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USDA GAIN: Fish Production


14 January 2013

USDA GAIN: China Fishery Products Annual 2012USDA GAIN: China Fishery Products Annual 2012

China's aquatic production in 2012 continues its growth trend, rising four percent to 58 million tons on aquaculture production gains fueled by domestic demand. Total aquatic trade value is expected to increase to an estimated $27 billion in 2012. US aquatic exports to China increased 1.6 percent to $945 million in the first ten months of 2012 but still face an aquatic trade deficit exceeding $1.3 billion. China's high import duties plus value added tax hinders US aquatic product export competitiveness for China's domestic consumption. Best prospects are for frozen fish, including salmon and plaice, and fishmeal

USDA GAIN: Fish Production

Total Aquatic Products Production

Total 2012 aquatic production is estimated to increase four percent over last year to reach 58 million tons, compared to the 56 million tons in 2011 and 53.7 million tons in 2010. Fish production accounts for 59 percent of the total aquatic production, followed by shellfish and crustaceans at 22.6 and 10 percent, respectively. Fish production is expected to continue its upward growth trend to reach 34.5 million tons in 2012, up from 33 million tons in 2011 and 31.3 million tons in 2010.

Table 1 China’s Aquatic Production (Unit: 1000 Tons)

Source: 2011 China Agricultural Statistics Report; *FAS/Beijing estimate

At the National Fishery Conference held in late December 2012, China’s Ministry of Agriculture (MOA) estimated total aquatic production at 59 million tons, up 5.4 percent over 2011. Within this total, aquaculture production was up 7 percent to 43 million tons and wild catch production was 14.8 million tons. An additional 1.2 million tons was attributable to wild catch from other territorial seas.

In 2011, Shandong, Guangdong, Fujian and Zhejiang provinces profited from favorable coastal locations and abundant freshwater resources/facilities to rank as the top four aquatic production areas.

In terms of freshwater cultured production, Hubei, Guangdong, and Jiangsu provinces are the largest producers. These rankings are expected to remain unchanged in 2012.

Table 2 China’s Top-8 Aquatic Producing Provinces in 2011 (Unit: 1,000 tons)

Source: 2011 China Agricultural Statistics Report

Aquaculture

China remains the world largest aquaculture producer with total cultured aquatic production accounting for about 70 percent of the world total in recent years, based on industry sources. Total aquaculture water area reached 7.83 million hectares (MHa) in 2011 from 7.65 MHa in the previous year, with the majority (164,000 Ha) expansion in freshwater facilities. While the majority of cultured facilities are fresh water due to available natural resources, growth in seawater facilities has outpaced that of freshwater facilities over the past four years, rising 33 percent between 2008 and 2011, compared to 15 percent for freshwater.

Aquaculture Area Growth Slowing

Overall, investment in facility expansion is slowing, with 2011’s 2.5 percent expansion cooling significantly from 2009’s 14 percent expansion. Government officials relate that environmental concerns and the rapid industrialization/urbanization of China’s coastal region are hampering further aquaculture expansion.

Aquaculture Production

Aquaculture (cultured) fish production dominates this sector with a total production of 22.8 million tons, accounting for 69 percent of total fish production in 2011. Carp remains the most popular cultured freshwater fish with total production of 15.6 million tons in 2011 (up from 15.1 million tons in 2010), accounting for 72 percent of total freshwater cultured fish production.

Tilapia, another popular cultured product, is estimated to reach 1.5 million tons in 2012, up from 1.4 million tons in 2011. After a decade of rapid development averaging an annual growth rate of 11 percent, cultured tilapia production growth slowed in 2010 following abnormal weather conditions, but rebounded eight percent in 2011. 2012 cultured tilapia production continues to rise in response to increased domestic and foreign market demand, with export volume climbing 12 percent in the first ten months of 2012 over the previous year. Some fairly serious challenges threaten the overall rebound, however (see following paragraph – Challenges). Guangdong, Guangxi, Fujian and Hainan continue to be the top four tilapia producers with combined production of 1.29 million tons in 2011, representing 90 percent of total tilapia production. Yunnan province increased its cultured tilapia production 30 percent this year to 77, 000 tons due to expanded facilities.

Total cultured catfish production is estimated at 610,000 tons in 2012, up from 598,000 tons in 2011 in response to dynamic domestic consumption. Cultured catfish production for export remains soft in response to uncertainty regarding pending U.S. import policies. Sichuan, Jiangxi, Hubei, Guangdong and Hunan provinces together accounted for 57 percent of total production.

