Part II - Plenary and Guest Lectures

Policy Making and Planning in Aquaculture
Development and Management
Plenary Lecture I

Ulf Wijkstrom1

Fisheries Department, FAO, Rome, Italy

 

Wijkstrom, U. 2001. Policy making and planning in aquaculture development and management, Plenary Lecture I. In R.P. Subasinghe, P. Bueno, M.J. Phillips, C. Hough, S.E. McGladdery & J.R. Arthur, eds. Aquaculture in the Third Millennium. Technical Proceedings of the Conference on Aquaculture in the Third Millennium, Bangkok, Thailand, 15-21 February 2000. pp. 15-21. Bangkok and Rome

 

Ladies and gentlemen, and friends:

It is indeed a pleasure to be here at this Conference, a great opportunity to meet friends of yesterday and to make new ones. I should thank Dr Pillay for this. He brought me into the Aquaculture Development Coordination Project (ADCP) and aquaculture. I should thank former colleagues, many of whom are here: Chen Foo Yan, Chua Thia Eng, Jim Kapetsky. Many I miss – foremost among them Joseph Kovari and Michel Vincke. All have been great friends and teachers.

First of all, what I will tell you during the next half-hour or so is my view, as a long-time staff member of the Food and Agriculture Organization of the United Nations (FAO), about policy and planning in aquaculture. It is what I would try to convince my colleagues to accept as an FAO position on these matters, if asked to do so. However, they have not had the chance to endorse or reject what I will tell you. This will permit them to intervene in the debate, and I expect they will, as I know they do not all agree with me on several points below. We should all benefit from the exchange.

Is it useful to address this subject globally? I believe it is useful to do so. There are three main reasons:

Fish farmers – one motive

As we all know, there are an immense variety of fish farmers. They vary in the technology they use and in the species they culture, and are active in a range of differing economic and social contexts. However, they do have something in common.

  They all, with very few exceptions, will do their best to improve the livelihood they derive from fish farming. They will attempt to improve returns. They will try to reduce costs. They will try to make the animal or plant they raise more acceptable to those who buy it. For some, this continuous striving to improve will lead to a substitution of species.

I believe these actions constitute the essence of the farmer’s policy and provide the context within which he/she plans and manages his/her activities. I do not believe much can be said usefully in a general manner about how he/she goes about this task, and so I will say no more about how the individual farmer should, could or will manage and develop his/her farm. But, established fish farmers may want to take action as a group, and I will return to this subject.

So I will talk mostly about “public sector” policy making and planning for aquaculture development and management. I said I had three reasons for believing that it is feasible to talk meaningfully about policy development and planning in a global perspective, so what is the second one?

Public administrations – uniform assignment

The way I see it, in almost all countries the public administration should promote an economic and social environment that is optimal for the fish farmer while ensuring that his/her activities do not cause undue costs for others. Thus the public sector intervenes to promote efficient production; to protect the environment, including ensuring biodiversity; and to ensure that the evolution of the sector is socially acceptable.

 

 
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Thus we have a situation where fish farmers as a group have fundamental concerns in common - and so do the civil servants tasked with supporting and guiding them - thus a global discussion of public aquaculture policy may have some merit.

Globalization

The third reason has to do with globalization. The “open market economy” tends to be a part of globalization. Governments increasingly adopt open-market economies as a framework for their economies. Even the poorest economies are drawn into international economic relations. No economy can remain isolated, and issues in economic management rapidly involve most countries. This is the third reason why I believe countries can learn from each other in policy development and planning, also within the narrow area of aquaculture.

But, the topic is still enormously large. Not much can be said in half an hour. However, the conference programme states that plenary lectures “are meant to draw a scenario of the state and prospects of aquaculture and outline the requirements for its development.” I will try to do that from the perspective that has been given me: that of policy formulation and planning for development and management of aquaculture.

To guide myself I have added a subtitle: “What can the public administrator do to facilitate the life of the fish farmer in the coming decades – or help him get started if he has not yet begun?” I will start by saying a few words about the situation and possible role of the public sector in countries or regions where aquaculture has not yet started or taken off in any meaningful way. I will then look at policy development and planning in countries or regions within countries in which aquaculture is an established sector of the economy. I will try to pay attention not only to issues which are still with us, and those which seem about to appear from within the sector, but will also look out for those that will arrive from outside the aquaculture sector proper.


Regions/countries with little or no aquaculture

I will start by going back to basics: do we need a policy at all?

