Fishery Industry

126
i FISHERY INDUSTRY IN PAKISTAN

Transcript of Fishery Industry

Page 1: Fishery Industry

i

FISHERY INDUSTRY IN PAKISTAN

Page 2: Fishery Industry

ii

Page 3: Fishery Industry

FISHERY INDUSTRY IN PAKISTAN

FINAL TERM REPORT

COURSE NAME: ANALYSIS OF PAKISTANI INDUSTRIES

SUBMITTED BY:

AHMED QAMARMAHAM ASLAM

MARIA RAZAMUHAMMAD DAIYYAN ALAM

NABA SIDDIQUI

SUBMITTED TO:

MS. KHADIJA BARI

iii

Page 4: Fishery Industry

LETTER OF TRANSMITTAL

Ms. Khadija BariInstructor, Analysis of Pakistani IndustriesInstitute of Business AdministrationKarachi

Dear Madam,We find pleasure in submitting before you the report on Fishery Industry in Pakistan. Our report comprises of the analysis of the fishery industry of Pakistan based on Micheal Porter’s Diamond Model. It includes information from the birth of the sector in Pakistan till today, the issues it faced since then and the possible recommended solutions that we could suggest. We have tried our level best to include as much recent information as possible.

We used questionnaires from the fishermen and different distributors as the source of our primary research and as an empirical tool. Our secondary research sources included books and reports from AERC and different websites mentioned in the references at the end of the report.

We commend this report to you so you may evaluate it with your expertise. We shall be pleased to receive a feedback from you. We feel honored for being your students and have greatly been benefited from the knowledge that you shared with us during this course and we are truly thankful for properly supervising us on each and every step of ours.

Sincerely,Ahmed QamarMaham AslamMaria RazaMuhammad Daiyyan AlamNaba Siddiqui

Contents

iv

Page 5: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY (1947-2011)......................................................................1

1947-1970:.................................................................................................................................2

1970 to Present:........................................................................................................................ 6

COMPETITIVENESS AND MODELS TO MEASURE THE COMPETITIVENESS OF AN INDUSTRY.......14

COMPETITIVENESS:..................................................................................................................14

MODELS FOR MEASURING COMPETITIVENESS........................................................................16

1) THE DIAMOND MODEL..............................................................................................16

2) PORTER’S FIVE FORCES MODEL.................................................................................18

3) SWOT ANALYSIS.........................................................................................................20

4) PEST ANALYSIS...........................................................................................................22

MODEL TO BE USED THROUGHOUT THE REPORT....................................................................24

FISHERY INDUSTRY OF PAKISTAN-SECONDARY DATA..................................................................26

INDUSTRY OVERVIEW AND SIGNIFICANCE...............................................................................26

FACTOR CONDITIONS...............................................................................................................29

WATER RESOURCES.............................................................................................................30

AQUACULTURE.................................................................................................................... 31

FISH STOCK...........................................................................................................................32

HUMAN RESOURCES............................................................................................................33

INFRASTRUCTURE AND PORT FACILITIES.............................................................................33

GEARS AND BOATS...............................................................................................................34

CATCHING AND PROCESSING...............................................................................................35

FIRM STRATEGY, STRUCTURE AND RIVALRY............................................................................35

RELATED AND SUPPORTING INDUSTRIES.................................................................................37

DEMAND CONDITIONS.............................................................................................................38

GOVERNMENT......................................................................................................................... 40

CHANCE FACTOR......................................................................................................................43

ISSUES...................................................................................................................................... 44

FISHERY INDUSTRY OF PAKISTAN-PRIMARY DATA.......................................................................45

OVER VIEW.............................................................................................................................. 45

UNSTRUCTURED...................................................................................................................... 47

v

Page 6: Fishery Industry

STRUCTURED........................................................................................................................... 51

ISSUES.......................................................................................................................................... 57

RECOMMENDATIONS.................................................................................................................. 61

APPENDIX.....................................................................................................................................64

REFERENCES FOR SECONDARY DATA.......................................................................................64

REFERENCES FOR PRIMARY DATA............................................................................................69

THE QUESTIONNAIRES.............................................................................................................70

FISHERMEN LEVEL QUESTIONNAIRE....................................................................................71

FIRM LEVEL QUESTIONNAIRE...............................................................................................76

vi

Page 7: Fishery Industry

EXECUTIVE SUMMARYPakistan is an agriculture country. Thus, fishery industry of Pakistan is of utmost importance as it contributes a major portion to the exports of Pakistan although the contribution to GDP is relatively less. Also it employs over one million people, so the sector is not only a major source of food nourishments but also a major source of livelihood for a lot of people. Hence, it is really important to study this industry thoroughly and look at the flaws in this industry and the reasons as to why it has not flourished despite its massive contribution to the exports and huge potential.

This report gives an in-depth study of the sector. The model that we have followed is the Micheal Porter’s Diamond model. We have first used the model to analyze the sector as whole and then we used it separately for the structured and the unstructured side of the industry.

Chapter one and two give an overview of the entire economy of Pakistan at two points in time: 1947-1970 and 1970-2011 (present) and the overview of different models and why have we chosen the Diamond model as the basis of our research. Chapter three then provides with the overview of the sector and analyzes the sector on whole. The major components including our water resources, fish stock, boats and gears, catching and processing (which are a part of the factor conditions), governmental ordinances, firms, oil spills, EU and Jeddah bans, etc.

Thee fourth and the last chapter consists of our primary data where we have again used the Diamond Model but this time we have applied it to the structured and the unstructured side of the industry. This comprises of the fishermen (unstructured) and processing firms, retailers, etc. (structured). The model has been applied to them to see what their factor conditions are, what rivalry exists amongst them, what is their demand, what are their related and supporting industries, what role government plays and how important are the chance factors for this industry. We have then included an “appendix” section which comprises of all the references of both primary and secondary data and the questionnaires that we used for research purposes.

vi

Page 8: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

OVERVIEW OF PAKISTAN’S ECONOMY (1947-2011)

Pakistan is a developing country which shares borders with Afghanistan, China, Iran and India adding up to about 6975 km in length excluding the coastal areas.

Outline of Pakistan:

Its area is 880940 Km2 and is 97.13% land, 2.87% water (Source: Wikipedia). Pakistan’s economy is 47th largest in the world in nominal terms and it is 27th largest in terms of Purchasing power parity (PPP). Pakistan’s population in 2010 was 17,593 million and the population growth rate is quite lower than that existed in the past and is equal to 1.8%. Pakistan’s GDP in 2010 amounted to US $174.799 billion at current prices according to the World Bank and the GDP growth rate was 4.4%. Foreign Direct Investment amounted to $2.016 billion. Agriculture, value added was 21.79% of the GDP, where as Industry, value added was 23.62% of the GDP. Exports were 12.9% of GDP (Source: World Bank, World Development Indicators). Since its birthday on 14 August 1947, Pakistan has been a semi-industrialized economy which mainly encompasses of sectors such as textiles, chemicals, food processing and agriculture industries, including dairy industry, fishery industry and sugar industry, etc. Growth poles of Pakistan’s economy are situated along the Indus River. Pakistan’s economy, however, has suffered a lot in the past from decades of internal political disputes, fast growing population, mixed levels of foreign investment and external disputes, such as that with India, the immediate neighboring country. Inflation, to this date, remains the significant concern among the public and the existing inflation rate, last reported in September 2011, is approximately 11.5% compared to 13.4% in 2010 (Source:

1

Afghanistan

China India

Afghanistan

India Outline of Pakistan

Afghanistan Iran

Arabian SeaPersian Gulf

India

(Source: Geography of Pakistan – Wikipedia, the free encyclopedia. Retrieved from:

http://en.wikipedia.org/wiki/Geography_of_Pakistan#International_boundaries)

Page 9: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

Historical Data Graphs per Year). Due to numerous changes in governments since 1947, Pakistan’s economy has seen severe ups and downs. Pakistan has been unable to maintain a solid growth rate. The situation is so worse now that A-third of its population is now living below the poverty line and its literacy rate is abysmally low and is around 50%, where as China has around 90% and India has reached around 65% (Source: Literacy rate in Pakistan). Pakistan’s labor force in 2011 is equal to 55,770,000 and the unemployment rate, as provided in 2010, was 15%. Pakistan spends too much on defense as compared to what it spends on development. Without sufficient revenue the government will continue to be burdened with an unsustainable debt. It needs to end tax exemptions and needs long term economic plans for sustainable growth. To easily understand Pakistan’s roller coaster economy, it can be divided in to two points in time; 1) 1947-1970 and 2) 1970 to Present.

1947-1970:

When Pakistan came into being it has to face major problems. Almost all the wealth, including industries, infrastructure, etc. that was in subcontinent went to India and Pakistan had little or almost to nothing wealth. It has almost no industrial raw materials and no significant industrial or commercial groups. Adding to its problems, Pakistan had to deal with the immense immigration, the refugee problem, etc. Pakistan’s Population during this period can be represented as follows:

Year

19501951

19521953

19541955

19561957

19581959

19601961

19621963

19641965

19661967

19681969

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

POPULATION FROM 1950-1969

Population

(Source: Demographics of Pakistan – Wikipedia, the free encyclopedia. Retrieved from:

http://en.wikipedia.org/wiki/Demographics_of_Pakistan#Pakistan.27s_yearly_population)

2

Page 10: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

However despite the problems it faced after independence, Pakistan’s average economic growth rate had been greater than the world’s average growth rate. Annual average growth in real domestic product was 2.74% in 1950s, which increased to 6.52% in 1960s.

(Source:

http://carnegieendowment.org/files/pakistan_tax.pdf)

1950s was a period of apparent stagnation and mounting economic problems. Pakistan saw changes in theGovernments quite frequently and despite all these problems it did manage to maintain an annual average GDP of more than 3% for most years in 1950s. It can be seen, from the

chart above, that in the beginning years, Pakistan’s major contribution of GDP came from Agriculture. Agriculture was a dominating industry in the first decade Pakistan and hence most of the employment was seen in this sector only. Pakistan’s large scale-manufacturing Industry grew at a phenomenal rate of 23.6% between 1949 and 1954 and later by 9% upto 1960. The investment rate more than doubled during the 1950s. However, agriculture contributed the most to the GDP; agriculture was quite stagnated in this period and only once obtained double digit growth in the year 1953/4, where as in rest of the years, it ranged from 0.2% to 2.6% in this period. It even went into negative in 1951/2 (-9.1%) and in 1954/5 (-0.8%). In September 1949, most of the countries in the world, including India, saw devaluation in currency, however Pakistan refused to devalue on the basis that it is an independent country and to take advantage of this devaluation as being a monopoly exporter of jute to India, it could sell its products at a higher price. As a result India suspended its trade with Pakistan. What may have been a draw back for Pakistan’s economy, turned out to be really fruitful due to the Korean War that broke out in June 1950 when people started stockpiling and so automatically the demand of Pakistani jute and cotton increased dramatically, making up for the suspended trade with India and during this period Pakistan enjoyed GDP growth rate of 9.4% which decreased after the war but still it managed to maintain it at 3% till 1958. Devaluation was again overseen in 1952 to prosper the industrial sector of Pakistan. From 1947 to 1960, Pakistan mostly enjoyed trade surpluses and Pakistan’s BOP position started deteriorating after the Korean Boom in 1952 due to which tariffs and indirect taxes were put and Import substituting scheme came with the major motive of decreasing imports and encouraging the local production of goods. Balance of Payments of trade from 1947-1958 of Pakistan were as follows:

Balance 1949/50 1950/1 1951/2 1952/3 1953/4 1954/5 1955/6 1956/7

3

53%

8%

39%

GDP CONTRIBUTION 1949-1950

AgricultureIndustryServices and Trade

Page 11: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

of Payments of trade (Rs m)

to 1950/1

to 1951/2

to 1952/3

to 1953/4

to 1954/5

to 1955/6

to 1956/7

to 1957/8

Exports 1218 2554 2009 1510 1286 1223 1784 1608Imports 1284 1620 2237 1384 1118 1103 1325 2335Balance of Payments

-66 934 -228 126 168 120 459 -727

(Source: Ahmed, Viqar and Rashid Amjad, The Management of Pakistan’s Economy, 1947-1982 Oxford University

Press, Karachi, 1984. P.65)

After 1958, Pakistan was placed under Martial Law, with which Ayub Khan came in to power. His decade was known as the decade of development, in which Pakistan saw phenomenal growth rates. Manufacturing sector was growing at rate of 16.9% in first five years of Ayub khan and after that it still managed to grow at the rate of 10% or higher; 10% in 1965-70 and 12% on average from 1960-1970. The stagnated sector, Agriculture, revived again due to the Green revolution and saw extraordinary growth rates starting from mere 0.3% and reaching as high as 11.7% in 1967/8. Pakistan’s economy saw dramatic changes in its trade policy where many controls were disbanded and Export Bonus Scheme came in which Pakistan’s exports were encouraged. Then there was an import licensing scheme which was to encourage the private sector investment. The era almost marked by sudden emergence of Small Scale Industries. The major factor for such high growth rates was the increase in the foreign investments. During Ayub’s era, foreign aid has increased a lot resulting in the government being generous in giving subsidies, etc. As foreign aid had increase, so had imports, thus even though manufacturing output grew at impressive rates, the imports increased at a faster pace, reversing the effect of such high foreign aid, though the economy continued to prosper. Due to increase in private sector interest, there was an income inequality (22 families controlled 66% of industrial assets, 70% of insurance and 80% of total banking assets) which along with several other factors, like all the development took place in the west, general belief that East had been exploited by the west, etc. led to the break up of East and West Pakistan. Change in Sectoral share in GDP between 1959-1960 and 1969-70 was as follows:

(Source: Pakistan Economic Survey (Various Issues), Islamabad: Government of Pakistan, Finance Division,

4

12

45.842.2

GDP CONTRIBUTION 1959-1960

Industry AgricultureServices and Trade

Page 12: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

and Statistical Appendix)

(Source: Pakistan Economic Survey 2004-2005, Islamabad: Government of Pakistan, Finance Division, and

Statistical Appendix, Table 1.2, p. 10)

In general, exports, import and trade balance from 1947-70 were as follows:

Year US S millionCurrent Prices

Exports Imports Trade Balance1950/1 406 353 531951/2 279 445 -1661952/3 262 307 -451953/4 194 249 -551954/5 149 237 -881955/6 156 203 -471956/7 147 319 -1721957/8 91 276 -1851958/9 93 215 -122

1959/60 160 379 -2191960/1 114 457 -3431961/2 114 470 -3561962/3 210 588 -3781963/4 226 626 -4001964/5 239 772 -533

5

16

38.9

45.1

GDP CONTRIBUTION 1969-1970

Industry AgricultureServices and Trade

Page 13: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

1965/6 253 605 -3521966/7 273 762 -4891967/8 346 699 -3531968/9 357 640 -283

1969/70 338 690 -352(Source: Government of Pakistan, Pakistan Economic Survey, various issues, Islamabad)

During this period 1947-1970, level of savings and investments were as follows:

Years Investments (% of GDP) Savings (%of GDP) Foreign Resource Inflow (% of GDP)

1949-50 4.1 2.1 21959-60 12.5 6.5 61964-65 21.1 10.6 10.51969-70 17.83 10.11 7.72

(Source: Pakistan Debt Management. Retrieved from:

http://www.cssforum.com.pk/css-compulsory-subjects/pakistan-affairs/4141-pakistan-debt-managment.html)

From the above table it can be seen that savings, investments and Foreign Resource inflow, increased after 1960s, which means foreign aids, etc. usually increase when the country is under the Martial Law.

1970 to Present:

This period was again marked by changes in the governments and hence, their policies. Pakistan’s population during this period was as follows:

6

Page 14: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

Year

19711973

19751977

19791981

19831985

19871989

19911993

19951997

19992001

20032005

20072009

20110

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

200,000,000

POPULATION OF PAKISTAN FROM 1970-2011

Population

(Source: Demographics of Pakistan – Wikipedia, the free encyclopedia. Retrieved from:

http://en.wikipedia.org/wiki/Demographics_of_Pakistan#Pakistan.27s_yearly_population)

Due to this GDP contribution of different sectors varied over the time. In this period, changes in Sectoral Contribution can be seen as follows:

7

Page 15: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

1979-

1980

1989-

1990

1993-

1994

1994-

1995

1995-

1996

1996-

1997

1997-

1998

1998-

1999

1999-

2000

2000-

2001

2001-

2002

2002-

2003

2003-

2004

2004-

2005

2009-

2010

0

10

20

30

40

50

60

70

CHANGES IN SECTORAL CONTRIBUTION TO GDP OVER THE PERIOD 1970-2010

AgricultureIndustryServices and Trade

(Source: Pakistan Economic Survey (Various Issues), Islamabad: Government of Pakistan, Finance Division, and Statistical Appendix)

From 1970-77, Pakistan experienced the era of Zulfiqar Ali Bhutto. During his reign the services sector grew by a phenomenal rate of 5.7% on average, even when the manufacturing and the agricultural sectors were growing at a negative rate. Inflation was high for most of the years in his reign. Inflation rates were as follows:

(Source: Naqvi, S.N.H and Khwaja Sarmad, Pakistan in Seventies, PIDE,

Islamabad, 1993)

It can be seen that in his era the Inflation rates went as high as 29.98% and 26.73%, possibly the highest in the history of Pakistan. Bhutto’s regime was market by heavy nationalization where public took over 31 large firms in 10 basic industries: iron and steel, basic metals, heavy

engineering, motor-vehicle assembly and manufacture, tractor assembly and manufacture, heavy and basic chemicals, petro chemicals, cement and public utilities. Later this nationalization process was extended to include control of 32 life insurance companies,

8

Year Inflation Rate (%)1970-71 5.711971-72 4.691972-73 9.71973-74 29.981974-75 26.731975-76 11.661976-77 9.24

Page 16: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

nationalization of educational institutes, trade in cotton and rice, vegetable oil, petroleum marketing, shipping, cotton ginning, rice husking and flour milling. Another major policy of Bhutto was devaluation of Pakistan rupee. He also introduced land reforms and bank reforms. Moreover, export Bonus Scheme established in Ayub’s era was abandoned. Pakistan experienced short economic boom from 1972-74 which ended following the world recession in 1974. However, Bhutto can not be simply blamed for his policies; he faced a lot of bad luck factor including floods, pest attacks that destroyed Pakistan’s crops severely, increase in over all oil prices which rose Pakistan’s import bill substantially. Investments in 1970-71 were 17.51% of GDP which fell to 15.8% in 1971-72. Savings in 1970-71 were 9.55% of GDP which increased to 10.55% in 1971-72. Foreign resource inflow decreased to 5.3% in 1970-71. His era also observed trade deficits which amounted to Rs. 1816 million in 1970-71 and further increase to Rs. 2838 million in 1971-72. The deficits were met by drawing down the reserves and largely by external resource inflows – grants and loan. Major exports in his era were of textiles, leather manufactures, rice, cotton, vegetables and fruits and fish etc. Imports included Machinery and transport equipments, chemicals and related products, petroleum and related products, wheat, animal and vegetable oil and fats and cotton, etc. As Bhutto nationalized, the private sector was highly discouraged and hence, private sector investments moved towards the Small scale Industries which experienced high growth during this period.