Shellfish production, primarily seawater cultured, continues to rise with 2011 total production at 11.8 million tons, up from 11.3 million tons in 2010 (See tables 3 and 4). Shandong, Fujian, Guangdong, and Liaoning provinces dominate the cultured shellfish production accounting for 80 percent of total volume in 2011.

Cultured crustacean production in 2012 is expected to reach 3.4 million tons, a slight increase from the 3.3 million tons in 2011, in response to stronger domestic demand; catch production remains almost unchanged in 2011. Cultured penaeus vannamei (also known as white shrimp) production exceeded 1.37 million tons in 2012, up from 1.3 million tons in 2011, accounting for 40 percent of total cultured crustacean production.

Cultured freshwater and seawater shrimp and prawn are produced primarily in Guangdong, Jiangsu, Hubei, Zhejiang and Guangxi provinces. In 2011, Guangdong led shrimp production with total cultured production of 609,207 tons, compared to 554,000 tons in 2010. Of this amount, penaeus vannamei production reached 502,871 tons, up 12 percent over 449,900 tons in 2010.

Eel production is concentrated in Fujian, Guangdong, and Jiangxi provinces, and much of the production is destined for the Japanese market.

Table 4 China's Seawater and Freshwater Aquatic Production by Category (Unit: 1,000 Tons)

*FAS/Beijing estimates;** including marine catch of 1.1 million tons annually from other seas

Production Challenges

Tilapia Faces Disease and Competition

According to industry sources, streptococcus disease continued to adversely impact tilapia production in 2011. Experts believe deteriorating water environments and high-density farming has led to high bacteria counts. Inadequate quality inputs, including feed and fingerling stocks, and overuse of antibiotics have also contributed to disease conditions. These problems will continue to impact tilapia production and quality in the near future. China’s experts have enhanced research on new species with more stress and disease tolerance, and development of more specialized feed for tilapia at different growing stages and environments. The vaccine for streptococcus disease is still in trial stage and not yet used in production.

Reduced farm-gate and falling export prices, which have dropped from $3,298 per ton in 2011 to $3,181 per ton in the first ten months of 2012, are also expected to reduce profit margins for tilapia producers. In addition, exports by Vietnam of Basa fish have risen to the US because of low price and high quality and have taken significant market share from China’s tilapia export sales in the United States. For example, total US imports of Vietnam’s Basa fish increased 48 percent in the first eight months of 2011, much higher than the 26 percent growth for China’s tilapia exports to the United States during the same period.

The World Wildlife Fund (WWF) continues to promote its international aquaculture certification system, which if widely adopted by major importers, is also likely to impact China’s tilapia production and exports in the future.

Aquatic Catch Production is Shrinking

Total 2012 domestic catch production fell from 15.8 million tons to 15.3 million tons in 2011 due to limited availability of marine resources. Seawater catch production from other territorial seas was 1,147,000 tons in 2011, slightly higher than the 1,116,000 tons in 2010. Industry insiders believe it will be difficult to increase production significantly from domestic or other territorial seas.

Aquatic Product Safety Concerns

Domestic cultured aquatic product quality/safety remains a big concern for consumers. An MOA aquatic product safety survey indicates some aquaculture farms have been punished for the use of malachite green and the overuse of antibiotics. In August, MOA published administrative measures on the supervision of agriculture product quality and safety, which stipulates regulations on risk monitoring and sampling for all agricultural products.

Future Fishery Development Plans

In October 2011, the MOA published its 12th Five Year (2011-2015) Development Plan for Fishery. Significant targets under the plan include:

  • meeting the rapid growing demand for quality aquatic products by domestic consumers
  • emphasizing the balance between aquaculture development and ecological protection
  • reconstructing and standardizing 1,333,000 Ha of aquaculture ponds to raise productivity
  • achieving safety/quality targets for 98 percent of aquatic products
  • maintaining stable of growing marine fishery output in other territorial seas with target production of 1.3 million tons per year, up from 2010’s output of 1.1 million tons
  • licensing aquaculture production facilities (100 percent) by 2015
  • raising production to 60 million tons by 2015, with 75 percent from aquaculture (as compared to estimated 72 percent in 2011)

MOA has established agricultural product quality test stations in 1,200 counties (out of the total more than 2,400 counties) nationwide to supervise quality. To ensure the quality of aquatic products for export, MOA and the Administration for Quality Supervision, Inspection and Quarantine of China (AQSIQ) adopted a strict licensing regime for all export-oriented farms and processing establishments. MOA and AQSIQ conduct frequent field audits and aquatic products for export are subject to mandatory inspection and must be accompanied by AQSIQ inspection certificates.