 

History

What does experience tell us? That many countries – with no sector or at the time when they did not have any sector – at one time or another adopted policies aimed at positively trying to create a sector. They conducted surveys to identify which species/culture systems would be possible to pursue, then conducted both research and training aiming to get the industry going, at times trying to speed up developments by economic incentives.

In some countries, aquaculture developed. In others, it did not, or the results were modest compared to expectations or targets. In those cases I am familiar with, I believe the reason is basically one of an inadequate balance between costs and revenue for the concerned enterprises or farmers. Revenues did not, or were not expected to, cover costs. That is, in my view, a minimum condition for the sector to take off.

However, for some sectors of the industry in some countries, the initiatives have come from the private sector. In fact, I do not believe there are many countries left where enthusiasts have not attempted to start culture of some form or another, with or without the support of governments. Sometimes they succeeded, on other occasions they found they did not have sufficient capital, or that the market was willing to pay a lower price than expected, etc. However, sometimes they did succeed and externalities were contained, or they did succeed and results – while being acceptable to the fish farmers – were negative for others; that is, externalities were not contained.

Lessons

I draw two lessons from the above. The first lesson is that it is not possible to substitute long-run, positive economic farming results with a large amount of public-sector efforts dedicated to developing policy and plans. I have some personal familiarity with Gabon, Sweden and Tunisia. In these countries, governments have not put considerable efforts into developing policies and plans, and relatively little has come in terms of aquaculture production. There are probably more examples. I rest convinced that, if the economic conditions are not there, there is very little that can be usefully done by public administrations. Generally, they have neither the means nor, in fact, the task to create such conditions.

 

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The second lesson is that unless some form of legal structure is in place, considerable harm can be done through unregulated, uncontrolled aquaculture development.

That is a reflection on the past. What is next in these regions where aquaculture has not yet established itself? First of all, globally, aquaculture is set to grow. We believe in FAO that capture fisheries will expand only slowly during the coming decades; so the aquaculture enthusiasts will come back. Thus it would seem to be imperative for public-sector administrations in countries with no or only a very small aquaculture sector to make certain that they have at least an appropriate minimum legal framework for the industry. I see three components of the legal framework: basic legal texts, procedures for issuing aquaculture permits and zoning for aquaculture.

A few words about these. I expect Annick VanHoutte will tell you more.

The basic legal texts should make certain that aquaculture is a recognized economic activity enjoying – particularly in respect of the use of renewable natural resources - the same rights and obligations as farming, fishing and forestry activities. Furthermore, these texts should be clear about how the sector should be managed.

The procedure for issuing permits should identify the species that may be cultured and the technologies that may be used, specifying limits inter alia related to possible externalities derived from practices employed in the search for fish health and in the management of aquaculture waste. The procedure should also specify the administrative procedures and the information requirements linked to applications, as well as establish procedures to be followed in the interest of transparency and consultation with those directly concerned by the granting of an aquaculture permit.

Zoning: The main purpose of delimiting geographical areas within which aquaculture will be allowed is to address the issue of equity. This would seem to be particularly important for marine areas. The general notion in most countries is that the sea belongs to all. The issuance of aquaculture permits is contrary to this belief, and the very idea runs into opposition, and not only from direct users of the water areas concerned. When establishing a zone these issues must be addressed squarely.

  The difficult scientific/political issue here is to determine the amount of alteration that is acceptable to the marine milieu and the landscape. The great attraction is that the issues are addressed once, and hopefully for all, for the zone as a whole and are not decided on the merits of any individual prospective fish farmer.

Thus, a partway conclusion of mine at this point is that this legal framework should be a priority in all countries where it does not exist and where there is a likelihood that aquaculture can develop.

But, some of you will say, should we not do more? A legal framework is not good enough – will not by itself generate a full-scale aquaculture sector. So let’s take a more positive approach. I am sceptical, and believe public administrations should be hard-nosed and selective at this point. There are a couple of reasons for this.

Technology transfer: In today’s world - and even more so in tomorrow’s - technologies are moved around the globe rapidly by entrepreneurs in search of low-cost locations for production. This is happening, and will happen with increasing frequency. It seems to me that this is the most likely avenue for the spread of new technologies and the practice of commercially oriented aquaculture to countries where it is not yet widely practised in Europe, Latin America, Africa and Asia.

In the poorest of the countries that do not have an established aquaculture, I do not believe there is much of an alternative. I believe, in fact, that economically self-sufficient aquaculture will take off by producing for urban markets, most of them, foreign urban markets. The local markets will not be wealthy enough and consumers, for reasons of economy, will be carefully considering substitutes.

