STRUCTURAL CHANGES IN FISH AND SEAFOOD MARKETS

Project Methods
The research topics to be investigated under this project can initially be grouped into four categories1. Trade competitionThe fact that 39% of all seafood produced is traded is an interesting indicator, but it significantly underestimates the impact of trade on seafood production and the seafood market. Trade is even more important because substantial quantities of seafood that are not exported are still exposed to strong competition from internationally traded fish. Empirical work demonstrates that import prices influence domestic retail and ex vessel prices. To take these factors into account, one must estimate how much of the seafood produced is exposed to trade competition, rather than just look at what quantity is actually traded. To this end, one can assess how much fish is exported and imported relative to the total seafood consumption. Although this ratio does not give any direct information with respect to how domestic species are directly exposed to trade competition, it provides an indication of the importance of trade.To estimate how much of the seafood produced is being exposed to import competition for various species. I will use consumption statistics provided by the FAO. How this indicator has developed over time for different countries will provide insights with respect to the factors that are driving the changes in the seafood market when related to the development in trade patterns and species composition. The USA is a particularly interesting with its combination of being a large importer as well as a large exporter of seafood, making the USA the only major seafood market where all most factors interacts at the same time.2. Trade patternsInternational trade has increased much faster than total seafood production. From 1976 to 2006 the export volume of seafood increased from 7.9 million tonnes to 31.3 million tonnes, or almost fourfold. Adjusted for inflation, the export value during this period increased threefold from 28.3 billion USD to 86.4 billion USD. The differences between growth in traded volume and value likely reflect a complex mixture of the trade composition of high- and low-value species composition, increasing prices of some species due to scarcity, and decreasing prices of other species due to technological advances in aquacultureThe trade patterns are widely different between exports and imports. When measured by value, the export sources were split almost equally between developing and developed countries in 2006. The share for developing countries has increased from 37% in 1976 to 49% in 2006. For imports, it is a very different story. Imports to developed countries comprised 80% of all imports in 2006 when measured by value. Even though the share declined from 86% in 1976, most of the increased trade in seafood is due to developed countries imports, and a considerable share is exported from developing countries. A feature that has received less attention is the fact that the unit price for developing countries imports is much lower than the exports. A result of this is that the imbalance in imports is much smaller when measured in quantities, as developing country imports make up over 40% of total seafood imports. This suggests that developing countries, at least to some extent, are exporting expensive seafood, importing cheaper seafood and are left with surplus income. There are indications that seafood trade on the balance is beneficial for developing countries. However, casual inspection of the data reveals very different patterns for different countries, and a more thorough analysis will provide more knowledge about drivers and beneficiaries of increased seafood trade.3. The Fish Price IndexAs the food crisis of 2007-2008 has shown, sharp increases in food prices have particularly dire consequences for the poor in developing countries. Tracking price developments can be a major tool in fighting poverty, because high prices signal shortages in current and expected future food availability. The most comprehensive source of information about global food prices is the Food Outlook, which summarizes production and price trends for major food groups. Until recently the Food Outlook omitted fish and seafood, which are key contributors of proteins to the global diet. In 2011, the FAO expanded its coverage of terrestrial food to include a full coverage of seafood by introducing the Fish Price Index (FPI), and I was a part of the team that developed this index.The FPI can be disaggregated into different sub-indices. This gives a new tool that we will use investigate how seafood markets in different countries and regions are linked, and how prices for different species and product forms influence each other and thereby determines trade patterns, where processing takes place and species composition. Disaggregating the FPI will also allow us to investigate an emerging trade pattern in which third countries like China process fish from traditional producing countries, and then they ship it to the final market. USA has also become a large importer from these sources in resent years.4. Fish meal, fish oil and (Sea-) Food WasteAbout 30% of the world´s fish landings is reduced to fish meal and oil. This is an increasingly controversial issue partly due to the perception that is unethical to use fish that could provide nutritious food for humans as feed, and partly due to the perceived overfishing that the reduction fisheries lead to. In recent years there has also been substantial focus on the link between aquaculture and reduction fisheries, and some claim that aquaculture is environmentally degrading because increased demand for feed would lead to increased fishing effort for the wild species used to produce the feed. The growth in aquaculture production would accordingly be limited by the availability of wild fish to be used as feed in aquaculture production. In this context I will address two questions.First, is it inevitable that the fish that are reduced to fish meal and oil are used for these purposes? The use of wild fish for reduction has been reduced during the last decade, despite record prices for fish meal and oil. Two specific examples of this development are the Norwegian herring fishery and the Chilean jack mackerel fishery. The evidence so far indicate that a reasonable hypothesis for this development is that with well working regulatory systems preventing Olympic fishing, it is possible to access higher paying markets that in general use the fish for human consumption. Furthermore, if one can identify the drivers of this process, one can also asses to what extent existing sources of reduction fisheries continue to go into these markets as countries with large reduction fisheries reform their fisheries will management systems.Second, what other factors drive the fish meal and oil markets. Fish meal and oil production have been reduced to a much lesser extent than the reduction fisheries because of increased reduction of cut-offs and trimmings, products that until recently mostly has been treated as garbage. FAO indicates that 25% of the global fish meal production is now provided by cut-offs and trimming, up from only a few percent in the 1990s. With the high prices one has seen for fish meal during the last decade, this is to some extent as expected, and is something one also observe for other natural resources. The US fishery for Alaska Pollock provides and interesting case as fish meal plants have been installed at the ends of the fillet lines. This discussion leads to two research questions: 1) To what extent do higher prices for fish meal and fish oil call forth more production of fish meal and oil by creating incentives for higher recovery rates and thereby reduce seafood waste? 2) Given that we know that the fillet yield for most species are between 30% and 65%, what is the scope in terms of production volumes due to this development?