Fish for Food :The Great Crossover

George KailisGeorge KailisProfessor of ManagementProfessor of Management

School of Business: Fremantle School of Business: Fremantle

Future prospects and Issues for the Australian Fishing Sector

The Great Crossover

• In 2007-8 the value of imports exceeded exports for the

first time in the modern era. (See also ABARE

Presentation)

• This gives Australia into a more typical developed country

profile as a destination for imports of ‘highly valued’

seafood from developing countries

School of Business: FremantleSchool of Business: Fremantle

ABARE 2009

Analysis from : W.A. FISHING INDUSTRY COUNCIL (2009) The Challenges: Report to the WAFIC AGM October 2009, (Economic Analysis by Mr John Nicholls). W.A. Fishing Industry Council.

Figure 6: Real Unit Values by Wild Capture Species Category$A/kg

0.00

5.00

10.00

15.00

20.00

25.00

30.00

Years

Val

ues

(in

200

0-01

Mo

ney

Val

ues

) Crustaceans (ExportDominant)

Molluscs (Export Dominant)

Fish (Domestic Oriented)

Linear (Crustaceans (ExportDominant))

Linear (Molluscs (ExportDominant))

Linear (Fish (DomesticOriented))

`

Sources: ABARE, Fisheries Statistics and ABS, Perth CPI, All Groups Index

Key Change Drivers

• Prices of high value species down 53% in real terms since

1998-9 – also not surprising that exports are down 49%

since 1998/9.

• Key Drivers

• Offshore aquaculture

• Economic factors - $ Aus /Australian Economy Growth

• Some ‘one- offs’ – sustainable/economic levels lower than MSY

School of Business: FremantleSchool of Business: Fremantle

Competitive Position – Market Change

• Australia’s past competitive position in high value wild

fisheries, such as prawns and molluscs, will face lower

prices in real terms – a permanent shift in some cases

• Technological development - such as lobster will NOT be

immune for aquaculture competition

• Less sensitive in area of wild and fresh fish

School of Business: FremantleSchool of Business: Fremantle

Domestic Opportunity

• Australia is a growth economy both in wealth and size

• “Shortfall” in national seafood supply will grow:

• 280,000 tonnes in 2000

• 610,000 tonnes in 2020

• This Shift effects on the Australian industry – aquaculture

and wild caught

School of Business: FremantleSchool of Business: Fremantle

Key Trends - Australia

• Seafood trade in Australia will be generally dominated by

imports

• Global technological change in aquaculture product –

ongoing domestic price pressure on exposed sectors

• Fresh fish less exposed

• Fluctuations, but only new unforseen factors chaneg the

above School of Business: FremantleSchool of Business: Fremantle

Sources: ABARE, Fisheries Statistics;

ABS, Private Sector, Wage Price Index, and

CPP, Price Watch, Average Monthly June Diesel Prices (since 2000-01). Table created by John Nicholls for the WAFIC

Figure 7:Trends in Input Costs and Average Nominal Unit Catch Values

0.0

50.0

100.0

150.0

200.0

250.0

Years

Ind

ices (

2000-0

1=

100)

WPI Index

Diesel Fuel Price Index

Nominal Unit Values Index-Crustaceans

Nominal Unit Values Index-Molluscs

Nominal Unit Values Index-Fish

2- 3% improvement needed every year

Efficiency: Gained and sustained

• Commonwealth Harvest strategy and similar changes

welcome economic AND environmental dividends

• Counter-examples such as Western Rock Lobster – in

trouble and in denial foregoing up to $90 million per year

by not moving to economically efficient structures

Quality of Fisheries Management

• Possible benefits to Australia of $350 million from better

management – 2009 FRDC Report ‘Evaluating Australia's

Marine Capture Fisheries’

• Basic management principles:

• Flexible management

• Clear performance objectives

• Conservative and risk adverse mindset – change too slow

Social Licence to Operate

• Risk from ‘environmental theatre’

• Theatre addresses community opinion; but

• Does not address real environmental risks

• Aquaculture and especially fishing sector an obvious and

weak target – even when real risks elsewhere

• Fisheries agencies must perform environmentally AND

robustly defend their performance.

Governance Change?

• Industry and markets will adapt, the hard way or otherwise

to new market realities

• Price is important...to domestic consumers, but also safety, sustainability

and freshness - an OPPORTUNITY But not a gift.

• Governance failure risk

• Outmoded assumptions

• Government systems fail to adapt/or too slowly

• Bring competitiveness down - negative spirals

Governance Change? Mechanisms?

• General: CSIRO/ABARE/BRS

• Specific: Seafood Experience Australia,

Seafood CRC, FRDC

• Industry: Seafood Alliance/ Leaders

• Political wing / Consumers?

Some References/Sources ABARE (2009) Australian Fisheries Statistics. Canberra, Australian Bureau of Agricultural and Resource Economics.

ACIL TASMAN (2010) Economic Snapshot of the W.A. Fishing Industry. W.A. Fishing Industry Council.

ASLIN, H. J. & BYRON, I. G. (2003) Community Perceptions of Fishing: Implications for Industry Image, Marketing and Sustainability Canberra, Fisheries Research and Development Corporation, BRS.

ECONOMIC RESEARCH ASSOCIATES (2006) Fisheries Management Paper 210: A Bio-Economic Evaluation of Management Options of the West Coast Rock Lobster Fishery IN DEPARTMENT OF FISHERIES MANAGEMENT PAPERS .

RIDGE PARTNERS (2009) Evaluating Australia's Marine Capture Fisheries: Final Report to the FRDC's Resource Working Group.

W.A. FISHING INDUSTRY COUNCIL (2009) The Challenges: Report to the WAFIC AGM October 2009, (Economic Analysis by Mr John Nicholls). W.A. Fishing Industry Council (avail from speaker)

 

Thank you!

I have prepared a written paper which is available, including a list of references.

Views are my own and not organisations or institutions with which I have been affiliated

I can be contacted at gkailis@nd.edu.au