Much alarm was sounded by the Chinese ministry of agriculture this week about the tilapia industry: investment in the sector fell a worrying 46 percent in the first half of this year while input of seedlings into Chinese ponds fell almost 12 percent on the same period last year. That’s according to data compiled by the ministry nationwide over the first six months of the year.
Several often-cited factors were blamed by the ministry: principally weak demand in export markets such as the Unites States. The ministry also pointed to a tightening of inspections by the U.S. Food and Drug Administration (FDA) which is blocking and slowing Chinese tilapia exports, suggests the ministry.
And yet dig deeper into the voluminous ministry report and you’ll see that China’s eel exporters are in trouble – weak Japanese (main export market) demand and a strong Chinese currency. Shrimp producers are reporting that prices are slipping back as stocks recover. Even the predominantly domestically-focused carp farming sector – China’s biggest single aquaculture segment – is troubled by low profitability.
Ultimately the ministry knows China is producing too much low quality seafood. That’s because a vastly fragmented aquaculture sector is populated by small-scale farmers, often with little tradition or skill, motivated by the bottom line and what’s perceived as easy profit. Indeed terms like “decline in breeding efficiency” and “industry restructuring” have become buzzwords at the fisheries bureau of the ministry of agriculture in Beijing.
Yet Chinese subsidies to aquaculture still tend to encourage volume rather than quality. While China has a decent fish farming extension service there is little motivation for farmers to acquire or refresh skills and standards to qualify for government support. Thus newcomers to the fish farming business use substandard, cheap seedlings as well as cheap (and often fake) antibiotics.
A certification process requiring farmers to show qualifications or training – which could be funded by government – would help to reduce some of the high-volume, low quality seafood coming out of Chinese ponds. Indeed this will simply have to happen as profitability won’t come from producing large quantities of low-end seafood – that cost base that allowed China to emerge as an aquaculture powerhouse is now a memory.
Compared to a decade ago prices for land and labor continue to rise in rural China because a wealthier populace wants to eat more fruit and vegetables (and more grain is needed to feed larger pig herds), while younger rural dwellers continue to move to cities for better services and urban employment.
A smaller, more professional aquaculture producer base would be more profitable. But for this to happen there needs to be more of a voice for the industry, and that’s not going to materialize anytime soon. Farmers and fishermen in China remain weak in income and political representation. There is no independent body representing the industry in China, only provincial and national bodies funded and supervised by government.
Seafood producers – with a few exceptions – have no voice to compare with the lobbying capacity of the pork industry, which is dominated by large “dragon head” enterprises with the backing (and sometimes ownership) of government and the ear of policy makers.
There is almost zero critical public debate about the policies and factors driving Chinese seafood production – certainly very little critical input from the grassroots producer level. Independent producer representation would also help to collate and share market pricing and outlooks among aquaculture producers around China – another weak link which often leads to overproduction.
Yes there are other issues which need tackling: the agricultural ministry in its report on the first six months of 2015 points to smuggling. China’s porous and often corrupt border customs regime lets a lot of smuggled seafood into China to compete with local produce. The ministry also points to the lack of branding. Again this is an issue related to producer power. There is little point of talking about restructuring the industry if the industry is unrepresented.
A sharp reduction in investment and seedlings in the first half of this year suggests yet another swing –upwards – in Chinese tilapia prices later this year. But these swings aren’t helping the industry. China needs less but better-quality tilapia – and seafood in general – but producers need to be part of the debate to be part of the solution.