After Zulfiqar Ali Bhutto, Pakistan was governed by Zia Ul Haq. Pakistan experienced one the highest GDP growth rates of 6.5% which at that time was only achieved by Korea, China and Hongkong. Zia’s era was seen as being engaged in restoring private sector confidence. He denationalized a few industries just to encourage the private sector; however the major chunk of the industries was still kept under the government’s control. This was because he did not want to alienate those who had benefitted from the nationalization of Bhutto by seeking employment in the sector. Later, he focused on Islamization to free the Pakistan’s economy of all the evils. Under this policy, all major policies of Shariah were followed. The last and the third half of his regime was the attempt to disengage the government from direct control of the economy. Institutional reforms were incorporated to increase the efficiency of the industrial sector. There was an emphasis of broadening of manufactured exports towards higher value-added items. A “free list” was made, items not listed on the list could not be imported and hence their imports were banned. Manufactured exports were given rebates and the exporters were given import facilities, income tax concessions and finance at concessionary rates to encourage exports. Fixed-peg system of Rupee to Dollar was replaced by managed float under which the currency was allowed to fluctuate between maximum and minimum exchange rate levels. Thus, during Zia’s regime there was diversity in the manufacturing sector which led to strong expansion in this sector and increase in private sector investment which led to the success of his regime. Moreover, consumption demand increased as whole and investment

9

Page 17: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

demand was enhanced by high resource inflows from the international community. However, Zia’s regime was highly dependant on the external assistance, which means if external inflows ceased, so would the economic development. Despite all the positives, there were some policy errors as well. The existence of negative effective rates of protection for certain industries, regulatory rime of the period and lack of incentives for value addition in the textile sector were all identified as the failures of policy implementation.

Following the death of Zia, Pakistan saw few acting presidents and presidents till 2001. Ghulam Ishaq Khan’s government failed to arrest the 30% fall in the country’s currency from Rs. 21 to Rs. 30 to the US dollar. He played a major role in the development of the nuclear weapons. The most significant aspect about this period was the large scale privatization which came into effect in 1990 when Nawaz Sharif was the prime minister. Around 105 units were privatized including the banking sector and major industries under the Privatization Committee which was established in January 1991 to supervise the privatization process from the valuation of the public enterprises that were to be privatized to the transfer of units to the private sector. The period was marked by efforts to consider a realistic trade regime as a primary investment or structural adjustment, enhanced exports incentives, reduced level of protection, reduced number of items on the restricted list of imports, achieve a tariff range from 0-100%, etc. IMF played a greater role and had a direct impact on the industrial development of Pakistan.

In general, exports, imports and trade balances from 1970-2002 were as follows:Year US S million

Current PricesExports Imports Trade Balance

1970/1 420 757 -3371971/2 591 638 -471972/3 817 797 201973/4 1026 1362 -3361974/5 1039 2114 -10751975/6 1137 2067 -9301976/7 1141 2325 -11841977/8 1311 2810 -14991978/9 1710 3676 -1966

1979/80 2365 4740 -23751980/1 2958 5409 24511981/2 2464 5622 31581982/3 2694 5357 -26631983/4 2768 5685 -29171984/5 2491 5906 34151985/6 3070 5634 -25641986/7 3686 5380 -16941987/8 4455 6391 -1936

10

Page 18: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

1988/9 4661 7034 -23731989/90 4954 6935 -19811990/1 6131 7619 -14881991/2 6904 9252 -23481992/3 6813 9941 -31281993/4 6803 8564 -17611994/5 8137 10394 -22571995/6 8707 11805 -30981996/7 8320 11895 -35741997/8 8628 10118 -14901998/9 7779 9432 -1653

1999/2000 8569 10309 -17402000/1 9202 10729 -15272001/2 9135 10340 -1205

(Source: Pakistan Debt Management. Retrieved from:

http://www.cssforum.com.pk/css-compulsory-subjects/pakistan-affairs/4141-pakistan-debt-managment.html)

Finally, came the era of Pervez Musharraf who stressed economic reforms and poverty reduction. His administration focused of agriculture, small and medium industry, oil and gas exploration and information technology. He introduced broad sales tax to increase the government’s revenue intake. Moreover, the agriculture income was also taxed which affected the country’s landed elite. He also deregulated the petroleum sector. He pledged to develop software and information technology industry when came to power and set money aside for development especially in poorer parts of Pakistan. He undertook the task of solving energy crisis of Pakistan. Corporate sector of Pakistan grew dramatically and its credit rating increased. Karachi became the financial capital of Pakistan and the manufacturing sector experienced double digit growth with large scale manufacturing sector growing at 18% in 2003. There was a reduction in fiscal deficit. Pakistan’s economy recorded 7.3% growth in 2006-2007. Again as the country was under the military rule, foreign direct investment rose sharply to $949.4 million as compared to $376 million in 1999. Also, the exports jumped and Pakistan’s KSE was the best performing market in the world. Pakistan was a net food exporter and exported rice, cotton, fish, fruits and vegetables and imported vegetable oil, wheat, cotton, pulses and consumer foods. Agriculture reforms were placed to improve the sector. Despite the debts, the economy showed miraculous growth (Source: Musharraf unveils bold economic reforms. Retrieved from:

http://news.bbc.co.uk/2/hi/south_asia/5666540.stm). After Musharraf, came the era of Asif Ali Zardari, the current president of Pakistan. During his regime, IMF lent Pakistan $7.6 billion which later increased to $11.2 billion. Growth rate was only 1.2% and the inflation rate was as high as 21% during 2008-2009. Growth rate increased to 4% in 2009-2010 (Source:

http://carnegieendowment.org/files/pakistan_tax.pdf). Pakistan’s GDP in 2010 was US $174.799 billion according to the World Bank and the GDP growth rate was 4.4%. Foreign Direct Investment was $2.016 billion. Agriculture, value added was 21.79% of the GDP, where as Industry, value added

11

Page 19: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

was 23.62% of the GDP. Exports were 12.9% of GDP and Imports were 19% of GDP (Source: World

Bank, World Development Indicators). Existing inflation rate, last reported in September 2011, is approximately 11.5% compared to 13.4% in 2010 (Source: Historical Data Graphs per Year).

Year GDP ($ billion)

Foreign Direct Investment, Net inflows

(BOP current US$)[mn= million and bn=

billion]

Exports (% of GDP) Imports (% of GDP)

1970 10.027 23 mn 7.8 14.71971 10.602 1 mn 7.1 12.81972 9.309 17 mn 11.8 17.01973 6.325 -4 mn 13.5 16.31974 8.773 4 mn 13.7 20.81975 11.34 25 mn 10.9 22.41976 13.338 8.221 mn 10.7 19.41977 15.126 15.223 mn 9.3 19.01978 17.82 32.273 mn 9.2 18.51979 19.708 58.254 mn 10.7 22.81980 23.69 63.633 mn 12.5 24.11981 28.101 108.085 mn 12.3 23.01982 30.726 63.833 mn 9.9 21.81983 28.692 29.457 mn 11.9 23.01984 31.152 55.51 mn 11.1 22.61985 31.145 131.389 mn 10.4 22.81986 31.899 105.73 mn 11.9 22.71987 33.352 129.378 mn 13.2 21.01988 38.473 186.492 mn 13.6 21.71989 40.171 210.6 mn 13.9 21.71990 40.01 245.263 mn 15.5 23.41991 45.452 258.414 mn 17.0 18.61992 48.635 336.48 mn 17.4 20.51993 51.478 348.557 mn 16.3 22.41994 51.895 421.025 mn 16.3 19.01995 60.636 722.632 mn 16.7 19.41996 63.32 921.976 mn 16.9 21.41997 62.433 716.253 mn 16.1 20.81998 62.192 506 mn 16.5 17.51999 62.974 532 mn 15.4 17.02000 73.952 308 mn 13.4 14.72001 72.31 383 mn 14.7 15.72002 72.307 823 mn 15.2 15.3

12

Page 20: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

2003 83.245 534 mn 16.7 16.12004 97.978 1.118 bn 15.7 14.62005 109.6 2.201 bn 15.7 19.62006 127.5 4.273 bn 15.2 23.22007 143.171 5.59 bn 14.2 21.32008 163.892 5.438 bn 12.9 23.92009 161.99 2.338 bn 12.8 20.42010 174.799 2.016 bn 12.9 19.0

(Source: World Bank, World Development Indicators – Google Public Data Exporter. Retrieved from: http://www.google.com.pk/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&idim=country:PAK&dl=en&hl=en&q=pakistan%27s+gdp%3F#ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_mktp_cd&scale_y=lin&ind_y=false&rdim=country&idi

m=country:PAK&ifdim=country&hl=en&dl=en.)

Labor Force from 1980-2011 was reported as follows:

(Source: Pakistan|Data-The World Bank. Retrieved from:

http://data.worldbank.org/country/Pakistan)

13

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

Labor force, total

Labor force, total

Page 21: Fishery Industry

OVERVIEW OF PAKISTAN’S ECONOMY

Saving at current US$ from 1976-2010 were reported by the World Bank as follows:

19761979

19821985

19881991

19941997

20002003

20062009

0.00

5,000,000,000.00

10,000,000,000.00

15,000,000,000.00

20,000,000,000.00

25,000,000,000.00

30,000,000,000.00

35,000,000,000.00

40,000,000,000.00

45,000,000,000.00

GROSS SAVINGS (CURRENT US$)

Gross savings (current US$)

(Source: Pakistan|Data-The World Bank. Retrieved from: http://data.worldbank.org/country/Pakistan)

14

Page 22: Fishery Industry

COMPETITIVENESS AND MODELS

COMPETITIVENESS AND MODELS TO MEASURE THE COMPETITIVENESS OF AN INDUSTRY

COMPETITIVENESS:

Competitiveness is a comparative concept that measures the ability and performance of a firm, country, and subsectors to supply and sell goods or services in a given market. In international terms, it is means to analyze a country’s macroeconomic policies. Measuring international competitiveness involves comparing salient economic features that can help explain international trade trends. It takes into account qualitative factors such as capacity for technological innovation, degree of product specialization, value of after-sales services, quality of products involved and all other factors that may influence country’s trade performance positively. Factors such as high rates of productivity growth are taken as a means of strengthening competitiveness. However, such structural factors may not always increase sales in a foreign market but instead may improve a country’s terms of trade which maybe brought about through exchange rate appreciation (Source: INDICATORS OF INTERNATIONAL COMPETITIVENESS:

CONCEPTUAL ASPECTS AND EVALUATION. Retrieved from: http://www.oecd.org/dataoecd/40/47/33841783.pdf.).

Competitiveness, in its narrow sense, is thus a measure of international price competitiveness which can be measured through various indicators of exchange rates. However such indicators attract immense amount of controversy. This is because, in common parlance, competitiveness can be used to cover almost any aspect of market performance. The definition of competitiveness differs on the firm’s level than that on the national level (vertical differences). On the firm’s level, resources and talent concentrate geographically, which locks the firms in inter-firm relationships with networks of suppliers, buyers and even competitors which enable them to gain competitive advantages. On the contrary, national competitiveness takes into account the global phenomena (Source: Competitiveness – Wikipedia, the free encyclopedia. Retrieved

from: http://en.wikipedia.org/wiki/Competitiveness.).

Despite the vertical differences, there are many horizontal differences as well. One concept of competitiveness revolves around the fact that competitiveness is a result of external performance of a country which is typically measured through factors such as export growth, shares of export markets or current account balances. Although developments in price competitiveness remain an important driver of an economy’s ability to compete in international markets, however, in recent years other factors have become important with the growing globalization. This includes export specialization, which incorporates the types and the quality of the products that the country exports and the particular markets it exports to. This type of competitiveness requires the countries to take advantage of their technological advancements

15

Page 23: Fishery Industry

COMPETITIVENESS AND MODELS

and skilled labor forces in order to produce high quality and classy goods and make efforts to redirect their exports towards strongly emergent markets. Another aspect of competitiveness deals with the concept of productivity. According to this concept, most competitive economy is the one which generate highly productive firms that contribute to long-term economic growth and welfare of the citizens of the economy. Now relating it with globalization, only the most productive firms do business outside the national borders of the country where as the less productive firms, those who can not bear the transports and other costs attached with foreign trade, either remain confined to within the national borders that is to the domestic markets or are forced out of the business. Countries whose highly productive firms flourish in the international markets can therefore be expected to perform well in over all export performance and thus will allow more firms to compete successfully in international markets. Countries with intense domestic market, better technology and openness to foreign competitors come under this heading. These models require countries to have an effective institutional framework which makes market access easier and puts high importance on domestic firms’ innovating capabilities (Source: The external and internal dimensions of Europe’s competitiveness. Retrieved from:

http://www.ecb.int/press/key/date/2009/html/sp090226.en.html.).

Another dimension of competitiveness is human competitiveness. It includes capacity of a community to generate sustainable well-being of its economic actors. This means that competitiveness is not just producing and selling goods in strategic markets, which was the case traditionally and required only to achieve economic growth, but it also encompasses human development of a country and takes into account the sustainability and development of human capital. This type of competitiveness comprises of production under free trade and fair competition expanding real incomes over the long term. In short, competitiveness is related to the wages. The International Labor Organization, ILO, also relates competitiveness with human capital and has redefined the concept to include fundamentals such as skills, knowledge, attitudes of employees, accommodating working dynamics, team works, partnerships, improved working conditions and self-respect. Economic theory also reinforces this dimension and came up with the “efficient wage model” which emphasizes the idea that to increase productivity, firms must offer more than a minimum wage in order to recruit more skilled, loyal and productive workers. Another concept offered by the economic literature was the idea of compensating differentials, which involves giving benefits such as pensions, health insurance, vacations, training, appropriate tools, etc. Both concepts offered by the economic theory lower recruitment and termination costs of the economy and the firms, as individuals. On the governmental level, the challenge is to eliminate marginalization, poverty, social inequity between men and women. The aim is to achieve a global distribution, both of productivity and of this greater wealth. To achieve competitiveness with human dimension, labor force should be trained and directed towards new sectors, higher quality education system for both genders should be there, competition should not be based on low wages or unskilled labor that can be

16

Page 24: Fishery Industry

COMPETITIVENESS AND MODELS

replace by machinery as lower wages can have negative effects on productivity, there should be diversification of labor and gender-related obstacles that distort labor markets should be eradicated, resulting in a no-gender-biased economy. In accordance with this concept, competitiveness is a result of a trained workforce where both men and women have equal access to employment and the development of human capabilities are given upmost significance resulting in generation of individual, corporate and collective wealth (Source: The Human Dimension of Economic Competitiveness with Evidence from the Dominican Republic. Retrieved from: http://www.usaid.gov/our_work/cross-cutting_programs/wid/pubs/GATE_DR_Human-Dimension-of-Economic-

Competitiveness.pdf).

Other than this, firms may maintain competitiveness by being the most cost-efficient firms giving them an edge over other firms in the industry. Firms with huge initial capital requirements may enjoy this kind of competitiveness and may even generate a monopoly situation for others if they can not be as cost effective as the monopolistic firm. Therefore, there are many different dimensions to competitiveness and people may use different models to measure competitiveness, some of which are listed below with their key elements.

MODELS FOR MEASURING COMPETITIVENESS1) THE DIAMOND MODELPorter’s diamond model basically describes the clusters of industries, where the competitiveness of one firm is related to the performance of other firms and other factors tied together in the value-added chain. He suggested that there are inherent reasons why some nations and industries within nations are more competitive than others. Porter’s analysis deals with the dynamic process by which competitiveness is created and by which national comparative advantage could be achieved. The four basic conditions are inter-related as without rivalry, there will be no innovation and without innovation there will be no use of advanced factors. The key tools for analyzing competitiveness in this model are described below:1. Factor conditions: These are the human resources, physical resource and the knowledge

and infrastructure needed including labor, capital and the raw materials required. These are factors that can be exploited by firms which can use it to their advantage to gain a competitive edge in the industry. However, the key to gaining sustainable competitive

17

Page 25: Fishery Industry

COMPETITIVENESS AND MODELS

advantage is that the factors should be converted in to specialized factors (advanced factors) such as skilled labor, capital and infrastructure which gives one firm an edge over another firm and increases the competitiveness of the industry resulting in high quality goods as whole. This is because unskilled labor and raw materials could be acquired by any firm that has easy access to it but it can not generate sustained competitiveness. For example, the major problem in Pakistan’s textile industry is that they do not innovate and they do not bring out new varieties of cotton as demanded by the rest of the world and hence, Pakistan over the past few decades has lost competitive advantage which it once enjoyed in the past.

2. Demand conditions: This is very important to any industry, because if there are not end users, who would the firms be producing for. Therefore, demand conditions provide an opportunity for companies to gain a competitive advantage and to innovate and make better products than their competitors, the greater the demand, the more the pressure on firms to innovate and constantly improve their competitiveness. Thus, according to this model, demand is a major driver of the industry’s sustainable competitiveness. If the local demand exceeds the foreign demand of a particular product, then local producers will put more emphasis on improvement than foreign companies and will potentially increase the global competitiveness of the local exporting firms. Consequently a more demanding home market can be seen as a driver for growth and innovation. Also, national advantage could be attained through a more demanding local market and also, global trends could be projected if the local markets our trend-setting.

3. Related and supporting industries: These industries provide inputs which may be necessary for innovation and internationalization. They provide cost effective inputs and the home country firms, in turn, tend to get more competitive and more cost efficient, investing more on innovation if the local supporting industries and supplier are competitive which eventually leads to greater competitiveness for the local firms and also stimulates other firms in the chain to innovate maintain competitiveness of the industry. The effect is further strengthened if the suppliers themselves are global competitors.

4. Firm strategy, structure and rivalry: This describes the way industries are set up, set goals and are managed are very important. The stricture and management systems of firms in different countries can potentially affect competiveness. If rivalry is very fierce in the domestic market then that can act as competitive advantages on the global scale. On the contrary, firms with less rivalry may be counterproductive in achieving global competitiveness based on innovation and development. Thus presence of rivalry pressurizes the firms to innovate to upgrade competitiveness.

18

Page 26: Fishery Industry

COMPETITIVENESS AND MODELS

5. Government: Government can influence the competitiveness a lot. Despite this it is not listed as one of the main conditions of the diamond model by Porter because government’s influence is only there in the short term. It is not likely for the governments to intervene in the long term. However, in the short term, they can control the demand conditions and the rivalry between firms. The role of the government is to act as a catalyst in the economy and as a challenger and encourage firms to raise their performance or fuel early demand for advanced, high quality products, focus on specialized/advanced factor creation to sustain long term competitiveness and to stimulate local competition by limiting direct collaboration.

6. Chances: These are factors which are outside the control of the firm. They might help a firm to become competitive or lose out on it. It may result from significant shifts of exchange rates, wars or other policies of the foreign governments. Chances play their role by shaping the four main conditions of the diamond model, however it is not considered as one of the main conditions as these only affect the firm in the short term, the effect in the long term is quite blur.

