaysian imports of fish and fishery products and 18 per cent of that in Singapore are met by Thailand. While Indonesia accounts for the major share of Singapore’s fishery imports, about 20 per cent is from Malaysia.
However, contrary to the advantages expected from liberalization, the recent trend in Asian seafood trade points to a downward shift in the global share as seen from Tables 1 and 7. While the currency crisis has been a major factor lately the contribution of globalization and the related liberalization process to this trend needs to be studied by INFOFISH or other concerned agencies.
6. CHALLENGES OF GLOBALIZATION
The ongoing process of globalization and liberalization offers challenges as well as new opportunities for Asian fisheries. This is more so in the case of Asian LIFDC’s that are relatively weaker in terms of financial resources for investment in infrastructure facilities and technical know-how as well as trained manpower. While globalization primarily envisages a global market for uniform products supplied by ventures taking advantage of economies of scale, it is not an entirely new idea for marketing fish and fishery products due to their international distribution and global demand. Currently there are over two hundred countries in the world either exporting or importing fishery products. Of these, just 50 countries account for roughly 98 per cent of imports and 95 per cent of exports respectively. The domination of these countries is expected to expand globally with added tempo with mergers and acquisition as a corollary of globalization in the years to come. At the same time the gap in demand and supply situation for fish and fishery products is expected to widen.
6.1 Emerging Opportunities
According to recent estimates, out of the total global production of 122 million MT fish and shellfish only 75.8 per cent or 92.5 million MT was available for human consumption with the rest moving for reduction into fishmeal. While no substantial increase in capture fishery production is expected, the estimated demand by the year 2010 is likely to be 105 - 110 million MT27 according to FAO.
Against the projected demand, estimates of total fish available from both capture and culture by 2010 ranges from 74-114 million MT. This means at the lower range the deficit is from 31-36 million MT while at the more optimistic estimate there will be 4 million MT excess supply provided the aquaculture production goes up to 39 million MT from the present level of about 29 million MT (1997). Either way there is need to increase production and exports from the current levels to meet the growing demand in global markets. This is expected to be met mostly by Asia and its LIFDC’s with their potentially rich fishery resources and manpower. Globalization of food habits and fast expanding tourism industry offers another attractive area for the Asian developing countries to expand fishery production and trade.
Though fisheries did not find a place in the Uruguay Round multilateral trade negotiations, the liberalization and enhanced market access brought about in the agricultural sector is indirectly expected to increase fish trade at estimated rates ranging from 12.9-13.9 per cent by the year 200528. Establishment of the World Trade Organization (WTO) in 1995 has led to substantial changes in the use of quantitative restrictions and other non-tariff barriers affecting imports. The reduction of tariffs after the process of tariffication as implied under WTO legal system will be 24 per cent for developing countries and 37 per cent for developed and transitional economies, by early next decade. Least Developed Countries are not expected to reduce tariffs. Importers of fish and fishery products such as Japan and Korea (ROK) have already announced steps aimed at reducing tariffs on selected items. Similar steps are also initiated by other Asian countries opening their markets for imports even from developed countries.
Another opportunity emerging for the Asian fishing and fish exporting nations is the scope for additional production from capture fisheries in their own waters as well as from international waters where under exploited stocks still exist. Available data show that these areas where marine capture fishery still follows an increasing trend with some potential for additional catch are mostly the waters not much far from Asian coasts (Fig. 5). Western Indian Ocean, the Western Central Pacific and the Northwest Pacific “have a lower incidence of fully exploited, over exploited, depleted or recovering fish stocks with relatively more under exploited or moderately exploited stock” (FAO, 1998). Countries like India, Indonesia or Sri Lanka should be able to exploit these resources provided their operations become technologically and financially competitive.
On the other hand, there are divergent views on possibilities of enhancing global fish production from capture fisheries. According to one finding, the sustainable annual world catch can be doubled to 200 million tons by around 202529.
Fishing or fish farming, like any economic activity depends on productivity and labour efficiency for its success. In the context of global concern for environmental impacts and biodiversity, it is important that Asian nations focus on increasing productivity while caring for sustainability. An earlier study by FAO puts fish production per person engaged in fishing and aquaculture at the lowest in Asia at 1.90 Tons/year against 3.47 Tons/year global average and 29.35 Tons/year for Europe at the highest (Table 8).
Obviously, the recorded lower productivity in Asia - lower than even Africa - is due to comparatively large number of artisanal fishermen. The artisanal fisheries account for some 35 per cent of global fish production and employs around 20 million against 500,000 in the rest of the fishery sector globally 4. The impact of globalization on the substantial artisanal labour force in Asia needs to be carefully studied, a task INFOFISH can take up.
6.2 Excess Capacity and Subsidies
The negative impacts of subsidies provided to fisheries especially by the developed countries and to some extent by China is now well recognized30. It is estimated that 20 to 25 per cent of the sector’s revenue is from subsidies altogether ranging from US$14-20 billion annually. The 30 per cent over capacity in food fish fisheries sector estimated by FAO30 is apparently due to the availability of subsidies in acquiring vessels, fishing rights and various other areas of operation. Despite the call for reducing over capacity by FAO and other concerned agencies, the size and capacity of fleets have continued to increase over the period 1991-1996. It has been shown that throughout this period, construction of vessels with large tonnage and better fish catching and processing facilities was continued31. Except for China and Japan the share of Asia in these additions was negligible32. As a result of subsidies and unrestrained fleet expansion, most of the fully exploited fishery resources as well as over exploited and depleted species are seen in waters adjacent to developed countries.
As and when these subsidies are abolished or regulated, as is expected soon - under WTO rules, the developing countries in Asia can become much more competitive on a level playing ground, not only in fishing but in fish processing - especially of value-added fishery products. Value-addition at present is relatively meagre in exports of fishery products from Asia, mainly due to lack of know-how and lack of encouragement by the traditional importers in the affluent markets who in turn reprocess and add value to these products. INFOFISH has been playing a leading role in helping its members in Asia in these lines.
7. SUSTAINABILITY OF ASIAN FISHERIES
Fisheries in Asia are currently affected by a host of environmental issues. Overfishing, by catch utilization and biodiversity, use of destructive fishing gear and methods, pollution of coastal waters, mangrove destruction as well as degradation of water and soil at aquaculture farm sites are some of them. Global attention is diverted to Asia due to the negative publicity given by a large number of NGO’s, often sincere and genuinely concerned but sometimes not entirely so33.
