Seafood and Aquaculture Marketing Handbook

About the authors xiii

1 Seafood and aquaculture markets 1

Global trends in seafood and aquaculture markets 1

Where are most aquaculture crops produced? 4

What are the major species cultured worldwide? 5

What are the major finfish species caught and supplied to world markets? 7

What countries are the major markets for seafood and aquaculture? 8

Trade in seafood and aquaculture 9

Are aquaculture products different from agriculture products? 9

Characteristics of aquaculture products 9

Market competition between wild-caught and farmed finfish 12

Consumption trends in seafood and aquaculture markets, expenditures, effects of income, and at-home versus away-from-home purchases 13

Aquaculture market synopsis: tilapia 14

Summary 18

Study and discussion questions 19

References 19

2 Demand and supply: basic economic premises 22

What is economics? 22

Demand 23

Population 27

Income 27

Consumer tastes and preferences 28

Consumer behavior 28

Supply 29

Costs of production 31

Technology 31

Price determination 32

Elasticity 32

Demand elasticity 34

Cross-price elasticity 36

Price elasticity and total revenue 37

Elasticity of supply 38

Market structures and implications for competition and pricing 38

Special demand and supply conditions 39

Aquaculture market synopsis: salmon 40

Summary 44

Study and discussion questions 45

References 45

3 Seafood and aquaculture marketing concepts 47

What is marketing? 47

Marketing plan 48

Market products 48

Supply chain and value chain 48

Processors 49

Market or distribution channels 50

Transportation 52

Wholesaling 53

Brokers 54

Retailing 54

Food grocers 55

Livehaulers 56

Restaurants 56

Direct sales 56

Profit margins 57

Economies of scale in marketing 58

Supply chain management 58

Pricing systems 59

Price determination 59

Marketing margins, marketing bill, and farm-retail price spreads 60

Pricing at different market levels 62

Price behavior, trends, and fluctuations 63

Geographic markets 64

Product storage 65

Market power 65

Advertising and promotion 66

Product grades, quality, and marketing implications 67

International trade 69

Aquaculture market synopsis: shrimp and prawns 70

Summary 76

Study and discussion questions 76

References 77

4 Market trends 80

The role of imports in U.S. seafood markets 80

U.S. seafood consumption 82

Food consumption away from home 84

Convenience in food preparation and consumption 85

Demand for healthy and wholesome foods 86

Sustainability and seafood 87

Certification of sustainability 89

The Marine Stewardship Council (MSC) 89

The Global Aquaculture Alliance (GAA) Best Aquaculture Practices (BAP) 90

The Aquaculture Stewardship Council (ASC) 90

GLOBAL Good Agricultural Practice (GLOBALG.A.P.) 91

Traceability and labeling of seafood products 91

Country-Of-Origin Labeling (COOL) 92

Ecolabeling of seafood products 93

Seafood and the "local food" movement in the U.S. 95

Organic seafood 96

Wholesale-retailer integration in the food system 97

Electronic Data Interchange (EDI) 98

The Efficient Consumer Response (ECR) 98

The Efficient Food Service Response (EFR) 99

E-commerce 100

Aquaculture market synopsis: Pangasius spp. (swai, basa, and tra) 102

Summary 104

Study and discussion questions 106

References 106

5 Seafood market channels 109

Market channels for primary seafood products 109

Seafood distribution in developing economies 109

Seafood distribution in developed economies 110

Seafood distribution in the U.S. 112

Price discovery for primary commodities 113

Contracting and vertical integration in U.S. seafood business 113

Other transaction types in U.S. seafood business 115

Participation in food market channels 116

Distributors 116

Wholesalers 116

Channel ownership and control for secondary products 123

Consolidation and channel control 124

Channel coordination and leadership for secondary products 126

Channel agreements 128

Tying agreements 128

Exclusive dealing 128

Value chain analysis 129

Channel conflict 129

Aquaculture market synopsis: trout 130

Summary 132

Study and discussion questions 133

References 134

6 Seafood and aquaculture product processing 136

Processing 136

Structure of the seafood and aquaculture product processing industry 142

Concentration 144

Vertical integration 146

Product characteristics 146

Entry into the industry 148

Plant location 149

Law of market areas 150

Capacity utilization 151

Innovation and branding 151

Challenges in aquaculture product processing 153

Aquaculture market synopsis: U.S. channel catfish 154

Summary 158

Study and discussion questions 159

References 159

7 The international market for seafood and aquaculture products 162

The basis for trade 162

Dimensions of the international market 163

Trade policy tools 167

Trade policy in seafood and aquaculture 169

The General Agreement on Tariffs and Trade (GATT) 169