(Sources: The Competitive Advantage of Nations Michael E. Porter; (1990); New York: Free Press. Retrieved from: http://www.businessmate.org/Article.php?ArtikelId=49 AND Diamond Model and Clusters. Retrieved from:

http://www.12manage.com/methods_porter_diamond_model.html)

2) PORTER’S FIVE FORCES MODELMicheal Porter’s Five Force Model is yet another model to measure competitiveness of an industry. It is a framework for industry analysis and business strategy development. It is usually used by the firms when evaluating the firm’s strategic position. According to Porter, this model should be used at the line-of-business industry level and is not designed or favorable to use at industry group or industry sector level. Industry is defined at more basic level as a market which comprises of similar or closely related products and/or services that are sold to the buyers. Firms that compete in a single industry, must, at minimum, develop one five forces analysis for their industry, individually meaning each line-of-business should develop its own five forces analysis for the industry. It can be used to

19

Page 27: Fishery Industry

COMPETITIVENESS AND MODELS

determine the competitive intensity of an industry and therefore can be used to measure the attractiveness of a market, meaning the overall profitability of the market. It can be said that this model measures competitiveness through the profitability of the industries and marks those as an unattractive industry which together with the five main forces of the model drive down the over all profitability. The very unattractive industry is classified to be the one which approaches “pure competition” and the profits of all the firms in this industry reach “normal profits”. Three of the five forces in this model are referred to as the external forces where as the rest are considered to be the internal threats. The five forces includes three forces from the horizontal competition that are; threat of substitute products, threat of competitive and established rivals and threat of new entrants, and two forces from vertical competition that are; bargaining power of suppliers and bargaining power of customers. These five forces are discussed more in detail below:1) Threat of new entrants: High profitability of the firms attract numerous new entrants and

unless their entry is blocked, industry’s abnormal profits will tend towards zero similar to that in perfect competition making the industry a very unattractive one. The lower the entry barriers, the higher the threat of new organizations entering the industry. Such organizations look at factors such as how quickly the can achieve economies of scale, whether there are few economies of scale or not, how much it costs to enter the market and compete effectively and how little protection existing firms have for their technologies. If all this is in their favor, new entrants can readily and easily enter the industry driving down industry’s profits. The ability of people to enter your market affects your power. Key barriers to entry include; economies of scale, capital/investment requirements, customer switching costs, access to distribution channels, retaliation from existing industry players. These barriers can help existing firms maintain their competitiveness.

2) Threat of substitute products or services: If the customers find other way doing of things that you do, meaning substitution is easy and viable; it weakens the existing firms’ power. Also presence of substitutes lowers industry attractiveness and lowers profitability because it limits price levels. Threat of substitute products is high when the prices of substitutes are low, their performance is exemplary, it is easy to substitute to other products, cost of switching is low and furthermore, buyers are willing to substitute to other products.

3) Bargaining power of Suppliers: This is considered as the market of inputs. The cost of item bought from the suppliers can have a significant affect on the firm’s profitability. Suppliers of raw materials, components, services, labors, etc. can be a source of power of the firm where there are few substitutes available. Also, they can refuse to work with them or charge really high prices for the resources they provide depending on their strength, control over the firm and the number of suppliers available in the market. Other factors that drive

20

Page 28: Fishery Industry

COMPETITIVENESS AND MODELS

the power of suppliers are; switching costs of suppliers relative to the firm’s switching costs, degree of differentiation of the products (if undifferentiated, higher bargaining power of the suppliers), presences of substitutes available, strength of distribution channel, etc. The fewer the supplier choices a firm has and the more help it needs from suppliers, the more is the power of the suppliers.

4) Bargaining power of Customers (Buyers): This is also known as the market of outputs which includes the ability of the customers to put firm under pressure and their sensitivity to the price changes. It answers questions such as how easy is it for the buyers to drive down firm’s prices. This is driven by a number of factors including number of buyers, importance of each customer, switching cost of buyers to other substitutes available in the industry, etc. bargaining power of buyers is high when there are few dominating buyer and many sellers in the industry, products are standardized, the industry is not the key supplying group for the buyers and so on.

5) Intensity of competitive rivalry: for most industries, this is the major determinant of the competitiveness of the industry. This requires that the firms have a powerful competitive strategy. This largely depends on the structure of the competition (if the firm can do what no one else can, the firm will exercise immense power, but if the competitors provide equally valued products, then the firm will have little power in that situation), structure of high costs, degree of differentiation (market with differentiated products usually has less rivalry), switching costs, strategic objectives (if the opponents are practicing aggressive growth policies, rivalry is likely to be more intense) and last but not the least, exit barriers (if exit barriers are high, rivalry is automatically high in the industry).

(Sources: Porter five forces analysis-Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Porter_five_forces_analysis#The_threat_of_the_entry_of_new_competitors, Porter’s Five Forces. Retrieved from: http://www.mindtools.com/pages/article/newTMC_08.htm and Porter's Five Forces

Model: analysing industry structure. Retrieved from: http://tutor2u.net/business/strategy/porter_five_forces.htm)

21

Page 29: Fishery Industry

COMPETITIVENESS AND MODELS

3) SWOT ANALYSISThis is a strategic planning tool used by several organizations to find out what are there strengths, weaknesses, opportunities and threats- hence the word, SWOT. It is also used in deriving marketing strategies of the firms. Strengths and weaknesses are categorized as internal elements and they relate to the present the situation where as opportunities and threats are sought from the external environment and relate to the changes in the environment that will impact the business at any point in time. This provides insight into business’s condition and potential. The strategy should be devised around strengths and opportunities and the major aim should be to match strengths with the opportunities and convert the weaknesses of an organization into its strengths for achieving sustainable competitiveness. Converting weaknesses into strengths is the major challenge faced by any business and it must address to this if it wants to prosper in the short-term as well as the long-term. This analysis involves specifying the objectives of a business venture or project and indentifying the internal and external factors that are either favorable or unfavorable to achieve those particular objectives. Objectives should be set after performing the SWOT analysis so that the organization is well aware whether the objectives are attainable or not, because if they are not attainable, new sets of goals or objectives should be derived and the process should be repeated. A small description of the four elements is as follows: 1. Strengths: Characteristics of a business and gives it an edge over others. These are the

positive attributes, tangible or intangible. They capture the positive aspects of a business that add value or offer it a competitive advantage. Strengths of business should be maintained, built up on them and used as leverage. This includes factors such as location advantages, unique product, skilled labor, high quality raw materials resulting in high quality products, insulation from competitive pressures, updated technology that the competitors may not even possess, adequate financial resources, access to economies of scale, cost-effectiveness, production innovation abilities of the firm, established customer base and long-term customer relationships resulting in customer loyalty, etc.

2. Weaknesses: Characteristics of a firm that gives other firms an edge and may place the firm at disadvantage relative to others. These factors seize the negative aspects internal to the businesses, reduce your ability to obtain or maintain your competitive advantage and are

22

Page 30: Fishery Industry

COMPETITIVENESS AND MODELS

within ones’ control. Possible weaknesses include no clear strategic direction, outdated and obsolete facilities and technology, skills gap, no diversity, poor quality, high fixed costs, customer dissatisfaction, weak image, location disadvantages, lack of investment in Research and Development (R&D), poor track record, competitive disadvantages and financial inadequacy, etc. As mentioned above, these weaknesses should be converted into strengths by updating technology, diversifying product-base, training employers and hiring skilled people, investing in product innovation and quality assurance and outsourcing if incurring high fixed costs, etc.

3. Opportunities: These are the external chances present in the environment to improve firm’s performance, for example, increase profitability and assess the reasons for the firms to exist and prosper. These are potential firms can realize through implementing their marketing strategies. These are the things that are good for the future and the firms should prioritize them, seize them, build up on them and optimize. Factors include; engage customer base in roadmap development, serve additional customer groups and enter new market segments, diversify, ability to move to better strategic group, contentment with other firms, improve market growth and maybe use merger, joints or strategic appliances, etc.

4. Threats: These are the external elements in the environment that can cause problems for the business. These are the things that may impact the business negatively in the future and should be put into plans to manage or counter them. It is necessary to classify threats according to their level of seriousness and probability of occurrence. This includes factors that are beyond business’ control and can put the business itself at risk. It is a challenge created by unfavorable trends or developments and can deteriorate business revenues and profits. Factors that are possible threats include; new competition in the market, competitor oligopoly or monopoly (competition is always a threat), growing substitutes, adverse government policies, changing stakeholders needs and tastes, adverse demographic changes, growing bargaining power of suppliers and customers and community dissatisfaction, etc. The better the firm is at recognizing threats, the more likely it can position itself to proactively plan and counter to them.

(Sources: SWOT analysis – Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/SWOT_analysis, SWOT analysis-introduction. Retrieved from: http://tutor2u.net/business/strategy/SWOT_analysis.htm, SWOT Analysis – History, Definition, Tools, Templates & Worksheets. Retrieved from: http://rapidbi.com/created/swotanalysis/ and How to perform a SWOT analysis.

Retrieved from: http://articles.mplans.com/how-to-perform-a-swot-analysis/).

4) PEST ANALYSISPEST analysis, also referred to as “Political, Economic, Social and Technological Analysis”, is a framework used in the environmental scanning component of strategic management. The

23

Page 31: Fishery Industry

COMPETITIVENESS AND MODELS

model itself has been shaped a lot. Some have added “Legal” to it, making it the SLEPT analysis, and then some further add “Environmental factors” making it PESTLE or PESTEL. The latest versions are STEEPLE and STEEPLED after adding “Ethics” and “Demographic factors” in the model. However, for most businesses, the original PEST analysis covers all the “additional” factors, thus the additional items can be seen as “sub-items” within the four main sections. According to these organizations, the four-part model is much more appealing and easier to use, manipulate and convey then the other extended forms. This is an external analysis of the different macro-environmental factors that the firm has to take into consideration while conducting a strategic analysis or carrying out a market research. It is basically a decision making model used to measure the market, including competitors from the perspective of a particular business. It can be largely used to explain market growth or decline, can be used to review direction of the business or its strategy or position within the market. Unlike SWOT analysis, which measures a business unit or a proposal, PEST analysis measures the market potential and the situation where the business resides, thereby assessing how attractive a market is, business potential, marketing position of the business and suitability of access. PEST analysis encourages proactive thinking, rather than relying on intuitive reactions. The market, here, is defined by what is addressing it, whether it is a product, a company, brand or business unit, idea, etc. the thus the definition of the market being addressed should be very clear and it might be from any viewpoint. The four main headings of the PEST analysis are as follows:1. Political factors: This is related to the pressures and opportunities brought by changes in

governments and public attitude towards any industry and includes factors determining the degree of government intervention, including government legislations that force businesses to act in accordance with them for example, health and safety requirements. It includes elements such as trade policy, changes In political institutions and regulatory bodies, political processes, legal issues, environmental or ecological issues, current and future legislations, international legislations, government policies, trading policies, funding, grants, subsidies received from the government, home and foreign pressure groups and wars and conflicts, etc.

2. Economic factors: it refers to the economic structures of the nations within which the business is operating and impact of different variable on the industries. These variables have a major impact on how businesses operate and make decisions. These elements are

24

Page 32: Fishery Industry

COMPETITIVENESS AND MODELS

quite unpredictable, such as the oil shocks, and are beyond even governmental control. Such variables include essentials such as: changes in stock exchange, interest and inflation rates fluctuations, nation’s economic policies, exchanges rates, economic growth, economic trends, overseas economies and their trends, taxation specific to products and services of the industry, seasonality or weather issues, market and trade cycles, market routes, distribution channels and trends, customers or end-users and international trade or monetary issues, etc.

3. Social factors: Social factors can greatly help organizations maintain their reputation among the stakeholders. They affect the demand for a firm’s product and hence how the company operates in those situations. They refer to the cultural attitudes of the society where the organization carries out its operations, ethical beliefs, shared values, level of differentiation in lifestyles, changing demographics, education levels, number of age bands (age distribution pattern), health consciousness, population growth rate, career attitudes, emphasis on safety, consumer attitudes and opinions, media views, laws that affect social factors, organization’s image in the market, consumer buying patterns, fashion and role models, buying access and trends, ethnic/religious factors, publicity and advertising, etc.

4. Technological factors: technological forces are changing dramatically quickly. These include the technological aspects of the industry or the firm. They can be used as barriers to entry in an industry; they either raise or lower these entry barriers and can determine minimum efficient production and influence decisions regarding outsourcing. Technological shifts affect firms’ costs, quality and may even force them to innovate and have the potential of completely changing the industry structure. These factors can also alter firm’s competitive position in the industry to such extent that it can give one firm an edge over the other. Because of these factors, industries merge, new groups emerge, current products improve and the cost of production gets reduced as it ultimately leads to the process of innovation. It includes fundamentals such as Research and Development (R&D) activity and its funding, automation. Technology incentives, rate of technological change, competing technological development, maturity of technology, upgrading of technology, manufacturing maturity and capacity, information and communications, consumer buying mechanisms and technology associated with them, technology access, licensing, patents, intellectual property issues and global communications, etc.

(Sources: ProvenModels – pest analysis. Retrieved from: http://www.provenmodels.com/32/pest-analysis/, PEST Analysis | Pbleepd.Com. Retrieved from: http://www.pbleepd.com/business/pest-analysis/, PEST analysis – Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/PEST_analysis, free PEST market analysis template and method. Free pest market analysis examples. Retrieved from:

http://www.businessballs.com/pestanalysisfreetemplate.htm)

25

Page 33: Fishery Industry

COMPETITIVENESS AND MODELS

MODEL TO BE USED THROUGHOUT THE REPORT

For our research purposes, we have chosen to work with Micheal Porter’s Diamond Model. This is majorly because of our broad understanding of the model and how to implement it in studying different industries present in the nation as we have already practiced it in our course. Despite this, Porter’s Diamond model offers more advantages comparatively to the other models. First and the foremost, it suggests inherent reasons as to why some nations and industries within those nations are more competitive than others on a global scale. The model not only takes local factors into consideration but also takes the affect of world wide changes into account and how it affects the industries; in general, which result in firms achieving competitive advantages while others losing theirs. It focuses on the factors, which industries receive from their national bases and try to attain competitive advantages through that on a global scale. This model takes into account all the essential factors that are necessary for achieving competitive edge. The model analyzes all the factor conditions of the industry and thus, as all the factor conditions are quite inter-related, shortcomings in any one step of the process can lead to the overall inefficiency and when writing individual factor conditions, these shortcomings can be easily pointed out, therefore this model is best suited for industries as the fishing industry, which extensively labor intensive. Fishing industry of Pakistan is one of the most important industries due to rich marine grounds and vast variety of fish species found here. In the past few years, global demand for fish has expanded rapidly which should have been resulted in an increased demand for Pakistan’s fish but no significant increase has been witnessed, as shown in the chapters that follow. This model gives a very critical approach to the demand conditions of the industry and will help us to find the reasons for the above given issue so that we are eligible to give appropriate recommendations. Moreover, other models are more efficient when measuring competitiveness of a single firm in the market and are not favorable for analyzing the industry as a whole. The other drawback of the other models is that they are useful in formulating strategies and looking at a firm’s marketing position, weaknesses and strengths, etc but they do not necessary pinpoint internal issues. On the contrary, Diamond model covers every aspect of the industry from minor to major issues.

26

Page 34: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

FISHERY INDUSTRY OF PAKISTAN-SECONDARY DATA

INDUSTRY OVERVIEW AND SIGNIFICANCENow, that we are aware of the ups and downs of the Pakistan’s economy, different dimensions of competitiveness and which model is most appropriate for analyzing the sector, we will now give an overview of the Fishery Industry of Pakistan and present the published data based on Diamond’s Porter Model as accurately as possible. Information missed out in this part of the report will be covered in the primary data where we will use questionnaires as our tool for research.

Pakistan’s fishing Industry is of immense importance and plays a significant part in the national economy of Pakistan. It is considered to be a major source of livelihood for the coastal inhabitants in the coastal areas of Sindh and Balochistan. With a coastline of about 1100 km. Pakistan has enough fishery resources, most of which still remain to be developed. Despite the very low contribution to the GDP of Pakistan of about 0.4% in 2009, which did not increase much in 2011 and was around 0.5% to 1%, it is a major of exports earnings in Pakistan. Fishery intake has lot of advantages and growing awareness about these advantages is turning out to be quite significant. Fish provides body protein and is essential for maintaining energy intake. It also plays a major role in protecting human heart and prevents illness such as asthma, arthritis and even some types of cancer. Fish is major a source of Vitamins A and D and iodine (Source:

APP Video Preview. Retrieved from: http://www.app.com.pk/video/preview.php?id=20463).

The Government plays a vital role in this sector and there are several Fisheries Related Departments and Institutions operating in Pakistan. The industry is managed by Fisheries Development Commissioner (FDC) under Ministry of Food, Agriculture and Livestock (MINFAL) of the Government of Pakistan. Offices of FDC are responsible for policy, planning and coordinating with provincial fisheries departments and other national and international fishery agencies including Asia-Pacific Fisher Commission (Source: Fishing in Pakistan. Retrieved from:

http://en.wikipedia.org/wiki/Asia-Pacific_Fishery_Commission), which functions as a regional Consultative Forum raising awareness amongst member countries, fisheries organizations and fisheries professionals in Asia-Pacific region (Source: Asia-Pacific Fishery Commission- Wikipedia, the free

encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Asia-Pacific_Fishery_Commission). MINFAL is accountable for enhancing production of fish and shellfish, reducing harvest losses, increasing seafood export earnings, improving quality control service and upgrading socio-economic conditions of fishermen. Pakistan has a National Fisheries Development Board (NFDB) which is responsible for policy formulations regarding the fishery industry and aims to promote fishery sector through private and public sector partnership. The board is responsible for coordination of national and provincial activities with relation to aquaculture and shrimp farming, helping

27

Page 35: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

government in regulating the sector and enforcing total quality management to restructure the sector, promoting investments in the sector, preparing and implementing plans for awareness development, playing a key role in marketing of system and constantly improving it and last but not the least, exploring and enabling export markets for Pakistani fisheries products (Source:

Fisheries Development Board :: Pakistan. Retrieved from: http://www.fdb.org.pk/objective.html). Then there is Marine Fisheries Department (MFD) which was established in 1951 and is an attached department of MINFAL. It is an executive fishery agency of Federal Government entrusted with primary responsibilities of promotion of fisheries, both marine and inland, with value addition, to optimize returns for the fishermen and other stakeholders, realizing exports potential and supplement local protein intake. It is also responsible for ensuring management and development of fishery resources in the interest of the nation. Another institute, Aquaculture and Fisheries Research Institute was established under the Pakistan Agriculture Research Council in 1955. Centre of Excellence in Marine Biology was established as Department of Marine Biology in 1969. In 1973, it was given the status of Institute of Marine biology and later in 1975, Federal Government then elevated the its status as the Centre of Excellence in Marine Biology under the Centre of Excellence Act of 1974. The research projects at the Centre are funded by international agencies like UNESCO and WWF, etc. Government of Pakistan has also established various directorates of Fisheries including, Directorate of Fisheries, Punjab; Directorate of Fisheries, NWFP; Directorate of Fisheries, Sindh; Directorate of Fisheries, Balochistan; and Directorate of Fisheries, WAPDA. These directorates serve functions of planning and assessment of fisheries resources and their potential, manage and develop fishery resources, training of fishermen, Research and Development and undertake actions of public water areas, realize government revenues and enforce the Fishing Act. Then there are two Fisheries Harbor Authorities; Karachi Fisheries Harbor Authority (KFHA)-established in 1984 and Korangi Fisheries Harbor Authority (KoFHA), which were responsible for developing Karachi port and Harbor and Port Qasim and its port facilities, respectively. Pakistan also has a Fishermen’s Cooperative Society (FCS)-1945 and Pakistan FisherFolk Forum (PFF) responsible for the welfare services to their members. The latter also deals with the issues regarding depletion of fisheries resources, lack of sustainable fisheries policy, over exploitation of fisheries resources, negative impact of the use of harmful nets as well as contract system in fishing livelihoods (Source:

Fisheries Sector in Pakistan – Outlook and Guidelines).

