15. Carl-Christian Schmidt, Head of the Fisheries Division of Organisation for Economic Co-operation and Development (OECD), chaired this session which considered the following presentations:
a) Itamar Rocha of Brazilian Shrimp Farmers Association: "Advantages and constraints of the fish industry in developing countries, the case of shrimp aquaculture in Brazil";
b) José Cyriac of MPEDA: "Advantages and constraints of the fish industry in developing countries, the case of India";
c) Carl-Christian Schmidt of OECD: "Opportunities and challenges for developed (OECD) countries";
d) John Wilkinson of Rio de Janeiro Rural University: "Vertical concentration (diminishing role for wholesalers and brokers) in the distribution channels and increasing market power of retailers and supermarket companies";
e) Aldo Ausiello of Unilever, Italy: "Buying strategies for brand development";
f) Nelson Sendas of Sendas Supermarket Group: "The role of supermarket in fish retailing in Brazil; the case of Casas Sendas systems";
g) Helga Josupeit of FAO Fish Utilization and Marketing Service: "National, regional and international trade, competition and complementation, including the role of small-scale fisheries".
Itamar Rocha: "Advantages and constraints of the fish industry in developing countries, the case of shrimp aquaculture in Brazil"
16. The Brazilian fishing industry displays development perspectives that vary significantly between its two main components: ocean and freshwater catch show signs of stagnation while aquaculture is vigorously expanding. At the same time, within each of these components, there are considerable variations in performance, which, in general terms, makes it difficult to establish a clear global vision of the mid and long term perspectives.
17. There is a national consensus that Brazil offers ample and varied alternatives for the vigorous development of its marine and freshwater aquaculture potential. Presently, farmed marine shrimp represents the main segment of Brazilian aquaculture in commercial terms with a 2002 production of 60 128 tonnes mainly destined to the export market. Shrimp is now the main source of seafood export earnings in Brazil, with a 45 percent share of the total value of fish exported by Brazil in 2002.
18. Major restrictions for the further development of marine shrimp farming in Brazil are:
- Restrictions for raw material exports;
- Lack of scientific and technological investments in the areas of nutrition and disease prevention;
- Lack of investments and production financing;
- Deficiencies in the public licensing mechanisms;
- Antidumping threats.
19. With a view to add value to production, several actions and projects are underway, including:
- Improve credit lines for investment and production financing;
- Develop a Quality Seal for Brazilian farmed shrimp;
- Emphasize environmental sustainability.
José Cyriac: "Advantages and constraints of the fish industry in developing countries, the case of India"
20. The main advantages identified for the harvesting sector concerns the fact that there is scope for further increases in fish production. There is an important amount of labour available and the fishing practices usually have low environmental impact. The main challenges concern limited knowledge about the resources, information and data availability. Artisanal fishers rely on traditional fishing methods and pay little attention to proper handling of the catch. Insofar as public authorities are concerned, a major challenge is inadequate resources for monitoring and surveillance purposes. There is a need to ensure proper management regimes and concurrently limit the otherwise free access to the resources.
21. The Indian post harvesting sector is characterized by a large number of small processing units with fairly low labour costs. There is a major opportunity if capital and investments can be attracted into the sector. The sector is also characterized by inadequate infrastructure for transportation, storage and domestic marketing. There is little scope for developing a domestic market for value added products and insofar as exports are concerned, tariff escalation in developed countries makes exports difficult.
22. The Indian aquaculture sector presents vast development opportunities as production sites, cheap labour and know how is readily available. The main constraints faced for further aquaculture development relates to a lack of investment in infrastructure, a complicated domestic regulatory framework and a lack of a comprehensive government policy for aquaculture sector that still has not been developed.
Carl-Christian Schmidt: "Opportunities and challenges for developed (OECD) countries"
23. Globalization, that is to say the growing interdependence between markets, in fisheries happens principally through three channels i.e. trade in fish and fish products, foreign direct investments in harvesting and processing (localization) and through fisheries services. As for the latter these include both harvesting, processing and fisheries management services.