Aquatic Processing for Domestic Consumption Continues to Grow in 2012

Most Chinese consumers’ still prefer live or fresh aquatic goods to processed products. Therefore, domestic consumption of processed aquatic products remains relatively small compared to overall domestic aquatic product consumption. Processed aquatic products using domestic raw material (mostly cultured products) are primarily export focused.

According to MOA, China had 9,611 aquatic processing facilities in 2011 compared to 9,762 in 2010. However, total processing capacity increased to 24.3 million tons from 23.9 million tons in the previous year, indicating a moderate consolidation in the sector. In 2011, 19.8 million tons of aquatic products were processed, significantly higher than the 17.8 million tons in the previous year and 18.2 million tons in 2009. Total processed aquatic product volume stood at 17.8 million tons, of which the frozen processed aquatic product reached 5.6 million tons, up by 1.1 million tons from 2010. This trend is expected to continue in 2012 as more frozen and frozen processed goods are shipped to heartland provinces, and the demand for frozen processed aquatic products by domestic consumers rises.

Aquatic processing bases are located in or near major aquatic production regions. Of the total 9,611 processing facilities, 6,413 (or 67 percent) are concentrated in Zhejiang, Shandong, Fujian, and Guangdong provinces. Shandong ranks first for processing capacity at 7.9 million tons per year followed by Fujian at 3.3 million tons. These provinces are also major aquaculture producers and are equipped with port and cold storage facilities. Many foreign enterprises have processing facilities in these provinces.

Aquatic Consumption Remains Dynamic

As China’s processing and distribution systems become more developed and consumers rising affluence increases their interest in a more diversified and nutritious diet, seafood consumption is on the increase. According to the National Statistics Bureau, the per capita consumption of aquatic products was 14.62 Kg per urban dweller and 5.36 Kg per rural inhabitant in 2011. Per capita consumption is expected to increase steadily, with strong growth potential in the rural sector.

According to MOA survey results (among 80 major aquatic product wholesale markets), the average wholesale price for aquatic products increased by 8.5 percent in the first eight months of 2012 from the previous year. The price increased by 9.7 percent for sea water products, and 6.9 percent for fresh water products. Prices for aquatic products are expected to grow in 2013, reflecting increases in the price of feed and other inputs.

Trade

Overall Aquatic Trade Value Likely to Hit Record $27 Billion in 2012

Total aquatic trade value in 2012 is estimated at $27 billion, up four percent over $25.8 billion in 2011. Total trade volume is expected to fall by two percent. According to MOA statistics, in the first three quarters of 2012, total aquatic trade volume stood at 5.86 million tons, down 2.4 percent, while trade value was $19.4 billion, up six percent over the previous year, respectively. Total aquatic import volume was 3.1 million tons, down 0.9 percent over the previous year; total aquatic trade surplus reached $7.5 billion, up $912 million over the same period from the previous year. Industry sources expect the 2012 total trade value will hit $27 billion. China’s aquatic export trade destinations (with export values over $100 million) rose from 17 countries/regions in 2009 to 25 in 2011 and will likely increase in 2012. Japan continues to be the largest export destination, followed by the United States and South Korea.

Exports

Export value is expected to rise to $18.5 billion, up four percent over 2011. This growth is mainly due to increased prices as volume is expected to fall from the previous year. Most Chinese industry insiders believe that a stable recovery of global economies support higher aquatic exports in the near future.

Re-export of Aquatic Exports Slowed in 2012

The aquatic processing for re-export slowed in 2012. According to MOA, in the first three quarters of 2012, aquatic products (with imported material) for export were 821,800 tons in volume, down 8.7 percent over the previous year. This export value accounted for 28.6 percent (down 2.3 percentage points over the previous year) of total aquatic exports. Weak demand by major overseas markets and the re-location of aquatic processing facilities from China to more competitive countries due to rising input costs in China, lowered domestic processing output in 2012.

Aquatic Exports with Domestic Material Increased in Value in 2012

According to MOA, total aquatic exports (with domestic material) in the first three quarters of 2012 stood at 1,775,100 tons by volume and $9.4 billion in value, down 1.3 percent and up 12 percent, respectively, over the previous year. Decreased export volume reflects an overall weak rebound in demand for aquatic products by major importing countries. The increase in export value is attributable to increased production costs. China’s industry leaders remain confident that total aquatic export value will continue growing though export volume will likely stabilize or decline in 2012.

