Mahfuzuddin Ahmed Director Policy, Economics, and Social Sciences WorldFish Center, Penang

1. TRENDS & PROSPECTS FOR AQUACULTURE IN DEVELOPING COUNTRIES: DRIVERS OF DEMAND AND SUPPLY IN CHANGING GLOBAL MARKETS Mahfuzuddin Ahmed Director Policy, Economics, and Social Sciences WorldFish Center, Penang FAME Workshop, University Of Southern Denmark June 2005

2. Presentation OutlineIntroductionPutting Aquaculture in ContextConcerns in Aquaculture DevelopmentAquaculture & Food Security in Developing CountriesRole of Environmental Practices & Policies in Aquaculture Role of International Trade & Trade PoliciesAquaculture R & DConclusion

3. 29% 10% 39% Source: World Bank Introduction • 1.1 billion live with <US$1.08/day; 2.7 billion below US$2.15 per day • 32% South Asians and 49% Sub-Saharan Africans live with less than US$1.00 a day • 68% of absolute poor lives in South Asia and Sub-Saharan Africa • Some 800 million people are suffering from hunger and malnutrition, which remains one of the most devastating tragedies in Asia and Africa

4. Subsistence Fishing Commercial Fishing CHANGING ROLE OF FISHERY IN DEVELOPING COUNTRIES Introduction From - • Traditional diet and major source of nutrition • Livelihood strategy: Probably supports over 200 million people worldwide Of these, majority are poor, living in pockets of poverty in Asia, Africa, Latin America and the Pacific Landless fish workers and artisanal fishers are among the poorest of the poor To - • Engine for economic growth and export benefits to developing countries Women & children Fish Processing

5. FISH ONE OF THE BIGGEST TRADE STORIES Fish gone Global Introduction • Nearly US$60 billion export industry • Nearly half of it shared by the developing countries • LIFDCs share of trade greater than 20% • Fish paying for growing food imports in LIFDCS • Fish export is nearly 45% of food imports

6. Introduction FISH ONE OF THE BIGGEST TRADE STORIES Value of fish export higher than meat, all cereals combined, and all beverages combined Highest Share for Fish in Major Agricultural Commodity Trade

7. Introduction FISH ONE OF THE BIGGEST TRADE STORIES Vietnam’s Agricultural Export $ Fish > $ Rice + $ Coffee

8. Outlook to 2020 Introduction Escalating Demand for Fish in Developing Countries

9. Introduction Outlook to 2020 Per Capita Demand for Fish Products, 1997-2020 (kg/cap)

10. 49% 51% 65% 35% 52% 48% 59% 41% 69% 31% Putting Aquaculture in Context WHY AQUACULTURE MATTERS? • Growing share of aquaculture to the total food fish production

11. Putting Aquaculture in Context WHY AQUACULTURE MATTERS? • Low value food fish from aquaculture is expected to surpass the capture fisheries in the future

12. 22% 78% 23% 77% 20% 80% 21% 79% 27% 73% • WHY AQUACULTURE MATTERS? • Developing countries continue to dominate food fish production with a high proportion in aquaculture Putting Aquaculture in Context

13. WHY AQUACULTURE MATTERS? • Aquaculture has grown faster and become more important in low income food deficit countries (LIFDC) Putting Aquaculture in Context Ahmed and Lorica, 2002

14. Source: Fish to 2020 Net Export: Developing World Continue to be Net Exporters, though at a Lower Rate than Presently Putting Aquaculture in Context

15. Putting Aquaculture in Context Outlook to 2020 More Regions in Developing Countries Joining the Rank of Net Importers by 2020 Growing south-south trade

16. Putting Aquaculture in Context Fish meal & oil efficiency Ecological collapse Slower aquaculture expansion Faster aquaculture expansion Most likely (current trend) Outlook to 2020 Poor to Feel the Pinch of Rising Fish Prices

17. Putting Aquaculture in Context • Environmental Context • Dependence on the wild for species and seedlings for culture • Dependence on fisheries for feeds and feed ingredients • Socio-economic Context • Resource users and stakeholders and their varying interests • Costs and benefits of the aquaculture enterprise • Domestic and international demand for aquaculture commodities • Legal and Institutional Context • Property rights • Regulations and standards

18. Concerns in Aquaculture Development at Various levels Local • High influence of income on fish consumption and similar nutritious food, though nutritional status may not necessarily improve as income increases • Increasing labor productivity • Increasing global demand for food supply • Increasing consumer awareness and demands • Increasing competition for resources

19. Concerns in Aquaculture Development National • Food security • Export Earning • Intersectoral Conflict • Environmental Sustainability • Increasing seafood imports and decreasing prices • Increasing nutrient and input costs

