Aquaculture grows as marine capture declines - China exported 2.97 million tonnes of fishery products worth US$10.6 billion in 2008, according to recently published Ministry of Agriculture (MOA) figures.
Fishery products are the largest category monitored among China's overall agricultural and fishery exports accounting for 26.2% of the nation's total fishery and agricultural export value.
The value of China's fishery exports rose 8.9% year on year the figures show, due mainly to rising international fishery product prices, although fishery exports fell 3.2% in tonnage terms compared with the previous year.
Fishery product imports grew by about 7% in 2008, however, reaching 3.88 million tonnes, according to MOA records. Of this about 1 million tonnes was processed for re-export worldwide.
Fishery exports fell due to a United States import ban on four fishery products from China amid fears the products could contain carcinogenic and other harmful substances. Fishery exports also were affected by a food poisoning scandal in Japan caused by tainted imported Chinese dumplings. The resulting food scare affected imports of most China food products in Japan last year including fishery imports which fell 5.8%.
Food quality has become a major issue in China recently. The government already has announced a series of measures to improve the quality of fishery products sold in China and exported in the wake of various domestic food safety scandals including the internationally publicised Sanlu adulterated powdered milk scandal that has affected local as well as overseas confidence in Chinese processed food safety.
Aware of the importance of fisheries in coastal communities, the government has enacted several measures to support the fisheries sector during the current economic crisis. In November 2008, the government raised the export rebate rate for aquatic products such as fish fillets from 9% to 13%. Then in December the government raised the export rebate rate for frozen prawn and crabs from 5% to 13%.
Shandong Province is one of China's leading fishery exporting provinces and boasts a large number of fish processing plants, many with foreign-based shareholders. The plants process about one third of all fishery products processed in China and account for around 25% of China's processed fish exports worldwide.
According to MOA figures, Shandong's fish processing industry experienced a 3.6% drop in fishery exports last year shipping out 776,000t of processed seafood products. The decrease in fishery exports was the first that Shandong has experienced for five years.
The European Union is Shandong's largest seafood market taking 276,000t, followed by Japan which imported 170,000t, South Korea with 136,000t and the United States with 108,000t.
“Aquatic enterprises have been reeling from the financial crisis, frequent food safety accidents and rising production costs,” the official Xinhua News Agency reported a senior official in the foreign trade statistics division in Qingdao Customs Department in Shandong as saying. “Government measures have eased the cost pressure of the enterprises to some extent, but the recovery of the fishery industry needs a longer time.”
After growing every year for more than two decades, China's fisheries production has dipped slightly for the past few years. In fact, production figures for marine capture and freshwater inland capture fisheries have been stable since the mid-1990s with all growth in fisheries production due to the growth of aquaculture during the past decade.
According to figures published by China Fisheries Bureau under the Ministry of Agriculture, total fisheries production is around 48 million tonnes a year, down about 6% from a record 51 million tonnes in 2005 due to a decline in marine capture fisheries production. The current total production is about double China's performance in 1995 when total fishery production was around 26 million tonnes.
Currently about 50% of China's marine capture fisheries production is by trawlers. Government statistics also reveal that about 95% of all fisheries production is consumed in China.
Aquaculture represents 70% of total fisheries production according to China Fisheries Bureau with marine capture fisheries contributing most of the remaining 30% share.
In tonnage terms capture fisheries total around 14.4 million tonnes a year of which marine capture is about 12 million tonnes and inland capture around 2.4 million tonnes. Marine aquaculture accounts for a further 13.6 million tonnes while freshwater aquaculture is the largest source of fishery products, contributing about 20 million tonnes a year, around double the freshwater aquaculture output in the mid-1990s.
“In general Chinese marine fishing and aquaculture has increased during the past 30 years. Marine fishing has flattened down a bit so overseas fishing is encouraged with tax free import quota privileges,” noted a fisheries trade officer at a Western embassy in Beijing, “Capture fishing is about 85% marine and around 15% freshwater fish while aquaculture production is 60% freshwater and 40% marine mariculture.”
“Chinese coastal fisheries face a big challenge as resources have reduced very fast. It's a big challenge as China does not have abundant resources. The three month summer closed fishing season is not enough.”
“The Fisheries Bureau has not started a quota on coastal fish capture unlike the EU's quota arrangement. Sometimes there is a planned quota but the challenge is how to organise the system. Fishing industry policy is not only made by the Fisheries Bureau here but must involve the local community. They cannot introduce a quota without that.”
As part of plans to reduce pressure on fishery stocks and overfishing the government operates a three month closed season on marine and freshwater capture fisheries each summer to encourage fish stocks to recover.
To avoid overfishing by small fishermen trying to improve their income level, the government also has launched several initiatives to help fishermen find new work on land by providing funding for aquaculture and other businesses. Provincial governments, in addition, have access to a special provincial fish fund to buy fish cages for fish farming.
The structure of China's fishing industry has changed during the past 20 years as private enterprise has entered the fisheries sector in the same way that government control over other areas of the economy has decreased.
