Identifying current and emerging fisheries trade issues
Fish are among the world’s most traded food commodities. What are the key issues affecting fisheries production and trade today and what trends to look out for?
It cannot be repeated enough that fish and fish products are deeply connected to the world trade system. Around 38 percent of all fish, caught in the wild or raised in aquaculture, are traded. But the landscape of fish catch and production is changing. While world catches from the wild have stabilised at around 90-95 million tonnes per year, aquaculture has expanded rapidly, now contributing more than 90 million tonnes to the annual total. Aquaculture is now on track to be the main source of fish in the near future. For developing countries in particular exports of fish and fish products are an important foreign currency earner. The value of fish exports from developing countries exceeds those of most other cash crops, namely food grown for commercial rather than subsistence purposes, including coffee and rubber. Most fish are exported to three main markets – Japan, the US, and the EU – but China is a huge and growing market. The Asian economy has become the most important producer and trader of fish products partly because it imports large quantities of unprocessed fish for processing and re-export.
Fish are also an increasingly popular item on consumers’ plates and fish are an important source of nutrients required for healthy growth. In developed countries it is a premium protein source and in many developing countries it is the main one. The UN Food and Agriculture Organization (FAO)’s State of the World Fisheries and Aquaculture 2014 (SOFIA 2014) report finds that globally fish provide just under three billion people with almost 20 percent of their animal protein intake. Based on this current picture, key emerging issues around the future of fisheries trade include: the prospect for aquaculture; how to better manage capture fisheries; whether sustainability certification can address public concerns regarding fisheries and aquaculture; and how to curb illegal, unreported, and unregulated (IUU) fishing. Trade is an important factor across each of these.
The future is farmed
Fish farming has developed more rapidly than any other food commodity and continues to exhibit strong growth potential. Catches from the wild are unlikely to grow in the future as most fish stocks are currently fully exploited or over-exploited. The Organisation for Economic Co-operation and Development (OECD)-FAO medium term Agriculture Outlook predicts that by 2018 fish for human consumption from aquaculture will exceed those from wild fisheries. Aquaculture nevertheless faces some constraints including, for example, potential negative impacts on local water quality and ecosystems. This is nevertheless very dependent on the type of production system. Land-based recirculating systems have minimal impacts while open pen cage systems can be risky if poorly managed.
World aquaculture production currently exceeds a value of US$140 billion, according to OECD-FAO, and covers a range of species. Half of world production is made up of various finfish with the most important being carp; a quarter are various aquatic plants including seaweed; and the remainder are shrimps and crustaceans such as mussels and oysters. The most important aquaculture producers are China, India, Vietnam, Indonesia, and Bangladesh. Among OECD countries specifically the principal producers are Norway, Chile, Japan, Korea, and the US. These countries all produce vastly different species, however, and in very different production systems.
A number of interactions exist between wild and farmed fish. Farmed carnivorous fish need some fishmeal and oil in their feed compounds and these are based on fish caught in the wild. Secondly fish from aquaculture and from capture fisheries ultimately end up in a common market for fish and fish products. While capture fish may carry a premium because of quality, size, and consumer preference for wild caught fish, farmed fish offer advantages for fish processors and retailers, including standard size, year-round availability, and a known production environment.
Both the fisheries and aquaculture sectors benefit from supportive policies including budgetary assistance for investment and operations. Such support, or subsidies, can alter the competitiveness of these sectors in a global market and can have unforeseen environmental and trade impacts particularly in relation to overfishing in the wild. Increasing subsidies for fish products both farmed and captured could also lead to trade disputes and hamper growth in developing nations. This is an area trade policymakers need to address urgently at both regional and multilateral levels. More competition in global markets from aquaculture will also affect the capture fisheries sector. It is therefore important that policymakers take action early on to ensure that the capture fisheries sector remains as sustainably competitive as possible in order to secure fishers’ incomes and livelihoods.