Shrimp farming which originated in Asia centuries ago and was scientifically developed by Prof. M Fujinaga of Japan in 1930’s now provides one third of the global shrimp supply. The total farm gate value of cultured shrimp in 1996 is estimated at US$6.2 billion against US$3.8 billion for salmon, next in importance. However, the future of shrimp culture that provides employment, foreign exchange earnings, foreign investment, poverty alleviation, and many other benefits34 doesn’t look very bright, despite globalization of this commodity, more than any other fish species.
Shrimp trawling is another activity under severe pressure due to its impacts on biodiversity including conservation of marine turtles. With such negative publicity, production and exports of shrimp the mainstay of many Asian developing countries especially LIFDC’s are adversely affected. Not much efforts are seen made by the concerned states to remove negative image through focused publicity or generic promotion of this product. It is interesting to compare the markets penetration in Asia by salmon another cultured species, in contrast to tropical shrimp. While Asian fisheries and fish culture has to depend on more developed countries to solve their technological and environmental problems the affluent countries are in a position to solve most environmental and marketing problems through their own research and development. The case of Norwegian salmon, which lately put Norway at the top of fish exporting countries overtaking Thailand and US, is a good example of science and technology as well as generic promotion helping to enhance production and sales despite initial environmental problems. Asia badly needs to strengthen its technological innovations and information base through organizations like INFOFISH and other regional agencies in cooperation with the developed countries.
The role of information technology including Internet and Multimedia Super Corridor, in educating consumers on environmental issues and impact of e-commerce and electronic retailing on fish marketing need close watch by Asian developing fishing nations. Given that e-tailing or electronic retailing of fishery products is here to stay as part of e-commerce, INFOFISH, which was a forerunner in sophisticated fishery information technology in the region can certainly assist those countries.
The various international initiatives including the FAO Code of Conduct for Responsible Fisheries (October 1995), the Kyoto Declaration of December 1995, and the U.N. sponsored Agreement on Straddling Fish Stocks and Highly Migratory Fish Stocks of December 1995 are expected to have a major impact on Asian fisheries in the coming years. INFOFISH has to play an active role in spreading the message and significance of these measures for the industry and governments to follow up. In the meantime, the various regional groupings in Asia including ASEAN (Association of South East Asian Nations) and SAARC (South Asian Association for Regional Cooperation) can also look into promoting fish trade and responsible fisheries to enable Asia reap the rewards of globalization and liberalization. ASEAN Free Trade Area (AFTA) and South Asian Preferential Trade Area (SAPTA) are expected to do much towards this objective in the future.
8. CONCLUSION AND RECOMMENDATIONS
Asia occupies a prominent position in the global fishery scenario. Leading fish producers as well as the top consumer and importer of fish and fishery products are in Asia. The region offers good opportunities for increasing fish production from both capture and culture. However, the starting of WTO and the liberalization process as a part of globalization seems to have negatively affected Asian fish trade by design or by coincidence. The effect becomes obvious when the fish trade pattern in WTO members in Asia is compared to that of China which is not yet a member of WTO. Arguably this needs more deeper studies before jumping into conclusions! Nevertheless, fish trade and exports especially from the LIFDC’s offer excellent scope for further growth as seen from the rapid expansion of the sector in these countries recently. Compared to the developed countries where technologically advanced, over capitalized, over capacity fishery sectors were responsible for over exploitation and depletion of their own resources, Asian LIFDC’s are in a much safer position with regard to resources in their waters. However, they need additional investment in production, infrastructure as well as the required know-how to increase productivity of their large population of artisanal fishermen.
INFOFISH which will continue its present activities in Asia is expected to play a more active role in helping these nations as a result of globalization. Special focus will be on technology transfer, manpower development and investment promotion for the sector in the coming years. This is in addition to the ongoing collection, compilation and dissemination of useful trade and market information. The following measures are suggested to facilitate wider range of activities with the support and cooperation of international funding agencies and FAO:
Finally, it is felt that the following excerpt from the FAO Code of Conduct for Responsible Fisheries, needs to be well recognized while considering the role of INFOFISH in Asian Fisheries:
“States, relevant intergovernmental and non-governmental organizations and financial institutions should work for the adoption of measures to address the needs of developing countries, especially in the areas of financial and technical assistance, technology transfer, training and scientific cooperation and in enhancing their ability to develop their own fisheries as well as to participate in high seas fisheries, including access to such fisheries”.
(Article 5.2)
Mr. Ali Supardan
Director
Fishery Enterprises and Processing
Development
Directorate-General of Fisheries of
Indonesia
1. A BRIEF OVERVIEW OF INDONESIAN FISHERIES
Indonesia is an archipelago comprising about 17,500 islands with a total coastline length of about 81,000 km. It located on the crossroads between two oceans, the Indian and the Pacific, and bridges two continents, Asia and Australia.
The islands have a land area of over 2 million sq. Km and 5.8 million sq. Km of marine waters, 3.1 million sq. Km of which comprise archipelago and territorial waters. The remaining 2.7 million sq. Km is in Indonesia’s Exclusive Economic Zone (IEEZ). About 775,000 sq. Km of marine waters are coastal areas of less than 200 meters deep.
With her vast area of inland, coastal and marine waters, fishery is considered play an important role in socio-economic life of Indonesian population since along time, especially for coastal community. The sector provides employment for more than 4.5 million fishermen/fish farmers. Currently, while most sectors suffer from the current economic crisis, fisheries demonstrate its sustained contribution to the national economy through significant export growth. In 1998, fisheries generate about US $ 2.0 billion from the fish export of more than 700 metric tons.
1.1 Fisheries Resources
MARINE FISHERIES. The Maximum Sustainable Yield (MSY) of Indonesian Marine Fisheries is estimated around 6.28 million tons per year broken down into 4.43 million tons from the country’s territorial waters and 1.85 million tons from the Exclusive Economic Zone (EEZ).
The main fishing grounds are the waters of Northern Java, Bali Strait, Malaya Strait, Western Sumatra, Eastern Sumatra, Eastern Nusa Tenggara, Eastern Kalimantan, Western Kalimantan, Southern Sulawesi, Northern Sulawesi, Maluku, Irian Jaya, etc.
FISH CULTURE. In fish culture (i.e., freshwater culture, brackishwater culture, marine cage culture, open water cage culture), there is still ample opportunity to be expanded and developed. Indonesia has 4.29 million ha of mangrove. In order to maintain ecological balance, about 830,000 ha or not more than 20% mangrove could be developed for brackishwater culture. If the potential area is utilized 30% for polyculture (shrimp and milkfish), 40% for milkfish monoculture, 30% for shrimp monoculture, the potential production is estimated at 810,000 tons per year, consist of 358,000 tons shrimp, and 452,000 tones milkfish including other fish such as tilapia (Tilapia spp), mullet (Mugil spp) and giant sea-perch (Lates calcarifer).