The World Trade Organization (WTO) 170

U.S. Antidumping 172

Byrd Amendment, Continued Dumping and Subsidy Offset Act of 2000 172

Salmon trade conflicts 173

United States and Norway 173

United States and Chile 173

European Union and Norway 174

Blue crab conflict 174

U.S. crawfish and China 175

U.S. catfish and Vietnamese basa 176

Mussel conflicts 177

Shrimp conflicts 177

The Convention on International Trade in Endangered Species (CITES) 177

Aquaculture market synopsis: ornamental fish 178

Summary 181

Study and discussion questions 181

Appendix 7A: The U.S. Antidumping Law 182

The U.S. Department of Commerce 182

The U.S. International Trade Commission (ITC) 183

References 184

8 Marketing by aquaculture growers 187

Fish species and markets 187

Production systems and intensification 188

Sizes of producers 191

Supply response and biological lags 192

Commodities, markets, and niche markets for differentiated products 193

Farmers' marketing alternatives 194

Sales to processors 194

Sales to livehaulers 194

Selling directly to end consumers 195

Marketing by fisher/farmer groups 198

Marketing cooperatives 201

Local cooperatives 201

Centralized cooperatives 201

Federated cooperatives 202

Mixed cooperatives 202

Marketing cooperatives as marketing agents 203

Marketing cooperatives as processing groups 203

Farmers' bargaining groups 203

Marketing orders 205

Futures markets for aquaculture products? 206

Generic advertising of seafood and aquaculture products 207

Advertising of seafood - the National Fisheries Institute (NFI) 208

Salmon advertising - the Salmon Marketing Institute (SMI) 208

Catfish advertising - the Catfish Institute (TCI) 209

Tilapia advertising - the Tilapia Marketing Institute (TMI) 209

Trout advertising - the United States Trout Farmers Association (USTFA) 210

Aquaculture market synopsis: oysters 210

Summary 213

Study and discussion questions 214

Appendix 8A: The Capper-Volstead Act 214

References 216

9 Marketing strategies and planning for successful aquaculture businesses 219

Current market situation analysis 219

Market research 219

Competition 222

Consumer attitudes/preferences 223

Analysis of business strengths and weaknesses 224

Developing the marketing strategy 226

Developing a retail outlet 227

Market segmentation 228

Products and product lines 229

Commodity markets 235

Niche markets 235

Value-added products 236

Business organization and contracting 237

Sales 238

The marketing plan 238

Aquaculture market synopsis: mussels 243

Summary 247

Study and discussion questions 248

Appendix 9A: A sample market plan (hypothetical) 248

Executive summary 248

Vision 248

Overall market situation analysis 249

References 251

10 Marketing research methodologies 254

Types of research and design 255

Exploratory research 255

Qualitative research 256

Quantitative research 257

Data collection 257

Secondary data 257

Primary data 258

Sampling 263

Questionnaire design 265

Response rate 266

Research on attitudes and preferences 266

Theories of choice behavior 267

Product research 268

Product ideas 268

Product testing 269

Market share research 270

Advertising research 270

Sales control research 272

Value chain research 273

Data analysis 275

Statistical summaries 275

Relationships between variables or responses 278

Discrete choice analysis 280

Conjoint analysis 282

Traditional demand analysis 284

Aquaculture market synopsis: baitfish 285

Summary 288

Study and discussion questions 289

References 291

11 Seafood demand analysis 293

Demand theory 293

Theoretical properties of demand 294

Approaches to modeling fish and seafood demand 295

Commodity grouping and separability 298

Other issues pertaining to estimating demand for seafood 299

Data 301

Scanner data 302

Elasticities and flexibilities of seafood demand 303

Estimates of elasticities and flexibilities of seafood demand 304

Recent estimates of elasticities/flexibilities of seafood demand in developed countries 304

Recent estimates of elasticities/flexibilities of seafood demand in developing countries 318

Aquaculture market synopsis: crawfish 319

Summary 323

Study and discussion questions 324

References 324

12 Policies and regulations governing seafood and aquaculture marketing 330

Regulatory frameworks for seafood and aquaculture 330

Food safety 331

Industry-initiated programs 333

Regulation of food safety 335

Organic standards 338

Green labeling and standards 339

Marketing and transportation of live aquatic animals 340

Aquatic animal health and biosecurity 341

Aquaculture market synopsis: mariculture of grouper, snapper, tuna, and cobia 342

Summary 343

Study and discussion questions 344

References 344

Glossary 347

Annotated bibliography of aquaculture marketing information sources 365

Annotated webliography of sources of data and information for aquaculture marketing 373

Index 390