Moving to sustainable wild fisheries
The current situation in capture fisheries is challenging. Too many stocks are overfished or threatened by IUU fishing. Carrying on with business as usual will lead to low fisher incomes, lost economic potential, and undue environmental damage given the delicate balance of marine ecosystems. Policy reform in capture fisheries would improve stock sustainability and overall environmental outcomes, contribute to a better fisheries economy, and increase countries’ tax base. Governments need to be clear that reform of fisheries policies will make their capture fisheries more environmentally, socially, and economically sustainable.
Excess capacity, dependence on subsidies, and stressed coastal communities are all signs of an inefficient fishing sector. Market-based and community-based approaches to fisheries management have a track record in improving both stock management and economic efficiency. Rebuilding fisheries that are below their potential requires control of fishing effort and, at the same time, policymakers need to maintain the quality of the ecosystem accounting for biodiversity, habitat, and pollution. Many marine spaces are increasingly subject to more diverse and intensive use. Placing fisheries policy in the context of a broader coastal and ocean economic strategy can help to mitigate spillover impacts and improve policy coherence across domains. When undertaking fisheries sector reform policy packages that address concerns by stakeholders – such as fishermen, fish processors, wholesalers, and retailers – that stand to lose will be important and may sometimes need to include effective flanking measures to ensure buy-in for reform.
Co-operative management of high seas fisheries through Regional Fisheries Management Organisations (RFMOs) can also contribute substantially to sustainability. Many international shared fish stocks are overfished. It has been a challenge in some cases for RFMOs to limit the overall take on the resources given that high seas fish stocks are part of the global commons. In particular, this has been the case for a number of highly migratory tuna stocks, with the continued combination of high prices and readily available markets exacerbating the problem. In certain cases subsidies to fleets have added additional fishing effort and further undermined sustainability efforts. This is yet another case for fisheries and trade policymakers to address.
Certification that fish come from a sustainably managed resource took a big step forward in the fisheries sector in 1995 when consumer-goods company Unilever and conservation agency WWF announced plans to set up a fisheries certification system known as the Marine Stewardship Council (MSC). Since then several other certification standards have been developed covering both wild and farmed fish.
Why did a multinational company and a major international NGO join forces to create a certification system for sustainable fish? After all, at least 20 years ago, these two players were seen as strange bedfellows. For the WWF it was yet another way of ensuring that fisheries resources would be sustainably managed and that consumers could make responsible choices in a world of food value chains. For its part, Unilever at that time purchased a quarter of all groundfish species sold globally for their processing lines, so it made very good sense for the company to secure their future fish supplies, production, and profits.
However, the proliferation of different eco-labels in the marketplace has since then led to concerns regarding consumer confusion, which may weaken the overall effectiveness of labelling. In turn retailers can “choice edit” information presented to consumers in a manner that is most profitable for them but that may not always serve the public interest. Moreover, multiple incompatible certification systems and labels could present an un-level playing field for fishers and aquaculture producers, and may act as a barrier to trade. Improved co-ordination both domestically and internationally is necessary and would increase the benefits of eco-labels vis-à-vis both consumers and fishers while being minimally trade-distorting. International standardisation work related to eco-labelling in wild capture and inland fisheries as well as in aquaculture has been elaborated, most importantly in the context of the FAO. One challenge moving forward is to ensure that the information given to the public is based on the facts at hand, is reliable, does not make false claims, and provides a basis for consumers to make informed decisions.
Co-operation to tackle fish piracy
Illegal, unreported, and unregulated fishing is a major challenge to the sustainability of fisheries while also taking its toll on legal fishers and fish markets. IUU occurs in both small-scale and industrial fisheries, in marine and inland water fisheries, as well as in fishing zones falling under national jurisdictions and on the high seas. The issue of “fish piracy” has moved to the forefront of the international fisheries policy agenda in recent years, with governments around the world recognising the gravity of the problem, and stepping up efforts to combat it. However, despite such action, fish piracy continues to be part of almost every fishery and in every size of vessel. While the black market nature of IUU means it is often difficult to identify and measure, the bottom line is clear; fish pirates pursue their activities because it is profitable and will keep pursuing it as long as their revenue exceeds costs.