24. While fisheries markets have become more open and traditional trade barriers have been reduced significantly, there are still obstacles along the globalization avenue. Among the developed countries, tariff escalation has been singled out as a particular concern. As for foreign direct investments in harvesting sectors, there are major difficulties for foreigners to participate and take part in fishing operations. Most countries do not allow the presence of foreign harvesting through company establishment, or only allow minority participation; the same applies to the use of foreign fish harvesting services which is mostly banned. Hence, globalization carries with it a major potential for additional wealth creation through further liberalizing trade in fish and fish products and investments and services in fish harvesting and processing.
25. Although the fisheries sector has gone through a long process of globalization, one integrated market for fish, fish products, harvesting rights and possibilities and management services does not exist. Obstacles on the road to globalization are vested in hard felt traditional views about ownership of fish resources, rights of access to exploitation and the role of public sector and private entrepreneurs. However, the earlier the opportunities and challenges are addressed and positive adjustment paths identified, the more successful the fish harvesting and processing industry will be in adjusting to and reaping the benefits from globalization, which, in any case, is going on unabated. These issues should be addressed further and could be a subject for investigation by the FAO as well as the OECD.
John Wilkinson: "Vertical concentration (diminishing role for wholesalers and brokers) in the distribution channels and increasing market power of retailers and supermarket companies"
26. Research on the restructuring of the food systems has demonstrated the extraordinary speed of supermarket expansion in the developing world and the way its influence is extending beyond the limits of large countries and metropolitan cities to promote a global transformation of food distribution and production systems. The effects of globalization, therefore, should not be limited to an investigation of developing country food exports but should focus also on this reorganization of domestic food supply systems, subject now to radically new access conditions, based on exacting quality and logistics criteria. These developments have been particularly pronounced in the fresh produce sector. Supermarkets have been less directly involved in the organization of the primary, capture fishing sector but the initiatives by the British supermarkets, (TESCO and ASDA), including direct obligational contract relations with trawlers, on the basis of detailed quality and delivery specifications, mark a significant new departure in the integration of fresh capture fish supplies.
27. For supermarkets, salmon from aquaculture, with its attractive colour, pleasant odour and boneless fillets has been seen as an ideal fresh-fish solution, and supermarkets have become directly involved in the promotion of fish-farming. In both aquaculture and capture fishing, therefore, the modern distribution system is becoming more involved in the direct organization of its supply chains.
28. It is to be expected, that supply structures will be radically modified, as the demand for quality, regularity, punctuality and scale are imposed backwards along the fish-food chain. Currently, taking Latin America as an example, the supermarkets are engaged in a competition with traditional retail outlets, while depending largely on established wholesale networks for fresh-fish supplies. In itself, this is likely to have an important market creation effect. Already, global sourcing is in place for the supply of high quality chilled products, particularly salmon, while frozen packaged shrimp are also in evidence, although here the supermarkets must compete, as in the USA, with a dynamic catering sector. The appearance of own-brand fish products also indicates a more aggressive promotion of "ready to eat" fish options. As in developed countries, it is likely that supermarkets will become directly involved in fish-farming, and the reorganization of fresh-fish supplies in line with new quality, scale and logistical criteria will undoubtedly have a major impact on artisanal fishing practices and their communities.
Aldo Ausiello: "Buying strategies for brand development"
29. The key message is that it is possible to reduce the supply chain costs. This can be done through closer cooperation between the various players in the chain. In particular the better planning of the mix size at the harvesting level may be feasible. By the same token there is scope for developing new value-added products. This comes through better use of raw material, as, for example, use of small fish for block production and reserve larger specimen for portion production with higher profits.
30. Branding is a mean to secure steady or increasing prices to the benefit of the primary producer. Supermarket buyers have less market power to put pressure on the price development of branded products which are a constant factor in their product mix. It is important to understand the "new emotional consumer" and his/her needs. In this regard proper branding becomes a key to success for major fish processors but while ensuring that consumers get quality, safety and reliability.
Nelson Sendas: "The role of supermarket in fish retailing in Brazil; the case of Casas Sendas systems"
31. Fish consumption in Brazil is rather low. A trial in the Sendas supermarket chain had been very positive and showed that even in a country with little tradition for seafood consumption; it is possible to introduce fresh fish counters and to get a positive consumer response.
Helga Josupeit: "National, regional and international trade, competition and complementation, including the role of small-scale fisheries"
32. According to FAO forecasts, total supply might reach almost 160 million tonnes by the year 2030. While fish captured for food use will stay stable at 70 million tonnes, aquaculture will reach almost 90 million tonnes in 2030, overtaking food fish in 2020.
