Markets for Groundfish in California, Part 2 of 4

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This is part 2 of a 4-part series intended to invite conversations in advance of our planned end market demand analysis for groundfish in California. The larger goal is to provide quantified end market data to inform profitable value chain investments that will positively impact harvesters, local communities and the ocean.

Export markets

How much California groundfish is exported and how much stays?

Fig1[1][2]

Although we have data from NMFS for exports from California ports, it’s not an apple-to-apples comparison to NMFS landings data, making it difficult to understand how much fish likely stays in California and how much fish exported from California actually was caught in California. The export data doesn’t divide export volumes and values by species, like the landings data does, but instead lumps it into broad categories for most species. For example, Dover sole and petrale sole, which are each reported in California landings, are lumped in the export category “flatfish”. This makes it hard to characterize demand for groundfish by end market preferences—we don’t know how much Dover stays in California or in the U.S., and how much is exported.

Another comparison conundrum is that the exports from California ports appear to include fish landed outside California waters. We did not include exports of pollock, haddock and cod since these are not recorded in the California landings data for the time period we compared. After filtering these out, there are relatively small volumes of groundfish (8-19%) exported as compared to landings in Figure 1.

Are there more money-makers like sablefish?

One bright point, in terms of value to the groundfish fishery, is sablefish. Sablefish seems to be driving not only value but volumes of exports from California. The average unit value (simply the landings value divided by the volume) for sablefish landings in California were usually twice as much as other groundfish from 2008 to 2014.For the same time period, the ratio of sablefish landed to sablefish exported averaged 24%, compared to 1 to 10% for most groundfish. Of course, this isn’t a wholly accurate comparison: since the sablefish exported from California may not have been landed there.

More than 90% of all exported sablefish over the time period assessed go to Japan, most of the sablefish going to Japan is frozen. Sablefish is doubly interesting because of this—not only are high value exports a rarity in this fishery, but so are high value frozen products.

Remaining questions include: Are there other species that can capitalize on the export market to Japan? Are there other species or markets that would have similar characteristics—a high value fish, exported in frozen form—where this success could be replicated?

Why does it seem that extremely low value groundfish is being exported?

Fig2

Another interesting comparison is the unit values of landings and exports in California, based on the same data provided by NMFS. We expect that export unit values would be higher than landing unit values, since they are likely processed and value-added. But for groundfish other than flatfish and sablefish, this expectation isn’t met. From 2008 through 2011, groundfish other than flatfish and sablefish had a higher unit value for landings than for exports.

There are a number of potential causes for this disparity:

  • We’re comparing different species. The “other groundfish” category that’s being exported is comprised of different species than the ones in the landings data. Perhaps these are low value species landed outside California and brought to California and exported.
  • Groundfish exports are lumped into a category other than “groundfish” for these years. Perhaps they’ve been exported in a product form that does not identify the type of fish.
  • Low value groundfish can’t be sold domestically. The groundfish being exported doesn’t match the domestic market demands and so the only market is a very low paying international market. Figure 3 compares the top five destinations for California groundfish.(Note that the Netherlands (NLD) appears to accept many low value imports in 2014.) Other than Japan, potential high value markets to explore include Vietnam and Canada. However, both these countries imported small amounts, albeit at high value, in 2014.

Fig3

[1] NMFS, “Commercial Landings,” page, Commercial Fishery Statistics, (2015), http://www.st.nmfs.noaa.gov/commercial-fisheries/commercial-landings/index
[2] NMFS, “Trade by Country,” page, Commercial Fishery Statistics, accessed February 18, 2015, http://www.st.nmfs.noaa.gov/commercial-fisheries/foreign-trade/applications/trade-by-country

Markets for Groundfish in California, Part 1 of 4

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This is part 1 of a 4-part series intended to invite conversations in advance of our planned end market demand analysis for groundfish in California. The larger goal is to provide quantified end market data to inform profitable value chain investments that will positively impact harvesters, local communities and the ocean. Read more

Does certification lead to better prices for harvesters?

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Indonesian boat at dockImpact and philanthropic investors have an interest in participating in sustainable fisheries to enable effective management, to generate market share and price premiums and to ensure that harvesters are rewarded for and incentivised by sustainable practices. What tools do we have to determine when sustainable fisheries products gain market share and trigger changes in seafood pricing? Certain certified and ecolabeled seafood products have price premiums in the market. Can certification serve as a sound metric for good investment decisions in sustainable seafood? Studies thus far have demonstrated varying price premiums in certified products. These include:

  • Marine Stewardship Council (MSC)-certified frozen processed Al aska Pollock products in London with a 14.2%. price premium;
  • MSC labeled salmon products in Glasgow, UK with price premiums in low-end retail chains but not in high-end chains;
  • MSC certified products in Australia generated 30-50% price premiums and;
  • MSC certified Haddock has a 10% price premium in Scotland for processors and wholesalers.

