Aquaculture Marketing Handbook

269 Pages·2006·4.43 MB·English

Aquaculture Marketing
Handbook
Aquaculture Marketing
Handbook
Carole R. Engle
Kwamena Quagrainie
Carole R. Engle, Ph.D.,is Professor, Director of the Aquaculture/Fisheries Center and Chairperson of the Department of
Aquaculture and Fisheries at the University of Arkansas at Pine Bluff. She has more than 25 years of experience in the
analysis of economics and marketing issues related to aquaculture. She has worked in 20 different countries in all major
world regions, but much of her work has focused on the economics and marketing issues of U.S. and Latin American aqua-
culture businesses. She continues to teach an undergraduate and a graduate course in Aquaculture Economics and
Marketing in addition to research and Extension responsibilities in the same area. She is the current President of the
International Association of Aquaculture Economics and Management, past-PresidentoftheU.S.AquacultureSociety,a
ChapteroftheWorld Aquaculture Society, and was the recipient of the Joseph P. McCraren Award of the National Aqua-
culture Association and Researcher of the Year Award from the Catsh Farmers of America.
Kwamena Quagrainie, Ph.D.,is Director of Aquaculture Marketing at Purdue University. He has more than 10 years of
industry and research experience in economics and marketing issues related to both agriculture and aquaculture. He has
worked in Canada and some African countries on economics and marketing issues of agriculture and aquaculture busi-
nesses. He teaches quantitative methods in Aquaculture Economics/Marketing and has research responsibilities in
agribusiness/aquaculture marketing.
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First edition, 2006
Library of Congress Cataloging-in-Publication Data
Engle, Carole Ruth, 1952-
Aquaculture marketing handbook / Carole R. Engle, Kwamena Quagrainie. 1st ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-8138-1604-3 (alk. paper)
ISBN-10: 0-8138-1604-1 (alk. paper)
1. Aquaculture industry. 2. Seafood industry. 3. Aquaculture--Marketing. 4. SeafoodMarketing. 5. Aquaculture
industryUnited States. 6. Seafood industryUnited States. I. Quagrainie, Kwamena. II. Title.
HD9450.5.E54 2006
664(cid:2).94(cid:2)0688dc22
2005015283
The last digit is the print number: 9 8 7 6 5 4 3 2 1
This book is dedicated to our familes:
Nathan, Reina, Eric, and Cody, and Mildred and Glenn Wambold and
Gifty, Sabina, Joshua, Damaris, and Joseph
v
Contents
Foreword ix
Preface xi
1 Seafood and Aquaculture Markets 3
2 Demand and Supply, Basic Economic Premises 19
3 Aquaculture Marketing Concepts 37
4 Aquaculture Growers and Their Marketing Choices 57
5 Seafood and Aquaculture Product Processing 71
6 Participation and Leadership in Marketing Channels 91
7 Marketing by Farmer Groups 113
8 Wholesaler Marketing 129
9 Market Trends 141
10 The International Market for Seafood and Aquaculture Products 153
11 Policies and Regulations Governing Aquaculture Marketing 169
12 Planning Marketing Strategies (Identifying Target Markets) 181
13 Marketing Research Methodologies 201
Annotated Bibliography of Aquaculture Marketing Information Sources 229
Annotated Webliography of Sources of Data and Information for Aquaculture Marketing 235
Glossary 245
Name Index 253
Subject Index 259
vii
Foreword
The growth and development of aquaculture industries ucts into larger, more lucrative markets. The interna-
around the world has transformed and in some cases tional trade in aquaculture products such as salmon,
dominated local, national, and international seafood shrimp, and tilapia has grown to have a substantial
markets. Yet many aquaculture growers have little for- effect on prices and consumption in other markets.
mal training in marketing and lack the tools to ade- Conicts have developed as this trade has grown over
quately evaluate and adapt to changing market condi- time.
tions. Moreover, the stunning diversity of cultured Markets, marketing, and trade have become ever
aquatic species, combined with strong local prefer- more important to growing aquaculture industries
ences for seafood, present a confusing arena within worldwide. Yet the diversity and idiosyncrasies of
which to design successful marketing strategies. The seafood markets require information that is specic to
dynamic nature of seafood markets adds additional aquaculture and seafood markets. The Aquaculture
uncertainty to marketing decisions. Marketing Handbookhas been written as a step toward
As aquaculture businesses have emerged from sub- lling a void in understanding both basic marketing
sistence-level, cottage industries and hobbies into com- concepts as well as markets for specic aquaculture
mercial businesses, interest in marketing has grown. products.Itisintendedtoserveasaguide,textbook,and
Small-scalebusinessescontinuetoseektocaptureniche referenceforcriticalsourcesofmarketingdata, infor-
markets, while larger industry segments have sought to mation, and research on seafood and aquaculture mar-
create demand for their products outside traditional kets. Most of all, we hope that this handbook will spark
consumption areas. Vertically integrated aquaculture new ideas and creative new marketing solutions for
companies have targeted export markets to compete those segments of aquaculture searching for new mar-
with products grown locally or to introduce their prod- kets and strategies.