Pakistan is endowed with great potential in inland, marine and aquaculture resources. Pakistan has a continental Shelf area of 50270 km2, of which 300,270 Km2 is used for fishing, and has a coastline length of 1120 km which is feasible for marine fishing. Pakistan has a fish industry worth US$ 1.2 billion. Marine Fisheries sector is the major component as it contributes more than 90% in the exports of fisheries. It has more than 30 species of shrimps, 10 species of crabs, 5 species of lobster and about 70 species of commercial species of fish (Source: Curriculum –

28

Page 36: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

Sectors- Initiatives | USAID Pakistan Jobs. Retrieved from: http://www.pakistanjobs.org/node/140). It is the most important economic activity and is a major source of employment and income generation and employs over a million of people directly and indirectly. Pakistan’s fishery sector has development substantially over the past few years acquiring updated technology, that is mechanized boats or nets, as well more and better breeds of fish and other seafood, including shrimps, etc., as compared to when it has only sail driven boats and no modes of processing were there, however, freezing has now become a chief mode of processing. Now, however, a lot of processing companies have emerged giving excess to processed fish across the country. Fisheries are considered to be major source of nutritious protein and rich diet, poultry feed, fish meal, fish oil and employment, marking the significance of the sector in Pakistan. Marine fisheries are majorly concentrated in Sindh and are mostly located in Karachi Division, then on the Makran coast of Balochistan, majorly in Gwadar. Inland fisheries are done on rivers, irrigation, canals, barrages and reservoirs. They constitute a small part in the contribution of fisheries as it is done part time only. The third subsector, which is recently emerging, is Aquaculture, which involves farming various types of fish, meaning artificially breeding and it is practiced in fish farms which are located in Sindh and Punjab. Pakistan exports fisheries to around 75 including European Union countries. It imports usually from USA, Japan and Sri Lanka. The overall imports of fish and fishery products are relatively lower than the exports. It has an export potential of over US$ 1 billion, but Pakistan has not made much headway in this crucial sector (Source: Fisheries Sector in Pakistan – Outlook and Guideline, Karachi Chamber of Commerce and

Industry). Of the total production, around 50% is consumed locally, 22% is exported and the rest is used as fish meal for the poultry industry. There over 65 fish processing plants in Pakistan with the 800 metric tonnes daily and the fish production in 2010-2011 was 937000 tonnes (Source: Pakistan produced 937,000 tonnes of fish in 201-11. Daily Times. Retrieved from:

http://www.dailytimes.com.pk/default.asp?page=2011\08\27\story_27-8-2011_pg5_5).

Pakistan has considerable markets worldwide and exports various types of fishers around the globe. The image of Pakistan was not that good in the international market but is now improving. The ban of European Union on the import of fish food from the Pakistan deteriorated its image in the industry due to unhealthy and ill handling and packaging of fish products. This ban tarnished the market image of the industry as European companies comprised of 50% of exports of Pakistan’s fish products. However, the exporters of fish products were quickly able to find new markets including US, Japan, Singapore, Malaysia, China and Middle Eastern countries. These markets compensated for the loss resulted due to EU ban. Also, Pakistani fish producers have put great efforts to revive the fishery industry of Pakistan by improving conditions of the harbors, acquiring new and improved equipment and management techniques and have focused greatly on innovation techniques to handle and package fish products. Most of the processing plants are now working on improving their processing

29

Page 37: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

conditions to be in-line with EU and other international standards. EU ban was imposed three times, in 1998, then in February 2005 and lastly in April 2007 which still prevails due to several deficiencies still present in the industry. The ban, however, gave Pakistan an opportunity to re-examine its policies and focus on improving its industry which has such huge export potentials. However, Pakistan’s exports did suffer a loss of $100 million per annum due to the EU ban but despite the EU ban, fish exports increased by 21% and were sold at $1.707 per kg in July-March 2008-9 compared to that of $1-6 per kg in the same period of the last fiscal year. A total of 100,422 tons were exported fetching $171.4 million during this fiscal year as new processing units were set up in Balochistan which were mainly exporting to Malaysia, Indonesia, Singapore and Thailand. Almost 5000 containers-each loaded with 27 tons- were exported to these countries every year. Pakistan was used to of getting high price from European countries but these countries are also providing with a very good price. Thus, exploring new markets have nullified the effect of the loss caused by the European Union ban (Source: Pakissan.com. Retrieved

from: http://www.pakissan.com/english/issues/fish.exports.up.21pc.in.value.during.9months.shtml). European Union is expected to lift the ban soon as EU informed the government of Pakistan that it was willing to lift the ban and resume fisheries trade from Pakistan without inspection provided that government identifies and provides a list of establishments and vessels that meet the European Union standards. As per recent year information, Sindh government has started a RS. 558 million worth project for the improvement of the sector and provides 75% modification cost to one boat and in excess of 100 boats have been modified as of August 2011. Pakistan’s export rose by 30.5% in the fiscal year 2010-11. The industry employs over 300,000 people directly and 400,000 people in the ancillary fishing industry. The amount of fish exports is equal to $258.161 million in this fiscal year compared to $197.829 million in the fiscal year 2009-10. Had the ban not been imposed, the exports to EU could have crossed $300 million and can enable Pakistan to earn approximately $50-60 million annually. However, sadly, to this date, EU ban remains imposed. But to ensure that Pakistan gets the above given figures, Pakistan has to ensure that its departments work on identifying fishing establishments and vessels because any delay could cause huge loss to government national exchequer (Source: EU likely to remove ban on fish exports | Pakistan Today. Retrieved from: http://www.pakistantoday.com.pk/2011/08/eu-likely-to-remove-ban-on-fish-

exports/).

Despite the EU ban, Pakistan’s fishery Industry faced several other obligations which will become prominent as we analyze the industry step by step following the Micheal Porter’s Diamond model. The latter part of this chapter comprises of the analysis on the basis of the model.

FACTOR CONDITIONSFactor conditions are one of the most important components of the Diamond Model and they are essential to almost all the industries. This is because if basic raw materials are not available

30

Page 38: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

for the firms in that industry, they can not produce at all. Later, when the basic raw materials are available, they can convert them into advanced factors, which do not happen in the Pakistan’s fisheries industry, despite the fact that we are rich in both marine and inland fisheries. They people involved in the fishery industry have no willingness whatsoever to

innovate and achieve a competitive edge. The following map shows various components of fisheries industry available as of under Fisheries Development Board:

(Source: map. Fisheries Development Board. Retrieved from: http://www.fdb.org.pk/documents/map.jpg)

Fishery industry of Pakistan can be divided in to three subsectors; Marine Fishing, Inland Fishing and Aquaculture. The factors of conditions will be analyzed according to these subsectors.

WATER RESOURCES Pakistan is rich in water resources and in terms of marine life. It has a coastline of about 1120 km2 and a continental shelf of 50270km2 and a total fishing area of 300270 km2. Pakistan has a coastline divided into the Sindh (30%) and the Makran (70%) coasts. Karachi and Makran are

31

Page 39: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

the most important fishing ports and are being developed by the Government of Pakistan as a fishing center.

On the contrary, for Inland fisheries, freshwater from River Indus are most productive for off-shores as well as for estuarine waters. Freshwater catch is usually dominated by River Indus and its tributaries. Indus River can be divided into two zones; fish fauna in the northern part of Indus system is the cold water type, where as the greater middle and southern parts of Indus system are the warm water zones. Fisheries from rivers and reservoirs account for approximately 80% of the total inland fish production and are managed by the provincial fisheries departments such as the directorates. These regulate the parts of fishery industry over there and ensure established closed seasons. Six large reservoirs have been established in the past few decades which provide approximately 250000 hectares for solely for fish productions. Several small reservoirs are also present. All these reservoirs ware managed under WAPDA’s supervision. Another source of inland fisheries, are the lakes which in Sindh are more than 100 and cover an area of around 100000 hectares. Of these the most important ones are the Haleji lake (1800 ha), Kinjhar Lake (120000 ha) and Manchar lake (16000 ha). Of these, Manchar Lake is the biggest and supports almost 2000 families. Small cluster of lakes extends over 40000 hectares. The natural lakes in Punjab cover over 7000 hectares. Few lakes, such as Namal Lake, Uchhali Lake, Jahlar Lake, Kallar Kahar, Kharal Lake and Khabikki Lake, are not suitable for aquaculture due to brackishness or salinity of the water (Source: Fishing in Pakistan- Wikipedia, the free

encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Fishing_in_Pakistan). However, recently due to reduction in the flow of the Indus in the pass decades has resulted in substantial decrease in production of several commercially important species such as river shad palla, barramundi dangri and Indian threadfin rawans. This has serious socio-economic repercussions and has serious impact on the production of important fish species. Due to such conditions fishermen have to suffer a lot and have to incur huge costs for catching fish but they do not get enough return for the market agents as they do not pay them sufficient rates (Source: PLAN for development

of fisheries and aquaculture in Pakistan. Retrieved from: www.fdb.org.pk).

AQUACULTUREAquaculture is a separate subsector of fishery industry and is new in Pakistan. It involves artificial breeding of several species of fish. This sector has immense potential and its productions has flourished over time and has increased to reach over 100000 tonnes per annum. This is practiced in areas of Punjab, Khyber Pakhtunkhwa and Sindh on a very limited scale. For this purpose, it has received substantial amount of government investment and government has established several hatcheries and training facilities for the fish farmers due to its huge potential. Although Pakistan has not been able to develop the sector so much due to non-availability of low cost feed, non-existent fish farming technology and inappropriate knowledge. Pakistan Agriculture Research council is playing a vital role in encouraging farmers

32

Page 40: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

to increase their yield as they can generate more money that way. Also, other training such as fish diseases, nutrition, breeding and water quality management are also under process. Most nations use aquaculture as the main raw material for export of sea commodities but due to underdevelopment of the sector in Pakistan, it has not been able to compete with such nations. Despite, country’s vast fresh, brackish and marine water, only carp culture is practiced in ponds. With the exception of trout culture in the northern areas, all other aquaculture consists of pond culture of various carp species and is a major aquaculture activity in Punjab, Sindh and Khyber Pakhtunkhwa. Although the northern mountains have great potential, the production is very small. Total area cover by fish ponds in Pakistan is about 60500 hectares of which 49,170 hectares are in Sindh, 10,500 hectares is in Punjab and 560 hectares are in Punjab. The sector has employed over 50,000 people and average size of farm ranges from 6-9 hectares. In Sindh, majority farms are located in Thatta, Badin and Dadu located around River Indus. Two of these, Badin and Thatta have waterlogged floodplains suitable for fish farming. In Punjab, farms are mostly located in well irrigated areas such as Sheikhupura, Gujranwala and Attock districts. In Khyber Pukhtunkhwa trout farms can be found in Chitral, Swat, Dir, Malakand, Mansehra and FATA, where is carp ponds can be found in Dera Ismail Khan, Kohat, Mardan, Swabi and Abbotabad districts. Coastal aquaculture is almost absent in Pakistan despite its potential. However, small scale shrimp farming is carried out near Indus River Delta. However other marine fisheries can also be farmed but at present there is not commercial harvesting or hatchery culture of those species in the country (Source: Fishing in Pakistan- Wikipedia, the free

encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Fishing_in_Pakistan).

FISH STOCKPakistan is rich in marine and inland fishery resource. The commercially important resources found in Pakistan include 250 species of demersal fisheries, 50 species of pelagic fisheries, 15 medium sized and 20 large pelagic fish species. On the coast of Pakistan, there can be found more than 30 species of shrimps, 10 species of crabs, 5 species of lobster and about 70 commercial species of fish including sardine, Hilsa, shark, Mackerel, Butterfish, Pomfret, Sole, Tuna, sea bream, Jew fish and Cat Fish, Shark, and Eel. Shrimps varieties include Panaeus indicus and Panaeus Monodom. Some of these species like shrimps, lobsters and certain species of demersal fish resources are exploited. Fish stock can be increased by venturing offshore but because of limited resources, fishermen are unable to do that. Various pelagic fisheries, Skipjack tuna and related species are located in our EEZ of Pakistan in the Karachi District. Local fishing fleets also harvest different varieties of Mackerel, including Frigate Mackerel, Indian Mackerel, Spanish mackerel and they also harvest Barracuda and Dolphin fish. A large variety of mesopelagic fish exists on the continental shelf and is scarcely exploited. There are species of Mussels, oysters, clams, seaweed, kelp and sea urchins also available but are no accurate information is available regarding their harvesting. In a carp farm in

33

Page 41: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

aquaculture, warm water species found include Catla (10-20%), Rohu (30-35%), Mirgal (15-20%), Grass Carp (15-20%) and Silver Carp (15-20%). Recently Brown trout and Rainbow Trout are produced and cultured successfully including. Apart from shrimps, tuna, Pelagic and Demersal varieties, several Benthic fisheries are also found jewfish, croakers, grunters and snapper are also found (Source: Fishing in Pakistan- Wikipedia, the free encyclopedia. Retrieved from:

http://en.wikipedia.org/wiki/Fishing_in_Pakistan). Breeding season of the fisheries is from June to August, July being the peak-period as monsoon periods and flooding periods are most suitable for fish breeding. Fishermen are advised not fish during the breeding season as it adversely affects the fishery industry but this seldom happens. The major issue in the industry is over fishing and fishing during the breeding seasons (Source: Fishing season resumes | Metropolitan |. Dawn

News. Retrieved from: http://www.dawn.com/2011/08/02/fishing-season-resumes.html). HUMAN RESOURCESFishery industry employs over a million of people either directly or indirectly. Most of these people are directly employed as fishermen. These people are settled along the coastline and there are around 30 settlements, 19 of which are of permanent nature. The temporary nature ones are occupied during the fishing season. The industry also largely employs women. But women only work in aquaculture or farms which are for domestic or home use. They do not work in companies which are involved in exporting activities. These women help during feeding, planting grasses in the ponds and looking after the farms in the absence of their men.

INFRASTRUCTURE AND PORT FACILITIESCurrently, there are five operational fishery harbors present in Pakistan. These are:

Karachi Fish harbor- This is the biggest and oldest harbor in Pakistan and handles about 90% of fish and about 95% of fish exports. Currently there are more than 4000 fishing crafts based in it and cater for the needs of 75% of the local fleet. This is managed by Federal Ministry of Food, Agriculture and Livestock.

Karachi Fisheries Harbor- This is operated by the Provincial Government of Sindh. Korangi Fish Harbor- This is again managed by Federal Ministry of Food, Agriculture and

Livestock. Pasni Fish Harbor- This is operated by Provincial Government of Balochistan. Gawadar Fish Harbor- This is operated by Federal Ministry of Communication.

The major fishing centres include Ormara, Jiwani, Sonmiani, Kalmat, Ibrahim Hyderi, Ketim Bundar and Shah Bunder. There are no proper road linkages, communication infrastructure, educational and medical facilities, however, there is a medical clinic at Karachi Harbor for fishermen (Source: Fishing in Pakistan- Wikipedia, the free encyclopedia. Retrieved from:

http://en.wikipedia.org/wiki/Fishing_in_Pakistan#Harbours).

34

Page 42: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

GEARS AND BOATS Most of the gears used by the fishermen are of the artisanal types. Gillnet is the main fishing gear and is used by majority of fishermen and is used in almost all the fishing centres, however other popular gears used are cast nets, trawl nets and lines. Trawl nets are usually used for catching shrimps and gained popularity as shrimp industry was established in Pakistan. They are mostly used by boats in Karachi Fish Harbor and are also popular in Ibrahim Hyderi. Cast nets are popular in coastal villages and are used for catching fish along shallow waters. It also used for catching shrimp in Kalmat, Pasni, Sonmiani, Gawadar and other areas of Balochistan. It is also used for catching variety of fish and shellfish species. Small Gillnets are used in shallow waters for catching small pelagic, shrimp and other species. Its types include Thukri and Rach. Thukri is now also used for catching Indian mackerel. These types of nets are used for catching croakers, barracuda, catfishes, mullets, threadfins, eels, and Promfets, etc. Large gillnets are used for catching large Pelagic including tuna, mackerels, billfishes and sharks, etc. Stake nets, locally known as “Aar” are in creek areas of Sindh and are used for catching large fish in inter-tidal areas. Smaller version of this net are used to catch large croakers and other species. Katra, another type of gear, is used for catching small pelagic fish species. It is mainly used in Sindh and few boats use it in Dam, Sonmiani area of Balochistan. Bhoola gears are used for catching fish from inter-tidal zones. Bhan are used for catching mullets, small pelagic fish and other species along the open coastline and in creek areas. Line gears are mainly used by small boats.

Like gears, Pakistan has a variety of boats as well, f simple nets to fishing boats to deep-sea trawlers. Inland fishing is mostly done by simple methods where as marine fishing requires mechanized boats and techniques. Currently following types of boats are operating in Pakistan: Trawlers- These vessels use trawling nets which are targeted for shrimp catching. Gillnetters- These vessels use large gillnets for catching fisheries. Long Liners- These are deep-sea fishing vessels and are similar to trawlers but are equipped

with special equipments such as winches for net pulling. Howra- These vessels are same as gillnetters and are used in shallow waters for catching

fish and shellfish species. Dhonda- These are life boats obtained from ship breaking industry in Gaddani. These boats

are mainly used for gillnets and liners.

There are about 24000 vessels registered where as only 16000 are operational in Pakistan. More than 50 long liners (for tuna fishing) and 30 foreign deep-sea fishing vessels are at present operating in Pakistan. There are about 2500 trawlers, 2300 gill netters and 3750 mechanized sail boats, 6400 sail boat registered (Source: STUDY ON VALUE ADDED TO THE CATCH OF FISHER FOLK (FISHERIES DEVELOPMENT FOR SUSTAINABLE LIVELIHOOD. Retrieved from:

http://www.wwfpak.org/pdf/tp_sp_fishereies_report.pdf).

