Value chains and value-addition in ACP-EU trade in

fisheries

ICTSD Dialogue on Fisheries in ACP-EU Negotiations on Economic Partnership AgreementsMombasa, February 9th and 10th, 2010

Context• Structural adjustment policies are

designed to maintain economic growth at a sustained level.

exports of raw natural products, of which fish and other marine products constitute a growing proportion

• short-term objectives of maintaining growth convert these issues into a simple sell-off of fisheries resources = ecological dumping

• Export without processing and therefore with no national added value

• Non trade barriers: raise the standard (sanitary)

Facts (1)

Fact 2:Population

versus wealth

Population in 2015

GDP in 2015

Fact 3: Fish Exportsversus Imports

Exports

Imports

From 2002 to 2006, China has doubled its fish imports!!

Quality and national added value (1)

• International trade opportunities mean: – to sell ‘quality’ rather

than ‘quantity’, that is, basically market fish that has been elaborated as much as possible;

– the second is to extend control over the product as far as possible along the distribution chain

Fish chain in West Africa Production Processing Market supply means Final market

Non-food use processing: 20000 t

Artisanal Prod. 600 000 t

UE DWF 250 000 t

Industrial Prod. 100 000 t

DWF (incl. Joint venture) 300 000 t

No processing (Fresh or Chilled): 350 000 t

Traditional processing: 260 000 t

Local marketing: 400 000 t

Export without landing 540 000 t

National markets: 400 000 t

Afrique : 200 000 t

Europe: 240 000 t

Eastern Europe: 290 000 t

Routing to export market: 290 000 t

Asia (China, Japon, Philippines): 100 000 t

Fish filets and whole fish frozen : 80 000 t

Non-food use: 20 000 t

Countries of the Sub-regional fishery commission: Mauritania, Senegal, Cap Verde, Gambia, Guinea Bissau, Guinea, Sierra Leone

Quality and national added value (2)• Waters free of pollution = big

advantage!• Huge production of low

quality products due to bad catch, processing and handling practices = 30% of catches = $ losses + ecological dammages

www.ecostproject.org

opt for trade development based on product quality: value added does not necessary mean fish processing

Value addition differentiation• Need to be based on the relation

Species-targeted markets:– Very high quality fish and elaborated

products for highly-profitable international markets

– processed fish (salted, dried, smoked, etc) for the domestic and local markets

– canned fish for the low-profit international markets

• Fresh products: entrepreneurs capable of intervening along the entire supply chain = industrial groups

• Traditional processing and canning: one-off intervention, as fish quality and freshness are not critical = tendency to regroup small producers into producer organisations

• Canning: secure raw material supply = vessel-factory integration

Value addition through

Investment and Private Public Partnerships

Investment Context

In August 2005, African governments meeting to debate the “Fish for All” initiative concluded that strategic investments were urgently needed to ensure Africa’s fisheries sector would contribute to poverty alleviation and economic development (NEPAD, 2005).

Strategic investment is indeed a must-be for ACP countries and especially with regards to their fishery and aquaculture sectors.

Towards ACP countries, the EU takes part to these investments through both public aid, accounted as “overseas development assistance” (ODA), and private investments, accounted as “foreign direct investments “(FDI).

The Risk Factor– Unreliable & uncompetitive supply of

quality raw material for industry– Weak services of quality and standards

while burden of compliance on the laps of ACP exporting countries

– Huge information asymmetry and limited knowledge of markets

– Limited knowledge of value addition potentials

– Limited education on products adaptation & development

– Limited access to specialized product & market development services by MSMEs in the sector

– High cost for accessing critical functions for production and trade

– Limited technology transfer– Limited skills to support processing for

high value added products– Limited access to finance

Trends in global investment for development

Figure 1: Overseas development assistance versus foreign direct investment, 1990-2006(Source: Weirowski et al. 2008; OECD 2005; USAID. 2007)

The public-private partnership agreements in fisheries and

aquaculture PPP = “a cooperative venture

between the public and private sectors, built on the expertise of each partner that best meets clearly defined public needs for services or infrastructure through the transfer between partners of resources, risks and rewards.”

2008 = 25 PPP projects

25 Public-Private Partnerships

Figure 2: Distribution of objectives named in 25 PPP projects for developing fisheries and aquaculture in developing countries (source: Weirowski et al. 2008)

Facilities to promote PPP arrangements in ACP countries

• As part of the EU cooperation, the “Pro Invest” programme provides a technical and financial support to the private sector in ACP countries.

• Pro Invest has developed a specific branch aiming at strengthening fishery products and health conditions in ACP countries and Overseas Countries and Territories (OCT) www.sfp-acp.eu/

• Ongoing program and seems to be a robust basis for investment in ACP countries

Potential uses of PPP

• Improving access to national and international markets

• Improving food safety and quality• Developing niche markets• Improving sector-specific

infrastructure services• Improving financial services• Technology development and

research• Improving information and

communication• Improving physical and technical

infrastructure• Capacity building and extension

services• Privatizing government-owned

facilities and services

Risks associated with PPP

1-PPP arrangements can be viewed as the key to solve all challenges in fishery sectors

2-External risks: changes in government, modifications to legislation, or a disrupted political environment.

3-Internal risks : the functioning or structure of the PPP project (a key internal risk is when demand is insufficient to allow the project company to repay its financial obligations from project revenues)

Conclusions and recommendations

Selling off fisheries resources in order to satisfy the demands of economic growth is difficult to conceive of today…

Imperative to consider fisheries resources as a potential, one that can contribute to economic growth and social development.

health of the marine ecosystems must not be jeopardised, for that would undermine the very foundations of the entire structure and condemn it to “impoverishing” growth.

To put the environment at the forefront of the trade stage, thwarting the phenomenon of environmental dumping which we are currently witnessing

Recommendations (2): value addition, trade and fishery management

Urgent need for consultation between the fisheries and trade policy-makers

Moreover, the establishment of strong ties between fisheries and trade policies will contribute towards the emergence of good governance in the fisheries sectors and favourable environment for entrepreneurship (long term perspectives)

Use market and its predilection for quality

Regulate fisheries not by trying to control access, but by ensuring that everything that is caught meets international quality standards

Recommendations: entrepreneurship (3)

• ACP Ministers should aim to enhance the investment climate in fishery and aquaculture sectors, through the strengthening of economic, legal, and political environments

• ACP Ministers should aim to strengthen policy coherence in national fisheries sectors with regard to sustainable fisheries, food security, and trade development

• ACP governments should be aware of PPP arrangement facilities and potential uses, and assess the use of these with regards to their national environmental, social and economical context.