Potential production of freshwater fisheries mainly consists of: (i) part of the irrigation system (about 4 million ha), and (ii) about 1% of the openwater area of 14 million ha (about 140,000 ha). If for example, those of irrigation area are utilized about 60% for polyculture and 40% for monoculture, the production potential of freshwater culture can be estimated about 805,000 tons per year.
In openwaters (i.e., lakes, rivers, dams, swamps), fish can be cultured in floating and static cages. The potential production is estimated about 350,000 tons per year from the area of 140,000 ha. Paddy field could be also utilized for culturing fish together with paddy. There are around 1,700,000 ha of paddy field that half of these areas could be utilized for paddy-fish culture. The potential production is estimated about 230,000 tons per year.
1.2 Production Trends
Fisheries production over the period of 1994-1998 steadily increased. By volume, it grew from 4,013,830 tons (1994) to 4,761,270 tons (1998) with an average increase of 4,37% per year. Table 1 presents fisheries production by sub sector of fisheries, 1994-1998.
The production comprises marine fisheries, inland openwater fisheries, brackishwater fisheries and freshwater fisheries. In 1998, marine fisheries contributed 75,95%, inland openwater 7,17%, brackishwater fisheries 9,42% and freshwater fisheries 7,46%.
Considering the data mentioned above, the total of marine fisheries production in 1998, was around 60% of the MSY. Precautionary approach is adopted in managing fisheries resources in order to minimize risk resulting from natural uncertainty. In this respect, the target of the utilization of the fish stock is set up at 80% of the MSY.
1.3 Trade of Fishery Products
Export of fishery products steadily increased during the period of 1994-1998. Total volume increased by 7.01% from 545,371 tons in 1994 to 714,427 tons in 1998. By value, it increased by 4.9% from US $ 1,678,720 thousands (1994) to US $ 2,030,725 thousands (1998).
During the period, major importers of fishery products (in order) were Japan, other Asian Countries, USA and European Countries. Commodity-wise, frozen shrimp was the first major contributor, followed by tuna and other products. By value, shrimp contributed 53.09% to the total export value in 1998.
Import of fishery products decreased by 11.95% (volume) and increased by 0.97% (value) per year in 1994-1998. Fishmeal was the major imported fishery product during the period. It was primary imported from Peru, Chile and RF of Germany.
1.4 Annual Fish Consumption Per Capita
Supply of fish for domestic consumption (fish consumption) grew by 2.53% per year during 1994-1998. Average consumption per capita increased from 18.54 kg (1994) to 19.25 kg (1998). Using the national standard of 26.55 kg/capita/year, the level of consumption is only 72.50%. Table 4 presents the growth of fish consumption during the period.
1.5 Number of Fishing Vessels
Marine fishing vessels are divided into non-powered and powered vessels. During the period of 1994-1998 its number increased by 3.14% per year, from 396,185 units (1994) to 448,244 units (1998). Non-powered boats accounted for 58.48% of the total fishing vessels in 1998 and increased by 1.66% per year. Number of powered vessels increased by 5.42% per year from 150,699 units (1994) to 186.123 units (1998). Table 5 presents number of marine fishing vessels by size of vessels, 1994-1998.
The main fishing gears used in off shore and deep sea waters are fish net, purse seine, long line and gill net.
1.6 Area under Culture
During 1994-1998 the total areas under culture increased by 3.06% per year, from 526.092 ha in 1994 to 593,504 ha in 1998. Brackishwater ponds accounted for 62.04% the total areas in 1998 and increased by 3.02% per year.
1.7 Fish Processing Plants
Over 50% of the total fish production was distributed fresh in 1998 and the rest were processed products, such as salted-dried, salted-boiled, smoked, fermented, frozen, canned and fish meal.
The number of modern fish processing plants oriented for export quality products are as follows:
|
254 units |
|
31 units |
|
13 units |
|
76 units |
The main export commodities include shrimp, tuna/skipjack, froglegs, seaweed and other fish. Shrimps are presented to the market either alive, fresh/chilled, frozen, canned or dried. Product forms include; headless shell-on, head-on, peeled and undeveined, individual quick frozen or block frozen according to the requirements of the intended market.
Tuna/skipjack are marketed in fresh, frozen, canned or dried for domestic use and for export. In addition to shrimp and tuna/skipjack other fishery commodities with potential economic importance include froglegs, seaweed, and other species of potential market value (red snapper, lobster, etc.).
In order to promote quality assurance of fishery products, until recently 105 fish processing plants have implemented HACCP-based Integrated Quality Management Program. The program is validated, audited and verified by fish inspectors of the Directorate General of Fisheries.
1.8 Contribution of Fisheries Activities to GDP
Contribution of fisheries activities to GDP grew by 1.60% per year during 1994-1998, from 1.59% in 1994 to 1.87% in 1998. Table 7 presents the growth of contribution of fisheries activities to GDP during the period.
1.9 Credit and Savings Mobilization
The Indonesian Government has been implemented several institutional credit programs that cater to the financial needs of different types of fisher-folk - borrowers and cover a wide range of fisheries - related projects. The earlier program included financing of: (i) building or improvement of fishing vessels and purchase of equipment/gear; (ii) setting-up of cold storage and ice plants; (iii) intensive and extensive brackishwater and freshwater aquaculture production; (iv) tuna capture; (v) establishment of Micro-enterprises, among others.
Financial assistance programs to meet the investment and working capital requirement of fisheries project of small scale borrowers and micro-entrepreneurs, include the following:
1) Small Investment Credit (KIK) (1974-1978), which extends loans for small investment initiatives of fishing vessel, engine and gear, as well as for intensive and extensive brackishwater and freshwater aquaculture production;It is important to note that all credits mentioned above, except KIK/KMKP on Bimas Pattern and SFDP, are general of credits or in other word of saying, can be used by all kind of activities not specific for fisheries.2) Working Capital Credit (KMKP) (1974-1978), which provides for working capital;
3) Mini Credits (1974-1984), which provides for investment and working capital;
4) Midi Credits (1974-1984), which provides for investment and working capital;
5) Rural Credit Project (RCP) (1979-1984), which provides for brackishwater and freshwater ponds;
6) KIK/KMKP on Bimas Pattern (1980-1983), which provides for assisting fishermen affected by the trawling ban. It was to enable them to convert to other type of fishing techniques or to brackishwater fish culture;
7) Sumatra Fisheries Development Project (SFDP) (1981-1986), which provides for marine fisheries and freshwater ponds;
8) Intam Credits (1984-now), which provides for intensification of brackishwater fish culture;
9) Others.