35

Page 43: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

CATCHING AND PROCESSINGThe area where marine fishing is undertaken starts from right beyond the coast to 200 nautical miles into the sea. This distance can be divided into the following zones as shown in the table:

ZONE LIMIT RESERVED FOR TYPES OF VESSELS

MAXIMUM NUMBER OF VESSEL FOR OPERATION

ZONE-1 From coast line upto 12 Nautical Miles

Local fishing boats -

BUFFER ZONE 12-20 Nautical miles - -ZONE-II 20-35 Nautical miles Medium size deep sea fishing

trawlers20 trawlers

ZONE-III 35-200 Nautical miles Larges size deep fishing trawlers and tuna longliners

Trawlers: 10Tuna longliners: 50

(Source: Fisheries Sector in Pakistan – Outlook and Guidelines)

As most of the boats are small with little catching and processing facilities, beyond 12 Nautical miles, the catch reduces and thus, the cost of fish producing increased. The catch in Zone III is very nominal. Few foreign vessels are said to enter the Zone III without proper license from the government and they even enter Zone I in collaboration with the local firms. The coastal zone along the Sindh province till 350 Km. is said to be the most highly productive zone and production from there constitutes over 70% of the marine catch. The owners their boat to the fish catchers and then they divide the profits equally. The fish catcher brings his catch to auction hall from where only the commission agents buy the fish because only commission agents can process the sale. The commission agents then again auction the catch from where purchaser with the highest bid gets the catch. Fish is passed on to processor or the exporter via the commission agents. The exporters then take it to the importers who take to final end-users, the customers. Since all the processing units are mostly located in Karachi, the fish is either auctioned at the Harbor, or brought to Karachi immediately if purchased at other harbors.

As far as processing is concerned, Pakistan does not have required processing facilities due to which it has to face several problems in the international market. It has few processing units and icing units but they are not upto the mark. Due to this, Pakistan’s fishery industry remains quite uncompetitive in the international scenario and also faces post harvest losses.

FIRM STRATEGY, STRUCTURE AND RIVALRYFirm strategy and structure describe the way industries are set up, how they set their goals and how they are managed. Firm’s structure and strategy are very important if it has to maintain competitiveness in the industry and if it wishes to attain long term sustainability. Rivalry is an import of any industry. If rivalry is very fierce in the domestic market then that can act as

36

Page 44: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

competitive advantages on the global scale. On the contrary, firms with less rivalry may be counterproductive in achieving global competitiveness based on innovation and development. Together these three make the second significant component of the Micheal Porter’s Diamond model and is critical for measuring competitiveness of an industry.

The fishery industry of Pakistan is rather unstructured and unorganized. There are several small fish producing firms, each competing for the maximum market share to maximize its profits. The supply chain of seafood can be categorized into three different types; 1) distribution to different areas of Balochistan and Sindh from the Harbor, 2) seafood processing in Gawadar and Karachi for export market and finally 3) seafood exports from Gawadar and Karachi ports. The major stakeholders of the firm are fishermen, middlemen, local mandi/market, processing plant owner, transporter, exports, retailers and lastly the end users (Source: 182FisheriesFeasibility.pdf.

Retrieved from: http://sanat-o-tijarat.org/Feasibilities/182FisheriesFeasibility.pdf.). The flow of fish is channeled from the boat owner or fish catcher to the commission agent to the wholesaler to the retailer and then at last to the consumer. For export market, from commission agent it goes to the exporter to the importer and then to consumer of the export market. There are about 11 canning plants in Pakistan, one of which was set up under USA’s supervision and cans and exports Sardine fish in tomato sauce. Only 2 of them are currently operational. Major ports in Pakistan are; Karachi port, Ibrahim Hyderi, Korangi, Pasni-located in Karachi and in Balochistan we have Gawadar and Gaddani. We have floating pliers, berthing capacity, flake ice plant and oil dispensing station. Gawadar highway has been constructed recently to improve transportation of fishery products to Balochistan and Karachi. It has reduced transportation time from 2 days to approximately 5-6 hours. The major component of the costs to the fishermen comprises of the fuel costs, therefore, the cost of fishing becomes high for the fishermen, which pressurizes them and has adversely affected the living conditions of the fishermen.

As there are few firms in the industry they more or less follow the same strategy. However, to gain a competitive edge, as said earlier, firms try to gain more market share and to gain market share, firms have to make sure that their products are marketed well and in the right markets. Products are sold via agents working on the commission basis. They are marketed either at the farm gate or by open auctions through intermediaries. Buyers of fishery products can be anyone from public to exporters. Fish markets are mostly located in Sindh but are present in only selected locations of Punjab. Local administrations regulate these markets. Most of markets lack basic fishery facilities, they have poor hygienic conditions and inadequate communication links. Communication links are very important as fish is priced on its level of freshness. Other than this, it is priced according to its weight. High prices can be charged for fisheries below 3 kg.; however, prices tend to decline when the weight of the fish exceeds 3 kgs.

37

Page 45: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

Due to high demand of freshwater fisheries, they are sold at a higher price, thus demand-supply conditions are another mechanism for pricing of fish and fish products (Source: Fishing in Pakistan-

Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Fishing_in_Pakistan#Processing). Processing plant owners charge earn profits on two levels; 1) when acquiring fish from the local fishermen at lower prices and 2) exporting fisheries at a higher price.

Rivalry forces the firms to invest in innovation and Research and Development. However, that is not the case in the fisheries industry of Pakistan. Despite local rivalry, no firm is willing to invest in research and development and hence, this industry has no research and development units. This is majorly because the firms have nothing to lose. They have plenty of resources and plenty of markets, so no one is really losing anything. However, there is absolutely no rivalry on the international level as the firm is not as competitive as the global firms, majorly because of lack of port facilities, unhygienic conditions and lack of other technologies and facilities that are adequate of the international level. Thus the industry is unable to meet the international standards due to which EU and Jeddah imposed bans on imports of seafood from Pakistan decreasing our demand significantly. Our fishery industry much focus on improving conditions if it wants to regain the competitiveness that it once enjoyed globally.

RELATED AND SUPPORTING INDUSTRIESRelated and supporting industries are yet another major component of the Diamond model. Supporting industries are those industries which provide inputs that maybe necessary for innovation. They may provide cost effective inputs that may increase the competitiveness of the home country industry. On the other hand Related industries are those industries that use the products and by products of the home country industry to make further products. They, being the end users of the industry, create demand for the home country industry’s products.

Supporting industries are those industries which help Pakistan’s fishery industry in establishment of adequate hatcheries, processing plants, storage facilities, preservation and marketing of the fishery. These industries also provide fisheries with gears, boats, engines and nets which are necessary tools used while fishing. There are no major supporting industries found immediately near Pakistani fisheries. Also, there is lack of proper training and infrastructure; there are no major companies who provide us with that.

Related industries are those which use fish and fish products. Four major by-products of the industry are fish scales, fish meal, fish oil and Cod liver Oil. Fish meal is a product made from whole fish as well as from the bones of processed fish. It can be made from any type of seafood but mostly fish is used. This is because small marine fish usually contain a high content of bones and oil which is not suitable for the consumption of humans. When whole fish or fish trimmings

38

Page 46: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

are pressed to remove fish oil and water, it is further grounded to obtain a brown powder which is the fish meal. It is used to make a diet for domestic animals and livestock that is rich in nutrients and acts a high protein supplement. This is usually used because the diet made from plants is either too expensive or unavailable (Source: Fish meal-Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Fish_meal and Fish meal. Retrieved from:

http://www.fao.org/ag/AGA/AGAP/FRG/AFRIS/Data/332.HTM). Fish oil is made from the tissues of oily fish. It contains omega-3 fatty acids eicosapentaenoic acid (EPA), and docosahexaenoic acid (DHA) which are thought to have many health benefits. However the fish themselves do not produce omega 3 fatty acids but receive it by eating prey fish that have accumulated the from microalgae.it has various health benefits. It is used to cure many diseases; such as Alzheimer’s disease, Parkinson’s disease, depression etc. (Source: Fish oil- Wikipedia, the free

encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Fish_oil). Fish scales cover the fish and vary in size, color, shape and structure. They protect and armour the fish against predators. They are directly used by drying and painting to be used in jewellery, for appliqué, and as decorative objects. Indirectly used in many industries such as cosmetic, pharmaceutical etc. fish scales have a natural silverfish color in them. This color is added to lipsticks and to nail polishes which give them their silverish shine. The cosmetic industry uses fish scales in collagen based products such as anti wrinkle creams, Botox knock offs, eye-miracle cures and some skin moisturizers (Sources: fishscales. Retrieved from: http://stoneplus.cst.cmich.edu/zoogems/fishscales.html and What Are Fish

Scales Used For? Retrieved from: http://www.ehow.com/about_5063644_fish-scales-used.html). Another major industry that uses fish and fishery products is the food industry. Fisheries are used for domestic and foreign consumptions and used in hotels and restaurants. They are food resources for lower income groups as they are the cheapest source of protein. Oil from Cod and Shark are sources of vitamins A and D and are used in tanning industries for curing leather, producing soaps, etc. Shark skin is used for manufacture of leather. Cod, Haddock and Hake skins are used for manufacture of glue. Fish sauce, another by-product, is derived from fish that has been allowed to ferment. It is an essential ingredient used in making different curries and sauces (Source: Fish Sauce – Wikipedia, the free encyclopedia. Retrieved from:

http://en.wikipedia.org/wiki/Fish_sauce).

DEMAND CONDITIONSDemand conditions are very important to any industry as if there are no end users then there will be no competition and hence firms will stop producing. Demand conditions are an important measure of competitiveness of an industry as it forces the firms of an industry to innovate and make better products, generating high demand and maintaining the overall competitiveness of the firms. Thus home market is the major driver of demand of any industry.

39

Page 47: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

Similarly, like all the industries, home demand is quite essential for the fishery industry. However, Pakistan’s consumption of fish and fish products is very low and its per capita consumption is around 2 kg per annum only, which is quite below the world per capita consumption. The world per capita consumption is averaged at 16.2 kg per annum, with European countries having a per capita consumption of 20 kg per annum and Japan having a per capita consumption of 64 kg per annum. Pakistan has one of the lowest per capita consumption is the world and hence does not have much domestic demand. This is majorly due to Pakistanis’ preference of other types of meat over fish and fish products and due to lack of awareness of the protein intake. Of the total marine catch, 32% of the fish is locally consumed. Freshwater fisheries are given a preference over the marine fisheries due to freshness, taste and type of meat factors (which will be discussed later); however, freshwater fisheries usually sell at a higher price than the marine fisheries. As most of the fish farming (aquaculture) is done for inland fisheries, the increased consumption of local fisheries is expected to continue due to high production as well. In Pakistan, fish demand is seasonal and tends to increase during the winter season as it contains “A-class” protein which is essential for human body during the winter season to maintain the energy intake. Also, due to increased awareness of the advantages of fish intake, urbanization and increase in population, domestic demand has been increasing over the past few years, although not substantially (Source: APP Video Preview. Retrieved

from: http://www.app.com.pk/video/preview.php?id=20463). Being a cheap source of protein, its demand and intake are usually higher amongst in the lower income groups. Despite all this, local demand of fish is still quite low and does not encourage people involved in the fisheries industry to work on innovation.

In spite of the local demand, Pakistan’s fisheries has a wider global demand and is exporting to over 75 countries in the world including Japan, UK, China and US, etc. Fish is usually exported in salted dried, frozen and chilled form (Source: Trade. Retrieved from:

http://www.pide.org.pk/pdf/Books/Trade.pdfhttp://www.pide.org.pk/pdf/Books/Trade.pdf). This foreign demand has been dramatically affected over the past few years due to unhygienic port condition and inadequate port facilities which potentially lacked internationally recognized facilities and did not meet international standards. Due to these European countries as well Jeddah has put a ban on imports from Pakistan of fresh seafood. This has cost a potential loss of exports (Source: Seafood exports fetching good prices | Pakistan Today| Latest news, Breaking in. Retrieved

from: http://www.pakistantoday.com.pk/2011/06/seafood-exports-fetching-good-prices/). Unless Pakistan improves it port conditions and updates its processing techniques, foreign demand will continue to deteriorate over the period of time. Pakistan usually exports shrimps, fish meal, fish maws and shark fins along large quantities of chilled fish.

40

Page 48: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

In addition to the local demand and foreign demand, where fish is consumed by the people for eating either at home or at restaurants, fish and its byproducts are used and demanded by other industries as well. The most common of them all, is Pearlescence, a shiny substance found on fish scales is used by the cosmetics industry to add shimmer effect to products such as lotions and nail polishes, etc. (Source: Top 10 Products You Didn’t Know Are Used in Cosmetics. Retrieved

from: http://funrocking.com/2011/07/top-10-products-you-didn%E2%80%99t-know-are-used-in-cosmetics/). Other than this fish oil is used by pharmaceutical industries as it is beneficial for heart patients and is also good for health and fitness as apart from controlling heart rhythms, it is used for many psychological illnesses, joint pains and muscular weaknesses (Source: Fish Oil Has Marvelous

Effects. Retrieved from: http://www.forum.noorclinic.com/thread.php?topic=21694).

GOVERNMENTGovernment, however, is not a major component of the Diamond model but it plays a relatively important part in the fishery sector of Pakistan and can be measure of competitiveness of this industry. Government’s role can be seen as the constant effort to develop the sector despite the fact that it contributes only about 1% to the GDP of the country but comprises a rather larger part of the exports of Pakistan so it is a major source of exports earning, as Pakistan being an agriculture country and a major source of livelihood of the people living on the coastal areas. As the exports constitute of over $258.161 million, which is major part of Pakistan’s total exports earnings together with other agriculture products, government is bound to make sure that the industry flourishes in order to acquire more exports markets in the future and to sustain the long term competitiveness of this industry and maintain high quality products so that Pakistan does not has to face yet another ban like the EU ban. Also, the government has to put in its efforts to encourage EU to lift the ban that it imposed in August 2007.

For this purpose, government has put in conscious efforts to set up various institutes, which to this date work zealously to improve the fishery industry. In summary, Fisheries Development Commissioner (FDC) was established under Ministry of Food, Agriculture and Livestock (MINFAL) of the Government of Pakistan to manage the industry. National Fisheries Development Board (NFDB) which is responsible for formulating policies. Then there is Marine Fisheries Department (MFD) which was established in 1951 which is an attached department of MINFAL. It was responsible for preventing exports of substandard products, to regulate quality control, manage fishery resources of Pakistan, and promote research and development and to upgrade knowledge of fishermen and train them. Centre of Excellence in Marine Biology was also established to prepare several projects on marine biology. Moreover, government of Pakistan has also established various directorates of Fisheries, as already stated above, to serve major functions to manage and develop the industry under the Fishing Act. Furthermore, two Fisheries Harbor Authorities were established to enhance Pakistan’s harbors and to improve

41

Page 49: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

processing and other port facilities to meet the international standards. Fishermen’s Cooperative Society (FCS) and Pakistan FisherFolk Forum (PFF) were also established to revive fishermen’s conditions and work for their welfare.

Apart from establishing these institutions, several laws and policies were passed in different eras focused on this important industry of Pakistan. Pakistan’s deep-sea fishing policy was formulated in 1982 under the UN convention which define the territorial and exclusive economic zones for Pakistan and countries all over the world. The policy aimed to boost exports in this sector, allowing joint ventures between foreign and local investors. However the policy was changed in 1989, to permit only Pakistani flagged vessels but failed to restrict foreign trawlers. The policy was formulated a number of times but according to the Deep Sea fishing Policy of 1995, amended in 2001 and then again amended in 2006, following zones were created:

ZONE LIMIT RESERVED FOR TYPES OF VESSELS

MAXIMUM NUMBER OF VESSEL FOR OPERATION

ZONE-1 From coast line upto 12 Nautical Miles

Local fishing boats -

BUFFER ZONE 12-20 Nautical miles - -ZONE-II 20-35 Nautical miles Medium size deep sea fishing

trawlers20 trawlers

ZONE-III 35-200 Nautical miles Larges size deep fishing trawlers and tuna longliners

Trawlers: 10Tuna longliners: 50

(Source: Fisheries Sector in Pakistan – Outlook and Guidelines)

The 12-200 nautical miles zones are considered to be the Exclusive Economic Zone (EEZ) and fall within the federal government’s remit. Federal control has been traditionally extended into territorial waters and this control has become more pervasive via Maritime Pollution board and Karachi Fishermen Cooperative Society.

Provincial laws include:1. Sindh Fisheries Ordinance of 1980. This law provides rules and regulations for marketing,

handling, transportation, processing and storage of fish and shrimps for commercial purposes and sale of fish in domestic markets as well as inter-provincial trade in Sindh. It imposes total ban on use of destructive fishing gear and for closed season of shrimp during June and July. People who do not abide by the rules are punished by 6 months imprisonment or PKR 10,000 fine.

2. Then there were Sindh Fisheries rules 1983 and 1995.3. Karachi Fisheries Harbor Authority Ordinance of 1984 which focused on developing port

facilities, including processing facilities and put upmost importance on hygienic conditions.

42

Page 50: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

4. Coastal Development Authority Act of Sindh of 1994 which provides legal basis for the industry and puts emphasis on the development of the sector.

5. Balochistan Sea Fisheries Act of 1971 which provided for control of fishing crafts, licensing, processing and other related activities along the coast of Balochistan. Wrongdoers are punished by one month of imprisonment or PKR 5000 fine or both.

6. Balochistan Sea Fisheries Ordinance Amendment of 1994 and Balochistan Sea Fisheries Rules of 1971.

7. Karachi Fisheries Harbor (Control and Management) Regulations of 1991, came into force in 1992, and regulated Karachi Fisheries harbor and ensured it proper management.

8. Coastal Development Authority of 1994 which focuses on management and maintenance of coastal areas and development of fisheries and other agriculture products.

Federal laws include: 1. Exclusive Fishery Zone Act of 1975 which was later amended in 1993 and focused on

management of fishing in the EEZ of the country including licensing and management of fishing operations, prohibition of illegal dynamite and poisoning fishing. It also enforces observing closed seasons and prohibited areas.

2. Pakistan Fisheries Ordinance of 1961, West Pakistan Fisheries Rules of 1965 and Sindh Wildlife Protection Ordinance of 1972.

3. Pakistan Animal Quarantine (Import and Export of Animal and Animal Products) Ordinance of 1979 which provides control over import and exports of animals and regulates trade of animals and animal products and calls for dealing issues of animal’s health and spread of diseases.

4. Exclusive Fishery Zone Rules of 1990, Territorial Waters and Maritime Zones Act of 1976 and Pakistan Environmental Protection Act of 1997.

5. Pakistan Environment Protection Ordinance of 1983 which protects the waters of Pakistan from water pollution.

6. Agriculture Produce (Grading and Marketing) Act of 1937 which controls grading and marketing of agriculture products.

7. Pakistan Fish Inspection and Quality Control Act of 997 which provides details for registrations of processing plants, ice factories, fish handling, landing places and fish processing establishments, etc.

(Source: Action Plan for Fish Quality and Value Adding at Karachi Fisheries Harbour. Competitiveness Support

Fund. Word Document Retrieved from: www.competitiveness.org.pk)

Apart from these laws, government provides subsidies and grants for the up-gradation of Pakistan’s fishery boats and other facilities. For example, in the fiscal year 2010-11, it provided for 75% of the modification costs of the boat to meet the international standards of EU and other countries around the globe, as the government of Sindh, which is responsible for enhancing port facilities of Karachi fisheries Harbor, is blamed for the EU ban. Other than this,

43

Page 51: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

Sindh government is also investing in projects for the development and improvement in the fishery industry of Pakistan.