Value Added Product Export Increases in 2012

Fish fillet (HS Code 0304) continues to be the largest export category with export value at $4.4 billion, accounting for 27 percent of total aquatic exports in 2011. Based on the Global Trade Atlas figures, in the first ten months of 2012, fish fillet exports accounted for 25 percent of total aquatic exports by value. The combined export value of prepared or packaged fish and caviar (1604) and prepared crustaceans and mollusks (HS Code 1605) has grown rapidly in value to $5.4 billion, accounting for 39 percent of total exports.

Tilapia Exports Continued to Grow

According to the Global Trade Atlas statistics, in the first ten months of 2012, total tilapia exports reached $913 million, up 8 percent over the $845 million in the previous year, although the export volume increased by 12 percent. In the first ten months of 2012, the United States remained the largest destination for China’s tilapia products, accounting for 48 percent of volume; however, net export volume also climbed to 137,427 tons, 24 percent higher than the previous year on low prices. If prices remain competitive, industry insiders believe the US will continue to be a strong export market for tilapia products.

Imports

Import value is estimated at $5.7 billion in 2012, almost unchanged from the previous year; however, total import volume is likely to be 2.6 million tons, down four percent over the previous year. Russia is expected to remain China’s largest supplier of aquatic products in 2012, followed distantly by the United States and Japan. Qingdao and Dalian continue to be the two largest arrival ports for aquatic products, accounting for 80 percent of the total import volume in first ten months of 2012. Well-established facilities, including processing factories in Qingdao and Dalian, solidify their status as the largest seafood import hubs in China.

Global Trade Atlas numbers reflect 1.6 million tons of fish/frozen (HS Code 0303) imports in the first ten months of 2012, a nine percent drop from the previous year. Although the import volume of flatfish was unchanged from the previous year, salmon imports during this time period dropped sharply to 117,000 tons from 192,000 tons in 2011, due to lower processing demands. In 2011, US salmon imports rose to 83,000 million tons, up 40 percent over the previous year, capturing sales left by a gap in lower Norwegian salmon exports. Import prices for salmon in the first ten months of 2012 averaged $3,487 per ton, up seven percent from the previous year.

Fishmeal Imports are Estimated at 1.2 Million Tons in 2012

China’s domestic fishmeal production remains low. Growing feed industry demand creates an ever widening supply gap which must be filled by imports. Many contacts believe domestic demand by the feed industry will continue to grow, which will require higher year on year imports.

Peru remains China’s largest fishmeal supplier at 636,283 tons and accounted for 59 percent of China’s total imports in the first ten months of 2012. During the same period, imports from the United States hit a record 116,776 tons from 104,993 tons in the previous year, most likely due to more diversified products at relatively lower price. At the end of October 2012, the Peruvian government announced a reduction in its fishing quota (from average 2 million tons to 810,000 tons) for resource management, which triggered a price spike of RMB2,000 to 2,500 per ton ($317 to $398 per ton). A smaller, more expensive Peruvian fishmeal production potentially creates opportunity for US fishmeal exports in 2013.

Fishmeal imports fell to slightly more than one million tons in 2010 from 1.3 million tons in 2009, mainly due to fishmeal prices which spiked at over $1,600 per ton. Imports prices averaged $1,335 per ton in the first ten months of 2012, down nine percent over the previous year.

US Aquatic Trade Imbalance with China

Although the United States remains the second largest importer and exporter of aquatic products to China, there is still a large trade deficit. In the first ten months of 2012, US aquatic product exports increased to $945 million, up two percent over the previous year, while China’s exports to the United States climbed to $2.3 billion, resulting in an aquatic trade deficit exceeding $1.3 billion. Industry insiders believe the trade deficit will grow as China increases value-added processed aquatic product exports.

Policy

China’s Policy Favors Smooth Growth for Aquatic Production and Exports

China’s fishery production policy remains generally unchanged. In the 12th Five Year Fishery Development Plan, the MOA plans to continue to promote a more sustainable development model with resource utilization, environmental protection, production of safe products, and increases in farmer income as major priorities. In November 2012, MOA published a notice promoting a sustainable and healthy development of marine fishing in other territorial seas. The notice stressed the need to upgrade fishing facilities to maintain a stable catch volume which reached 1.15 million tons in 2011.

Domestic wild aquatic catch will continue to be restricted by the “Zero Growth” policy which placed a threshold or upper limit on annual catch. The two to three month summer fishing moratorium in China’s seawater continued in 2012, and the three-month spring fishing ban in the Yangtze River entered its eighth year. Additionally, for the second year, MOA instituted a two-month fishing ban in the Pearl River region. In an effort to protect and restore an ecological balance, the state and provincial fishery departments conduct frequent releases of aquatic fingerlings in national waters to increase wild stock.