The total amount, interest rate and loan period of credits can be seen in Table 8.
It was just in December 1998, the Central Bank of the Government of Indonesia issued a Board of Director's Decree concerning with Credit for Primary Cooperatives Members for Fishermen (KKPA Nelayan). In this kind of credit, there is still a requirement such as collateral and others, although the interest rate is relatively low, 16% per year.
Recently, the government is preparing Kredit Usaha Tani/KUT (credit for smallholder) for fisheries sector (up to now the credit package on KUT established primarily for food corps). The maximum amount of KUT for fisheries in Rp. 10 million with the interest rate of 10.5% per year. The loan period of credit will be defined later.
Beside the banking credit system, other capital support may be gained by means of utilization of a venture capital. This is a capital from big or medium company to smallholder for financing investment and or working capital. The benefit effort will be defined based on sharing system among others.
2. SOME POLICY CHANGES IN FISHERIES SECTOR
2.1 Fisheries Resources Management
In the case of Indonesia, before the establishment of the Code of Conduct for Responsible Fisheries in 1995, the principles contained in the code have been sufficiently covered under Law No. 9 of 1985 on Fisheries. Indonesia attaches great important to improve productivity and increase production in line with environmental management and conservation in which it has been reflected in the policy toward sustainable development and management of fisheries.
In the particular issues, the Government of Indonesia (GOI) has so far promoted a number of measures that include:
1) Establishing TAC (Total Allowable Catch) in marine fishing activity;It is important to note, in 1980, the GOI issued the President Decree No. 39 concerning with Trawling Ban, and then followed by the President Instruction No.: 85/1982 concerning with the use of BED = By-catch Excluder Device (similar to TED = Turtle Excluder Device in USA).2) Strengthening fisheries management methods such as limitation on the use of certain fishing gears;
3) Revising and/or issuing legislation enforcing improved management measures such as re-arrangement of fishing zones;
4) Discouraging of additional fishing effort in highly exploited areas;
5) Enforcing control and monitoring on compliance at relevant regulations; and
6) Promoting aquaculture activities and providing alternative source of livelihood for fishermen.
2.2 Fishing Regulation
Management of potential fishery's resource in Indonesia’s EEZ complies with United Nation Convention on Law of the Sea (UNCLOS) of 1982. The law stipulated that potential fishery's resource in EEZ waters that has not been fully utilized by the nation concerned might be utilized by other nation under the regulation of nation concerned.
As a follow-up, Minister of Agriculture has issued some regulations such as Government Regulation No. 15 of 1990 laying down Fisheries Business and Decree of Minister of Agriculture No. 815 of 1990, which provided for fishing using Indonesian flag vessel with tonnage up to 30 GT and engine power up to 90 HP, without foreign element capital and crew, its license will be issued by local level government. While, fishing using vessel more than 30 GT and engine power more than 90 HP whether with or without foreign elements, its license will be issued by central level government, in this case, Directorate General of Fisheries.
Furthermore, regulation for fishing vessel using foreign flag and operating in IEEZ is stipulated by the Decree of Minister of Agriculture No. 816 of 1990. This decree provided also for fishing license for long liner, pole & liner, purse seines, trawler (except in Malaya Strait IEEZ), gill net (with maximum length of 2.5 km) and other fishing vessel using hook and line.
In the effort of increasing marine fish production, and as the implementation of deregulation policy in fisheries sub-sector, in 1996, the GOI issued the policy concerning with “procurement of fishing vessel and abolition of charter system of foreign flag fishing vessels”. The decree includes:
1) simplification of licensing in fishing vessel operation;Recently, in the middle of 1999, the government just issued the Ministry of Agriculture Decree No. 392/1999 with regard to “the fishing lanes”. The decree mainly focused to protect and secure the small scale fishermen operation, and to reduce pressure on resources in coastal areas.2) division of authority in conduct of fishing port between Directorate General of Fisheries and Directorate General of Sea Communication;
3) opportunity for Indonesian national to purchase ex-charter fishing vessel, purchase vessels produced locally or to import newly or second hand vessels.
The fishing lanes are divided into 3 (three) areas as follows:
In addition, coral fish/grouper catching business should be in form of nucleus-plasma business partnership. The nucleus should provide the fishermen (plasma) with working capital and boat, and helping plasma with marketing of their product. Nucleus company is much encourage to develop marine culture of the coral fish in order to ensure sustainability of the fish resources.
2.3 Import Duty and Tax
To anticipate the globalization era, the GOI has manifested her commitment and actively participated in economics cooperation such as AFTA, APEC, and WTO. In the light of the implementation of the APEC Early Voluntary Sector Liberation (EVSL), fisheries was identified as one of the nine sectors to be first tracked. The application of the EVSL will be positively affected the trade and investment as of from fisheries it will reduce the import tax of fishery products up to 99.27% by 2003.
The GOI will gradually reduce import duty and tax of fish and fishery products up to 0% in 2003.
2.4 Fish Inspection and Quality Control System
It is well realized that the international market for seafoods becomes more competitive in this globalization era. The major issues in the fish industry, which are mainly, environment and safety of seafoods, have influences on fish trade relations between exporting and importing countries. Those issues have been reflected in various legislation on environmental conservation and seafoods applied by developed countries.
As producing nation, the Indonesian fish industry has, inevitably, to keep pace with the requirement imposed by the importing countries. Therefore, equivalence of quality assurance system with the importing countries is very important in facilitating fish trade flow.
As far as fish export market development is concerned, the Directorate General of Fisheries has positioned itself to meet all those challenges by implementing a Hazard Analysis Critical Control Point (HACCP)-based Integrated Quality Management Program (IQMP) in the fish industry which is adopted from FAO-WHO Guidelines of HACCP. The program was stipulated by the Ministry of Agriculture in 1998 and all fish industries shall take place in the program for fish handling and processing.
To provide quality assurance of seafood safety and to meet equivalence of the system, implementation of the program has been supported by strengthening the fish inspections through provision training to instructors, fish inspectors, quality control personnel etc.; provision of training workshops to industries; supervision on the application of HACCP-based IQMP, empowering network organization of fish inspection and establishment of legislative support on the application of the IQMP.