CHANCE FACTORChances are another component of the Micheal Porter’s diamond model. However they are not considered to be the main components as they only affect the industry in the short term and their effect if quite blur in the long term. These factors are normally out of firm or industry’s control. They can include natural disasters, changes in policies of foreign governments, changes exchange rates and natural disasters etc. Chances can shape and alter the four other conditions of the Diamond model dramatically.

Natural disasters such as floods can significantly affect, both positively and negatively, the fishery sector of Pakistan. Due to recent flooding in 2010, for example, hundreds of farms worth millions of rupees were damaged. A small farm of 2 acres contains 3000 seeds of fish approximately which are available for Rs 5-7. These fisheries, when matured after one and half years, are sold for Rs. 250-500 and are sold when their weight reaches 1-2 kg, so the loss to the owner of such a small farm is around Rs 1.5 million, where as flood ruined farms which were based on 50-200 acres, imagine the loss to the owners (Source: Hundreds of fish farms washed out in

floods. Retrieved from: http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=71423&Cat=3). But on the other hand, the effect of floods was not completely negative. Floods are considered to be a great catch for the fishermen, as according to Daily times, it increases fish in both numbers and sizes and floodwaters are expected to enrich lakes and thus the fortunes of the fishermen. This is because, when the flood occurred, the river waters met the sea waters, and due to the smell of the river waters, fisheries increase in the sea. Also, freshwater brings nutrients for the sea species which makes them stronger, increases their size and breeding capabilities. Due to this increase in fisheries, fishermen’s incomes are expected to more than double in the near future and due to this they will be able to offset the rising prices of fuel and food which has adversely affected them in the past ( Source: Floods ‘great catch’ for fishermen. Daily Times. Retrieved from:

http://www.dailytimes.com.pk/default.asp?page=2010\09\26\story_26-9-2010_pg7_27).

Apart from the natural disasters, disasters such as Oil spills add on to the chances factor. The oil spill of 2003 ruined Pakistan’s fishery industry. Tasman Spirit, the oil tanker, spilled 31000 tonnes of crude oil into the sea at Karachi coast. Due to this oil spill contaminations in different fisheries were found and high concentrations of toxic materials were found in all the fisheries and shellfish caught from the affected area. Contaminations such as Naphthalene were found which may damage or destroy the red blood cell if consumed (Source: Two major studies on Tasman Spirit oil spill released. Retrieved from: http://www.dailytimes.com.pk/default.asp?page=2008\03\11\story_11-3-

2008_pg12_10). Pakistan’s fishery industry was said to have incurred major losses during this

44

Page 52: Fishery Industry

PAKSITAN’S FISHERY INDUSTRY-SECONDARY DATA

period as it exports were greatly affected due to spoilage in the fishery industry. The market price also reduced considerably leading to and economic loss in the fish industry venture.

Chances also include factors related to the changes in the government policies of other countries. European Union ban and Jeddah ban can also relate to this component. It affected the fishery industry of Pakistan in the short run as exports started to decrease until Pakistan finally later found other export markets. It was only then, that the export earnings from the fishery sector started flourishing again. Had Pakistan not found other export markets, it exports earnings would have decreased significantly.

ISSUESAs per above analysis we can see that Pakistan’s fishery industry has to face following issues:1. Over fishing: Due to increase in number of fishing vessels, increasing population of fishing

communities and harmful nets, Pakistan faces with the problem of over fishing.2. Stock Assessment: There is no accurate data as to how much fish stock is present in

Pakistan’s water resources. 3. Degradation of Indus River: This has been usually due to reduction in water in the Indus and

its tributaries4. There are many threats to inland and marine eco-systems.5. Post Harvest losses: Due to lack of processing units, lack of preservation and freezing

facilities, Pakistan has to face post-harvest losses.6. High Fuel Prices and little or No subsidies: With the rising fuel prices, poor fishermen are

highly burdened and fuel cost are the major components of the fish cost and so these fishermen are unable to meet such high oil prices.

7. Fishermen areas are the areas with most poverty because of high costs and low returns.8. Processing constraints such as deficiency of sound infrastructure, no compliance with food

safety standards, lack of technology at processing units, no research development and improper marketing have adversely affected the demand for Pakistan’s fish.

From now onwards, the report will be based on the primary data and will focus on what issues are there now, whether or not any of the above given issues have been addressed and if not, we will provide possible recommendations at the end of the report.

45

Page 53: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

FISHERY INDUSTRY OF PAKISTAN-PRIMARY DATA

OVER VIEWThe previous chapter gave us an in-depth study of all the secondary data of the Fishery Industry of Pakistan based on the parameters of the Diamond Porter Model. Doing so, gave us an increased understanding of this sector which has greatly helped in our primary research, where we used questionnaires and interviews as our primary tool. Secondary research highlighted several issues in the existing industry, however, while conducting our primary research several recommendations were highlighted which can be found at the end of this chapter. We have tried our level best to give as realistic scenario as we could regarding the fishery industry of Pakistan, which will help evaluate the major issues that the industry is still facing and we will then be able to give a little more practical solutions to the existing problems. Primary research also resulted in getting our facts rights about the industry and we might be able to present even a less gloomy picture. The people and companies we contacted, via phone or a meeting, are listed at the end of the report. Also, the questionnaires that we used are attached in the latter part of references section.

Pakistan is an agriculture based industry, where major exports comprise of agriculture products and agriculture contribution to GDP is around 23% which no doubt has decreased during the past few years but still our exports majorly comprise of agriculture products. Thus, in a country like this, it is extremely important to develop our agricultural side. Fishery plays an important role in the agriculture of Pakistan and employs over a million of people in the industry directly or indirectly. Therefore, it remains a very important sector to be studied and to be excelled, in order to increase our exports further because Pakistan has well established markets in Europe and US that have been greatly affected by the EU and Jeddah bans, however the sector has seen some improvements which will be discussed in a while.

We have seen that our sector was largely divided into unstructured and structured parts that individually add to the flaws of the over all sector. As we have already placed the information under the Michael Porter’s Diamond model in the secondary data, the Primary research will also follow a somewhat similar picture but ofcourse Porter’s Diamond Model will now be studied under the structure and the unstructured labels where structured side would be given more importance because of increased demand of processed fish due to increased awareness about processing techniques and health and safety environments and also, firms have now acquired micro bio labs to invest in Research and development, however there is not much innovation in this sector as yet. So we already had the overall issues of the industry, conducting our primary research in this manner has given us an opportunity to study the structured and

46

Page 54: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

the unstructured sides individually and find the flaws in the individual parts of the sector. It made it easier for us to give suitable recommendations according to the structured and the unstructured sides. And as said earlier, more recommendations will be highlighted for the structured side due to increase demand of products from that side. However, fishermen also play a vital role, so recommendations will include improving their conditions to further improve the sector’s productivity and efficiency.

Nevertheless, before we move on to the structured and the unstructured sides, Zones, as described earlier in third chapter, were created as follows:

Another concept to be noted is deep sea fishing. Deep sea fishery or industrial fishery is done in the exclusive economic zones beyond the territorial waters up to 200 nautical miles (where 1 nautical mile = 1.85200 kilometers). Historically, these resources were un-tapped because fishing activities of the fishermen were confined within the territorial waters. For such type of fishing, Government of Pakistan allowed the operation of foreign flag deep sea fishing trawlers of 300-350 GRT (1 register ton = 2.831648466 m3) under 1982 joint venture scheme. However, this stopped in 1986 and only Pak-flag are allowed to operate for catching demersal fish resources. Their catch is subject to fixed royalty and the annual license fee. The deep sea fishing under join ventures always had controversies attached to them. They have been a source of

47

Page 55: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

number of problems for local fishermen where foreign vessels fish illegally in shallow waters and artificially report low catches. These have resulted in damage to fishing gears and crafts.

UNSTRUCTURED The unstructured sector comprises of the fishermen located at several places along the coast. These fishermen are the major suppliers to the domestic consumers, foreign consumers where they export via Karachi Port trust and to the firms which then process it and meet the processed fish demand. Now according to the diamond model, we will analyze the information provided to us directly by the fishermen via interviews, to find out major issues faced by them and then we will try to come up with realistic recommendations:

Fishermen have full excess to the water resources of the Pakistan where Pakistan has a coastline of about 1120 km2 and a continental shelf of 50270km2 and a total fishing area of 300270 km2. Pakistan has a coastline divided into the Sindh (30%) and the Makran (70%) coasts. Karachi and Makran are the most important fishing ports and are being developed by the Government of Pakistan as a fishing center, as stated in the earlier part of the report. Apart from these, they have access to several dams, reservoirs, lakes and ponds from where they fresh water fisheries. Fresh water fisheries are usually found in interior Sindhi, landhi and Marine water fisheries are found in fisheries, Ibrahim Hyderi, Fairi quarter. The places where fishermen fish the most include Keamari (Netty Jetty), Abdur Rehman Goth, Charna Island, Sonehri village and Karamat, the latter four being the most important fishing sites according to most fishermen.

In addition to the gears and boats stated in the secondary data, we found out that the most common types of boats used by the fishermen are mostly wooden boats, Launch-40ppl, Hora boats which can board maximum of 8 people. Boats are maintained by lifting out boat on land and by use of leather seats, finger sized wooden plugs, diesel and motor servicing. Some perform boat maintenance 3-5 times a year, some every 20-22 days and some whenever it is needed. These fishermen usually use “Dori”-a type of net, for fishing in these places as it is suitable for most fishery products. However, material of the net and size of the net depends on the size of the catch. Nets can be knitted closely with 1 finger to 8 finger space or has holes at a distance of 2 inches, Resham nets are used for big fisheries and Plastic nets are used for comparatively smaller fishery products. Some also use polyester nets. These nets can be as long as 6 miles for big fish and as small as 1 mile for small fish. These nets are simply put against the waters and fisheries are caught in abundance. However, internationally there are many more types of nets, including cast nets, coracle nets, Chinese nets, Dragnets, Drift nets, Drive-in nets, Fyke nets, Gillnets, Ghost nets, hand nets, Lave nets, lift nets, Plankton nets, Seine nets, Stake nets, Surrounding nets, Tangle nets, Trammel nets and Trawl, etc. Most of these are not even

48

Page 56: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

found in our fisheries. The nets found abroad have holes after a space equal to approximately two thumbs of a man and are usually mesh nets.

Using worms is now just a traditional practice for catching fish; however, some fisheries still prefer worms and earth worms are usually used. Type of worms defer in terms of sizes. Worms are usually of Rs. 400 per kg; however this depends on the size of worms. The price ranges from Rs. 100 to Rs. 200 per kg. Some people also use sea weeds to attract fisheries. Sometimes special medicines are given to make the fish ill so that they are weak and want food, this will attract the fisheries towards the food, whenever it is given to them which makes it easier for the fishermen to catch them. Coral reefs are also of vital importance. These are underwater structures made from calcium carbonate. They provide spawning, refuge, nursery and feeding areas for fisheries like shrimps, spiny lobsters, squids, cuttlefish, octopus and crabs, etc. If these are managed properly, they can yield around 15000 tonnes of fish resources per square kilometer annually.

The types of rods used by fishermen include trawling machine rods, bottom fishing 25-70 pound wire with hooks and weights on it. Hooks are of 3 or 4 inches. While talking to the fishermen, we found out that the fluctuations in price of diesel greatly affect the cost of fishing and diesel is one of the major raw materials and comprises of a large part of cost of fishing. For others, nets are also a costly raw material as one 6-mile net costs around Rs. 3,200,000. Their daily catch ranges from 100-500 different fisheries or different size. Prawns account for almost 250-600 kg in a 12-15 days period. Yearly the catch ranges from 1200 to 30000 fisheries depending on the fishermen and the scope of his business and the demand of his product.

Fishermen are mostly uneducated. Although some have complete education till fifth grade, some till matric and some had even completed their colleges. So they have little or no knowledge about the industry except those passed on by their elders. Fishing usually runs in the family. Fishermen usually get their raw materials from the fisheries, Karachi harbor, Lee market, Ibrahim Hyderi, Kharador and/or the other rural areas or the villages. These fishermen usually live in nearby villages including Bit bay, hawksbay, Machar colony, Muhammadi colony, Lyari and Ibrahim Hyderi, etc.

Major products include Surmai, Pamphlet, Mushka, Photar, Kapartan, Singhara, Saran, Dhotar, Rahu, Prawns, Lofter and tuna. Tuna fish is unconditionally the most demanded product in the world. The breeding seasons are June and July, where as the fishing seasons are August to May. Fishermen are not allowed to fish during the breeding seasons during which they earn through part time jobs, taking people to manora or they simply use the revenues that they earned the rest of the year for living. Fishermen supply to the fisheries, private companies, contractors and

49

Page 57: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

fish farms, roadside sellers, fish exporters and owners of fish stalls. Fish is marketed through auctions. There are three auction halls in the fish harbor which are managed by the Harbor Authority. Fish and shrimps have different auction halls. The catch is brought in by the vessels and is put for open auctions and whoever bids the highest gets the products. The type of auctions followed here are forward auctions. The auctioneers charge 6% value, of which 50% is given to the harbor Authority and the other 50%, is retained by the auctioneer a commission. For others, it is marketed through communications between suppliers and consumers or via business to business communication. However in the international markets, like that of India, the scenario is a bit different. Their supply chain starts from fishermen, goes onto the commission agent, then the supplier (pre-processor) and finally to the consumers or the exporters.

At one place there are 10 to 40 fishermen, however, the total fishermen population is more than one lac. Women also work in this industry and help out at home and in making nets as nets require knitting work which is done best by the women. Some women do janitorial work in offices. Women also help out in cleaning prawns. Despite so many governmental policies of improving port facilities, living conditions of fishermen, conditions of harbor, boat conditions, etc., none of the policies were ever implemented. They do not receive any subsidies from the government or from the firms, except salaries and small commissions in form of fish or money. Nevertheless, some fishermen receive utility or ration cards from the government which may subsidize their living. Also, some fishermen receive training from the firms directly. Some fishermen have the advantage of not paying taxes. However, some have to pay Karachi port trust taxes (KPT taxes). Fishermen work on average for 12-14 hours and some may spend time in the sea for as long as 1 week. There are storing facilities available on the boats and on harbors in forms of ice boxes, where small fisheries can be stored for 2-3 before processing and big fisheries can be stored for 10-20 days before processing. When fish is frozen, it can be kept for as long as 8 months. When the fish is caught, for 15-20 days the fishermen keep it with them, they put salt on it and keep it in ice (minus temp) and when the order comes they deliver it further. The processing which we do is not medicated (improper). Normally in hawksbay fishermen take old deep freezer and line them with steel because it gets cold quickly, then they put ice and keep it airtight with fish inside. However, to maintain the freshness fish must be processed within an hour, this portion will be discussed later in the structured side of the fishing industry. When the fish is old, its color slowly its color changes to red color. If a fish is caught recently and it is held from its tail then it will stand up and it will be stiff but a fish caught days before will fall.

As there are lot of fishermen present, rivalry is quite strong as all the fishermen want to cater the most demand and obtained the largest market share. Thus, there may be price wars where

50

Page 58: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

everyone tries to lower their prices as much as possible. However, different fisheries are sold at different rates. So there are no specific rates. Prices of fishery products depends largely on the demand of the product and hence the demand of the fisherman. Fishermen may sell at a price above or below the prices of their fellow fishermen. This depends on the bids. Some fishermen may use quality as a tool and sell at a higher price, for example, some fishermen used to sell frozen fish above the market price because of better storing facilities that maintained fish’s freshness and thus, that fish was highly demanded as well in the market. They do not have much port facilities, but whatever they have, they are located in harbors only.

According to the fishermen, demand conditions differ for fresh water fisheries and sea water fisheries because of the difference in taste. Sea water fisheries are comparatively salty and fresh water fisheries are relatively sweet. Salt lovers prefer sea water fish while others prefer the fresh water fish. They are also different in terms of meat, meaning the texture and the hardness of meat. Fresh water fisheries are considered to be tastier and have a little bit harder meat as comparatively to the sea water fisheries. But due to a huge coastline, 70% of the Pakistan’s fishery industry comprises of marine fishing and thus production is usually of salt water fisheries. But people prefer fresh water fisheries if they are easily available in places where they buy from. Fisheries are used for both subsistence and commercial use. Demand during the breeding seasons is usually bridged by hoarding fish supplies during fishing seasons and then supplying when fish production is low. Demand is gauged according to the sales, personal contacts and the direct demand fishermen face when they go to the fishery harbor for selling purposes. Some fishermen also sell directly to food chains and restaurants. They also export sometimes. Some export via big companies while others export via Karachi Port trust (KPT), private firms and smuggling on borders. Despite that, they are not given any facilities to meet the international standards especially those put forth by the European Union and Jeddah. Fisheries are also used by people where they are kept in aquariums for decorative purposes. Fishermen sell small fisheries on the road sides and in markets like Saddar solely for this purpose.

Chances are a part of Micheal Porter’s Diamond model and they affect an industry in the short term, thus they are not a major component. However, as they affect the industry, we need to study it in terms of the Fishery Industry of Pakistan. Fishermen also have to face the chance factors. For example the oil spill of 2003 decreased the production of fisheries drastically, as reported by the fishermen who we interviewed. Some of them were not even allowed to fish until the effects of the oil spill completely vanish, as it would not be safe for humans to eat contaminated fisheries. Also, the consumption declined dramatically because people were scared to eat sea-food during this period and thus, the demand was quite adversely affected. On the other hand, deep sea fishermen remained unaffected. This is because the oil spill

51

Page 59: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

occurred on the coast of Pakistan so deep waters were safe and so were the fisheries. Demand for such fishery products increased a little, however the overall demand was still low because of over all perception that oil spill had contaminated all the fisheries. Also, In Ramadan and in summers the demand is low while in winters it increases so the price also increases.

When asked about the India and Pakistan water issues, most of the fishermen had answered that their catch was not affected by the Pakistan Indian water issues as they were purely navy issues and they did not face any problems during these issues. According to them, although border is the ideal place for fishing but our waters have enough catch to meet the domestic and foreign demand faced by them. The problem is generated when their trawlers cross the border which is yet another major problem faced by the fishermen of Pakistan; the threat imposed by the foreign trawlers. Foreign trawlers fish is our waters which decreases in-house production of fisheries and also affects certain breeds. Fishermen can not control the entry and exit of these trawlers as this is the role of Pakistani navy, which it is not performing properly. Nonetheless, fishermen do not mind trawlers coming in. According to some of the fishermen from the trawling team of Karamat, fishing is a game of pure luck and blessings of God. They believe in “kismet” for getting their catch of day. So there is a 100% chance that they get no fisheries at all, yet they do not object on the presence of the foreign trawlers in our water.