Higher penalties, more efficient monitoring, control and surveillance measures, and widespread use of catch and trade documentation schemes can increase the cost and risk associated with IUU fishing. Ultimately, for long-term success, international co-operation is needed. One way to do this would be to include all interested parties in the work of the RFMOs and establish management arrangements for areas of the high seas that are currently still unregulated. Sharing lists across countries of vessels engaged in IUU activities and the implementation of port state inspection and certification schemes are additional measures that have been taken in recent years to tackle IUU fishing where it is most obvious, namely, at landing point. Once an IUU fish reaches the market, it becomes very difficult to identify and track, especially for internationally traded fish products.
In 2001 FAO members agreed to a voluntary code known as the International Plan of Action to Prevent, Deter and Eliminate IUU Fishing, outlining various tools for general, flag, coastal, and port states to use to address the challenge. FAO members later began working on developing internationally agreed standards for the implementation of port state measures to tackle IUU, later clinching the binding FAO Agreement on Port State Measures to Prevent, Deter, and Eliminate IUU (PSMA), approved at an FAO conference in November 2009. That agreement is slated to enter into force 30 days after ratification by 25 parties and 11 have done so to date.
However, while more regulation may be a central part in the overall combat of IUU fishing activities, these may be costly to implement. Investing in new, modern surveillance methods such as CCTV on vessels and automatic recognition of fish species brought on board could help to reduce these costs over time. In the case of unreported fishing, better use of existing systems to trace the origins of catches could be put in place, alongside a more generalised use of on-board observers. Private legal operators have a strong incentive to ensure that their markets are not undermined by IUU fishing and can take a more active role in combating illegal activities. For example, they could “name and shame” bad actors, with a view to putting moral pressure on illegal fishing operators and changing the culture in the industry.
Both the code and the PSMA are good regulatory attempts to address IUU fishing. However, as long as it is profitable and as long as some states do not take sufficient action, IUU will not be completely eliminated. Future work at the OECD will also focus on closer links between fisheries enforcement and the organisation’s work on tax evasion. Following the money trail of illegal activities, including IUU, looks to be a new and promising avenue for addressing the problem.
Fish will help feed growing populations
Based on current trends, the OECD-FAO expects that total fish production will grow substantially by 2023, driven entirely by growth in aquaculture production. Aquaculture is estimated to grow 38.2 percent over this period while capture fisheries are expected to increase by only 1.1 percent. However, the annual growth rate in aquaculture is estimated to be only 2.5 percent between 2014 and 2023, which is significantly lower than levels of 6 percent or more that we have witnessed over the past decades. Lower annual growth rates are due to competing uses of the coastal space combined with higher costs of fishmeal, fish oil, and other feeds.
Figure 1: Consumption of fisheries products, million tonnes
Source: OECD/UN FAO, OECD-FAO Agricultural Outlook 2014, OECD Publishing.
While these predictions are generally positive for the fisheries markets, especially aquaculture products, new disruptive challenges such as ocean acidification and climate change will need to be addressed by policymakers and stakeholders. Fish stocks and particularly calcifying animals, such as oysters and mussels, are vulnerable to changes in ocean pH values, an effect caused by the increasing levels of manmade carbon dioxide in the atmosphere, part of which is subsequently absorbed by oceans. Changing ocean temperatures from climate-warming greenhouse gases will also likely alter the distribution and productivity of fish stocks. In certain areas of the world these phenomena are already having an impact. The shifting distribution of major fish stocks of herring and mackerel in the North Atlantic Sea is a case in point.
These changes could potentially pose challenges to the international trading system. Mechanisms and policy dialogue to address such potential future changes are needed before they occur on a large scale and give rise to major trade conflicts. This is another important agenda item for trade and fisheries policymakers and co-operation across these policy domains could make a significant contribution to future sustainable development.
The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, the OECD.
Carl-Christian Schmidt, Head of the Fisheries Policy Division, Organisation for Economic Co-operation and Development (OECD). Schmidt is also a member of the E15Initiative Expert Group on Oceans and Fisheries.