ix
Preface
Many aquaculture practitioners recognize the need to readers unfamiliar with economics to understand the
understand product marketing. Nevertheless, many use of these terms in later chapters. Readers who are
aquaculture growers tend to equate marketing with already familiar with these concepts can forego Chap-
salesanddonothaveanadequatelevelofunderstand- ter 2. The synopsis on shrimp presents an overview of a
ing of fundamental marketing principles. Thus, they complex but highly valued aquaculture product.
lackthetoolstoadequatelyevaluateandadapttochang- Chapter 3 reviews fundamental marketing concepts.
ingmarketconditions. This chapter lays the groundwork for dening both
This book presents fundamental principles of mar- technical terms and conceptual understandings for the
keting from a practical how-to perspective for those discussion that follows in subsequent chapters. The
who are already in the business, those who might be in synopsis on salmon presents an example of an aquacul-
the aquaculture business someday, and students, scien- ture product that has come to dominate the overall
tists, and Extension personnel seeking to understand salmon market.
aquaculture markets and marketing. Aquaculture mar- Chapter 4 provides an overview of aquaculture sup-
ket synopses are used throughout the book to add the ply considerations. Aquaculture products present some
complexities of the real world into each chapter. This unusual characteristics and challenges that have impli-
book can be used as a text for academic classes, as the cations for successful marketing strategies. The synop-
basis for marketing workshops, as a self-study guide sis on baitsh markets provides an excellent example
for aquaculture entrepreneurs, and as a reference book of the need to constantly align farm production to meet
for commercial aquaculture businesspersons. the changing demand of different market segments.
The book contains both an annotated bibliography Chapter 5 reviews the structure of the processing
and a Webliography. These describe the marketing in- sector for aquaculture products. Processing innovation,
formation and sources of data available at the time of branding, and associated challenges are discussed. The
writing of this book. The bibliography and Weblio- synopsis on catsh draws upon the history of the devel-
graphy include descriptions of key references or a site’s opment of the catsh processing sector and supply
contents and use. Data sources on prices, demograph- coordination to present examples of these challenges.
ics, trends, and other critical data are described and Chapter6discussesthedynamicsofchannelorgani-
evaluated in the Webliography. zation, ownership, and control in aquaculture market-
Chapter 1 presents an overview of seafood and aqua- ing.Contrastsaremadewithtrendsinagribusinessmar-
culture markets and marketing. This chapter establishes keting.Thetroutsynopsishighlightsamatureindustry
the uniqueness, scope, and diversity of seafood and that has moved into value-added products to develop
aquaculture markets. It establishes the global nature of newmarkets.
seafood markets and provides an overview of charac- Chapter 7 covers marketing by farmer groups from
teristics and trends. The synopsis on tilapia provides an cooperatives to bargaining groups to generic advertis-
encouraging example of a market that was developed in ing. Aquaculture marketing initiatives are contrasted
a relatively short period of time and that continues to with those of other farm commodity groups. The grow-
grow at a rapid pace. ing markets for farmed seabass and seabream are dis-
Chapter 2 denes the fundamental economic con- cussed in the synopsis.
cepts of demand, supply, and price discovery mecha- Chapter 8 discusses the wholesale market for aqua-
nisms of the market. Determinants of demand and sup- culture products. The respective roles of food service
ply are reviewed. Inclusion of this chapter allows distributors and brokers are dened, described, and
xi
xii Preface
contrasted. The synopsis on carp adds a different Chapter 12 develops a framework and methods to
dimension to the discussion on wholesaling and distri- develop market plans based on well-conceived market
bution of aquaculture products. strategies. The synopsis on hybrid striped bass provides
Chapter 9 summarizes recent trends in marketing. an example of an aquaculture product lling a market
The role of imports in seafood markets, increased niche that became available with the demise of a popu-
wholesale-retail integration, food traceability, and tech- lar shery.
nological innovations in distribution are changing the Chapter 13 reviews various research methodologies
nature of seafood marketing. The giant clam market used in marketing research. The intent of this chapter is
synopsis introduces the complex interactions among to make the reader generally familiar with the terms
aquaculture, the environment, and markets. As a threat- involved, to provide some idea of which methodologies
ened species, giant clams are protected from trade. are best suited to which market questions, and to offer
These same restrictions may limit development of mar- some understanding of interpretations. The synopsis on
kets for giant clam aquaculture. ornamental sh markets further demonstrates the com-
Chapter 10 provides a brief overview of the theoreti- plexity and diversity of aquatic products, their markets,
cal underpinnings of international trade. Trade disputes and the challenges faced.
related to aquaculture products are chronicled and dis- We sincerely appreciate the following individuals
cussed. The crawsh market synopsis traces the entry who reviewed this book and provided helpful and
of Chinese crawsh into these markets, the impact on thoughtful suggestions: Robert Pomeroy, Jo Sadler,
the U.S. crawsh industry, and the subsequent anti- Aloyce Kaliba, and Nathaniel Wiese.
dumping lawsuit and its effect in the United States.
