Over the past week China has been unveiling the broader outlines of its latest policy blueprint, the 13th Five Year Plan, which sets all kinds of priorities and targets for the country, including for its fisheries and seafood production. The drafting of said plan has been highlighted in all official fisheries news and statements over the past year.
But it’s worth looking back at the blueprint, which runs out at the end of this year: the 12th Five Year Plan, which ran 2010 to 2015. It called for the full licensing of all the country’s aquaculture facilities and a radical improvement in the efficiency, environmental sustainability and innovativeness of the sector.
Yet from talking to those in the industry it’s clear those targets haven’t been met. Certainly not all aquaculture facilities have been licensed. China’s aquaculture sector remains more about volume than it does efficiency or innovation. And indeed any new emphasis on quality may have come too late because the seafood production industry here faces broader macroeconomic and environmental pressures that will squeeze a lot of players out of the industry over the coming decade.
China continues to lose competitiveness in labor-intensive, export-focused industries like seafood due to higher wage costs and an expensive trade-weighted currency. And China’s latest economic reforms make it even harder to see how the country’s many zombie seafood firms can survive. Heavily indebted seafood producers/processors are finding that local governments – which are also heavily indebted after a two-decade binge of infrastructure and real estate building – are no longer so keen to offer subsidized utilities. Charges for electricity, fuel and water have all gone up in China over the past few years as the government seeks new sources of revenues and struggles to meet new central government goals to clean up the environment.
It’s easy to see how Chinese seafood processing firms now struggle more than ever to be profitable: look at the percentage wage increase of the past decade (500 percent in some provinces) and look at the growth in seafood prices in the past decade – negligible to 10 percent in most cases. Meanwhile the rising cost of doing business makes it less and less feasible for certain companies to remain in the industry. Even as they pay higher wages and increased utility bills, compared to even a decade ago aquaculture and processing firms face far more checks on water pollution and antibiotics use and are also being scrutinized like never before under the country’s new food safety law, which was brought in this year.
While it’s likely that many smaller firms will exit the sector it’s also likely that many of the larger firms – and this is already happening – will look overseas to what’s considered another government priority, long-distance fishing. That will see many of the boats which are being locked out of chronically overfished local waters being adapted for the high seas. Fuel subsidies from China’s government ensure these companies make a profit. China’s agricultural ministry has set a goal of building the world’s largest fishing fleet, with increased influence over the sourcing and pricing of all types of sea resources, including smaller fish for use in fishmeal, a critical resource for China.
Scooping up fish in the waters of Africa or Latin America might be easier than difficult restructuring of the aquaculture industry at home. While the detailed version has yet to appear, it’s likely that the newest Five Year Plan will call yet again for more innovation and efficiency and sustainability in China’s seafood industry. But how realistic are these goals? Efficiency may come from a consolidation of the sector and sustainability may be improved through culling some of the less scrupulous players through enforcement of environmental rules.
Yet the laudable goal of innovation – an oft-repeated Chinese government priority – won’t be achieved anytime soon. China’s seafood industry has no real strong voice, just waves of producers seeking to compete on volume rather than unique product selling points. It’s always puzzled me why the representative body of the Norwegian seafood industry has opened offices in China, yet the China Aquatic Products Processing & Marking Association (CAPPMA), representing the world’s biggest seafood producer and consumer, has no office in Brussels or New York – indeed no office overseas.
CAPPMA remains a government-sponsored entity, and while it does valuable work it has nowhere near the kind of staffing and capacity to train and effect real innovation, training and restructuring that’s needed in the seafood industry. I’ve not heard much frank, public debate about the results of the outgoing Five Year Plan or the merits of the upcoming Five Year Plan – or about how innovation can be achieved. China’s seafood industry will change utterly over the coming decade. Where is the industry’s own five-year plan?