STRUCTUREDThe other half of the fishery industry of Pakistan is the structured side that is the fish and shrimps processing firms or the aquaculture farms. Due to increased awareness about the health, safety and cleanliness most of the people now prefer processed fisheries over the open ones that are sold in the harbors by the fishermen. Thus processed fish has a major demand in Pakistan. The processed fish was analyzed with respect to the fisheries and prawns and shrimps, including boneless fishery products. We will now analyze the information given to us by different fish processing firms and people from these firms including Mr. Javed Hussain (provider of fish to the restaurants), Mr. Syed Arif Raza (Chief executive food links Pakistan), CEO and Research and Development department member of Kanpa International Sales Ltd. (Processor and Exporter of Seafood) and member of Shah sons (processed fish seller), etc. We either went to meet them or we emailed them our questionnaires and they sent it back to us after filling them. Some of the firms were contacted on phone, where we were connected to the designated person and he or she answered our questions. The information will be again analyzed under Micheal Porter’s diamond model to find out issues in the structured side and give feasible recommendations:

Firms get their fisheries from the fishermen or from specific company suppliers who buy it from the open market after conforming to the quality standards set forth by importing countries. The

52

Page 60: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

firms are labor intensive rather than capital intensive. These firms have both skilled and unskilled labor including both males and females. Skilled to unskilled ratio is 90:10 and male to female ratio is 30:70, some have 50:50 male to female ratio. The minimum qualification required is Matric for the skilled labor. For production area they need people who are expert in sized grading of shrimps and for breading of value added products. For supervisory staff they need to have people with good managing/ managerial skills and Time management skills. Firms also have child labor and child labor is becoming a big issue, but without child labor the wage costs rise significantly. In addition, there are about 100 workers in a firm. Skilled labor is used at production floor and in technical or in maintenance staff where as the unskilled labor is used for moving of material from one place to another place. There are no labor unions found in the firms hence minimum wages are paid according to the declaration of the government. Major components of costs are freight (major), raw material, electricity, packaging and Labor. An average worker works for 8 hours per day or 54 hours per week.

The minimum time before which the fish product must be processed in order to maintain its freshness varies from fish to fish. However, it is recommended that within 4 hours the fish must be sent to the freezing chamber. Meanwhile, it should be stored with plenty of crushed ice. Major products include tiny shrimps (locally called kiddy), white pink, Brown tiger and lobster crabs. Among fish, Red Meat tuna, Silver Pomfret, Black Pomphret, Croaker, Trevelly, Indian Mackrel, Mullet and Sardene are highly demanded. Variety of lobsters includes Rock lobster, Spiny and Slipper while crabs such as three spot, Blue Swimmer and Mud crabs are also among our major products. Kanpa has both raw fish and shrimps and value product line called Mahi sea foods in which they see breaded fish finger, breaded fish fillets, breaded fish biscuits and breaded shrimps.

There are 32 processing units in Karachi in all. These mainly include freezing plants and fish and shrimp processing plants. There are five plants set up at Korangi harbor and some more are underway. Also include a huge plant in collaboration with the Chinese is in progress for processing mize fish. To prepare surimi, new technology is acquired from the Japanese which provides plants on turn key basis in which expensive sea food like crabs shrimps and lobsters are prepared by fish meat by adding different flavors. Processing plants are equipped with freezing units like contact freezers (cabinets) to store the fish and maintain their quality. Blast freezers are used for 2-3 hours for freezing the fish if they are of significantly different sizes. Every plant has a cold storage capacity of 500-1000 tons. Firms like Kanpa International sales Ltd. have two types of processing units Fish processing unit and Shrimp processing unit. In the processes, size grading is a process of increasing or decreasing the size of the products. They can be made into Fley or biscuits (squared pieces). Every factory maintains its purchase department and hires experienced staff for the purchase of raw material from the auction on behalf of the company. Some of the purchasing staff is on fixed salaries while others are on

53

Page 61: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

commission. We have middle men involved who are involved in the fishery process and they are appointed by the buyers to get fisheries from the auctions. The role of middle man is important as they are in constant contact with their processors, take their stock and offer prices to their principles. Negotiation of prices, checking of quality and final supervision is done by the agent. Firms do have research and development department where they employ around 20% of their budget and call for experts whenever needed. They carry out their research projects on an on-going basis. For food links, every factory has started maintaining a micro biology lab for testing the quality of production. Budget of Rs. 50000 is allocated to research and development of fishery products. Kanpa is working on ISO 22000 which is Quality Management system for some new product to give variety in seafood based products to the customer.

The machineries are usually imported from China, USA and Denmark. They do not have to pay duties on the machines. Most used machines include: IQF (Individual Quick Freeze) (required to freeze the raw fish and shrimps), Plate freezers and Tunnel freezers (required to freeze the raw fish and shrimps) and Glazing machines. Refrigerated containers are usually provided by the major shipping lines, and they vary from ware house to ware house. Insurance is done by the buyer. For companies who provide boneless fish have the mincing machine in which bones and skin are mechanically separates from the meat portion. Food links has health, safety and environment departments known as Arsala Sea Food, Coastal Sea food and AG sea foods. They are located in the Fish Harbor, west of Karachi. For other companies, there are no separate health and safety departments, their administration departments work on solving such issues.

Internationally, the machines used for processing or so advanced that Pakitani fishery industry people can not even reach that level unless heavy investing is done by the private sector. The have advanced processing equipments. These machines include computer vision technology, electronic scales, automatic skinning and filleting machines, etc. Methods include control of temperature using ice, refrigeration or freezing, controlling water activity by drying, salting, free-drying or smoking, physically or chemically controlling microbial loads through heating and vaccumm packaging. When fish products are transported, it is necessary that the cold chain is maintained to preserve its freshness. For this purpose, they have insulated and adequate refrigeration,

(Please turn over for a sample process used for processing and cleaning fish in processing plants of Pakistan)

54

Page 62: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

A sample fish processing and cleaning process is as follows:

Big companies have formed an oligopoly and companies like Kanpa International sales Ltd. and Sea Green Enterprise have acquired market shares of 40% each. Their sales and marketing team bring the products to the retail and institutional customers and their vehicles have freezing facility which they use for the transportation of products from factory to the market. Hence, operational, promotional or marketing costs are very high and contribute to a major portion of the costs of the firms. There is a general perception that the fishery industry is very profitable as a large portion is met by the exports demand, so finding financers is quite easy in this industry. There are about 35 Fish and seafood wholesalers, 11 fish meals and oils, 27 fish oil businesses and 31 fish and seafood retailers in Pakistan. Of all of these, most of them are located in Karachi due to the presences of Karachi fish Harbor. Retailers like Meat-one, do not sell local fisheries and instead import them from foreign fish companies.

55

RAW SHRIMPS QUALITY CHECK APPROVED GOODS

PROCESS OFPEELING

PEELED and DEVEINED SHRIMPS

WASHING & CHILLINGSIZE GRADING

REJECTED GOODS

SUPPLIER

WASHING & CHILLING

PACKING IN INNER BOXES

FREEZING PROCESS IN THE

CONTACT FREEZER

STORED IN COLD STORAGE AT - 18 TO -

20C

PACKING IN M/CARTONS

SHIPMENT

Page 63: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

Peak demand season for fisheries is from August to November and for shrimps from August to December. In order to bridge the gap between production and demand in seasons other than the peak season, price regulation is adopted. Prices rise during off seasons with low supply and increase in seasons with high supply. Firms use forecasting tools to come up with adequate solutions from bridging the gap between demand and supply in off-seasons. The best quality products, first grade, are processed and exported, whereas the second grade shrimp and fish which is fit for commercial use, is consumed locally. The prices of local market are higher or equal to exports because of high demand and less supply.

Around 60-80% of their sea food is exported and our main markets used to be Europe and USA. However, since the past 4 years EU has put a ban on imports of sea food from Pakistan due to unhygienic conditions prevailing in the catching fleet. Very little attention has been paid to this issue and although the government issued budget for the improvement of the situation, nothing has been achieved. More importantly, the authority certifying the plants for approval is itself not capable of doing so. As a result the market for fish has changed and now the main shrimp market is Egypt and UAE. In addition, Fish and allied products are exported to China. Markets like Middle East are also very profitable. As far as marketing of fish product is concerned, every firm sends different offers, shipment schedule, pricing and payment terms, etc. to different countries to attract foreign markets. Although Vietnam is a small country, it has progressed significantly in fishery sector. They are producing fresh water cat fish known as Pangasius. This has brought revolution in reducing the fish prices since they are exporting huge quantities in the form of fillet. On the other hand, Pakistan is importing majorly. This hascompletely replaced the consumption of shark fillet in Pakistan. Fish is exported to China, Turkey Afghanistan and gulf countries. Of these, highest export demand that we meet comes from Srilanka. High exports are of black and white pamphlet, hajham, sole, surmai, gesser, daama, red snapper (red color from beneath) and shrimps. Best in taste is daaama and surmai. Shrimps comprise of the major exports of Pakistan’s fishery products. Food links is the leading sea food trader from Pakistan representing more than 30 reputable companies and arrange the port for more than 250 containers in a season. Turkey imports a lot of our sea food but the major issue is that they actually have machines to test the life and see when it expires and we do not possess any such equipment because of our drawback on technology. All importing countries check the goods under their health authorities, and products are examined according to their quality. If they do not meet their standards, the containers are rejected. Hence, packaging is done to meet the international standards and according to the following flow:

Wash-------Grade----------freeze----------pack in boxes ---------pack in cartons.Traditional packaging materials are used for packaging fresh and processed fish for local and a limited export market. These include materials like bamboo baskets, wooden boxed, second hand ply-wood cases, screw pinemats and gunnies, etc. However, given the status of our fishery

56

Page 64: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

industry, it is paramount for us to adopt scientific methods of packaging for perishable products such as fish to get us back on our competition line in the international markets.Not all of our companies meet the international standards, especially those pointed out by EU. Around 12 factories do maintain such standards, and such practices are usually adopted when EU team is expected to visit Pakistan. The EU ban will not be lifted unless the companies improve their catching fleet and auction hall, regardless of whether they meet the international standards or not. Kanpa International Sales Ltd. is one of the companies which have been approved by the EU for exporting. They are HACCP and EU certified. HACCP controls are specifically for food safety through out the supply chain. EU approval is important for our fishery sector as it will lead to many developed countries importing seas foods from Pakistan and driving us towards making value added products. Eventually, they will give us greater revenue than the non-traditional market. Fortunately, Pakistan is in a better situation now as the non-traditional market has started consuming a lot of sea food, and we are facing fewer difficulties in exporting our products. The certification of quality is carried out by marine fisheries department government of Pakistan. Government has full authority, but unfortunately they do not do much to improve the situation. If more competent people enter the fishery sector, we can move towards improvement in a very short period of time.

Domestically, the target market for fish is local market. For frozen food, Karachi is the main market where frozen food is demanded the most. Demand for fish shrimps in restaurants and individual fish is also high. Export duty/ tariffs are paid on fish according to quantity and on prawns according to value when exporting. Consumers are interacted through focused groups to know what they want so that they where the demand stands. Fish industry has never been given incentives or benefits on export quantity due to which it is declining. Prices of fish are increasing every season and wild sea catch is depleting in major areas however in developed countries it is substituted by farming. In marine fisheries, Pamphlet has the highest demand where is in inland fisheries, Rohu is most demanded.

Consumers are visited once a year by our workers and middle man is in contact with the buyers on a daily basis. Moreover, the middle man visits them in Dubai Fair, China fair and wherever else possible. No government aid or aid from EU is received to improve firm conditions and be in line with the international standards.

Firms do not provide as such facilities to the fishermen. The sometimes provide our own boxes for the transportation of raw material in order to maintain our product quality. Commission agents provide loans for the purchasing and making of nets. In order to perform value additions for our product many factories are bringing machines from China and Denmark. However our attempts are not so fruitful since countries like China, Europe and USA give us tough

57

Page 65: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

competition in value added products and will never promote them in their region. The industry itself has no barriers but people in general do not want to work in this industry so this becomes a big barrier for the improvement in the industry. Firms work on cutting costs to gain competitive advantages in the industry. Every efficient plant prepares a market cost sheet and calculates a loss or profit at the end of the day. Instructions are immediately given to the purchase staff to be careful in case of losses.

By-products include skin, bones, Shark liver oil, fish meal, poultry feed etc. Also, we came to know that the waste material in the stomachs of the fisheries is separately marketed and is used for treating cancers and making threads for stitching the skin together. Companies like Kanpa use by-products to simply make fish meal. Fish scales can also be used to make collagen-based products, for example, skin moisturizers, anti-aging creams, wrinkle removers, cleansing gels and hand creams, etc.

ISSUESOur fishery industry is subject to a lot of issues that need to be resolved if this industry is to flourish in the future. The industry has a huge potential, and Pakistan being an agriculture country, it is quite significant for us to develop our fisheries because a major chunk of our exports are being catered by the fishery industry. The following issues are still faced by the fishery industry and people involved in it, additional issues after conducting the primary research have been found out and they have been in corporate in the list below:

1. Over fishing: There are increased number of vessels, increasing population of the fishermen who also use harmful nets. This has greatly increased the problem of over fishing which Pakistan has the face. More over there are numerous foreign trawlers who come to fish in out waters to fish; this has reduced our production and types of breeds drastically.

2. Wrong Perception of the fishermen: Fishermen have a common perception that the fishing is a game of luck, so even if foreign trawlers fish in our waters, it is their luck and God’s blessings that whether they will get the catch of the day or not. However, the need to learn that our fish stock is declining day by day.

3. Stock Assessment: There are no methods to accurately asses the fish stock present in Pakistan. Due to this, awareness can not be created amongst our fishermen about the declining stock.

58

Page 66: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

4. Degradation of Indus River: Due to a lot Pakistan India water issues and climatic issues, water has been declining in the Indus River and its tributaries. But according to the fishermen, Indo-Pak water issues are purely navy issues and they have nothing at stake.

5. Threats to inland and marine eco-systems: Due to lack of processing facilities, fish meal, lack of improvements on part of both government and the people of fishery industry. Oil spills and overfishing, etc. there have been a high threat to our fisheries.

6. Post Harvest losses: Although we have developed processing units and freezing facilities, but lack of timely processing and freezing is a major issue as when fish becomes old, it loses its freshness and its meat become stale and of red color.

7. No aid or subsidies: Fishermen do not receive any aids or subsidies from the government, the firms or even EU to meet the demand and international standards as set forth by the EU after the ban has been imposed. Due to this, fishermen can not compete well with the ever-increasing fuel prices, extremely high costs of net, marketing and promotional costs, all of which add a lot to over all costs of the industry. They have been given no incentives such as basic needs availability by the government.

8. No facilities to the fishermen: They have not been given any facilities and thus, the fishermen areas are the ones with most poverty because of high costs and low returns. Although they are the major stake holders in this industry and they mistreated by the government and they are given no shelter, colonies, etc. Little or no training is provided to them and if they are trained properly, they can improve their living conditions and be more productive, giving more back to the fishing industry. Furthermore, they can not try deep sea fishing, a recent trend in fishing, because of their lack of knowledge. As mentioned above, they can not meet the high transportation costs due to high fuel costs. They have been given no security whatsoever, and thus they are scared that if God forbidden something happens to them then what will happen to their families. Due to fishermen being poor, they are unable to afford the latest fishing vessels. They have been given little or no health facilities and government has not provided any hospitals for them.

9. Other fishermen problems: Private companies have their own fishermen and thus, they are equipped with better technology and tools as companies need significant amount of catch and they can not depend on luck as the fishermen do. So due to high technology, they have an edge over other fishermen. Our local demand is not that high so the fishermen are forced to sell their products at a much lower price than expected. Also, they are not aware of the international borders and they have a huge chance of entering neighbor’s borders

59

Page 67: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

especially those of India. A major chunk of their production met the exports demand but due to the EU and Jeddah ban, these exports and so their earnings have reduced. Most of the fishermen are also unaware of the recent improvements in the industry.

10. Processing constraints: Although some firms have now been giving a specific amount of budget to the Research and Development departments, we still have a deficiency of sound infrastructure and no compliance with food safety standards. Also, the R & D departments have not come up with any thing useful that may add value to our fishery products. The processors are not united, therefore they are unable to make policies that can be forwarded to the government for considerations and prove to be favorable for everyone. This also causes quality issues as set forth by EU and Jeddah. It is necessary that we comply with the quality standards.

11. Low Per capita consumption and crude demand: Pakistan has a very low per capita consumption of 1.3 kg as compared to the world average of 17 kg. Low demands means that our resources are not being utilized to the fullest although out rivers and deltas are rich with fish resources especially after the recent flooding. Recent flooding has decreased our agriculture food crops, so fishery can be used as a substitute and food crises could easily be solved with appropriate government efforts. Moreover, our people prefer fresh fish while all over the world preserved and canned fish is demand. So local demand does not encourage people of our industry to innovate and bring value addition to this industry. Thus, there is a need to create a more sophisticated demand.

12. Lack of private investment: Private sector is very reluctant in investing in the industry mostly because many people do not like working in this industry. If private investments increase we can easily attain modern fishing vessels and equipment. Although we have new kinds of trawlers with cameras which tell if there is fish or not so you get an idea. So then the net is put accordingly. This concept is increasing slowly but still they are a no match to the foreign fishing vessels, technology and equipments.

13. Inappropriate utilization of the by-products: fishery industry has lots of by-products which can be marketed separately for high profits if regulated properly. But due to lack of awareness and economic benefits to the fishermen, they generally dispose of these by-products in to the sea only.

14. Environmental issues and lack of Waste treatment plants: As Pakistan is a developing country, it has little or no proper waste treatment programs, so all other industries dump their waste in the sea. This contaminates not only our water but also our fishery products.

60

Page 68: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

Excessive use of insecticides and pesticides has also affected this industry as well and because of this our fisheries have moved away from the coastline. These have not only compromised the quantity of our fisheries but also the breeds, meaning the quality of our fisheries. As for the environment, due to increased global warming threats and increase in over all temperatures, the sea temperature has also risen significantly over the past few years affecting the fish breeding radically.

15. No diversification: Most of the port facilities are available in Karachi which is subject to immense law and order situations. More and more facilities are being added to the Karachi port but this has done nothing except congesting the Karachi port. Also, due to high fluctuations in law and order situation, it is necessary that some of these facilities be moved to the Gwadar port.

16. Obsolete fishing vessels and methods: There is a need for up-gradation as the world is moving towards new technologies. Pakistan must attain the new technologies and methods to expand their over all catch and meet the demand more easily and get back the competitive advantage that it once enjoyed conforming to the international standards, as some of our fishing methods are less productive and more harmful, due to the use of harmful nets by our fishermen.

17. No Implementation of the Law: Pakistan had many laws regarding the improvement of the fishery industry of Pakistan. However, we have always failed to implement those laws in the real life; it is kind of our weakness now. Certain measure took place, like modifications of boats, getting new nets, giving more government support. But when we talked to the fishermen, we found out that none of the laws have been implementation majorly because of our flawed system.

18. High smuggling: Smuggling keeps on increasing on our coastlines which majorly affects our export earnings.

19. Packaging faults: In Pakistan, packaging is done to meet the international standards. We use can, however, all over the world, especially in Europe, there has been a shift from using can to plastic bags but we still use cans. There is poor quality in packaging, cans are not dried up properly which results in swelling up of cans and swelled up cans are rejected on the grounds that they are defected. Also, they are not sealed properly, which causes bacteria to enter the food items. Traditional packaging materials are still used for packaging fresh and processed fish for local and a limited export market. However, it is vital for us to adopt scientific methods of packaging for fish.