Thus, in my view the fastest way of starting a sector is by inviting already established entrepreneurs; but before doing so, the minimum legislative package should be in place, at the very least.

Infant-industry argument: What are the alternatives to inviting foreign entrepreneurs? Some of you will argue that the “infant-industry argument” applies. That is, that there is a “potential” but the potential will not be realized because the potential producers cannot make the initial investment or cannot compete against established entrepreneurs supplying possibly foreign markets. Therefore, some economic support should be given to those who are willing to start aquaculture.

 

 
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The support should permit the sector to overcome initial economic difficulties, and it should be withdrawn after a brief period.

This argument is not generally valid in wealthy economies. In less wealthy ones, it has more validity but should be inspected on a case by case basis. In fact, with growing globalization and the relatively large share that international trade has for several aquaculture products, there will be a growing international opposition to direct governmental transfers in favour of aquaculture producers, or of other forms of shielding domestic producers against foreign competition.

Government obligation: Others will argue that it is the duty of the public sector to provide “basic support” to the industry. Potential producers should be supported through aquaculture research, training of aquaculture technicians and extension of technologies.

Most poor countries do not have the resources required to develop commercially viable technologies for local species not yet subject to culture. To my mind, to do so ahead of the establishment of a sector should require exceptional conditions. Much of the work needed for technology development and adaptation is costly. It would benefit from international cooperation, perhaps of the kind initiated by the International Center for Living Aquatic Resource Management (ICLARM) for the use of traditional animal breeding technologies also in the field of aquaculture.

But, let us end on a somewhat more positive note. I would say that government policy in developed economies, at a minimum, should focus on informing potential entrepreneurs and financiers. It is important that they receive up-to-date information on technologies, markets and the best intelligence about possible future developments.

Exception – reducing poverty and improving nutrition: There is, of course, an exception to all of what I have just said -that is the case where aquaculture can serve as a means of reducing poverty and improving nutrition. The fact that aquaculture has, and will continue to have, also this role is the main reason for FAO to be closely involved in this activity. However, experience tells us that also, in these regions, it is essential to proceed with care.

  Economic activity: Also, for the poor, fish farming is an economic activity. There is no doubt about this; the poor can ill afford hobbies. The poor will get involved in fish farming or aquaculture activities only if they believe that it will improve their income (in cash or kind) and will only continue the activity if that proves to be the case.

Cheap fish for poor people: At times in the past, the stated objective of these policies has been to make the poor people produce cheap fish for other poor people to buy. If such a policy is pursued, it should be recognised that it is, in principle, contrary to what the farmer in his role as producer wants to produce. He/she wants to produce expensive products so that his income increases. If the policy is seriously pursued, it is likely to need increasing subsidies.

Subsidies – indefinitely? The first issue to settle is to see that aquaculture – usually some form of fish farming – is indeed the best alternative, given the objectives of better nutrition and food security. Once that is done, direct subsidies should be avoided as far as possible. If they need to be provided, it is essential to maintain them as long as necessary. It would be cruel to withdraw them before the activity has become self-sustaining.

Diversification vs. specialization: The second issue to remember is that introduction of pond culture, with or without association with other livestock, often represents a diversification. However, with economic growth, specialization is more likely than continued diversification. Thus it is likely that in any given farming population, as economic growth occurs, the number who continue to be active in fish farming will decline. Some will remain and probably expand their operations; others will abandon this activity. However, this does not mean that it has been a failure. The opposite may be the case. Aquaculture can have served as a stepping stone to a higher living standard.

Finally, I would like to draw your attention to the fact that in economically underdeveloped regions, the challenge for the poor is how to obtain a chance to have an occupation from which they can derive sufficient income to provide a decent life. Where most aquaculture is practised today – you have that chance if you have access to land and water, that is, if you have access to natural resources, you have a base with which to earn a livelihood.

 

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The information revolution and globalization of markets will cause change in rural areas to be much faster during coming decades than it has been. The technologies used in agriculture, forestry, fisheries and fish farming will change with increasing speed. This will be reflected in changing values of land. In order not to be displaced, the poor need to acquire the knowledge needed to realize the income from the land.

In my view, the task of the public sector should be one of attempting to anticipate change by preparing rural producers to become part of the change. If not they run the risk of being pushed aside by it. Information about developments in aquaculture should also be provided to them. They should be encouraged to form producer associations and to improve their technical know-how.

