W2004: Marketing, Trade, and Management of Aquaculture and Fishery Resources
Statement of Issues and JustificationAquaculture and capture fisheries provide a significant source of protein and economic activity for people in the United States and other countries. In addition to pond, tank, cage, and raceway production, aquaculture broadly interacts with capture fisheries by providing hatchery raised fish and shellfish that are released into the wild to enhance or rebuild wild stock populations, thereby providing support for both commercial and recreational fisheries (NOAA 2008). Capture fisheries also interact with aquaculture products in exchange markets, regulatory environments, and economic development activities. The importance of the multifaceted relationship between aquaculture and capture fisheries suggests a need for reliable economic studies of these two critical resources, especially as management, regulatory, and market demands change over time.
This proposed revision to multistate project W1004 outlines a study of the marketing, trade, and management issues found in various aquaculture and fishery resources. The research will focus on four interrelated areas: 1) marketing, niches and new products; 2) production for dynamic markets; 3) regulatory influences on sector development; and 4) assessing infrastructure and industry organization. Four cross-cutting themes integrate the project objectives: 1) analysis of emerging and innovative technologies; 2) roles of property and stakeholder rights, 3) spatial organization of management, markets and infrastructure; and 4) market coordination and integration. These themes represent an expanded focus compared to the previous W1004 project and will capitalize on the expertise of the anticipated broader participation in the project and the need to address important emerging issues. Conducting the proposed work within a multistate framework will facilitate the examination of important stakeholder issues by bringing together experts from across the country, thus avoiding duplication of effort in the design and implementation of research studies. In doing so, the project will continue to create and maintain the human capital infrastructure of the original W1004 project and provide a scientific resource that can respond to emerging problems in this resource sector.
The remainder of this section briefly describes the issues and justification for each of the main areas of research to be conducted under the project.
Marketing, Niches, and New Products
The last three decades witnessed the globalization of trade in seafood products. World exports of fishery products equaled approximately $17 billion in 1986. By 2006, they had increased to $85 billion, or 170% after adjusting for inflation (United States CPI). Much of the increase in seafood trade was fostered by advances in worldwide aquaculture production. U.S. imports of seafood products during this period increased from about $4 billion to $13 billion, with many of these imports competing directly with the U.S. capture (e.g., salmon, pollock and shrimp) and aquaculture (e.g., catfish and crawfish) fisheries. In many instances, this competition resulted in declining real dockside prices for the nation's domestically-produced products and a gradual erosion of economic activity in the harvesting and supporting sectors. Many rural U.S. communities that depend on the production of captured and farmed aquatic products are at a crossroad because of this expanded globalization. Eventually, participants in this sector must respond to global competition and adopt new methods and frontier technologies with the goals of sector rejuvenation and economic security in a changing marketplace.
To meet the challenges ahead, these communities, and the small to mid-size companies that support them, must innovate by developing new products that end-users favor, position products in market niches that increase market penetration, and/or communicate with end-users to maximize the perceived value of the product. Thus, information concerning product distribution and flow, end-user preferences and perception, pricing, processing methods and technology, packaging, and institutional and structural arrangements in the supply chain is needed to ensure marketing success and the sustainability of fisheries and aquaculture assets.
Production for Dynamic Markets
Rapidly changing prices and business opportunities have led to increasing economic stress and uncertainty concerning the future direction of aquaculture and fisheries production in the U.S. If these industries are to survive, research must focus on improving efficiency and competitiveness. Many aquatic species exhibit inter- and intra-annual changes in physiological characteristics which significantly influence consumer and producer welfare. To remain competitive, U.S. aquaculture producers need to continually improve production efficiencies in order to maximize the financial benefits that can be extracted from their managed production operations, all the while doing so in an environmentally and socially responsible manner. For capture fisheries, it is essential to design regulations and management systems that both maximize the market-related economic benefits derived from the resource and reward well-managed fisheries. Research that integrates both temporal and spatial characteristics of aquaculture and capture fisheries production can be an effective way of evaluating policy options and illuminate the important mechanisms operating between fish-based resources and their respective industries and markets.
