Value chain of Fish and Fishery products Origin, Functions and Application in Developed and Developing country markets.doc

Value chain of Fish and Fishery products: Origin, Functions and Application in Developed and Developing country marketsD.A.M. De SilvaDrivers and Governors of change on the DemandSeveral factors are affecting on the demand function of fish and fishery products. Price, income, income distribution, substitutes, tastes and fashion, advertising and expectations of the consumers make the changes along the demand curve and demographic characters lead to change the position of the demand curve, upward or down ward shifting of the curve.1. DemographicsPopulation growth rate and age distribution are key important factors affecting the demand function of fish and fishery products. Many developing nations having positive population growth rates and which generate larger youth population. Their food consumption habits and preferences directly affect the demand function. The opposite side of this coin is developed nations with slow or negative population growth rates. Food consumption pattern and food preferences of large elderly population have greater impact on global food supply chains. Worlds largest fish consumer, Japan has experienced very low population growth and population is aging. Twenty five percent of the population is aged over 65 years. Their diet is based on fish and rice and aging population places more demand on traditional fish cantered diets (DeSilva and Yamao, 2006). i. Ethnicity and RaceEthnicity and race are other important determinants on demand function. Socio-cultural values, religious concerns, and attitudes make difference among the market places. Especially, for countries in East place high demand on wide variety of fish and fishery products compared to other parts of the world. Moreover, countries having larger populations of Muslims are placing high demand on meat products than the fish. Species selection has great impact on food habits and religious concerns. i.e. most preferred species for one market may be least preferred for another market. For an example, sea cucumber and shark fins are luxury fish products for Hong Kong and China markets and other markets have no value.ii. Geographic distributionGeographic distribution is major important phenomenon to decide the demand on fish. Communities around the world have their own methods to harvest, handle, store and prepare the fish. Available fish species in their own destinations lead to develop unique methods to harvest and to consumption. Many tropical countries are blessed with multi species fishery and food habits of the communities are based on multiple fish species and preparation styles are different to location to location. On the other hand oily white fish species are common in temperate countries and they place high demand over the time on such species. iii. Extent of travelExtent of travel, passing national boundaries and exposure to different cultures is challenging experience to traditional demand curves on fish and fishery products. Especially, todays concern on global village lead to change the traditional face of the fish markets all over the world. Consumers exposed to different cultures and societies are demanding different products compared to less exposed people. Markets should compose of fish and fishery products from different destinations to cater for new world consumers. iv. LiteracyLiteracy rates and level of education lead to create knowledgeable society which is more concern on food safety and quality. Health concerns, food safety and hygiene are the key concerns in develop country markets compared to developing nations. Consumers are placing growing concerns on sustainability, depletion of fishery resources, social responsibility and climate change. Moreover, consumers of developed country markets are willing to pay extra premiums for fish and fishery products from sustainable base.v. Retailer promotionRetailer promotion is another important determinant of demand function. Developed country markets are composed of giant retail chains and competitiveness among retailers are very high. Their expenditure on promotional campaigns is high and getting the advantages of economies of scale compared to small-scale retailers in developing country markets. In contrast developing country markets are less competitive and individual retailers are prominent. Mobile fish retailers and vendors play a great role in supplying fish to rural destinations of Asia, Africa and Latin America. Moreover, individual retailers are using establish strong social networks to market their products. Word of mouth is their cost effective promotional tool and they bring fish and fishery products to the door step of the freshness concern consumers. 2. Consumer preferences Price, quality, convenience, year round availability, variety, nutritional concerns, safety and hygiene are principal determinants of consumer demand on fish. Food habits and food consumption behaviour directly affects the consumer concerns on price and quality. Worlds biggest fish consumer, Japan concerns more on fresh produce and they fetch highest prices for freshest form of the fish. Raw fish is centred for their diet and in general, they used shop daily for fresh fish. On the other hand, western markets consume cooked forms and their concerns are more on quality and food safety. Weekend shopping behaviour is popular in Western destinations and places much attention on convenience. Quality standards add extra cost to the production process and quality requirements differ from market to market. i.e. European Union market based on EU directives food safety and sanitation, US market based on United States Food and Drug Administration (USFDA) requirements and Japanese market based on Food and Sanitation Law (Lupin,1999). Especially quality concern markets are willing to pay extra for the maintenance of quality standards. i. ConvenienceConvenience plays important role in fish and fishery product marketing. Especially busy mothers and house wives are reluctant to buy fish due to its time consuming initial preparatory work. Clean, cut ready to cook or ready eat forms of fish is demanding more and consumers are willing to pay extra premiums on it. Moreover, range of value added meat products available in markets make meat is more popular compared to fish. Fish and fish based meals are popularizing all over the world due to health concerns. Product development can play a great role in this endeavour. ii. Year round availabilityAquaculture, make it possible compared to capture fisheries. Especially, regular supplies to the market are essential to have loyal group of consumers. Seasonality is common with many fish species and which makes consumers to search substitutes. Many developing country fish suppliers are supplying seasonal species to the markets and which lead to change the consumer base time to time. Value addition will help to bring the different forms of fish products to the market place while reducing post harvest losses. Post harvest losses in developing county markets are high as 30-40% of the harvest. iii. Variety and nutritional contentFish and fishery products already acquire the minds of health concern people everywhere in the world. Fish is rich in Omega 3 fatty acids and which make fish more popular in modern markets. Year round availability of different species as well as different