Japan
The tragic earthquake and accompanying tsunami in Japan is affecting world markets for food. Japan is the world’s single largest importer of fish and fishery products, and in the short term, the damage to infrastructure and the disruption in transportation and electricity transmission is negatively impacting imports, distribution and consumption of chilled and frozen products. The earthquake and tsunami have also destroyed many fishing zones and fishing vessels, thereby reducing Japan’s ability to catch and produce fish locally. Fish processing plants have been damaged as well.
The 2009 combined production of marine capture fisheries and marine aquaculture of the three most affected prefectures was 446 000 and 198 000 tonnes, or 11 and 17 per cent respectively of the total Japanese production. A reduction of 80 per cent in production can be expected in those affected areas as a result of the tsunami. It must be borne in mind that Japan is heavily dependent on imports as well for its fish consumption so the contribution of the affected areas to total supply is actually far less.
The effect on Japanese consumer sentiment and consumption resulting from the nuclear fall-out is still unknown, although the frequent interruption in power supply will continue to limit consumption of chilled and frozen products. Equally, consumer reaction to domestically sourced fishery products is uncertain. This factor could potentially be much more important than the direct damage caused to domestic production if consumer preferences were to move towards imported products. In this case, the impact on world fish markets would be significant.
For the industry, one likely effect overall is a change in strategy to one of less concentrated supply. Operators will be willing to forego some economies of scale to ensure a more diversified supply. It can be expected that parts of the processing facilities destroyed will not be rebuilt as plant owners choose to re-locate industry elsewhere. Much of Japan’s fish processing capacity has already been outsourced to neighboring countries such as China, Viet Nam and Thailand, and this trend will continue.
2010 with strong rebound in global fish trade
International trade in fish and fishery products bounced back in 2010 to pass the USD 100 billion mark again. In part, this was thanks to higher average fish prices, which had declined sharply after the crisis struck in late 2008 and continued through 2009. Consumer demand was particularly strong in developing countries supported by the faster than expected economic recovery in these countries. This rising demand was and is still being met through higher domestic production and imports of tropical aquaculture products.
Prices
In 2010, the farmed shrimp price reached its highest level in a decade. Quotations for farmed salmon, tilapia, pangasius, Indian carp and other species have also gone up in domestic and international markets - a trend expected to influence and redirect world fishery trade in the future. In part the high prices of farmed species were caused by factors on the supply side but with the expected growth in demand over the next decade and with rising prices of a number of input factors, including energy and fishmeal, prices for both wild and farmed species can be expected to rise to even higher levels.
As shown by the FAO Fish Price Index, current fish prices are higher on average than ever before, indeed higher than the levels reached before the start of the 2008 economic crisis. Aquaculture products, in particular, have shown strong increases and at present levels are 23 per cent higher than in September 2008. Again, this is mostly explained by factors on the supply side but it is also evident that the market is willing and able to accept these prices.
Capture prices on the other hand, after a sharp drop in the aftermath of the crisis, have only recently regained pre-crisis price levels.
Outlook
After a strong 2010, the current year is expected to yield new records in international fish trade. Volumes are sustained by firm demand in most markets, in particular in developing countries, and prices are rising for both capture and farmed species. The situation in Japan has added some uncertainty regarding Japanese consumer behavior, its possible impact on demand for imported fish products and the repercussions in world markets.
June 2011
