2. AQUACULTURE ECONOMICS AND CONTRIBUTION TO THE GREEK ECONOMY

2.1 AQUACULTURE ECONOMICS

2.1.1 As in any industry, the total contribution of aquaculture to the national economy is the aggregate of the performance of individual aquaculture units. This contribution can be measured in terms of productive factor mobilization. Besides ordinary factors, such as labour, capital, and technological know-how, aquaculture requires a specific resource, i.e., a suitable aquatic environment. This aquatic resource should possess all the characteristics necessary to develop, in a more or less intensive way, production of aquatic animals or plants that would not occur in natural conditions without human intervention.

2.1.2 The rational use of the aquatic environment depends largely on access, the state of the art in production techniques, determining the areas appropriate to aquaculture, and the importance of other competing activities.

2.1.3 The availability of capital depends on the decision by private investors and banks, or on a voluntary choice by public authorities, to invest in this industry. The decision by private investors and banks is largely based on the anticipation of high profits and quick returns on their investments. This requires that production techniques must offer the opportunity to produce a product for which a market exists, or can be developed. Also, production costs must be low enough to realize a good profit on sales.

2.1.4 Labour depends on the availability of people trained in techniques of production and marketing, and of unskilled people needed to perform the work. Access to technical aquaculture know-how, directly or through transfer, is a major prerequisite to development.

2.2 THE GREEK ECONOMY AND THE CONTRIBUTION OF AQUACULTURE

2.2.1 The Greek Government wishes to establish a mixed economy characterized by a strong public involvement in investment and an incentive policy to compensate the very low level of investments. The capital market in the country is very limited. The inflation rate remains high (16 % in 1987). Interest rates are fixed by administrative decisions and are designed to support government subsidies and incentives policy. This control over financing systems should be progressively removed as part of the Government's five-year (1988–1992) development programme targets, and also as a consequence of EEC policy. Presently, the high cost of borrowing capital, the high cost of importation, and the lack of flexibility in state involvement are the main constraints to private investment.

2.2.2 Fishery production accounts for less than one percent of the GDP. Aquaculture production is 4.8% in volume of the fisheries total. Low productivity of adjacent waters and difficulties of access contribute to a large deficit in the supply of fish. Greece imports about one quarter of its total consumption of fishery products. However, this is still not sufficient to cover the strong demand, resulting in very high prices. Considering the local level of incomes, fish prices are perhaps the highest in Europe. High prices and shortages in some areas strongly limit the demand. Some markets, for example the tourist market, can be expanded. This, as well as export market opportunities, allows for optimism regarding aquaculture development: however, the economic feasibility of each type of activity must be assessed in a realistic way, and coordinated investment, incentives policies, and marketing actions must be set in motion.

2.2.3 If production from lagoons (to be enhanced by their rational management) is included in overall national aquaculture production, the present contribution of aquaculture to the Greek economy can be assessed as follows:

Detailed figures are given in Appendix 1. Available records do not permit the calculation of the net added value ¹ as a measure of the real wealth created.

2.2.4 If the targets fixed by the Ministry of Agriculture for aquaculture development by 1992 are met, the contribution should then be a total output of Dr 13 000 million, including Dr 5 000 million from lagoon production (see Appendix 1).

2.2.5 Many sectors are concerned with the development of aquaculture. They include the cement industry, water-use related industries (pipes, tanks, pumps, etc.), animal-feed industry, wood industry (cages), chemical industry, net industry, etc. In some areas the demand by aquaculture is not yet sufficient to create an interest among the industries. The feed industry, for example, is now starting to develop pelleted foods which could substitute foreign imports. Where feasible, such activities should be encouraged to reduce to the minimum the importation of products for aquaculture activities in Greece.

¹ The net added value is the part of the total value distributed to the profits to the productive factors and the state: wages, net profits and taxes. This concept is a useful way to assess the real contribution of an activity to the economy and to allow for its comparison with other activities in terms of wealth created and distributed.

Note: Values expressed in current (end-1987) terms, unless otherwise stated.

Exchange: US$ 1.00 = Dr 132

2.2.6 Despite its promising future, aquaculture is not developing in Greece as quickly as foreseen by the national authorities. Constraints include: difficulties of access to the water resources and to the technological know-how, enthusiasm of potential investors depressed by lengthy administrative procedures, and the results of the existing production units being far below the expectations. Hence, there is a need for a qualitative economic study of the main constraints responsible for the slow development in the aquaculture sector.

2.3 THE INVESTORS IN AQUACULTURE

2.3.1 The opinion that aquaculture will be developed by fishing people has been proved to be wrong. The experiences of Greece and other countries show that, except in the case of lagoon exploitation and management, the origin of the investors is vey heterogeneous. Small-scale producers, using well-known techniques, may have other sources of income. Larger scale investments are often made by professional people, such as doctors, lawyers, engineers, etc. Very big investments result from diversification strategies of large industries or from activities of banks. Such large-scale investors generally do not have any experience in fish-related matters. They are merely looking for high profits on investments without always being fully aware of the risks involved. These sociological factors should be taken into account when discussing aquaculture with potential investors.