MSC products do not always guarantee price premiums nor do they ensure long-term sustainability and economic gains for the harvester. Noted benefits for harvesters include access to new markets and processing opportunities for value added products, but not a trickle back from price premiums. A price premium found on a product in a retail chain or region does not mean the premium is globally ubiquitous. MSC notes that harvesters or chain of custody operators seeking certification do so to achieve sustainability outcomes, to gain clout and to improve negotiating capacity with large institutions. The goal of certification, therefore, is not always to attain price premiums or increased market share.

In addition, MSC does not collect market data prior to certification and thus does not measure changes in price. Over 10% of wild-capture seafood products are certified by the MSC. There are over 15 ecolabels for certified wild-capture or aquaculture seafood products, all of which have different metrics for certification and none of which measure if higher income from increased market share and price premiums reach the harvester. While MSC and other certifications can generate price premiums and seem to open market access, they are not yet a proven smart investments for all sustainable fisheries.

The What’s and Why’s of Wilderness Markets

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WHAT?

“What do you do?”

The big picture, easily digestible, non-jargon answer: We’re trying to figure out how to make it possible for impact investors to work with fishermen to continue catching fish from our oceans, make money doing so, and still have enough fish for future generations.

The buzzword, jargon answer: We’re using value chain based analysis to determine constraints preventing impact capital from flowing to triple-bottom line SMEs in fisheries.

After that question has been settled with a degree of satisfaction, the natural follow-up question is, “Yes, but WHAT do you do?”

The big picture, simple answer: We use readily available data to give us an idea of how big a fishery is in terms of volume and value and what the important markets are for the fishery. This way we can figure out the most important parts of the fishery and focus our efforts there.

The more in-depth answer: We use readily available data to characterize the value chain flows, and we use interviews, scientific papers, and previously published reports to identify opportunities and constraints within the value chain.

WHY?

Not often asked directly, is the question of “Why?” Why are you doing this? Why is it important?

Millions of people rely on fish as their primary source of protein, and billions more benefit from having fish in their diet. A healthy ocean is a great asset to all of us.

We also think it’s a great challenge. How do you quantify risk for a resource you can’t see and where the capriciousness of weather dictates when you can and can’t fish? The multitude of stakeholders adds another layer of challenge: harvesters, processors, distributors, retailers, restaurants, consumers, multiple levels of government plus the local communities, NGOs, and more. Considering the nature of fisheries and the plethora of stakeholders, it’s no wonder that this sector can be overwhelming for financial institutions to explore.

Finally, and perhaps most importantly, we want to see fisheries investments done well. No one benefits from short-sighted projects that may do more harm than good. If the fishery isn’t properly managed, improving the logistics of the supply chain will just lead to overfishing. We know that ensuring appropriate management safeguards are implemented is one of the keys to sustainable fisheries.

Wilderness Market Issues RFP for West Coast Groundfish in California Market Research

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Wilderness Markets invites eligible market research firms to respond to a Request for Proposals (RFP) intended to develop and improve end market research of the recovered West Coast ground fish fishery in California. The ultimate goal of the research is to improve the economic value of products from this fishery.

With a specific focus on the California ITQ ground fish fishery, the selected firm will be expected to identify and quantify the current key channels of distribution for fishery products by species, and provide insight and recommendations into optimum channels of distribution based on product and species. The nature of this market means that primary research is anticipated.

This research is intended to provide current and new market participants, as well as potential investors, with the needed quantifiable data related to opportunities in the groundfish market in order to make sound investment decisions.

Firms are requested to submit their proposals, detailing their technical approach, timeline and budget based on the RFP by December 18, 2015. Following a selection process, the successful firm is expected to present results by the middle of April 2016.

This work is being developed and implemented with the support of the David and Lucile Packard Foundation.

Disclaimer

Participation in this RFP does not constitute an agreement or award, nor does it obligate the organizers to award a contract or to engage any party. The organizers reserve the right to change, modify or cancel this RFP at any time prior to a contract award.

Download the RFP

Wilderness Markets West Coast CA Groundfish Market Research RFP Updated Dec 8 2015 circ

Calling all partners

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Help us eliminate the threat to our oceans, build thriving fisheries, and provide returns for impact investors. If you are a potential partner who wants to help us analyze fisheries, an investor who wants to finance a business, or a fishery who wants to receive financing, contact us today.