6.1 Marketing intermediaries and channels
Fish marketing in Bangladesh, India, Thailand and the Philippines is largely controlled by the private sector. Three to four intermediaries operate between producer and final consumer (Table 20).
In Bangladesh, the dominant marketing channel (product route to ultimate consumers) of freshwater fish for domestic consumption includes farmer-bepary-aratdar-paiker[2]/retailer-consumer (Fig 1). This simple channel covers primary and secondary market levels up to Upazila. Beparies handle a large volume of fish and sell their purchases to Aratdars and to Paikers/retailers. Beparies do not generally hold any trade licences, unlike Aratdars[3]. They can be local or non-local traders. Some Beparies get advance business loans from the Aratdars during lean periods and on the condition that they will sell their purchases through Aratdars. From the higher secondary markets, fish flow-down again to the town and peripheral village primary markets (final consuming markets) through Paikers/retailers. Fig 2 shows the flow of the quantity of fish being channelled to different intermediaries.
Coulter and Disney (1987) observed that “communication between the traders in different markets is generally good and takes place by telephone [nowadays cellular phones are also used] and this keeps wholesale prices in line throughout the country. The least informed party is the fisherman, because of his physical isolation from the markets. Other factors which weaken the fisherman's bargaining position are his dependence on credit and illiteracy”.
With the growth in commercial pond fishery, a new pattern is emerging in the marketing channel (Alam, 2000) that affects production points, primary markets/landing areas, higher secondary markets and consuming areas/retail markets. The flow of harvest between intermediaries is shown in Figure 3. As shown in the figure, after harvest pond fish farmers directly approach Aratdars at the higher secondary market. Fish farmers get 8-10% of the total sale proceeds from the lot of each catch. The farmers bear the transportation costs to the Aratdars in the markets and arrange bidding for open sales of fish to paikers/retailers. In lieu of providing space for fish landing, icing for some fish and selling, Aratdars get commission at different rates of the sale proceeds. For example, commission for Hilsa fish is 3%, for carps 4%, rohu, catla mrigal 6.20% in Mymensingh and Kishoregonj markets.
The limited number of wholesalers, their joint actions in bidding and close understanding through their associations negate the principles of competitive market structure. Inadequate competition at the Aratdar level mean that the Beparies pay relatively higher commission, and the effect of this is born ultimately by the fish farmers/fishermen, who get lower prices. Open auctioning of fish lots by the wholesalers to Paikers/retailers makes the market structure competitive at retailer level in the final consuming markets. Therefore the market structure situation is not the same for all market levels. Exploitation prevails from the farm-gate to the higher secondary market level.
China's marketing channel for freshwater aquaculture products in general is a bit different to that of Bangladesh. According to the origin of aqua-production (marine culture and freshwater culture), the products enter the coastal and inland producers' markets. From there, the products enter state, collective or private markets and processors. A portion is delivered to producers operating at this market level. It then reaches the consumers' market. It is acknowledged that the liberalization of the aquatic products market has resulted in a prosperous aquatic market, which means that the share of the state-run marketing channel is decreasing rapidly while the total number of transactions is increasing dramatically.
India is a country of several states with different languages, traditions and castes. A significant proportion of the Indian population does not eat animal protein including fish. Therefore, fish produced by one state is moved to other states. As for Andhra Pradesh, it exports its aquatic products to West Bengal. Bigger fish weighing 2 kg or more have high demand in West Bengal markets. The smaller sized fish are sold in local markets. In the local markets, cycle vendors and small merchants buy small quantity of fish at pond bunds from small farmers and sell to the domestic consumers. The middlemen finalize the deal by negotiating with both producer and wholesaler, for which they receive commission from both parties. Middlemen takes a commission of US$ 10.87 from both the producer and the wholesaler for every truckload (5 t) of fish, which is about 5% of the total sale value of the fish.
In the Philippines, fish marketing is generally characterized by shorter distribution channels than those for agriculture products. In general, there are four types of middlemen/fish traders engaged in fish marketing in the country, namely: the brokers, wholesalers, wholesaler-retailers and retailers.