3. DISCUSSION
In the attempt to provide conducive investment climate and to enhance competitive capacity of Indonesian fish and fishery products in international market, the GOI has launched deregulation in fisheries sector. Such deregulation having significant impact to the fishery activities on fish farming, fishing and fish inspection and quality control, as following:
3.1 Fish Culture Activities
At the beginning of 1990’s, a lot of companies tried to be the nucleus in the NES pattern of brackishwater pond shrimp culture linked with transmigration program. At the same time, hundreds of shrimp farmers transmigrated outside of Java Island being the plasma. Unfortunately, this program so far, has not really been successful.
In addition, with respect to the obligation of conducting the EIA (Environment Impact Assessment) study, there was no complaint on the rule. The decreasing of shrimp production in the period of 1993 - 1998 mainly caused by shrimp diseases such as MBV viruses and or any other pollution. The positive impact of the EIA rule, is to promote public awareness among the fish/shrimp farmers and bigger companies on the importance of taking good care the mangroves and coral reefs in the coastal areas.
3.2. Fishing Activities
After the issuance of Minister of Agriculture Decree in 1996 as mentioned earlier, the Indonesian fishing fleet is expected to gradually utilize fisheries resources in the Indonesian EEZ, so that at the end of 1999 no foreign fishing vessels would operate.
In the year of 1997, the DGF as the competent authority has permitted to 24 fisheries companies to provide 302 imported fishing vessels. At the end of December 1997, the realization to import fishing vessels gained 281 fishing vessels.
Furthermore, in 1998 the DGF also permitted to 33 fisheries companies regards to import fishing vessels as big as 657 and the realization reached 138 units.
In the year of 1999, following the new policy on importing fishing vessels, the DGF agreed to import 992 fishing vessels. Until the end of August 1999, the fishing vessels have been imported was 419 units.
In case of the improvement of “fishing lanes rule”, the important factor is to protect small scale fishermen operating in coastal areas and encourage the bigger or motorized vessels those belong to fisheries industries to operate in farther areas or EEZ. This new rule is also intended to avoid conflict among the fishermen.
3.3 Fish Inspection and Quality Control
As already known, the international market for seafood will become more competitive in this globalization era. The major issues in the fish industry, environment and safety, have influence on fish trade relation between exporting and importing countries. Those issues have been reflected in various fish hygiene legislation applied by the developed countries (importing countries), such as EU's Commission Decisions, Council Directives, US Federal Regulation etc.
To deal with the “new trend” in the business climate, the government have been making any effort to establish a joint-agreement with fish importing countries. Such an agreement is very important in building up an understanding in the interpretation of all aspect of trade issues between both sides:
1) EU has endorsed approved establishment, as stipulated in Commission Decision No. 94/324/EC to comply with Council Directives Nos. 91/492/EEC; 91/493/EEC and 92/48/EEC;The European Commission has admitted the Directorate General of Fisheries as the Competent Authority for Verifying and Certifying Compliance of fishery and aquaculture products. As the consequent, most fish processing industries, now, trying hard to improve their management of product quality include the human resources development.2) Japanese quarantine has established an MOU with the Directorate General of Fisheries that handling of pre-transported live fish/lobster/shrimp shall be directly under the supervision and inspection of fish inspectors according to prescribed “Code of handling practices”;
3) An MOU with the Canadian Government on joint inspection of the implementation of a HACCP-based IQMP has been signed up by both parties.
4. THE REFORM AGENDA OF FISHERIES DEVELOPMENT
From economical point of view, since 1997, Indonesia has experienced a very bad condition. Moreover, there was also a political change in the middle of 1998. Among Asian Countries, Indonesian economy has been one of the most deeply affected. The GDP in 1998 felt nearly 14%; inflation soared to nearly 78% - after decades of stable prices, interest rate climbed to over 62%, and the exchange rate depreciated as much as 84%. To overcome all those situations the government has decided some steps of programs covering of rescue, recovery and export increase.
Under the recent economic crisis, fisheries demonstrated that this sector is less affected compared with the other sub-sector in agriculture. It was indicated that in the period of 1997-1998, the fisheries production grew by 3.93%, fish export grew by 9.65% (volume) and 6.63% (value), and fisheries GDP grew by 6.21%. This condition due to the following competitive advantageous:
In this respect, fisheries is viewed as one of the primary source of growth in agriculture and considered to be prime-mover of the economic growth to come out from this difficult situation.
The newly Government Policy for Reformation Development set up in November 1998 (MPR Decree No. X/1998) explicitly stipulated the important role of fisheries, that in the attempt to overcome with the economic crisis, one of the focus of short run economic development is to optimize the economic potential of the natural resources, particularly marine resources and to reactivate the production activity toward export-oriented basis.
To address the issue of food security, the government launched a crash program for boosting the export of fisheries commodities so called PROTEKAN 2003 (Fish Export Development Program). The program is aimed at generating foreign exchange earning from fisheries sub-sector with ultimate target of US $ 10 billion by 2003. This target is expected to be generated from export of marine fisheries around US $ 2.64 billion, shrimp culture of US $ 6.78 billion and other commodities such as seaweed, snapper, grouper and pearls around US $ 0.58 billion. Moreover, the program is expected to provide employment for around 830,000 people.
The development of fisheries sub-sector at this current condition will be directed to the: (i) increasing of food security through the supply of animal protein source from fish (ii) empowerment of the fishermen/fish-farmer and (iii) increasing foreign exchange earnings through the increase of fisheries export and fish meal production as import substitution.
The strategy for this program will be carried out through the application of agribusiness approach in both fish capture and aquaculture.
