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How Will the Fishing Industry Deal with Future Increasing Demand?

A recent article in the Economist depicts the current market structure of the fishing industry.  As the costs of production – i.e. high oil prices – increase, the sale prices increase at a parallel rate in order to maintain profit.  Another facet of the current industry’s condition is increasing demand.

Increasing demand has been perpetuated unevenly between two types of fish production: “capture” which consists of catching wild fish and “aquaculture” which is fish farming.  Increased demand has been placated largely by aquaculture, as there is a global limit of 90 million tonnes a year for wild fish captured.  There is vertical product differentiation between the two types of fishing, as “captured” fish are universally perceived to have superior quality.

Since captured fish are more scarce and have superior quality, the increased demand has incurred higher prices (prices have nearly doubled between 1990 and 2012).  On the other hand, aquaculture has only seen minimal price increase – prices increased one-fifth in the same time period.

Market demand is projected to grow rapidly: in 2020 output is likely to be six times larger than 1990 levels.  The article points to very different strategies for firms in each mode of production will need to implement to stay in business.  Firms in aquaculture will need to rely on technological improvement.  Lowering input costs will behoove firms in order to have an edge over competitors (i.e. – reducing quantities of fish feed, reducing energy costs, more efficient medicines to prevent sickness, automation to reduce labor, etc.).

On the other hand, technological improvements are less relevant to fish capture – the highest quality is yielded when more traditional approaches are taken.  Wild fish producers will likely thrive after serving a niche market (the article cites one firm that has stopped producing medium-quality fish and focuses solely on “catching tuna for sushi and sashimi for the top end of the market”).  This does not mean that aquaculture firms wouldn’t benefit from niche markets; the aquaculture industry has recently benefited from a newly found a market for collagen in beauty products (Turning Fish Scales into Gold).

Projected growth in the coming years will most likely shake up the markets for fish.  Declines in expected aquaculture production will result in weaker firms leaving the market.  Do you think that the fishing industry will follow the US brewing industry’s trajectory (will aquaculture firms act as parallels to macro brewers while “capture” firms will play the role of imports and domestic craft brewers)?  Or are the circumstances surrounding each industry too unique from one another to follow the same path?


  1. keesler keesler

    I think that the answer to your question depends on whether or not the fishing industry and the brewing industry share the same factors of production. In the brewing industry, large firms experience economies of scale- both in terms of producing their product and in terms of advertisement. If the aquaculture market has economies of scale as well (no pun intended), then that will create a higher likelihood that a few large firms will dominate that facet of the fishing industry.

  2. reilly reilly

    In my Environmental economics course we looked at fishing industries. With few barriers to entry fishermen will come in and decrease the fish a fisherman in the market could have taken after a certain equilibrium point. Once a fishery is depleted that resources is gone. Fishing is generally considered a common good. Anyone can fish(in a world without regulations) and as people fish the total # of fish available for catching does not increase. Barriers to entry such as fishing boat safety requirements and permits can limit this however. I would classify aquaculture as a private good. The company which raises the fish can sell them all without rivalry over those specific fish.

  3. There’s a lot of variation in aquaculture, from small ponds for tilapia and catfish to fjords in Norway and Chile for salmon. For the latter entry may be more difficult, and the trade secrets (firm-level non-patented technology) embodied in know-how and cumulative experience is I think greater. Catfish farming is commoditized. Shrimp may be close to that.

    Now why the price differential? Is it true of shrimp, or just of the limited number of “captured” fish with high name recognition? (E.g., tuna for sushi, salmon, others?)

    The real value may lie in the distribution chain, eg a firm that can station buyers in Caribbean ports to buy tuna off of recreational deep sea fishers who really have no use for a 200 lb fish, or who may even be obligated to give the fish to the captain.

  4. “in 2020 output is likely to be six times larger than 1990 levels” Well, it’s hard to see how that growth is to come from fishing seeing most areas are overfished and underpopulated already. Add the uncertainties of e.g. the Fukushima “fallout” this seems to strongly point towards most of the growth coming from aquaculture. If the idea that “wild” fish is of superior quality can be mitigated (and/or apprehension over radioactive pollution will grow) and if, despite fracking, which I consider a short-term phenomenon, fuel costs will rise again, then most growth must come from aquaculture alone.

  5. paulsen paulsen

    I agree, aquaculture does appear to be a necessary shift if consumer demand for fish continues to rise. I don’t believe that the decline the industry experienced following the exit of weaker firms will be permanent. Going forward, it will be interesting to see how long before this new practice takes hold, and whether/when it will take over a majority of fish produced.

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