Fish traders buy and sell all kinds of fish - freshwater, brackish water and marine. A majority or 70% of the traders directly obtain their supply from fish producers, while the rest (30%) buy from wholesalers (Olalo, 2000). This shows that traders are exploring the possibilities of increasing profit by dealing directly with fish producers. Specifically for tilapia, this confirms the earlier finding that the marketing channels through which tilapia passes are very short: from producers to wholesalers then to retailers and finally to consumers (Torres and Navera, 1985). Also, between 5% and 19% of the fish farmers were able to sell their fish to restaurants. As in most of these countries, small pond tilapia operators usually kept some of their produce for home consumption, while medium and large pond owners sold 100% of their harvest. The percentage of farmers keeping tilapia for home consumption decreased as pond area increased indicating that increased pond area was associated with increased entry into the cash market economy (Molnar et al., 1996). Milkfish pond operators are also generally market-oriented. As much as 98-99% of their total produce is sold and only 1-2% is for home consumption. Large milkfish pond operators usually sell their produce directly to wholesalers, either by consignment or contract selling. Only small pond operators are engaged in direct retailing. This is also true for tilapia farmers.
Fish traders obtain their fish supply 4 - 55 km away from the trading market (Regaspi et al., 1997). As expected, they source their fish supply as near as possible to the market as this has implications for their transport and marketing costs and ultimately for their profit. As the distance and travel time are relatively short, this also provides the opportunity for fish producers to sell their fish directly to the market as a way of increasing their farm income. A majority, or 55% of fish traders used jeepneys to transport the fish from the source to market, as this is the most accessible mode of transport in the Philippines.
Domestic freshwater fish marketing in Thailand is complex as it involves many types of markets and a larger number of intermediaries and participants. The flow of freshwater fish marketing with distribution of product volume traded at different levels of traders is shown in Figure 4. As shown in the figure, the market structure of cultured freshwater products is classified into three major market levels: primary markets, intermediate markets and terminal markets. Fish farmers distribute their harvest to every level but the highest proportion (35%) is sold to primary markets through fish collectors. Most small-scale fish farmers rely on fish collectors who have experience and more information about fish market outlets. Also, it may not be worthwhile for fish farmers to transport small volumes of fish.
After buying fish at fish farms, collectors will transport and sell the product in the central assembly markets, which are either state-owned or private. State assembly markets are managed by the Fish Marketing Organization (FMO[4]), where fish are sold through registered fish agents. Private assembly markets on the other hand, are run by private persons where fish traders are non-registered fish agents. Fish collectors collecting fish from the primary markets are involved directly in selling. As stated earlier, fish farmers can bring their produce directly to these markets and sell directly without resorting to help from any intermediaries. However, in some markets, both fish farmers and agents collect fish from the primary markets. Fish brought to these markets by farmers are sold through fish agents, for which the farmers pay a commission[5].
Fish agents, both FMO and private, as well as fish collectors in the assembly markets distribute most fish to wholesalers (44% of total fish volume), then to retailers (16%) and fish processors/cold storage (14%). Wholesalers distribute most of the fish directly to retailers (about 55% of total fish volume), while 4% is sold to processors/cold storage and 1% is exported. Fish exported by wholesalers to nearby neighbouring countries (like Burma) are mostly catfish (Pangasius sutchi).
Processors/cold storage have another route of processed fish distribution: 13% of total fish production is distributed to wholesalers; 6% is sold directly to retailers[6] and another 6% is exported. Most of fish exported are chilled and frozen. The volume of many species that are exported fluctuated during the past years. Walking catfish and snakehead are exported to the United States of America, Japan and Europe. Thai silver barb, tilapia, rohu, and mrigala and other similar freshwater fish are mostly exported to the Near East while catfish (Pangasius) is exported mostly to Europe and Asia.
Retailers are the last channel before the fish reach the consumer. From the marketing channel and percentage of freshwater fish distribution, it can be deduced that 93.4% of total cultured freshwater fish is consumed domestically, of which 74.3% is bought fresh/alive and 19.1% is bought in several processed forms. Exports account for 7% of total freshwater fish production, mostly in chilled/frozen form.
As far as marketing channels in rural areas are concerned, small-scale wholesalers and retailers buy the fish directly at the fish farms nearby. Species of fish traded in rural areas are low-priced species of small size that consumers are able to afford.
