Value-added products and trade
Surimi is a popular example of value-added fish products
FAO/FIIU Photo Library
There are several factors that explain the choice to add value to products. On one hand, producers and exporters aim at satisfying the increasing demand for value-added products from consumers, aided by demographic and economic changes. At the same time, governments of countries with fish resources wish that value addition takes place in their own countries rather that in the importing country as it is thought to benefit job creation and higher economic activity.
Factors in value-adding
However, a number of factors make the strategy of value-addition quite complex and not at all clear-cut. On one hand, value-added products generally face higher import duties than unprocessed products or raw material. At the same time, value addition frequently involves large investments in buildings and equipment. This not only decreases flexibility and increases vulnerability in situations with uncertain supplies of raw material, which often is the case for many fish stocks, but also channels large amounts of scarce economic resources into fixed capacity. In addition, production, sales and distribution of value added products often require large economic resources for marketing and promotion, which smaller companies usually do not possess.
In conclusion, value added production is just one of many possible strategies that must be considered by a company or by a policymaker. Alternative uses of the relevant economic resources must be evaluated in order to arrive at the optimal long-run strategy.