3.1 General agricultural development policy
The development of aquaculture in China will be influenced by ongoing economic reforms and agricultural policies. Food self-sufficiency has been, and will continue to be, the central goal of China's agricultural policy. Both the Ninth Five-year Plan for 1996-2000 and the National Long Term Economic Plan call for continued growth of agricultural production, advances in farmers' annual income of 4%, near maintenance of food self-sufficiency, and elimination of absolute poverty. Strategies to achieve these long-term goals include:
However, despite these bold goals, which may be implemented over the coming years, the mandate of grain self-sufficiency will largely define the limits of other agricultural activities, including those in aquaculture. To ensure sufficient food crop production, we expect that present limitations on converting cropland to other uses will remain in effective in the future.
3.2 Land tenure policy
China initiated rural economic land reforms in 1979. Production teams distributed agricultural land among households depending on family size or the size of the family size and additional workers; yet ownership of the land remained with the collective. A number of publications highlight the importance of this reform for the long-term growth of agricultural production. The effects on food security and alleviation of poverty of equitable distribution of land to farmers are obvious.
Renewal of land contracts constitutes a significant shift away from the past in the government's agricultural policies. New land regulations, introduced in 1994/1995, offer 30- or 50-year extensions of land contracts from the time the original contracts expire. Farmers may also acquire rights to use the land in return for payment, although the land is still owned collectively. Policy-makers designed transfers of user-rights to encourage farmers to invest in agricultural production, especially of grain, thus counteracting the ill effects of unclear land titles and small-scale holdings. The policy may also encourage land consolidation and agricultural commercialization. A recent land tenure survey conducted by the authors in eight Chinese provinces indicates that efficient land- and input-use and higher investments by farmers (due to well-defined land-use rights and tenure system) might boost agricultural production. Further investigation is necessary to determine the extent of possible increases.
As part of the rural system, the fishery sector shares most of the land tenure issues with the agricultural sector and is thus subject to changes in land tenure policies. For example, joint ownership of water is encouraged, and studies are being conducted to evaluate the results of this experiment. The government promotes investment in infrastructure for production, storage, processing and delivering aquatic products and encourages taking risks in bringing products to market.
3.3 Aquaculture ownership and production systems
China's aquaculture sector is divided into state- and non-state-owned sub-sectors. Until the late 1970s, the state sector used to dominate the supply side (production, procurement and rationing) of the fishery economy. Reforms that started in 1979 relaxed government controls in favour of market development. Currently, less than 20% of the aquatic market is estimated to be state-controlled. Non-state-owned enterprises include townships and village collectives, cooperatives, and individual households. This non-state sector responds to price signals and can increase supply quickly, when needed. As of 1997, production from the non-state sector amounted to 9 million t - seven times more than that from its state counterpart. Non-state aquaculture has a labour force of 12 million workers, 19 times larger than the number of workers engaged in state-owned aquaculture. Based on 1991 statistics (Xie and Qu, 1993; Guan, 1993), the water area managed by non-state producers was nearly 3 million ha, twice as large as the state sector's. A growing non-state sector in aquaculture seems to have transformed aquaculture into a more labour-intensive industry. It has certainly increased aquatic productivity.
Organization of the non-state sector follows the general outlines of rural reforms, which started in the late 1970s. Basic tenure arrangement is defined by the household responsibility system, with five variations since the early 1980s:
(i) The primary unit consists of individual households contracting production materials and water areas from villages. Households are responsible for reinvesting and managing aquaculture resources, and delivering products to markets. The owner of the resources, mainly the village unit, collects rents and fees.Table 11 shows the area under freshwater aquaculture for those farms that specialized in aquaculture production in the 1990s. The data are from the Cost of Aquacultural Production Survey conducted by the State Economic Planning Commission (SEPC). Due to the small sample-size of the survey, the size of farms selected by SEPC changed greatly over the years. Despite the limitation of the data, Table 11 provides some background information on the magnitude of aquaculture farming in China. For intensive production (mainly for fish raised in ponds), the average size of an aquatic farm run by an individual household is about two ha. It is much larger than the size of an individual household's farm specialized in crop production (0.4 ha/farm). Farm size under collective and state management was much larger than an individual household's (Table 11). It should be noted that many farms under aquaculture in east and south China are operated part time or do not specialize in aquatic production. For these farms, sizes of fish ponds normally ranged from 0.01 ha to 0.03 ha.(ii) The number of privately owned aquaculture businesses has been increasing. This includes enterprises such as:
- operations in self-owned water areas,
- processing facilities for water products,
- transportation and trading businesses.