I conclude for regions without a sector, by saying that it is important to elaborate a policy for the management of the sector that will help ensure its development. A policy that favours development (in the sense of providing support to producers) and forgets management may be heading the wrong way. Finally, it is important to remember that the poor also count their money.


Countries, regions with well-established aquaculture sectors

In these regions, the minimum legal texts are often in place. Where they are not, it is urgent to get them into place along with institutions and staff to make them effective. The industry and the government then need to keep them up-to-date; that is, to see that they reflect economic and technological realities, inside and outside the aquaculture sector.

However, we all know that the laws do not solve all the problems of the sector, and in particular, there is no guarantee that they will be effective in handling future ones. I will address some of those I see, from the policy and planning framework. I will classify them under: technology, markets and “spill-over”. I do not presume to identify how they should be resolved; I highlight them simply because I believe they need to be dealt with.

However, before discussing these, a few words about the regulatory framework and its implementation.

  It would be useful to develop implementation plans for this framework. Such plans should consider inter alia the following issues:

Up-to-date: First of all, the framework needs to be kept up to date. After all, it was designed to handle the latest technology at the time of its development. It should, therefore, evolve as technology and economy evolve. A joint government, civil society, producer group should be established to review these issues.

Costs: The public costs associated with implementation should be kept as low as is reasonable. The level should reflect the costs to society of not monitoring the adherence to the framework by the farming sector. These costs should be added to the direct costs of implementation and a minimum sought.

Incentives versus other instruments: The plan should specifically review the possibilities of gradually replacing some of the command-and control-measures by economic incentives.

Role of producers: The introduction of incentives may go hand in hand with a larger role for producers, probably as producer associations, in the management of the sector. The plan should review and establish a schedule for the gradual transfer of management responsibility from public administrations to producers.

Civil society: Also, more or less formal groups in civil society may demand a role in the management of the sector. Their role should be agreed with producers and the public administration.

Technology

The sector faces a number of technology issues: feed; new species, including genetically modified organisms (GMOs); and health.

Technological developments outside the aquaculture sector in communication, transportation and food preservation will lead to better knowledge of distant, often foreign, markets and provide the economic possibilities to supply them with high-quality products. Technological developments in various maritime industries will feed into the aquaculture equipment sector, and technologies involving offshore, submersible, automated culture units will come into increasing use. These developments will make it essential to modify parts of the legal framework.

 

 
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Aquaculture feeds: The issue is global; it is one where the individual producer has little possibility to play a role. Informed observers believe that by the end of this decade the aquaculture industry may absorb as much as 70-80 percent the world fish oil production and at least 50 percent of the white fish meal production. Fishmeal will also continue to be demanded by the livestock industry.

Interests in the industry differ and therefore, also the approach used in dealing with the issue. The producers of fishmeal and oil, of course, would like to see the demand grow even further, while users look for substitutes. Research in support of both strategies is carried out in the industry and by university-based scientists. The role of the public sector is foremost, to ensure that research results come to good use, by keeping aquaculture producers up-to-date on developments.

Other factors of production: Land and water - will they be available in the quantities needed? Yes, but not perhaps at a price that can be afforded. They are basically difficult to move, so in technologies where they are needed in large quantities, production sites will be selected accordingly, that is, essentially to sites where human population densities are low. Or, technologies will be modified. Where fresh water is increasingly in short supply, closed recirculating systems, then relying on intensive feeding, may be used. However, in the more distant future it is not easy to see what will happen. If desalination technology becomes very efficient, we may be in a situation where we have more fresh water available then we thought, especially if simultaneously gene technologies permit grain (wheat, barley, rice etc.) to be grown in salt water.

New species: It is indeed rare that the individual producer manages to domesticate new species on his own. It seems often to be a drawn-out and costly undertaking. Considerable work is done on this, particularly by industries in wealthy economies, and especially amongst those for which the fishery sector is of vital economic interest. It is in these industries and countries that most new domestications will occur. In countries with large aquaculture production, but spread out amongst a large number of small producers, the sector faces a bottleneck, and this is an area where it would seem to me that governments should concentrate their resources available for research and development. The fisheries aquaculture administration should pursue a policy that facilitates such research in the public and private sectors.

 

Genetically modified aquatic species: My colleague Devin Bartley tells me that so far only a few genetically modified aquatic species have been brought into commercial aquaculture operations. But, the know-how to develop genetically modified fish is spreading. So far, consumer reactions to genetically modified foods have been – at least in Europe – hostile. The aquaculture industry would probably find it to be in its interest to join forces and agree, jointly with governments and consumer organizations, on a protocol to be followed by anyone intending to develop commercial cultures using genetically modified aquatic species. Once agreed, the protocol would become part of national legislation. To me, it seems important that such a protocol be in place before the industry develops genetically modified organisms (GMOs) that satisfy the desires of the consumer more than the economic needs of the producer, which is now the case. The reason is that there is no reason to believe that such modifications are more benign to humans than modifications that makes life easier for the producer.