“Thirty years ago everyone belonged to a fishing collective company owned by the local community. This system is not finished yet but it keeps changing,” the diplomat said. “There are still collective fishery companies in Shandong Province, for example. Also, individual private fishing boat owners. Previously most used to be with collective companies.”
“Small fishing boats are mostly operated by private owners while big fishing boats are more often government owned by provincial and city governments in coastal areas. For example, Dalian city and coastal provinces Shandong, Fujian, Guangdong and Zhejiang have their own fishing fleets, aquaculture farms and fishery processing plants. Also, these provincial governments operate fisheries import and export trading businesses.”
“Some profits go the local governments but not all as governments own a share in the fishing companies and processing plants with private investors. The company's management also have a share in these fishery businesses.”
According to government statistics, China's fishing fleet consists of 15,000 fishing boats of which only about 450 vessels have been reported to the International Maritime Organisation as measuring more than 24m in length. For several years already it has been government policy that the number of small fishing vessels with motors less than 185hp should be reduced in each coastal province. The idea is to reduce coastal fishing while encouraging the expansion of marine aquaculture such as cage farming.
Currently there are about 2 million fishermen in China, with the number declining each year. Many have a second job to supplement their income.
“Marine fishermen have decreased in number but inland fishermen are starting up without a license and causing accidents,” the diplomat said. “Older fishermen are fishing boat captains, they invest in vessels and hire others to work with them. Also, they invest in inland fisheries and other businesses.”
While China's coastal fishery resources are under pressure, aquaculture still offers considerable potential and is expanding in most parts of the country.
“Aquaculture is growing. Chinese authorities believe this trend will continue for the next five to 10 years as since 1980 the government has set up aquaculture privilege policies while capture fisheries is controlled,” the diplomat noted. “There is a three month summer closed season for marine capture and inland freshwater fisheries. This policy started in 1994. It's a good policy and you can see the results from coastal fishing boats where you can see bigger fish being landed.
Aquaculture is spreading nearly everywhere except Tibet but including Xinjiang in the northwest and Inner Mongolia. The biggest aquaculture provinces are Guangdong in the south and Shandong in East China, where there are many fish processing plants in the port city of Qingdao.”
The organisation of China's large fish processing industry is different to capture fisheries and aquaculture with most fish processing plants being established as private enterprises and owned by private investors including foreign companies.
Hong Kong investors include Pacific Andes which has a plant in Shandong while Japanese investors include Marubeni Corporation, Iwatai-ken prefectural government and Maruha which operates a processing plant in Zhejiang Province. Apart from the large number of Hong Kong and Japanese joint venture processing plants, companies from Taiwan, the United States and Canada have established fish processing facilities in China.
Currently around 37% of fish that pass through the processing plants is imported while the remaining two thirds is caught by the Chinese fishing fleet.
About 70% of China's total fishery imports are brought in for processing and re-export to other markets. Russia is a major supplier of fish to Chinese processing plants along with Peru, Japan and the United States.
“The proportion of imported fish changes year by year. In recent years resources have changed a lot – pelagic and cod fish have changed. Cod prices have increased,” the diplomat remarked. “In the beginning Chinese companies processed high priced cod but changed to cheaper fish like Alaska Pollack as they did not want to pay a high price because more US and European buyers were asking for lower priced fish based on fish resource availability and quotas in the US and Europe.”
Now that China's marine fish catch has started to fall the fish processing industry is seeking new supply sources to ensure that sufficient fish are available for processing. Fish imports have grown as more foreign companies sign cooperation agreements with Chinese processing plants. A growing number of foreign companies supply their own fish for processing in China to ensure the availability of fish to fulfil their orders.
“Many Norwegian, Icelandic and Scottish companies establish contact and sell fish direct to Chinese processors. They supply fish in refrigerated containers transported on ships,” the diplomat explained. “Some supplies have changed in recent years especially for white fish such as cod, Alaska Pollack and blue whiting. Previously the plants processed a lot of cod but the total catch decreased and many companies changed to process low value Alaska Pollack.”
Meanwhile, economic development has encouraged consumption of more imported fishery products in recent years, much of it served in hotels and high class restaurants.
“China probably will consume more imported products. Now 95% of salmon is air freighted. It's popular in high quality Chinese restaurants and Japanese restaurants in China as sashimi. Smoked salmon also is getting popular. In some restaurants they use salmon in traditional Chinese dishes as it has a lucky red colour,” the diplomat remarked.
“Live seafood is a luxury market in China. They use air freight both for imports and domestic supplies. A lot of local seafood is transported live such as shrimp, grouper in South China, turbot in North China, also, abalone, sea cucumber and giant scallops. Also, China imports live crab and lobster, also grouper from Southeast Asia, Europe and Australia.”
China's livestock industry is another important market for imported fishery products.
China is the world's biggest fishmeal importer. There is low local production here as there is not enough coastal fish so they have to import,” the diplomat noted. “Most local fishmeal comes from the fish processing industry waste and low quality fish. Fishmeal is used for animal feed and aquaculture feed.”
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