Table 1. Fisheries Production by Sub Sector of Fishery, 1994-1998
Unit: 1000 tons
|
Sub Sector |
1994 |
1995 |
1996 |
1997*) |
1998**) |
Annual Rate of Increase (%) |
|
|
Total |
4,013.83 |
4,263.59 |
4,452.27 |
4,581.22 |
4,761.27 |
4.37 |
|
|
Marine Fishery |
3,080.17 |
3,292.93 |
3,383.46 |
3,481.89 |
3,616.14 |
4.11 |
|
|
Inland Fishery |
933.66 |
970.66 |
1,016.81 |
1,099.33 |
1,145.13 |
5.27 |
|
|
336.14 |
329.71 |
335.71 |
337.91 |
341.10 |
0.38 |
|
|
597.52 |
640.95 |
733.10 |
761.42 |
804.03 |
7.78 |
|
|
|
Brackishwater |
346.21 |
361.24 |
404.34 |
421.51 |
448.47 |
6.73 |
|
Freshwater Pond |
140.10 |
162.20 |
182.92 |
188.71 |
199.22 |
9.32 |
|
|
Cage |
33.01 |
39.86 |
44.63 |
45.47 |
46.80 |
9.38 |
|
|
Paddy Field |
78.20 |
77.66 |
101.21 |
105.73 |
109.54 |
9.43 |
|
*) = Revised FigureTable 2. Export of Fish and Fishery Products, 1994-1998
**) = Preliminary Figure
|
Item |
1994 |
1995 |
1996 |
1997*) |
1998**) |
Annual Rate of Increase (%) |
|
Volume (Tons) |
545,371 |
563,065 |
598,385 |
651,568 |
714,427 |
7.01 |
|
Shrimp |
99,523 |
94,551 |
100,230 |
103,774 |
107,367 |
2.00 |
|
Tuna/Skipjack |
79,729 |
86,470 |
81,947 |
83,182 |
84,367 |
1.72 |
|
Seaweed |
18,689 |
24,958 |
17,526 |
18,375 |
18,498 |
2.32 |
|
Others |
347,430 |
357,086 |
398,682 |
446,237 |
504,195 |
9.83 |
|
Value (US $ 1,000) |
1,678,720 |
1,763,989 |
1,785,799 |
1,904,491 |
2,030,725 |
4.90 |
|
Shrimp |
1,009.738 |
1,037,006 |
1,017,892 |
1,044,849 |
1,078,127 |
1.67 |
|
Tuna/Skipjack |
182,200 |
212,983 |
192,980 |
197,414 |
203,964 |
3.28 |
|
Seaweed |
9,029 |
16,263 |
13,431 |
14,847 |
16,640 |
21.33 |
|
Others |
477,753 |
497,737 |
561,496 |
647,381 |
731,994 |
11.34 |
*) = Revised FigureTable 3. Import of Fish and Fishery Products, 1994-1998
**) = Preliminary Figure
|
Item |
1994 |
1995 |
1996 |
1997*) |
1998**) |
Annual Rate of Increase (%) |
|
Volume (Tons) |
276,829 |
163,240 |
154,895 |
147,029 |
152,049 |
(11.95) |
|
Food |
14,016 |
14,487 |
16,355 |
19,616 |
23,879 |
14.48 |
|
Non-Food |
262,813 |
148,753 |
138,540 |
127,412 |
128,170 |
(14.43) |
|
Value (US $ 1,000) |
136,713 |
115,917 |
126,972 |
129,411 |
139.285 |
0.97 |
|
Food |
18,032 |
21,041 |
22,622 |
23,446 |
26,067 |
9.76 |
|
Non-Food |
118,681 |
94,876 |
104,350 |
105,965 |
113,217 |
(0.42) |
*) = Revised FigureTable 4. Fish Consumption Per Capita, 1994-1998
**) = Preliminary Figure
Unit: Kg
|
|
1994 |
1995 |
1996 |
1997*) |
1998**) |
Annual Rate of Increase |
|
Total Consumption |
3,534,868 |
3,653,389 |
3,728,872 |
3,805,197 |
3,906,528 |
2.53% |
|
Consumption/Capita/Year |
18.54 |
18.86 |
18.95 |
19.04 |
19.25 |
0.95% |
*) = Revised FigureTable 5. Number of Marine Fishing Vessels, 1994-1998
**) = Preliminary Figure
|
Type of Vessels |
1994 |
1995 |
1996 |
1997*) |
1998**) |
Annual Rate of Increase (%) |
|
|
Total |
396,185 |
404,653 |
419,447 |
433,054 |
448,244 |
3.14 |
|
|
Non-powered Vessel |
245,486 |
245,162 |
252,561 |
257,082 |
262,121 |
1.66 |
|
|
Powered Vessel |
150,699 |
159,491 |
166,886 |
175,972 |
186,123 |
5.42 |
|
|
87,749 |
94,024 |
96,995 |
101,156 |
105,556 |
4.74 |
|
|
62,950 |
65,467 |
69,891 |
74,816 |
80,567 |
6.37 |
|
|
|
< 5 GT |
45,331 |
48,855 |
51,327 |
54,304 |
57,467 |
6.11 |
|
5 - 10 GT |
9,664 |
9,562 |
10,312 |
11,066 |
11,801 |
5.34 |
|
|
10 - 20 GT |
3,376 |
2,789 |
3,074 |
3,196 |
3,314 |
0.12 |
|
|
20 - 30 GT |
1,688 |
1,519 |
1,500 |
1,539 |
1,568 |
(1.69) |
|
|
30 - 50 GT |
1,869 |
2,682 |
1,626 |
1,788 |
1,963 |
1.60 |
|
|
50 - 100 GT |
567 |
687 |
1,535 |
2,282 |
3,671 |
63.54 |
|
|
100 - 200 GT |
340 |
253 |
2,354 |
425 |
509 |
13.55 |
|
|
> 200 GT |
175 |
120 |
163 |
216 |
274 |
15.95 |
|
*) = Revised FigureTable 6. Area Under Culture, 1994-1998
**) = Preliminary Figure
Unit: Hectare
|
Item |
1994 |
1995 |
1996 |
1997*) |
1998**) |
Annual Rate of Increase (%) |
|
Brackishwater Ponds |
326,908 |
332,365 |
334,759 |
356,308 |
368,244 |
3.02 |
|
Freshwater Ponds |
60,892 |
65,545 |
68,531 |
71,889 |
75,391 |
5.49 |
|
Cages |
15 |
46 |
63 |
92 |
110 |
79.71 |
|
Paddy |
138,277 |
141,363 |
142,482 |
145,930 |
149,750 |
2.02 |
|
Total |
526,092 |
539,319 |
548,120 |
559,090 |
593,504 |
3.06 |
*) = Revised FigureTable 7. Contribution of Fisheries Activities to GDP, 1994-1998
**) = Preliminary Figure
|
Year |
Fisheries |
National |
% |
|
1994 |
5,659.5 |
354,840.8 |
1.59 |
|
1995 |
5,928.4 |
383,792.3 |
1.54 |
|
1996 |
6,248.4 |
413,797.9 |
1.51 |
|
1997*) |
6,610.1 |
434,095.5 |
1.52 |
|
1998**) |
7,020.8 |
374,516.6 |
1.87 |
|
Annual Rate of Increase |
1.60 |
||
*) = Revised FigureTable 8. Maximum Amount, Interest Rate and Loan Period of Fisheries Credits
**) = Preliminary Figure
|
No |
Kind of Credit |
Maximum |
Interest Rate |
Loan Period |
|
1. |
KIK |
15,000,000 |
12.0 |
8 years (including 4 years grace period) |
|
2. |
KMKP |
15,000,000 |
12.0 |
5 years (including 1 year grace period) |
|
3. |
Mini Credits |
200,000 |
12.0 |
· 3 years for
investment |
|
4. |
Midi Credits |
500,000 |
12.0 |
· 5 years for
investment |
|
5. |
RCP |
10,000,000 |
10.5 |
More than 5 years (including 3 year grace period) |
|
6. |
KIK/KMKP on Bimas Pattern |
5,000,000 |
12.0 |
5 years (including 1 year grace period) |
|
7. |
SFDP |
1,500,000 |
12.0 |
· 5 years for investment
(including 6 months grace period) |
|
8. |
KKPA for Fisheries |
50,000,000 |
16.0 |
· 15 years for
investment |
Working Group I: IMPLICATIONS OF GLOBALIZATION AND MILLENNIUM ROUND OF MULTI-LATERAL TRADE NEGOTIATION ON ASIA AND PACIFIC FISHERIES
Chair: Prof. M. Yamao
Rapporteur: Dr. E. Ruckes
1. It had been realized by many developing countries that compliance with existing agreements had turned out to be rather difficult and costly due to financial requirements and manpower needs. Further assistance from bi- and multilateral sources was essential for timely and effective implementation of the agreements.