value added forms will lead to fulfil the needs and wants of todays consumers. Aquaculture provides promising answers to the variety of products available in the market year round basis. Moreover, value addition helps to reduce post harvest losses and bring the regional specialties over the national boundaries. iv. SafetyConsumers of today are more concern on food safety ever before and high value markets such as EU and USA market are place much attention on it. Developing country markets are placing poor attention on food safety and sanitation measures and rising levels of market information, education and awareness programmes will help to minimize the gap. v. GreennessSustainability is the end concern of the green or environmental friendliness. Fish stocks all over the world are declined in to threaten levels and remaining stocks make it possible to serve for limited time. On the other hand, climate change and global worming bring the situation into dead end. Moreover, states and policy makers are facing severe issues of rising levels of food crisis. Consumer and fisher awareness on sustainability will help to reduce the threats on fish stocks and make it available for future generations. Consumer of high value markets place more attention on products from sustainable resource base and they are ready to pay extra for the conservation measures. Eco-labels, organic labels and MSC label are generating consumer awareness. Health concern consumers are paying more attention on chemical free stuff and free from antibiotics. Consumers willingness to pay premium prices on chemical free, sustainable products encourage producers to think twice on their way of production. vi. Faire tradeFair trade labels spell the social responsible behaviour of the company. Rarely fish and fishery produce processing companies hold the fair trade label. Only the Icelandic fishing community holds the faire trade label for their wild salmon products. Millions of small-scale subsistence fishers depend on directly and indirectly on this industry. Therefore, its worthwhile to pay attention to apply fair trade label to sustainable fishing communities across the world. Consumers of high value markets are willing to pay premium prices for fair trade products and this is encouraging producers of developing nations. Moreover, which facilitates the fish processors to provide better packages to their employees and help to protect the resource base. 3. Buyer specificationi. volumeBuyer specifications are very important to the marketing of fresh produce. Buyers are twofold, individual buyer and institutional buyers. Volume of trade differs according to the type of buyer mainly. Seasonality, economic status, cultural aspects and purchasing power of the consumers affects the trade volume. ii. PresentationPresentation style appeals and attracts the consumers and especially important for fish and fishery products. Fish and its nature of fresh produce with odour and perishability makes consumers away from the products. Good packaging materials will improve the handling and shelf life of the products. Clean cut ready to cook or eat fishery products attracts more consumers than the raw whole fish. Food habits and food culture have direct impacts on the consumer preferences.iii. LabellingFood labeling is intended to provide information on product composition and safety. Country of Origin Labelling, meaning all fish and shellfish has to carry labels saying where they came from and whether they are farmed or fresh. Bottom line is that we consumers should now know exactly where the fish we are buying came from and how it was grown, with no question. Recently the European Union (EU) adopted regulations requiring labelling of all fisheries and aquaculture products. This labelling regulation is intended to strengthen traceability - the ability to trace fisheries products from sea to market and allow consumers to choose their seafood according to specific criteria that might be of concern to them. All fisheries products on sale at retailers will have to be labelled with the following information: the commercial name of the species, the production method (wild or farmed) and the area where the fish was caught (Benjamin, et. al., 2001).iv. Private standardsMandatory public (regulatory) standards carry with them a legal obligation for compliance and are a response to a perceived market failure; as such they are often implemented in the presence of negative externalities, to ensure the provision of public goods, or to mitigate information asymmetry (Hobbs, 2010). Private standards for food safety and food quality can be distinguished on two dimensions: the source or scope of the standard and the economic function of the standard. Private standards emerge from a variety of sources and include proprietary standards established by firms, third-party standards established by independent standard-setting bodies and other non-governmental organizations, and voluntary consensus standards established by industry bodies or coalitions of firms (Hobbs, 2010). Private standards can also be distinguished by the economic functions they perform, including product differentiation, supply chain management, and liability reduction or protection of a firms (industrys) reputation. Private standards can enhance product differentiation if the standard is communicated to consumers through labelling or the presence of a logo on the final consumer product, both of which act as quality signals. Alternatively, the primary purpose of a private standard could be to enhance supply chain management by improving information flows and reducing transaction costs in the supply chain. Finally, private standards may serve primarily to reduce liability as a component of a due diligence defence in the event of a food safety problem. If effective, private standards can reduce transaction costs by facilitating longer-term supply chain relationships and in doing so lowering both the search costs of finding reliable suppliers and the monitoring costs of ensuring the quality of supplies. For this reason, a credible system of verification (often by a third-party certification body) is a necessary component of most private standards systems, both proprietary and consensus. While ostensibly voluntary, private standards can be de facto mandatory if a majority of the market adopts the standard as a requirement (Henson, 2006; Henson and Reardon, 2005).4. CertificationCertification and the labelling of certified products aim to identify products that follow certain minimum standards or regulations, such as standards for quality, organic production, fair trade, or sustainability (Green peace, 2010). A variety of seafood certification schemes have been developed over the past decade, all claiming that the fish that they certify have been sustainably caught or farmed and that they are the best option for consumers to purchase. Guides and advisory lists are · Marine Conservation Society (MCS), Fish online website and Good Fish Guide (UK) and Northeast Atlantic) · The Monterey Bay Aquarium Seafood Watch · Greenpeace: International Seafood Red list · Australian Marine Conservation Society (AMCS) produces Australia's Sustainable Seafood Guide, a consumer guide, advising consumers which species are in danger of being fished out. · Royal Forest and Bird Protection Society of New Zealand, Best Fish Guide · The Blue Ocean Institute Seafood Guide, Based in New Yor