6.2 Marketing margins and the producer's share
In Bangladesh, marketing margins vary for different intermediaries, ranging from US$ 6.29 to US$ 14.18 per quintal of fish marketed (Table 20). The farmers' (or producers') share in the consumers' price is about 56% (Alam, 2000). Marketing margins vary according to the seasons in India. They range from 50 to 60%. In Thailand, margins vary for different fish species. The margin for Tilapia is 41.1% implying that 59.9% is the producer's share in the consumer's price. For silver barb, walking catfish and striped catfish, the producer's share in the price to the consumer is 51.4%, indicating that 48.8% is the marketing margin. The producers' shares in the price the consumers pay for fish are highest for striped snakehead (75%) and salted and dried sepat Siam (76%).
Traders in Philippine fish markets realize a price margin of US$ 0.10 - 0.40 per kg of fish marketed. By species, traders obtain a price margin of US$ 0.20 (tilapia, milkfish), US$ 0.10 (catfish), US$ 0.30 (bisugo), US$ 0.40 (crustaceans), US$ 0.20 (other marine fish), and US$ 0.15 (other freshwater fish) by marketing 1 kg of fish. With these price margins, fish trading appears lucrative.
6.3 Marketing barriers/constraints and physical facilities
Table 21 shows the major constraints faced by the fish farmers in the region. At the primary market level, the main constraint for Bangladeshi and Indian fish farmers are lack of bargaining power and market information and barriers to entry in the market. Lack of transport is another important constraint preventing producers from sending produce to higher markets. Thus they often end up being paid lower prices by the existing buyers, as the product cannot be kept for long periods because icing facilities are absent in almost all primary markets. Physical facilities and infrastructure in all types of market are far from satisfactory. Most primary/village markets do not have facilities for electricity, water, ice, or shelter. Fish sellers in the majority of rural and primary markets sit under the open sky. Secondary and higher level markets have better facilities, though in general, conditions in urban and retail markets are far from satisfactory with regard to stalls, parking, spacing, sanitation, drainage and management.
Apparently, access to Thai fish markets is less constrained. However, sellers and fish producers do face serious problems, such as: supply scarcity, lack of buyers, bad debt, lack of market information, non-availability of regular retail markets, rising marketing costs and inadequate transportation (Piumsombin, 2000). In general, market infrastructures and facilities in Thai and Filipino fish markets are better than those in Bangladesh and India.
6.4 Credit facilities
Credit can be obtained from public sector institutions (such as banks) and from the private sector (non-institutional). In Bangladesh, the credit situation of the public sector for pond fish farmers is very poor. It was reported that only 20% of fish farmers in the country obtained institutional credit (Shang, 1990). Alam (2000) on the other hand, reported that about 16% of pond farmers could obtain credit from either public or private sources. Most farming operations are run using farmers' own capital. Creditors from the public sector are mostly large-scale farmers. Rahman and Ali (1986) also reported that access to institutional credit by the fish farmers is very low. In addition, Alam and Bashar (1996) reported that intermediaries provide production credit linked with marketing, where the aqua producers receiving credit are obliged to sell their produce to the credit supplier for slightly less than the market price. By any measure, access to credit is very limited for the overwhelming majority of pond-fish farmers. Also, there are no insurance schemes to cover the loss of fish production.
In India, most of the credit flows are also from the private non-institutional sector. Merchants provide finance for fishing operations in inland capture. Apart from the marketing agents, professional moneylenders advance credit against securities of gold and agricultural properties. Problems like multiplicity of pond ownership, non-recognition of aquaculture as a land-based activity, the absence of long-term leasing policy and non-assurance of seed supplies at the appropriate time constrained access to credit.
In the Philippines, the bulk of credit extended for fish marketing and processing is provided by marketing intermediaries in the form of short-term working capital advances to suppliers and small-scale fish processors. Only during the last few years have financial institutions been involved in financing domestic fish retail marketing and small-scale fish processing in the context of rural development and anti-poverty programmes. Credit for capital investments in fish marketing and processing for the establishment, upgrading or purchasing of processing and storage plants and transport facilities is more often provided by the financial institutions than by the informal sector.
The Government of Thailand does not have any special credit programmes for fish producers and marketers owing to the fact that trading is left in the hands of the private sector. Fish trading agents, for the sake of their businesses, provide interest-free credit to producers and fish suppliers. Large-scale processors/cold storage owners and big company-oriented fish agents have good access to the existing institutional credit facilities of the country. There is no insurance scheme that covers the production and marketing risks of aquaculture products.