2. Regarding tariff reductions, mention was made of the Early Voluntary Sectoral Liberalization (EVSL) programme of APEC, which includes fishery products. It was recommended that countries should evaluate their possible obligations under this scheme, which would refer not only to tariff rates but also to standards and non-tariff barriers. Fish exporting countries have a major interest in tariff reduction and it was noted that fish exports played a very important role for the economies of many developing countries in the region.
3. The specific role of financial transfers/subsidies must be scrutinised in the light of the given situation of any particular country taking into consideration:
4. Countries should inform themselves on emerging issues related to international trade and future MTN, analyse the implications for their specific situation and formulate a position before the negotiations. At national level, co-ordination was required involving those responsible for trade negotiations, agriculture and fisheries.
5. In order to avoid critical loss of food security, appropriate measures should be put in place whenever there is a danger that international demand could reduce the availability of fishery products for local populations.
6. Resources owning countries should be encouraged to develop their capacities to obtain the desired share of the value of resource utilisation.
7. FAO should give consideration to organize a meeting on fisheries issues in the Millenium Round which are relevant for the Asia Pacific region as soon as these issues have been confirmed after the opening of the MTN.
Working Group II: CREDIT AND INVESTMENT SUPPORT FOR STRENGTHENING POSITION OF ASIA PACIFIC FISHERIES IN GLOBAL MARKET
Chair: Mr. Ansar Uddin Ahmed
Rapporteur: Mr. Bishnu Shrestha
CONCLUSIONS & RECOMMENDATIONS
In order to strengthen the competitive position of the fisheries sector of developing countries in Asia and the Pacific in the context of globalization, credit and investment support is needed for:
More specifically and additionally, the following measures are to be taken:
1. Fisheries sector should be declared as a priority sector to ensure increase in value added fisheries production/as well to achieve the following:
2. For development of fishery sector, emphasis be given for rapid development of the related infrastructure such as:
3. Handling, processing and marketing techniques should be modernized and upgraded to meet the global standards:
4. While encouraging fisheries development, principles of responsible fishing practices be encouraged with a view to ensuring effective conservation, management and development of living aquatic resources with respect to eco-systems and bio-diversity:
Working Group III: GLOBALIZATION AND TRANSFER OF TECHNOLOGY, EXCHANGE OF INFORMATION/TRAINING, RESEARCH AND DEVELOPMENT AND THE ROLE OF FISHERMEN/WOMEN ORGANIZATIONS AND COOPERATIVES
Chair: Mr. M.A. Upare
Rapporteur: Dr. U. Tietze
1. Transfer of Technology
1.1 Technical assistance, funding support and related training should be provided to developing countries for the transfer of appropriate technology from developed to developing countries in the areas of:
1.2 FAO, APRACA and INFOFISH should organise a regional workshop for the South Pacific, to be hosted by Fiji, on strengthening the export potential of fisheries products for international markets.
2. Exchange of Information and Training
2.6 Cooperation with mass media in promotion of role of fisheries industries in developing countries in process of globalization.
3. Research and Development
Technical and funding support should be provided to developing countries by national And international sources and donors:
3.1 for the conduct of case studies on the successful adaptation of private fishery enterprises, fishermen/women, co-operatives and Government organizations to processes of globalization. Case studies should be disseminated by FAO.
3.2 for research on impact of liberalization of imports of fishery products on food security and nutritional status of low-income consumers.
3.3 for research on impact of taxation, tariffs and fiscal policies on economic efficiency and environmental and resource sustainability of fisheries industries in developing countries.
3.4 for developing of guidelines on policies and measures to prevent unauthorised export of genetic resources from country of origin and on negotiating favourable mutually agreed terms of such export if any.
4. Fishermen/women Organizations/Co-operatives
4.1 Technical and funding support to developing countries for reorientation of fisheries co-operatives and fishermen/women organizations towards improving economic efficiency through privatisation, professional management and other means and strengthening their role in environmental conservation and integrated fisheries management.