Markets

Natural limits: As for any other agricultural or livestock product, the consumer also imposes limitations on the aquaculture sector. The salmon industry has experienced this and confronted it inter alia with generic advertising. The Mediterranean marine aquaculture industry is getting ready to do the same. In America, the catfish industry has faced such limits; so has the culture of milkfish in the Philippines and rainbow trout in Europe. Also, in the future the industry will face market saturation.

Created limits: Besides quality and price, other considerations may affect the size of the market. In large parts of Europe and North America, products from capture fisheries and aquaculture have a bad name with many consumers. Both industries are seen – fairly or unfairly – as doing harm to nature. This is not only a constraint on the aquaculture licensing process, but it also reduces the size of the market. Where industry associations are strong, they need to do something, and where the public understanding is decidedly mistaken, the public administration could intervene and support the industry in its search for a balanced view by the general public of the industry relationship to nature.

 

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There is also the possibility that capture fisheries will, through eco-labelling schemes and other means, create niche markets. They would do so, as one of the better avenues to increasing income is by increasing unit value, as the near-term possibilities to achieve sustained increases in volume are limited. One strategy for creating niche markets is to emphasize the healthy quality of its wild product – in contrast with the “unnatural” products of aquaculture. Again, it could be a task for the public sector to try to forestall any “marketing-war” between aquaculture and capture fisheries, as it would probably be detrimental to both industries.

Spillover issues

There are several: substitutes, subsidies, cost-recovery, the information explosion and increasing globalization.

The first spillover I will say a few words about is that of substitutes. First the almost perfect one – fish caught in capture fisheries. The thinking in the Fisheries Department of FAO on this point now is that by the middle of the next decade there will have been some expansion of capture fishery landings. Production is likely to oscillate around at least about 100 million mt per year from capture fisheries in marine waters, some 85 million mt destined for human consumption. Thus a reduced portion of small pelagic species would be used for reduction. These figures are tentative and will be revised in the course of this year.

Consumption of terrestrial meats: The livestock industry is predicting a rapid growth of production; average consumption reaching in developing countries some 30 kg/capita by 2020 (according to International Food Policy Research Institute (IFPRI)/International Center for Living Aquatic Resources (ICLARM)/FAO), and importantly, this would happen under stable, or even slightly falling, relative prices for both meat and grains. This will impose a constraint upon retail prices for fish in developing countries. The less well-off part of the populations will have a viable alternative to fish. As I said before, this will put a lid on possibilities of local aquaculture production for local markets. The stage will be set for continued growth of fish exports.

  Subsidies: The practice of providing financial transfers in the fishing industry is a subject of much controversy amongst World Trade Organization (WTO) members. The issue was one of the very difficult subjects in the negotiation of the recent International Plan of Action for the Management of Fishing Capacity. The salmon aquaculture industry, both in Norway and Chile, has already experienced international controversy related to alleged subsidies. As subsidies to the capture fisheries have been significantly reduced during the last 15 years, it seems more than likely that the concern – essentially of large fish-exporting countries – will turn to the aquaculture sector. Strong arguments will be made for the elimination of all subsidies also in the aquaculture sector. If subsidies to fisheries become part of a future trade negotiation in WTO, I suppose that aquaculture produce will be included.

Cost recovery: Closely related to the issue of subsidies is that of cost recovery. Some countries are starting to request that the capture fishing industry refund to the public budget the cost of the public-sector management of the sector. Where this is the practice fishers will, of course, argue that all those who sell to whatever market they sell to, should do the same. Compatriots in the aquaculture industries will be first to feel the pressure; those abroad will be included as this argument is extended to all those who share the same export markets. Industry organizations would probably do well to consider how to tackle this issue.


Conclusions

It seems to me, that in the presence of developed aquaculture sectors, the public administration vis-à-vis these sectors should have a somewhat different policy than that advocated vis-à-vis areas where no aquaculture exists, assuming that the legal framework is in place and operational. The policy should be to establish an early warning mechanism and consultation procedure facilitating public-sector response to the number of issues likely to befall the sector from outside itself.

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1 Ulf.Wijkstrom@FAO.Org

 

 
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