Implementation of Aquaculture Licensing System Continues

The MOA will continue to implement a nationwide aquaculture licensing system during the 12th Five Year Fishery Development Plan period. Licensing thousands of small-scale aquaculture facilities, however, has proven to be a challenge for the government. As of the end of 2011, 79 percent of aquaculture facilities had obtained production licenses.

The Policy on Aquatic Processing Trade Remains Unchanged

China’s government reportedly positive view of the aquatic processing trade may be due to its role in generating new employment and producing rendered feed ingredients that are in demand by the growing feed industry. If imports are exported as processed products, they will not be subject to a tariff or value-added tax (VAT). Imports sold in China are subject to tariff and VAT (see GAIN CH5089).

According to MOA, the share of processing trade has declined, accounting for 28.6 percent of aquatic export value in 2012 (compared to 33 percent in 2010). Nevertheless, both Chinese industry and official sources claim that China is becoming the world’s processing center for mackerel, salmon, cod, and herring. Industry sources note that the number of enterprises involved in the “Processing Trade” is on the rise, especially in Shandong and Liaoning.

Aquatic Exports for Domestic Consumption Faces Barriers

High import costs, which include a duty plus value-added tax (VAT) approaching 25%, make imports for domestic consumption expensive. Some industry experts are calling for reduced import duties and VAT for seafood species that are not produced in China to encourage more imports for domestic consumption. As reported in GAIN CH11098, effective January 1 2012, the import duty on four categories of seafood (frozen Greenland halibut, plaice, herrings and cod), will be reduced (see table) which should facilitate their import and sale in the domestic market. However, traders have not been granted the reduced duty due to a misunderstanding of the definition of these products. Exporters are encouraged to consult with Chinese importers and Customs for clarification on specifics. Additionally, China may require a “risk assessment” for some fish species entering China for the first time.

Import Certificate for Live Edible Aquatic Products

Through bilateral consultation, a NOAA amended version of the Health Certificate for live edible aquatic products was approved by AQSIQ. Obtaining the certificate for live edible aquatic product may remain an issue for exporters.

New Hygiene Certificate for US Imported Fishmeal

In late July 2011, the Department of Commerce, NOAA, Seafood Inspection Program and AQSIQ reached agreement on a new health certificate for fish meal and fish oil exports to China, which took effect on July 1, 2012. In addition, AQSIQ approved registration of 26 US fish meal and fish oil exporters (http://dzwjyjgs.aqsiq.gov.cn/zwgk/slaq/jjsljtjj/zcqymd/201105/t20110526_185441.htm.

New Health Certificate for Fish and Fishery Products Effective on January 1, 2013

On April 10, 2012, AQSIQ requested an amendment to the US Health Certificate for Fish and Fishery Products destined to China, effective Jan 1, 2013. In late December, the Department of Commerce, NOAA, Seafood Inspection Program and AQSIQ agreed on a new certificate which will be implemented January 1, 2013. The current certificate will be accepted for entry into China for fish and fishery products exported prior to January 1, 2013. Any fish and fishery products exported from the US after January 1, 2013 to China must be accompanied by the new health certificate.

Marketing (ATO/Beijing)

Due to market development efforts, domestic demand has increased for imported frozen aquatic products. Salmon, snow crab legs, and cod are all products commonly available in supermarkets. Product identification, such as brand names, logo and country of origin are important tools to attract consumer interest. The education of retailers and distributors is critical to promoting brand recognition and loyalty.

Scallops, salmon, Alaskan snow crab legs, king crabs, black cod, and oysters are popular items in many upscale hotels which commonly feature these products in buffets. With the proper display, high-value imported items can be promoted to customers. Chef demonstrations or themed promotions during major Chinese holidays, such as Spring Festival and Mid-Autumn Festival, are effective for the Hotel Restaurant Institution Food Service sector. Fish roe is another popular product, particularly with Japanese style restaurants.

Importers claim high value U.S. seafood products are easy to sell in both first and second tier cities, even in coastal cities such as Qingdao. Popular products are king crab kegs, scallops and oysters. Major obstacles include inconsistent availability due to insufficient supply and counterfeit products. Trade shows in China help promote new products and increase sales. At the recent China Fisheries & Seafood Expo in Dalian, multiple US exporters successfully promoted geoducks, a popular item in Chinese cuisine, particularly Cantonese style. The next China Fisheries and Seafood Expo will be held in Qingdao in second half of 2013. Other fishery expos include the annual Cross-strait Fishery (Fuzhou) and Shanghai International Fishery Expo.

January 2013

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