(iii) Joint operations have been put in trials recently. Joint operations are usually formed as follows:
- farmers become partial owners of productive capital through shareholdings,
- farmers contribute investment to collectively owned businesses, such as storage facilities, harbours and fish farms,
- farmers form shareholding businesses.
(iv) Economic integration and cooperation has emerged across regions and sectors.
(v) Businesses under collective ownership have remained active in many areas, such as water-processing factories, collectively managed fishing farms, etc. (Xie and Qu, 1993).
China is a large country with enormous coastal and inland freshwater areas where aquaculture is practised. It has an estimated 2 million ha of sea beach and 12 million ha of shallow sea suitable for aquaculture. Seawater derives nutritious contents from inflows of a large number of rivers and provides excellent conditions for growing aquatic organisms. Before 1949, aquaculture production was negligible. Change came in the 1950s, when artificial propagation of seaweed succeeded. Introduction of laver culture followed in the 1960s. The 1970s saw a major development in shellfish production. Finally, successful introduction of prawn culture marked the 1980s.
Appendixes 1 and 4 summarize the basic trends of marine culture production in China. The tables show a great jump in marine aquaculture production from the early to mid-1950s, perhaps due to the emergence of seaweed culture. Introduction of shellfish culture was the force behind the growth in the 1970s. We lack exact production data for major species. In terms of area expansion (Appendix 4), shellfish production continued to accelerate through the 1990s. It enjoyed the most significant growth and currently accounts for more than 60% of production area. Shrimp and crab cultures received a big boost in the late 1980s, then decelerated in the early 1990s and they have been recovering lately. Their production area is second to shellfish, but less than 20% of total marine production. Marine fish culture remains small (less than 8% of total area) and steady over time.
The changes in marine aquaculture production reflect the impacts of technological complexity and cost factors. Algae culture enjoyed early success, because it is technologically less complex. Shellfish, prawn and crab cultures grew rapidly in response to growing demand and due to the cost advantage in culture production. Marine fish culture faces greater technological difficulties related to the nature of the life cycle of marine fishes and their potential for long distance migrations. Thus, marine fish culture is probably less cost-efficient compared to capture fishing, which might explain why its growth has been relatively stagnant.
China has a long history of freshwater aquaculture dating back to the fifth century B. C. By the time of the Ming Dynasty (fourteenth - sixteenth century), a well-developed system for culturing fish already existed in the Yantze River basin, Zhu-Jiang River basin and Tai-Hu Lake, Dong-Ting-Hu Lake and Bo-Yang-Hu Lake. The technology for mixing grass carp and chub cultures had already been developed. Written works existed on how to build fish ponds, mix fish species, on fish density, feeding, disease control, etc. Yet, until the 1950s, culture fishing was still a minor part of the freshwater fishery. Supply from capture-fishery dominated the supply from freshwater fishes in most periods (Appendix 2). In the 1960s, China's aquatic sector adopted the strategy of giving culture fishery priority in response to dwindling natural fishery resources and rising demand. In the 1970s, production from freshwater culture surpassed that from capture fishery. With the introduction of the household responsibility system and a free market for aquatic products in the late 1970s and early 1980s, farmers gained greater freedom in making decisions about production. Consequently, rural freshwater aquaculture, especially pond aquaculture, has become the major contributor to the growth of the aquatic sector. In 1997, freshwater culture production reached 12.3 million t, which amounted to 86.3% of the total production from freshwater fishery (Appendix 1).
Currently, output from pond culture accounts for more than 75% (Appendixes 4, 5) of total freshwater aquaculture production. Mainly local farmers are engaged in the business of operating fish ponds, and outputs largely serve local markets. Other sources of freshwater production are lakes, brooks and reservoirs, accounting for 6%, 6% and 8% of the total freshwater culture production respectively (Appendixes 4, 5). Full-time fish farmers and collective teams often manage these larger fish-culture systems.
