China’s fishing sector benefits from cash splurge
China’s subsidies for fishermen look set to hit a record increase this year. Estimations from several official sources and Ministry of Agriculture documents seen by SeafoodSource suggest China will pay CNY 20 billion (USD 3.2 billion, EUR 2.5 billion) in subsidies — most of it for fuel — to the catch fisheries sector in 2012, beating a record CNY 17.1 billion (USD 2.7 billion, EUR 2.1 billion) in fuel subsidies paid to fishing vessel owners in 2011 (a year on year increase of 63.8 percent). However government support for the fishing and aquaculture sector could be as much as CNY 500 billion (USD 80.2 billion, EUR 61.7 billion) when regional and national subsidies for rural-based fish farmers are taken into account.
Subsidies for the marine catch fisheries sector were originally introduced to cushion a surge in oil prices on local fishermen. Crews at Qianhuangdao port in Hebei province told SeafoodSource how trawler owners get a hefty discount of 30 to 50 percent on the CNY 7.71-a-liter (USD 1.23, EUR 0.9) diesel sold at local gas stations.
However, major beneficiaries of fishery subsidies include state-controlled CNFC Overseas Fishery Co Ltd. The firm, according to results reported to investors on the Shenzhen Stock Exchange, came from diesel subsidies in the first nine months of 2012. The firm made CNY 50 million (USD 8 million, EUR 6.2 million) in the first nine months of this year but took in CNY 80.52 million (USD 12.9 million, EUR 9.9 million) in diesel subsidies.
Last year the firm took CNY 60.49 million (USD 9.7 million, EUR 7.5 million) and CNY 61.79 million (USD 9.9 million, EUR 7.6 million) in subsidies and profits, respectively. Subsidies paid to CNFC appear to have increased significantly in the past two years. In 2010 the figures were CNY 50 million (USD 8 million, EUR 6.2 million) and CNY 25 million (USD 4 million, EUR 3 million) in profits and diesel subsidies respectively. CNFC also gets subsidies to build and renovate its larger vessels.
China's aquaculture and fisheries sectors are both benefitting from a general ramp-up in government spending to spur rural growth and lift incomes among peasants, seen by Chinese policymakers as the most disadvantaged section of society but also a new source of consumption spending. In 2011, the central government paid a record CNY 1 trillion (USD 160.5 billion, EUR 123.5 billion) in subsidies to the so-called “three peasant” sectors of society: rural infrastructure, farm families and agricultural enterprises. The figure is set to rise to CNY 1.2 trillion (USD 192 billion, EUR 148 billion) this year.
To put fisheries subsidies in context, the ministry of Agriculture in 2011 paid CNY 17.5 billion (USD 2.8 billion, EUR 2.2 billion) in subsidies for farm machinery to promote mechanization of the country’s farming sector. The biggest recipients, grain farmers got CNY 143.9 billion (USD 23 billion, EUR 17.8 billion) in 2011.
Subsidies are targeted at lifting export-oriented and labor-intensive industries, such as aquaculture, in rural areas. China produced 56 million tons of aquatic product in 2011, according to Wang Chen, an official at the State Council Information Office. The country had 7.8 million hectares in aquaculture cultivation plots, producing 40.2 million tons of produce. Of that, freshwater cultivation contributed 24.7 million tons and sea cage culture 15.5 million tons. Offshore marine fishing yielded 12.4 million tons. “In recent years the production and value of distant-water fisheries has been increasing…distant-water fishing and employees have both been strengthened,” said Wang.
Aquaculture appears to benefit less, at least in direct subsidies. The Ministry of Agriculture, for instance, announced CNY 400 million (USD 64 million, EUR 49 million) in national subsidies in 2011 for fish seedlings. However subsidies are being ramped up regionally, with the government of Chongqing, a southwestern megalopolis, rewarding local fish farmers who cultivate one hectare or more get CNY 1,000 (USD 160, EUR 123) per mu. Other localized subsidies assisting fish farmers: minivan sales in rural areas near are subsidized in key cities — among them, Chongqing — with major automotive factories.
The fisheries and aquaculture sectors are also helped with subsidies for insurance. Government wants to expand coverage of fishermen and boats. The government of Zhejiang province, a key fisheries region, has provided a mutual fisheries fund with CNY 180 million (USD 29 million, EUR 22 million). Each fisherman is covered to a maximum of CNY 440,000 (USD 70,617, EUR 54,316) while vessels are covered 75 percent — up to a limit of a CNY 5 million (USD 802,000, EUR 617,000) payout.
Home to the world’s largest marine fishing fleet and aquaculture sector, China pays USD 4 billion (EUR 3 billion) in subsidies annually to its fisheries sector; however, information remains scant given sensitivities over China’s role in overfishing and illegal fishing globally.
Subsidies have also become a source of corruption among officials. A recent corruption case saw Yun Mou, former director of the Shuiling County Oceanic and Fishery Industry Authority in southerly Hainan province sentenced to seven years for taking CNY 600,000 (USD 96,000, EUR 74,000) in money intended for farmers developing deepwater aquaculture off the Hainan shore.
China has tried to free up financing for the rural population, encouraging finance for farmers and agro processing enterprises.