33. International trade patterns show a net-flow from South to North; trade among developing countries is still relatively low. With higher income, developing countries, especially those where fish is much appreciated, are likely to purchase more fish products. Part of the supply may come from diverting supply from the domestic export industry or from other developing countries.
34. Artisanal fisheries production is an important element in international trade and has the potential to expand its contribution. However, there are several impediments such as lack of infrastructure (landing sites, roads, etc.), competition with industrial fisheries, overexploitation of coastal zones, international standards for quality and safety, which create difficult obstacles for small scale operation.
SUMMARY
35. The chairperson of the session summarized the main concerns raised in the presentations and discussions:
a) Limitations on capture fisheries in both developed and developing countries are caused by numerous factors, but, in particular by:
i. Overfishing;
ii. Poor social conditions;
iii. Poor management institutions/frameworks;
iv. Lack of development opportunities with respect to markets.
b) Many developing countries face market access difficulties caused, among other things, by:
i. Tariff escalation;
ii. Standards;
iii. Technical barriers;
c) Whether artisanal fisheries represented a particular case, the Consultation concluded that artisanal fisheries presented the same type of issues as "industrial" type fisheries, i.e. overexploited resources, but in addition, artisanal fisheries presented the following additional characteristics:
i. Lack of infrastructure;
ii. Distances to markets (in particular export markets) are in many cases more important;
iii. Fishers may be replaced in due course due to industrial development;
iv. Difficulties to respond to international standards set either by governments or private operators.
d) Aquaculture was found to be a key sector for the future supplies of fish but also in this sector constraints were identified, including:
i. Lack of suitable production sites;
ii. Environmental and other regulations;
iii. Technical constraints (feed);
iv. Not readily available risk willing capital;
v. Market access problems including antidumping threat.
36. The Consultation noted that as markets develop so does the role that can be played by the industry and the public. In summary:
i. There are few but concentrated fish markets in Europe, Japan and the US. Partnerships are developing along the distribution chain and it was noted that consumers in developed countries are willing to pay more for fish which may mean less fish for consumption in developing markets.
ii. Globalization in fisheries is dominated by specialized fishing fleets, food and feed manufacturers and distributors.
iii. Increased consolidation and concentration takes place (in particular among food manufacturers and distributors) due to squeezed food processing margins. One consequence is that processors develop own distribution systems and in this process: New "market entry" specification/barriers for primary sector (e.g. quality, punctuality, regular supplies, closeness to quota holder) are being created.
iv. Private initiatives (like MSC) may have a sustainable impact on fisheries. This is an action of enlightened self interest and ensures paybacks on long term investments for operators in the business.
One role of the industry is to improve the marketability of fish. This is possible through:
i. Production techniques and better use of raw material;
ii. Improved handling;
iii. The development of value added products;
iv. Better marketing, including labelling;
v. By "educating" artisanal fishers so that they can meet industry standards, and better coordination through the distribution chain.
Similarly the role of the public sector can be to:
i. Ensure sustainable and responsible management of capture fisheries;
ii. Ensure a positive regulatory environment in support of further aquaculture development;
iii. Remove trade, market and investment and service barriers;
iv. Explore novel fisheries management tools and frameworks;
v. Ensure capacity building.
37. Recommendations of the Second Session for FAO action:
a) Get the plethora of stakeholders to recognize the drivers that cause globalization;
b) Strengthen the implementation of the Code of Conduct, in particular as it relates to international fish trade and marketing, and aquaculture;
c) Building capacity to ensure sustainable aquaculture development in particular in the developing world;
d) Building capacity on fisheries management systems and tools;
e) Work on more transparency and analysis on trade and market and investment and services impediments, for example by assessing the impact of their liberalization;
f) Help Member Countries ensure policy coherence among the range of policies that are in play in the fisheries sector (e.g. trade, management etc.);
g) Study the impact of vertical concentration in marketing channels with specific attention to supermarkets and its impact on the levels of production, processing and wholesaling;
h) Develop assistance programmes for developing countries aiming at improved marketing performance;
i) Create a consultation mechanism between FAO and the private industry with the purpose of increasing the benefits which developing countries can derive from international fish trade.