20. Concerns in Aquaculture Development Global • Environmental and ecological responsibility • Use of technology to produce transgenic fish • Social acceptance as an economically viable means of producing much needed high quality food for an ever increasing and hungry population • Market access / barriers in trade • Health and safety issues • Capture-Culture Relationship

21. Aquaculture and Food Security in Developing Countries LESSONS FROM ASIA • Aquaculture is regarded worldwide as one of the fastest growing food-producing sub-sectors, especially inlow-income food deficit (LIFDC) countries • Asia accounted for over 90% of world aquaculture output in 1998, regional production having increased from 14.3 million mt to over 35.8 million mt between 1989 and 1998, equivalent to growth of nearly 11% per year (FAOSTAT, 2003)

22. Aquaculture and Food Security in Developing Countries LESSONS FROM ASIA • In Asia, major contributors to aquaculture are small-scale family managed fish farm and subsistence-oriented farmers • Global importance for rural and coastal societies, both in terms of economy and as a means of improving food security for the growing population • Effect of own production on household fish consumption • Moving away from cereals and crop commodity supply • Income and employment effects on poor people, women and children

23. Aquaculture and Food Security in Developing Countries AQUACULTURE’S LINK TO FOOD SECURITY Figure2: Framework for Analyzing Aquaculture’s Linkages to Food & Nutritional Security ADOPTION-EMPLOYMENT LINK ADOPTION-CONSUMPTION LINK ADOPTION-INCOME LINK High income effect from aquaculture production and sale-profit Ability to create alternative employment High home-consumption Ability to earn higher wage or income Price effect and increased demand Higher return to capital from aquaculture High income effect on nutrient rich food consumption Ability to increase labor productivity Source: Ahmed et al. (2002) – in press

24. Aquaculture and Food Security in Developing Countries FOOD SECURITY THROUGH AQUACULTURE DEVELOPMENT: LESSONS FROM BANGLADESH • In Bangladesh, nearly half the population suffer from chronic under nutrition • Green revolution overlooked the role of diversified production, employment and income • Role of critical vitamins and minerals in the diet, improvements in sanitation, hygiene and living environment • Improving access to diverse and quality food types • Moving away from cereals and crop commodity supply perspective • Integration of fish and livestock in discussion and debate on food security • Examine aquaculture’s impact to food and nutritional security at the farm and household level

25. Aquaculture and Food Security in Developing Countries: Lessons from Bangladesh ADOPTION – INCOME LINKAGES • Income and purchasing power have a tremendous influence on household demand for food • Income has high influence on fish consumption and other nutritional food • Though, nutritional status may not necessarily improve as income increases

26. Aquaculture and Food Security in Developing Countries: Lessons from Bangladesh INCOME EFFECTS Higher Household Income Following Aquaculture Intervention Source of Income Before Aquaculture After Aquaculture Intervention Intervention Farm income (excluding fish) 15,747 18,388 Income from fish culture 758 5,053 Off-farm income 10,869 13,884 Total income 27,374 37,325 Contribution of fish to farm income (%) 4.6 21.6 Contribution of fish to total income (%) 2.8 13.5 Source: Gupta, et al. (1999)

27. Aquaculture and Food Security in Developing Countries: Lessons from Bangladesh ADOPTION – EMPLOYMENT LINKAGES • Household ability to earn income depends on the nutritional health of the household labor • Family labor is an important production factor in developing country agriculture • Ability to earn higher wage or income • Ability to create higher employment • Increase in labor productivity

28. Aquaculture and Food Security in Developing Countries: Lessons from Bangladesh EMPLOYMENT EFFECTS • Relatively low use of labor in aquaculture compared to crop agriculture • Post-adoption labor/ employment in aquaculture is much higher than pre-adoption • Use of hired labor is also becoming common in aquaculture • Impact of Aquaculture Practices in Employment Source: Miah (2000)

29. Aquaculture and Food Security in Developing Countries: Lessons from Bangladesh EMPLOYMENT EFFECTS Wage Rate (Tk/day) of Pond Aquaculture and Agriculture Compared 1998 Source: Thompson et al (2000) & BBS (1999) Higher return to labor (Tk/day) from technology adoption in aquaculture Source: Islam (2000)

30. Aquaculture and Food Security in Developing Countries: Lessons from Bangladesh ADOPTION – CONSUMPTION LINKAGES • Adopting households consume a disproportionately higher amount of fish that are rich in micro-nutrient • Adoption of aquaculture increases market supply that pushes fish prices down