| 1 Professor, Faculty of Applied Biological
Science Hiroshima University Higasi Hiroshioma, 739-8528, Japan E-mail: [email protected] 2 FAO. 1995. Code of Conduct for Responsible Fisheries. FAO. Rome. 41p. The text of the Code is also available at the FAO-FI web site: http://www.fao.org/fi/agreem/codecond/ficonde.asp 3 FAO. 1995. Agreement to Promote Compliance with International Conservation and Management Measures by Fishing Vessels on the High Seas. FAO. Rome. 65p. (In Arabic, Chinese, English, French, Spanish) 4 Resolution 15/93 of the Twenty-seventh Session of the FAO Conference 5 Adaptation of Code means that its provisions may be adjusted or specified to meet the particular needs and circumstances of sub-regions, regions, countries and fisheries, so long as the adaptation remains fully consistent with the Code’s basic tenets and principles. For example, the conditions and fisheries management requirements in inshore small-scale fisheries are vitally different from those in offshore industrial fisheries, although the need for management in both types of fisheries is apparent. In this situation, there would be merit in adapting the Code to take account of the specific management requirements of both fisheries so that the Code might be more effectively applied in both sub-sectors 6 Agreement on subsidies and countervailing measures (Article 1) of WTO Multilateral Trade Agreements defines subsidies as a financial contribution by a government or any public body within the territory of a Member (referred to in the Agreement as “government”): i.e. (1) where (i) a government practice to involve a direct transfer of funds (e.g. grants, loans and equity infusion), potential direct transfer or liabilities (loan guarantees), (ii) government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives such as tax credits), (iii) a government provides goods or services other than general infrastructures, or purchases goods, and (iv) a government makes payments to a funding mechanism, or entrusts or directs a private body to carry out one or more of the type of functions illustrated in (i) to (iii) above which would normally be vested in the government and the practice, in no real sense, differs from practices normally followed by governments, or (2) as any form of income or price support in the sense of Article XVI of GATT 1944. 7 OECD, “The Economic Impact of Responsible Fisheries on Production and Management: The Impact on Fisheries Resource Sustainability of Government Financial Transfers,” AGR/FI(99)3, 1999. 8 OECD, “The Economic Impact of Responsible Fisheries on Production and Management: The Impact on Fisheries Resource Sustainability of Government Financial Transfers,” AGR/FI(99)3, 1999. 9 Economic definition: A government-directed, market-distorting intervention which decreases the cost of producing a specific good or service, or increases the price which may be charged for it. Fiscal definition: A government expenditure, provision for exemption from general taxation, or assumption of liability which decreases the cost of producing a specific good or services, or which increases the price which may be charged for it. Environmental definition: An environmental subsidy consists of the value of uncompensated environmental damage arising from any flow of goods or services (Barg, Stephan, Eliminating Perverse Subsidies: What’s the Problem? In OECD, Subsidies and Environment - Exploring the Linkages, 1996). 10 OECD, “The Economic Impact of Responsible Fisheries on Production and Management: The Impact on Fisheries Resource Sustainability of Government Financial Transfers,” AGR/FI(99)3, 1999. 11 Existence value arises from preventing the extinction of a species or preventing the complete destruction of a resource and refers the amount an individual would be prepared to pay to assure the continued existence of a good (Freeman 1993). Option value refers the amount an individual would be willing to pay in order to be able to use a good sometime in the future (Hyman 1987). 12 A club good is excludable but non-rival in that the consumption of the good by one person does not reduce the consumption of the same good by other person (Pearse 1986). 13 OECD, “Agricultural Policiesin OECD Countries-Background Information,” 1999. 14 OECD, “The Economic Impact of Responsible Fisheries on Production and Management: The Impact on Fisheries Resource Sustainability of Government Financial Transfers,” AGR/FI(99)3, 1999. 15 Korean small-scale fisheries comprise a large part of the Korean fisheries, which are a cornerstone of fisheries cooperatives. Today, Korean fisheries cooperatives face a variety of challenges, which require betterment of services to their members. The most important questions to be asked are “What kind of enterprises can the cooperatives expect to survive and prosper in the next century?” and “How do cooperatives check out when compared with certain criteria for future success?” (Park and Ryu 1999). 16 This total expenditure includes central/local governments’ direct financial support, lending and self-finance. Table 4 shows government direct support related to buyback programs in 1996 and 1997. 17 CPUE did not decrease significantly over time, but it is widely known that there is a remarkable decline of fish quality (i.e. sizes). 18 The government purchases the target items at higher prices and releases them at lower prices than those of market. 19 As in table 9, stock assessment results indicate that the entire off-shore fishing capacity should be curtailed by 25.2% on the average. 20 Even if the current level of fishing effort of off-shore fisheries exceed MSY levels by 25.2%, fisheries management conditions may induce much more fishermen to participate in the buyback programs. 21 In a half-line compromise, the Korean and Japanese delegations to the Tokyo talks in 1998 agreed to include half the squid fishing ground in the joint fishing area whose eastern limit is drawn at 135.5 degrees east longitude. Both States also agreed in principle to put a limit on catches to conserve marine living resources in the joint fishing area. To this end, Korea and Japan agreed to set up a joint fisheries committee to work out concrete measures. Operations by fishing boats will be regulated by their own State. Under the new accord, Japan will provide grace periods ranging from one to three years for Korea, during which Korean fishermen will be allowed to operate in waters beyond 135.5 degrees east longitude and off Japan’s 35-mile exclusive zone. After the new accord takes effect, Korean fishermen will be allowed to catch pollack for one year, large crabs for two years and other fish for three years in the waters near Japan (Donga Ilbo, Korea Herald, September 26, 1998). Korea-China Fishery Agreement was concluded in November 1998, but follow-up negotiations are still under way. 22 Special Law of Fishermen/Other Support and Fishery Development Associated with Fishery Agreements, August/1999. 23 Uruguay Round Multilateral Trade Negotiations, Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, Agreement on Subsidies and Countervailing Measures, Marrakesh, Morocco, April 15, 1994 (Washington: USTR, 1994). 24 describes the information required from Member countries on government financial transfers. This issue was OECE Fisheries Committee, “Impact on Fisheries Resource Sustainability of Government Financial Transfers,” 1997. This document discussed at the 80th Session of the Committee for Fisheries (6-8 October 1997). 25 At the 81st session in March 1998, Norway and Australia provided their own case studies. Norway study1 showed interesting results. The greatest support was granted in the early 1980s, with diminishing allowances in the following years. In 1996 government financial transfers were almost zero. As a result, fishing capacity (i.e., the number of fishing vessels) and the number of fishermen have gradually reduced since 1982. Total biomass has drastically increased from 1988 (OECD 1998). 26 A new service for Asia and the Pacific: Wolfgang Krone, October 1981, Advance Issue, INFOFISH Marketing Digest. INFOFISH, Kuala Lumpur. 27 This is a downward revision from 1995 estimates when 110-120 million MT was the demand projected by FAO. Lesser demand is attributed to the current economic downturn in Southeast Asia, leading to 8 per cent fall in per capita consumption together with similar fall in per capita demand in Europe (6 per cent) and North America (4 per cent) compared to the year 1995 as well as a downward revision of global population by 140 million from earlier estimates (FAO, 1998). 28 Business Guide to the Uruguay Round, International Trade Center and Commonwealth Secretariat (1995). 29 Alexander Fridman (1999); The Large Fishing Vessels and the Future of World Fishing, Fishing Boat World, May 1999, p 8-13. 30 Subsidies in World Fisheries, A Re-examination, Matteo Milazzo, World Bank Technical Paper No. 406, Fisheries Series (1998). 31 Fitzpatrick J and Newton C (1998); Assessment of the World’s Fishing Fleets (1991-1997) Greenpeace International p.1. 32 Japan 19 per cent, China 2 per cent, Korea (ROK) 1.6 per cent. 33 World Fisheries - What is to be done, p 182-188. Alexander Fridman (1998) Baird Publications. 34 Singh T, INFOFISH, Kuala Lumpur (1999). Shrimp Aquaculture
- Pros and Cons. FAO-GLOBEFISH Special Series No. 3, Rome, Italy. |