3.4 Price and marketing reforms
Price and marketing reforms in the fishery sector are interesting not only by virtue of their large scale, but also because they have been expanding in the midst of a rapid transition from planning stage to market. Liberalizations in the sector took off earlier and proceeded faster than reforms in other parts of the agricultural economy.
Reforms in agriculture, because of its strategic role in the economy, have proceeded slowly. Gradual reform in China has its logic (McMillan and Naughton, 1991). In the first stage, reformers only implemented measures that were not expected to threaten food security or individuals. Reforms did not alter the institutional structure that was set up to provide abundant and inexpensive food to the urban economy. De-collectivization and administrative price-hikes improved incentives to farmers. During the early 1980s, leaders remained responsible for meeting the old ambitious goals in the food sector and did little to the rest of the economy. They left grain, fertilizer, seed and agricultural technology systems virtually unchanged, with the exceptions of horticulture and aquaculture.
With surprisingly little disruption, horticultural and aquaculture markets gradually and partially supplanted planned production and distribution networks in the early 1980s. By 1985, controlled distribution was totally removed. All forms of economic entities, individuals, private farms, collective farms, and state enterprises were allowed to procure and deliver fishery products to the market. Consumer rationing was abandoned at the same time. Rising competition raised the efficiency of markets and made them more responsive to consumer demands and also reduced transaction costs.
Relaxation of controls for aquatic products has resulted in a prosperous aquatic market. The state-run marketing channel is vanishing rapidly, and total transaction in the aquatic market is increasing dramatically. Based on a 1996 survey (YJLZJC, 1998), 20 million t of aquatic products were sold at market, a 27-fold increase from 1979. Share of the state-run marketing channel fell to 18% (3.6 million t). Aquatic products marketed by collective and cooperative enterprises accounted for 20% (4 million t). Private merchants sold 34% (6.8 million t). Procurement by the processing industry accounted for 12% (2.4 million t), and the share of direct producer-delivery was 16% (3.2 million t) (See Fig. 1). These numbers reveal the entry of non-state businesses into the market as the source of its expansion over the past two decades.
Price liberalizations and increased demand led to a substantial rise in aquatic produce prices (Table 7). Higher rates, for both procurement prices and retail prices, have significantly surpassed those of the three decades prior to 1978. Price margins have also been increasing along with retail prices. The average price margin exceeds procurement price by 10%.
Systematic price data for various species are lacking. Therefore, it is difficult to evaluate changes in the market and market consolidation from a price perspective. We have seasonal price data for iced hairtail and silver carp from 1989 to 1999 for six major urban markets: Beijing, Hangzhou, Wuhan, Xi'an, Jinan and Guangzhou (Figures 3, 4 and Appendixes 7-10). We also have price data for a shorter time period (1997-1999) for common carp and crucian carp (Figures 4, 5). Price data are normalized by 1998 CPI. A notable trend found in the longer data series indicates that prices were falling. Prices fell even more after 1997. The trend for the period before 1997 resulted from a surge in supply in response to rising demand. The trend after 1997 may be attributed to a general decline in demand throughout the whole economy. Another noteworthy phenomenon is that regional differences got smaller after 1997, which might demonstrate a more efficient aquatic market (price gaps were exploited more thoroughly) as profitability went down. Market consolidation improved with a slow economy.
Another feature of the aquatic product market is the new prominent role of the private sector in the transaction of fresh and live seafood. State enterprises have been reluctant to join transactions due to the high risk in the business and the high transaction costs associated with the sector. Private merchants are flexible enough to respond to changing market demands and deliver high-value, fresh, live seafood to consumer markets. Private businesses contributed to establishing markets for such exotic sea products as Australian prawns, Norwegian salmon, and some shellfish products, and these markets have expanded as far as inland China's northeast, northwest and southwest regions.
The government has taken an active new role in investing in the market place and in information services. Today, there are 302 large-scale markets for trading aquatic products both in producing and consuming areas. In 1997, 12.5 million t of aquatic products were traded in these markets, with a total value of 138.6 billion yuans. The Government has also consolidated the formerly scattered market information centres and established a network of 142 members around the country, facilitating the cross-regional transaction of aquatic products.