Chapter 11 outlines policies and regulations that Carole Engle and Kwamena Quagrainie
govern aquaculture marketing. The synopsis on mus- Pine Bluff, Arkansas
sels provides an example of product differentiation and
branding in the French shellsh market.
Aquaculture Marketing Handbook
Carole R. Engle, Kwamena Quagrainie
Copyright © 2006 by Blackwell Publishing
Aquaculture Marketing
Handbook
Aquaculture Marketing Handbook
Carole R. Engle, Kwamena Quagrainie
Copyright © 2006 by Blackwell Publishing
1
Seafood and Aquaculture Markets
Successful industries must be successful in market- mesticated production of aquatic plants and animals
ing their products. A market can be dened in a has been of recent origin. The overall level of scien-
number of ways. It can be a location, as in the Fulton tic and technological progress in the development
Fish Market in New York City or the Tsukiji Market of aquaculture technologies in the 1900s has al-
in Tokyo, Japan; a product, as in the jumbo shrimp lowed aquaculture industries to blossom.
market; a time, as in the Lenten season market in the Demand for sheries products has grown as the
United States or the European Christmas market; or worlds population has continued to grow. However,
a level, such as the retail or wholesale market. capture sheries worldwide appear to have leveled
This handbook combines marketing concepts and off over the last 15 years while the quantity of aqua-
theory with practical examples from aquaculture. culture production supplied to the world market has
This introductory chapter provides an overview of continued to increase (Fig. 1.1). World capture sh-
seafood and aquaculture markets worldwide, the eries increased most rapidly during the late 1950s
global supply of major seafood and aquaculture through the end of the 1960s. From that point, cap-
species, the location of major markets, and interna- ture sheries continued to increase, but at a slower
tional trade volumes and partners. The chapter con- rate until reaching slightly more than 90 million
tinues with a discussion of characteristics of aqua- metric tons in 1989. Since then, world capture sh-
cultureproductsandthemarketcompetitionbetween eries have uctuated from 86 million to 97 million
wild-caught and farmed sh. The chapter concludes metric tons, averaging about 92 million metric tons.
by summarizing trends in consumption of seafood It is clear that most of the increase in the world sup-
and aquaculture products. ply of sh and seafood is due to the expansion of
aquaculture production, not to capture sheries.
GLOBAL TRENDS IN SEAFOOD Global aquaculture production has increased each
AND AQUACULTURE MARKETS year since 1984 at an average annual rate of 10%
The earliest recorded evidence of aquaculture dates (FAO 2004). By comparison, animal livestock pro-
back to 900 B.C. (Bardach et al. 1972). Although duction has increased by only 3%/yr, and capture
this date places aquaculture as an ancient technol- sheriesproductionbyonly1.6%/year.Overthepast
ogy, it is still quite young when compared to terres- ve years alone, the annual growth rate of cultured
trial agriculture. Diamond (1999) shows that domes- nsh and shellsh production increased from an
ticated species of both crops and animals were being annual rate of 5—6% in 1990—1991 to 14% in 1994—
cultivated by 8500 B.C. (Table 1.1). Southwest Asia 1995. Data for capture sheries over this same time
and China served as the birthplace of much agricul- period show either zero or negative growth.
ture and aquaculture. Diamond theorized that the All aquatic farming combined represented a 3%
relative availability of game was one of the factors shareoftheworldharvestof sh,shellsh,andsea-
affecting the development of human history. Areas weedsin1950(FAO2004).By2001,thissharehad
with abundant game provided little incentive for de- increasedto34%andconsistedofarecord48.4mil-
veloping alternative food species, but areas with lionmetrictons(MT)oftotalfarmedaquaticproduc-
sparse game would provide greater returns to the ef- tion.Ofthis,thegreatestincreasewasfor nsh and
fort in developing farming techniques. For most shellshproductionthatconstituted37.9millionMT
species of sh, scarcities due to overshing have be- in addition to seaweed production of 11.9 million
come evident only in the latter part of the 1900s. MTin2001.Thetotalvalueofaquacultureproduc-
Thus, the incentive to explore and invest in the do- tionworldwideincreasedto$61.5billionin2001.
3