31. Aquaculture and Food Security in Developing Countries: Lessons from Bangladesh CONSUMPTION EFFECTS • Increased access to fish in both rural and urban areas in last five years • higher per capita consumption for producer households compared to non-producers and national average consumption • Price and income elasticity of fish are higher than those of other food items • Consumer demand for fish will increase at a higher rate for income increase and supply increase • Adoption of improved pond management and species composition will direct more fish to on-farm household consumption

32. Aquaculture and Food Security in Developing Countries: Lessons from Bangladesh CONSUMPTION EFFECTS Comparison of Production and Home Consumption Before and After Adoption of Improved Aquaculture in Kapasia Thana, Bangladesh Source: 1. Ahmed, et al. 1993 2. Ahmed, et al. 1995 3. Extrapolated estimate by the authors based on the proportion disposed for the consumption.

33. Aquaculture and Food Security in Developing Countries POLICY ISSEUS FOR FOOD SECURITY & POVERTY REDUCTION • Aquaculture development: is it a panacea for poverty reduction? • Much of reported increase of aquaculture come from low-income food deficit countries • How much can aquaculture contribute to poverty reduction? There are opportunities as well as constraints • Can the constraints be removed through policy measures and policy actions?

34. Aquaculture and Food Security in Developing Countries ACCESS TO RESOURCES • Access to land is a major impediment for poor • richer people established greater access to land and water that were brought under aquaculture • Liberal government policies encouraged large-scale conversion of public land by the rich • Forced the poor out of common property fish harvest from public water or quasi-private land • Targeted development by NGOs and government have helped poor people access land and water • Flexible technology choices for more intensive use of labor

35. Aquaculture and Food Security in Developing Countries ACCESS TO RESOURCES Percent distribution of households of some aquaculture projects by size of land owned in Bangladesh in 1998 Source: Thompson et al. (2000)

36. Role of Environmental Practices and Policies in Aquaculture • Damaging impacts on the ocean and coastal resources • Interactions of escaped fish stocks with wild stocks • Introduction of exotic species

37. Role of International Trade and Trade Policies in Aquaculture Development Trade and Market Expansion • significant export orientation and focus on high value species • shift in the balance of trade in fish commodities in favor of developing countries • dependence on few developed country markets such as the EU, USA and Japan • global trade liberalization agenda vs. different forms of non-tariff barriers • resolutions and agreements on market access issues • regulatory measures on health and food safety requirements, • host of other forms of technical barriers to trade

38. Role of International Trade and Trade Policies in Aquaculture Development • Trade Policies • Liberalization of trade (UNCTAD – WTO) • Reduction of import tariff and import restrictions • Free trade agreements • Preferential market access

39. Role of International Trade and Trade Policies in Aquaculture Development • Trade Barriers • Technical barriers • Health, sanitary and food Safety barriers • Environmental regulation

40. Aquaculture R&D: Technology Need & Prospect • Reducing Aquaculture Dependence on Capture Fisheries for Feed • Nearly one-third of the world’s wild caught fish is consumed as aquafeed • As aquaculture trend increases, the pressure on wild fish stock increases • Technology to replace aquafeed with nutritious grains and protein rich oilseed • Remove the dependence of aquaculture on wild stock

41. Aquaculture R&D: Technology Need & Prospect 2) Increase Productivity in Aquaculture • Selective breeding of Nile tilapia (o.niloticus) in WorldFish • Selective bred Nile tilapia outperformed the most widely farmed strains of Tilapia in Asia by growth and survival rate • 85% growth increase over six generation • Yield improvement of 25-78%, depending on local conditions

42. Aquaculture R&D: Technology Need & Prospect 2) Increase Productivity in Aquaculture • Genetic modification for improving quality and quantity of fish • developed strains of genetically modified salmon for potential use in cage aquaculture in China and India • benefits of genetic modification includes: • survival of endangered species • improve the reproductive success • address consumer issue such as taste and aesthetics • comes with significant controversy and risk

43. Conclusion • Challenge for aquaculture is to expand production to meet the future shortfall in fish supplies • Greater need for enforcement mechanisms for sustainable and environmentally safe aquaculture in developing countries • Aquaculture for the Poor • Devolution of institutions to ensure access to resources • Equal opportunity to the poor to access inputs and market

44. Conclusion • Fish for the poor at affordable prices • Semi-intensive and extensive aquaculture of low value food fish • Mass-production of low-value food fish by small-scale producers • Balancing fish trade for the poor • Greater access to export markets, and fair share of benefits for the poor • Inclusion of small-scale producers and women in trade arrangements • Pro-poor technology and policy support • Credit and infrastructure • Low-cost and low-input technologies • Increased institutional and infrastructure support for diversification of production and trade by the poor households

45. Thank You