61

Page 69: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

RECOMMENDATIONSAs noted above our industry is full of flaws and we must ensure that the above given issues are given their due consideration so that they maybe solved as soon as possible so that Pakistan’s fishery industry can get back to the line of fighting for the competitive edge in the fishery industry of the world. For the above given issues, we found out the following realistic recommendations:

1. There should be strict laws imposed to avoid overfishing. Fishermen should be given a specific quota of how much they can fish per day and it should be checked strictly that all the fishermen are following the laws by either counting the fisheries or weighing them. Foreign trawlers should be restricted in the fishing zones which are exclusively for Pakistan. Navy should take direct action for any foreign trawlers entering.

2. Awareness should be created amongst the fishermen about the concept of luck and productivity of our waters. They should stop blaming luck for the lack of production and should start believing that our waters have lost the productivity that it once had years ago.

3. Government should come up with specific methods for stock assessment to atleast give a close approximation about our fish stock.

4. Pakistan should immediately work on solving Indo-Pak water issues. This is because until they are solved, Pakistan’s rivers will go on degrading affecting our fish production and breeds appreciably.

5. Inland and Marine eco-systems should be protected. Extinct fisheries should be attended to and their catch must be stopped. For incidents like oil spills, government should take immediate action to stop the contamination of our waters and hence, the fisheries.

6. For post harvesting losses, processing facilities should be readily available. Transport should be readily available to ensure that the fisheries are processed with one hour to maintain their freshness.

7. Aids and subsidies should be given to the fishermen so that they can atleast cover their costs like diesels and net costs which are exceptionally high.

62

Page 70: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

8. Facilities should be given to the fishermen for improvement of their condition. They should be ensured security and health facilities. They should not be mistreated by the government. Their returns must be increased.

9. The edge private companies have over local fishermen, must be eliminated, giving rights of catch to both. Also, fishermen should also have similar technologies. They should know what the international borders so that they are not accused of intervening. Facilities should be given to meet the international standards so the ban is lifted soon. They should be aware of recent developments in the industry.

10. More and more processing units should be made and easily available. More R & D departments and health, safety and environment departments should be made to bring value addition to the sector. Also, we should work on quality issues and try to achieve international certifications especially those pointed out by the European Union.

11. Local demand should be stimulated as according to Porter, the local demand is the most important. In times of flooding, rich water grounds should be used accordingly.

12. Private sector investment should be encouraged. For that government must overcome the above given recommendation (3) as if the industry has significant fish stock, the private companies will realize the true potential of the industry and will be willing to take the risk and invest in the industry.

13. By-products should be utilized properly. There should be increased awareness about their use so that the fishermen do not dispose them off in the sea.

14. Environmental issues should be tackled and there should be more water treatment plants so that contaminated water can be treated immediately ensuring less reduction in productivity.

15. Facilities should be diversified and not only available in the Karachi ports. They should be extended to Gwadar port as well. Also, law and order situation of Karachi should be handled soon.

16. Pakistan must obtain updated fishing vessels and methods to increased productivity. Use of harmful nets should be strictly forbidden, as these nets scrap the ocean surface and destroy fish habitat.

63

Page 71: Fishery Industry

PAKISTAN’S FISHERY INDUSTRY-PRIMARY DATA

17. Laws should be strictly implemented. Number of fishing vessels should be limited and threatened species must be protected and zoning should be there for different fishing areas.

18. Smuggling must be stopped. Proper trading channels must be formed.

19. Proper packaging should be done to avoid rejected material. They should be properly covered so that there are no bacteria. Pakistan should also move towards the usage of plastic bags for packaging.

64

Page 72: Fishery Industry

APPENDIX

APPENDIX

REFERENCES FOR SECONDARY DATA

1. Geography of Pakistan – Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Geography_of_Pakistan#International_boundaries

2. World Bank, World Development Indicators – Google Public Data Exporter. Retrieved from: http://www.google.com.pk/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&idim=country:PAK&dl=en&hl=en&q=pakistan%27s+gdp%3F#ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_mktp_cd&scale_y=lin&ind_y=false&rdim=country&idim=country:PAK&ifdim=country&hl=en&dl=en.

3. Historical Data Graphs per Year. Retrieved from: http://www.indexmundi.com/g/g.aspx?v=71&c=pk&l=en

4. Literacy rate in Pakistan. Retrieved from: http://www.netpakistani.com/pakistan/literacy-rate-pakistan/

5. Demographics of Pakistan – Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Demographics_of_Pakistan#Pakistan.27s_yearly_population.

6. Macroeconomic Determinants of Economic Growth in Pakistan. Retrieved from: http://www.pide.org.pk/pdf/PDR/1998/Volume2/125-148.pdf

7. Source: http://carnegieendowment.org/files/pakistan_tax.pdf

8. Ahmed, Viqar and Rashid Amjad, The Management of Pakistan’s Economy, 1947-1982 Oxford University Press, Karachi, 1984. P.65

9. Pakistan Economic Survey 2004-2005, Islamabad: Government of Pakistan, Finance Division, and Statistical Appendix, Table 1.2, p. 10

10. Government of Pakistan, Pakistan Economic Survey, various issues, Islamabad

11. Source: Pakistan Debt Management. Retrieved from: http://www.cssforum.com.pk/css-compulsory-subjects/pakistan-affairs/4141-pakistan-debt-managment.html

12. Pakistan Economic Survey (Various Issues), Islamabad: Government of Pakistan, Finance Division, and Statistical Appendix

65

Page 73: Fishery Industry

APPENDIX

13. Source: Naqvi, S.N.H and Khwaja Sarmad, Pakistan in Seventies, PIDE, Islamabad, 1993

14. Musharraf unveils bold economic reforms. Retrieved from: http://news.bbc.co.uk/2/hi/south_asia/5666540.stm

15. Pakistan|Data-The World Bank. Retrieved from: http://data.worldbank.org/country/Pakistan

16. Competitiveness – Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Competitiveness

17. INDICATORS OF INTERNATIONAL COMPETITIVENESS: CONCEPTUAL ASPECTS AND EVALUATION. Retrieved from: http://www.oecd.org/dataoecd/40/47/33841783.pdf

18. The external and internal dimensions of Europe’s competitiveness. Retrieved from: http://www.ecb.int/press/key/date/2009/html/sp090226.en.html

19. The Human Dimension of Economic Competitiveness with Evidence from the Dominican Republic. Retrieved from: http://www.usaid.gov/our_work/cross-cutting_programs/wid/pubs/GATE_DR_Human-Dimension-of-Economic-Competitiveness.pdf

20. The Competitive Advantage of Nations Michael E. Porter; (1990); New York: Free Press. Retrieved from: http://www.businessmate.org/Article.php?ArtikelId=49

21. Diamond Model and Clusters. Retrieved from: http://www.12manage.com/methods_porter_diamond_model.html

22. Porter five forces analysis-Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Porter_five_forces_analysis#The_threat_of_the_entry_of_new_competitors

23. Porter’s Five Forces. Retrieved from: http://www.mindtools.com/pages/article/newTMC_08.htm

24. Porter's Five Forces Model: analysing industry structure. Retrieved from: http://tutor2u.net/business/strategy/porter_five_forces.htm

25. SWOT analysis – Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/SWOT_analysis

66

Page 74: Fishery Industry

APPENDIX

26. SWOT analysis-introduction. Retrieved from: http://tutor2u.net/business/strategy/SWOT_analysis.htm

27. SWOT Analysis – History, Definition, Tools, Templates & Worksheets. Retrieved from: http://rapidbi.com/created/swotanalysis/.

28. How to perform a SWOT analysis. Retrieved from: http://articles.mplans.com/how-to-perform-a-swot-analysis/

29. ProvenModels – pest analysis. Retrieved from: http://www.provenmodels.com/32/pest-analysis/

30. PEST Analysis | Pbleepd.Com. Retrieved from: http://www.pbleepd.com/business/pest-analysis/

31. PEST analysis – Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/PEST_analysis

32. Free PEST market analysis template and method. Free pest market analysis examples. Retrieved from: http://www.businessballs.com/pestanalysisfreetemplate.htm

33. Fishing in Pakistan. Retrieved from: http://en.wikipedia.org/wiki/Asia-Pacific_Fishery_Commission

34. Asia-Pacific Fishery Commission- Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Asia-Pacific_Fishery_Commission

35. Fisheries Development Board :: Pakistan. Retrieved from: http://www.fdb.org.pk/objective.html

36. Fisheries Sector in Pakistan – Outlook and Guidelines

37. Curriculum – Sectors- Initiatives | USAID Pakistan Jobs. Retrieved from: http://www.pakistanjobs.org/node/140

38. Pakistan produced 937,000 tonnes of fish in 201-11. Daily Times. Retrieved from: http://www.dailytimes.com.pk/default.asp?page=2011\08\27\story_27-8-2011_pg5_5

39. Fish exports up 21pc in value during 9 months. Pakissan.com. Retrieved from: http://www.pakissan.com/english/issues/fish.exports.up.21pc.in.value.during.9months.shtml

40. EU likely to remove ban on fish exports | Pakistan Today. Retrieved from: http://www.pakistantoday.com.pk/2011/08/eu-likely-to-remove-ban-on-fish-exports/

67

Page 75: Fishery Industry

APPENDIX

41. Fisheries Development Board. Retrieved from: http://www.fdb.org.pk/documents/map.jpg)

42. Fishing in Pakistan- Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Fishing_in_Pakistan

43. PLAN for development of fisheries and aquaculture in Pakistan. Retrieved from: www.fdb.org.pk

44. Fishing season resumes | Metropolitan |. Dawn News. Retrieved from: http://www.dawn.com/2011/08/02/fishing-season-resumes.html

45. STUDY ON VALUE ADDED TO THE CATCH OF FISHER FOLK (FISHERIES DEVELOPMENT FOR SUSTAINABLE LIVELIHOOD. Retrieved from: http://www.wwfpak.org/pdf/tp_sp_fishereies_report.pdf

46. 182FisheriesFeasibility.pdf. Retrieved from: http://sanat-o-tijarat.org/Feasibilities/182FisheriesFeasibility.pdf

47. Fishing in Pakistan-Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Fishing_in_Pakistan#Processing

48. Fish meal-Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Fish_meal and Fish meal. Retrieved from: http://www.fao.org/ag/AGA/AGAP/FRG/AFRIS/Data/332.HTM

49. Fish oil- Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Fish_oil

50. Fishscales. Retrieved from: http://stoneplus.cst.cmich.edu/zoogems/fishscales.html and What Are Fish Scales Used For? Retrieved from: http://www.ehow.com/about_5063644_fish-scales-used.html

51. Fish Sauce – Wikipedia, the free encyclopedia. Retrieved from: http://en.wikipedia.org/wiki/Fish_sauce

52. APP Video Preview. Retrieved from: http://www.app.com.pk/video/preview.php?id=20463

53. Trade. Retrieved from: http://www.pide.org.pk/pdf/Books/Trade.pdfhttp://www.pide.org.pk/pdf/Books/Trade.pdf

54. Seafood exports fetching good prices | Pakistan Today| Latest news, Breaking in. Retrieved from: http://www.pakistantoday.com.pk/2011/06/seafood-exports-fetching-good-prices/

68

Page 76: Fishery Industry

APPENDIX

55. Top 10 Products You Didn’t Know Are Used in Cosmetics. Retrieved from: http://funrocking.com/2011/07/top-10-products-you-didn%E2%80%99t-know-are-used-in-cosmetics/

56. Fish Oil Has Marvelous Effects. Retrieved from: http://www.forum.noorclinic.com/thread.php?topic=21694

57. Action Plan for Fish Quality and Value Adding at Karachi Fisheries Harbour. Competitiveness Support Fund. Word Document Retrieved from: www.competitiveness.org.pk

58. Hundreds of fish farms washed out in floods. Retrieved from: http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=71423&Cat=3

59. Floods ‘great catch’ for fishermen. Daily Times. Retrieved from: http://www.dailytimes.com.pk/default.asp?page=2010\09\26\story_26-9-2010_pg7_27

60. Two major studies on Tasman Spirit oil spill released. Retrieved from: http://www.dailytimes.com.pk/default.asp?page=2008\03\11\story_11-3-2008_pg12_10

69

Page 77: Fishery Industry

APPENDIX

REFERENCES FOR PRIMARY DATA

For our primary research purposes we used questionnaires for interviewing people involved in this sector. The questionnaires are attached in the latter part of the report.

We questioned 15 fishermen from:1) Sonehri village2) Keamari3) Karamat4) Abdul Rehman Goth

For the structured side of the sector, we contacted:1) Mr. Javed Hussain (provider of fisheries to Arena and other restaurants)2) Mr. Shanil (Owner of a processing plant in Hyderabad)3) Ms. Nazia Khan, Manager of the Research and Development department of Kanpa International Sales

(Processor and Exporter of Sea foods)4) Mr. Kabir Kanji, C.E.O of Kanpa International Sales (Processor and Exporter of Sea foods) 5) Shah Sons, located in fish harbor, West Harbor (Sea food exporter) tel: 021-32311209 and 021-32311661.6) Metro (Provider of fresh fish products to the local individuals, as well restaurants of Karachi)7) SeaGreen Enterprises (Pvt.) Ltd. (Sea food processor and exporter)8) Meat One representative (Retailer and importer of Sea foods)

70

Page 78: Fishery Industry

APPENDIX

THE QUESTIONNAIRES

71

Page 79: Fishery Industry

APPENDIX

FISHERMEN LEVEL QUESTIONNAIRE1. What boats do you use?

2. What nets do you use?

3. What net-size do you use?

4. Which fishing rods do you use?

5. Do you use worms for fishing? If yes, which worms?

6. Who supplies you these worms?

7. What is the price of the worms?

8. What worms do our fishes prefer?

72

Page 80: Fishery Industry

APPENDIX

9. What is the most costly raw material?

10. What is your average catch, daily and yearly?Daily:Yearly:

11. Difference between fresh water and marine fish?

12. How is fish auctioned?

13. What are you major products?

14. How do you know what products are most demanded?

15. How do you bridge the gap between production and the consumption whenever need be?

16. What are your qualifications?

17. Where do you get your raw materials from?

18. Where do you live? How far do you have to travel to come here?

73

Page 81: Fishery Industry

APPENDIX

19. Do you fish for subsistence or commercial use?20. What are:

Breeding seasons:Fishing seasons:

21. How do you earn in the breeding seasons when you are not allowed to fish?

22. Importance of mangroves?

23. Do you get government subsidies?

24. Do you supply anyone? If yes, who?

25. Are there many fishermen or few?a. 5-10b. 10-20c. 20-40d. 40-50e. More than 50

26. How are boats maintained?

27. How many times you perform boat maintenance?a) Once or twice a yearb) Three to five timesc) Five to ten timesd) Ten to 15 timese) 15 to 20 timesf) More than 20 times

74

Page 82: Fishery Industry

APPENDIX

28. Do you receive any training from the firms?a) Yesb) No

29. Do you receive any subsidies from the firms?

30. What are your average working hours?

31. How is fish marketed?

32. What facilities are available to you:For storing on the boat:For keeping fishes fresh, until sold:

33. Within how much time should the fishes be processed or sold for it to remain fresh?

34. How was your catch affected during the oil spill?

35. At what price do you sell you fish?

75

Page 83: Fishery Industry

APPENDIX

36. Is it above or below the price of other fishermen? If yes, why?

37. Do you pay taxes?

38. Do you export? If yes, directly or via companies?

39. If you export directly, what facilities you have to meet the international standards?

40. Do women work in this industry? If yes, what do they usually do?

41. Was your catch affected by India and Pakistan water issues?

42. Sometimes, foreign trawlers fish in our waters, how does that affect our catch and breeds?

76

Page 84: Fishery Industry

APPENDIX

FIRM LEVEL QUESTIONNAIRE1. How many processing units do we have? And where do we have them?

2. How is fish processed?

3. Minimum time before which the fish products must be processed to maintain their freshness?

4. What are your major products?

5. What is Capital: Labor ratio?

6. What machinery is required?

7. Where do you get the machinery from?

8. What is:i) Skilled: Unskilled labor Ratio:ii) Male: Female Labor Ratio:

9. What are the required minimum qualifications of skilled labor? And which skills are most important?

77

Page 85: Fishery Industry

APPENDIX

10. Where are skilled and unskilled labor used:i) Skilled:ii) Unskilled:

11. Are there any labor unions?i) Yesii) No

12. How long does an average labor works per week?

13. How are your products marketed?

14. What is your market share in the entire industry?i) 0-5%ii) 5-10%iii) 10-15%iv) 15-20%v) 20-30%vi) 30-40%vii) More than 40%

15. Who are your target market and where are they located?

16. Do you sell your products to:i) Individual consumersii) Other business, restaurants, etciii) exportersiv) All of the above

17. If you export, what are your total export earnings and what percentage of the production you export?

78

Page 86: Fishery Industry

APPENDIX

18. Which countries do you export to?

19. Do you explore new markets often? If yes, which new markets have you recently targeted?

20. Do you have to pay export duties/tariffs? If yes, how much?

21. What are the most exported products?

22. Does your company meet the International standards especially those pointed out by EU?

23. Do you have any International certifications:i) Yesii) No

24. Were you sales affected by the EU and Jeddah bans?

25. How are you products priced both domestically and internationally:i) Domestically:ii) Internationally:

26. How do you package your products?

27. Who are your suppliers?

79

Page 87: Fishery Industry

APPENDIX

28. How do they charge you, meaning are you given any special discounts? If yes, how much?

29. What are your peak seasons?

30. How do you bridge the gap between production and demand n seasons other than the peak seasons?

31. How do you finance your company?

32. Do you receive government Aid?i) Yesii) No

33. Do you pay taxes? If yes, how much?

34. Do you receive aid from EU to maintain international standards:i) Yesii) No

35. What are the major components of your costs? How do you cover those costs?

36. What transport facilities are available to you?

37. Are there any middle men involved? If yes, what is their role?

80

Page 88: Fishery Industry

APPENDIX

38. Do you provide any facilities to the fishermen? If yes, what facilities?

39. Do you provide boneless fish? If yes, what is the procedure of taking out the bones?

40. What are the by-products?

41. What do you do with the by-products? If you give them away, who do you give them to?

42. Do have a Research and Development department?i) Yesii) No

43. How much budget do you allocate to the R & D department?

44. How often do you carry out research projects:i) Less than three timesii) 4-6 timesiii) 6-8 timesiv) More than 8 times

45. How often are experts consulted:i) Quarterlyii) Semi-annuallyiii) Annuallyiv) Others: specify _________

46. Are consumers interacted? If yes, how?

81

Page 89: Fishery Industry

APPENDIX

47. Who are your major rivals and where are they located:

S.No Rivals Location1234

48. Do you have a health, Safety and environment department? If yes, how frequently is it used:i) Monthlyii) Quarterlyiii) Semi-annuallyiv) Annuallyv) Others: Specify _________

49. Are there any entry barriers? If yes, what are they?

50. How do you perform value addition for your products?

51. Costs are usually higher than revenues in this industry, how does your firm copes up with that?

82