Another factor influencing production is the way in which sector growth and changing international markets have affected the trade of fish products. Optimized production practices and breakthroughs in biotechnology research have resulted in declining costs of production for most aquaculture species at a time when many traditional commercial fisheries face increasing resource exploitation, overcapitalization, and marketing infrastructure constraints. Given that these trends are expected to continue, an increasingly dynamic aquaculture sector is likely to erode the competitiveness of traditional fishery products, resulting in a need to devise strategies that will help the traditional fisheries sector adjust to the changing market scenarios. Only by carefully managing the quality and quantity of aquaculture and capture fishery production, both from a temporal and spatial perspective, will the U.S. achieve the national and regional objectives of economic efficiency, full utilization, and stock conservation.
Regulatory Influences on Sector Development
The collapse of many wild fish stocks in the U.S. and the world has led to significant changes in both commercial fisheries and aquaculture. In many parts of the world, capture fisheries management has gradually transitioned from a council-based direct management systems to stakeholder rights-based systems that, although managed by councils, utilize market forces to allocate resources. These market-based systems, which dominate management in Iceland, New Zealand, and Australia, are increasingly being used in U.S. fisheries. Meanwhile, world aquaculture production experienced dramatic expansion as it filled the gap between seafood demand and the capture fishery supply, increasing over fivefold between 1985 and 2005 and by a factor of 90 in some developing countries (FAO 2008). While some developed countries, like Norway, have kept pace with this rapid growth, the U.S. aquaculture industry stagnated even as it became the major supplier of technology, feed, and investment for the industry in other countries. Perhaps the only exception to this has been the catfish industry, which has an established presence in the U.S. but, for numerous reasons, has been unable to dominate its segment of the U.S. market.
At least three questions arise from the changes experienced in fisheries and aquaculture over the last 20 years. First, are the rights-based systems being used in some U.S. fisheries working better than regulated open access, and how should this evaluation be measured? Many of these market-oriented systems are relatively new in the U.S. and will be undergoing mandated reviews in the next 5 years. As federal fisheries managers conduct these reviews, the role of market institutions, the value of rights, methods for exchanging fisheries assets, the affect of the rights-based systems on fish stock and product marketing, and the impact of these systems on the welfare of coastal communities are all critical areas requiring analysis. Secondly, what is the economic relationship between capture fisheries and aquaculture, both in the U.S. and the world? Aquaculture has clearly arisen as a mature world industry, but it is still in relative infancy in the U.S. Investigating the economic and regulatory reasons for the lack of development in the U.S. industry can potentially lead to changes that enhance industry viability. At the same time, it is important to evaluate the role aquaculture can play in the management of capture fisheries and the welfare of the coastal communities that have historically relied on the sea. Lastly, how can U.S. aquaculture modernize and take advantage of new technologies, both from traditional and sustainable production perspectives, while at the same time competing in global markets? Answers to this question not only lay in understanding traditional market fundamentals and trade relationships, but also in evaluating the role various national policies have on industry viability.
Assessing Infrastructure and Industry Organization
Because they are biologically-based and often located in coastal zones, the ports, working water fronts, and communities that are dependent on fisheries and aquaculture are susceptible to shocks, ranging from environmental events to more persistent changes in markets and consumer preferences. For example, hurricanes have recently and severely damaged the livelihoods of commercial and recreational fishers along the northern Gulf of Mexico. During and after these storm events, saltwater intrusion, power interruptions, and chaotic markets have also disrupted aquaculture production and marketing. Although less dramatic than storms, harvest limitations, industry consolidation, depreciating infrastructure, and changing economic and regulatory landscape constantly force coastal communities to evaluate the maintenance and revitalization efforts for their waterfronts. In particular, changing consumer product requirements, especially with regard to safety, quality and traceability, demand new and innovative industry practices. Coping with any of these shocks requires detailed information about the effected industries, including the location and quality of support infrastructure, status of product quality, and viability of the communities in which industry participants work and live.
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