The Indonesian Seafood Sector: A Value Chain Analysis14 January 2013
The Asian region is a major supplier of fish products to the EU market. Over the period 2005-2010 in particular, the aquaculture sector in some Asian countries became an important producer as well as exporter of whitefish and shrimps. This article provides a summary of the Indonesian seafood sector, compiled for the Centre for the Promotion of Imports from developing countries (CBI) by LEI, part of Wageningen UR.
Within the Asian region, CBI is currently exploring the possibility of developing integrated programmes for the seafood sector for specific countries. This follows up on CBI's current sea-food activities in Indonesia with the Ministry of Marine Affairs and Fisheries (MMAF) and the Surabaya Seafood Centre.
Based on the results of the desk study, which was carried out in phase one of this seafood export VCA, the following subsectors in Indonesia were selected for value chain analysis:
- Pangasius and tilapia
Total cultured shrimp production reached 400,000 tonnes in 2008 but then fell back to just over 300,000 in 2010. The main reasons for this decline were production problems and crop failure caused by bad weather. The only two important species for exports are Pacific White and Black Tiger shrimp. Black Tiger shrimp accounted for 36% and Pacific White shrimp for 64% of total production in 2009. Although the geographical production of Black Tiger and Pacific White shrimp varies slightly in general, production is concentrated on the island of Sumatra (including Lampung), which accounts for 42% of the total shrimp production. On Sumatra, 64% of the total production volume is Pacific White shrimp. Three main bottle-necks for the export potential of the Indonesian shrimp subsector have been identified as a result of the desk study, the field work and the validation workshop. These are presented in Table 1.
The Indonesian shrimp sector is relatively mature and professional. While there are still companies that need to find their way to the high-end international markets, most large and medium-sized companies have well established links with the EU, the US and Japanese markets. Some of the large companies have integrated farms that guarantee them a minimum volume of quality shrimp which is certified by ACC, Naturland or GlobalGAP. These mature companies do not necessarily need further assistance to increase their export volumes to the EU markets. However, some of the small and medium-sized companies that currently do not yet have EU approval need support to obtain EU approval.
Furthermore, as a result of the maturity of the sector, there is great potential for increasing the share of sustainable certified products. As many of the large and medium-sized companies have their own farms, the barrier to investing in certification is low compared with companies that do not have their own farms. If sustainable certificates such as ASC become a pre-requisite for exporting to the EU market, some of these companies will need help applying for certification. However, an important question is whether these companies might be able to move towards certification on their own.
Seaweed production has increased significantly over the past few years and reached almost 3 million tonnes in 2009 and even 3.6 million in 2010. All this seaweed is documented as Gracilaria and Eucheuma species. Currently the export volume of carrageenan is still limited. However, as the Indonesian government has decided to limit exports of raw dried seaweeds, it can be expected that new processing facilities for carrageenan will be built and production and exports of the value-added product will rise rapidly. Sea-weed exports are dominated by raw dried seaweed. As a single market, China, Vietnam and the US are particularly important. However, the EU as a whole is the second largest market after China. All importing countries import raw dried seaweed from Indonesia as a raw material for the local carrageenan processors. Five main bottlenecks for the export potential of the Indonesian seaweed subsector have been identified as a result of the desk study, the field work and the validation workshop. These are presented in Table 2.
As a result of the industrialisation policy of the government it is expected that new processing facilities for carrageenan will be built and that production and exports of value-added products will increase. If the number of processing establishments and processing capacity is increased by creating an enabling environment for investors and processors and by disseminating knowledge about seaweed processing to interested companies, new opportunities will arise. Several seaweed processors are interested in the EU market but lack both the understanding of EU regulations and an overview of market opportunities in the EU. Export companies require additional assistance from the government and donor organisations to in-crease their export volume and value of value-added products to the EU.
Skipjack is the most important tuna species for the Indonesian tuna sector. During the period 2006-2010, a yearly average of about 300,000 tonnes of Skipjack was caught. Yearly catches of Yellow fin tuna amount to 100,000 tonnes. Other tuna species with high catches are Frigate tuna and Eastern little tuna. Besides the catches of tuna species mentioned in the table below, small amounts of Bullet tuna and Bluefin tuna are also caught. Canned tuna is the most exported product type in tuna production. In 2010 almost USD 190m of canned tuna was exported. Although the EU, US and Japan are important markets, several countries in North Africa and the Middle East also import significant volumes of canned tuna from Indonesia. Six main bottlenecks for the export potential of the Indonesian tuna subsector have been identified as a result of the desk study, the field work and the validation workshop. These are presented in Table 3.
The bottlenecks for the Indonesian tuna industry occur at several stages of the value chain. Because processors and exporters mainly depend on the catches of the Indonesian tuna fleet, it is essential to optimise the potential of the fishing fleet. Better handling and storage of tuna can produce more high-quality tuna for export, benefitting processors and exporters too and preventing the need to further exploit tuna stocks. As there are many small landing sites, it is also crucial that tuna landed at these sites can be transported efficiently. Although several exporters of frozen and canned tuna are already EU certified, there is still potential to help small exporters meet EU requirements. Furthermore, there is a growing demand for sustainable and eco-labelled tuna in the EU market, which could have potential for Indonesian ex-porters. Also the lack of traceability throughout the entire value chain implies that support for fishermen, middlemen and processors/exporters is required.
Pangasius and Tilapia Subsector
The production volume of pangasius and tilapia has increased significantly over the past 5 years, with production of both species tripling between 2007 and 2010. The most important production regions for both species are in Sumatra, Java and Kalimantan. Currently, pangasius and tilapia tend to be for domestic consumption. At the moment, pangasius in particular is not exported at all. Tilapia is also largely domestically consumed (+- 80%) but it arguably has a much higher export potential than pangasius. The government is currently developing policies to boost exports of tilapia. Due to the favourable climate in Indonesia, tilapia can be produced all year round and thus compete with tilapia from China that is only produced during the hot season. Six main bottlenecks for the export potential of the Indonesian pangasius and tilapia subsector have been identified as a result of the desk study, the field work and the validation workshop. These are presented in Table 4.
The bottlenecks that have been identified occur at all the different stages of the value chain. Compared with other subsectors, most of the production comes from small-scale producers. To be able to increase exports, this subsector has developed from many small-scale producers to a smaller number of large-scale producers. Increased collaboration between farmers might result in the creation of cooperatives that can supply producers and exporters with a more stable supply of fish. These cooperatives would also have a stronger position within the value chain. For pangasius, it was also mentioned that Indonesian producers would be better focusing on the domestic market rather than facing competition with Vietnamese pangasius. The contribution of producer and export associations to solving bottlenecks might be underestimated. In general, support at production level to produce good quality fish in the long term could also benefit processors and exporters.
Further ReadingYou can view the full report by clicking here.