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Global Demand for Seafood Tests Indonesia’s Sovereignty

Since April 1, Thailand has closed its Andaman Bay for commercial fishing and will maintain the policy until June 30. In a similar maneuver, China will adopt a moratorium on fishing in its waters from the Yellow Sea to the East China Sea and the South China Sea from May 1 to September 1.

Altogether more than 250,000 fishing vessels will be affected, and many of them will venture further to catch fish to avoid the costs of stopping operations completely.

To put this into context, China is the world’s largest net exporter of seafood, while the number one net importer of seafood is the US. However, China will soon become the world’s biggest seafood importer due to a rise in its people’s average income. China’s import volume has grown by 8 percent annually.

By 2020, the Chinese government projects that as marine resources deplete, the country’s fisheries production will shrink to around 10 million tons, a contraction of 3 million tons compared to its 2015 volume.

Growing Chinese demand for seafood, however, will stress existing global fisheries stocks unless proper sustainability measures are rigorously applied.

In comparison, the US government recently enacted a rule on seafood traceability seeking to prevent imports of illegally caught fish. However, major US seafood companies have filed a lawsuit against the government, claiming that the policy will increase operational costs by up to US$1 billion per year – because in practice, large volumes of US seafood are exported to processing hubs mainly in China and then reimported by US companies.

Witnessing these dynamics, the global demand for seafood will impact countries with relatively healthy fisheries stocks, including Indonesia.

Overfishing and illegal, unreported and unregulated fishing (IUUF) has been a global problem for decades but it is only recently that the Indonesian government has increased its awareness of sustainability challenges in its maritime domain, as part of President Joko “Jokowi” Widodo’s global maritime nexus vision.

Indonesia’s zero-tolerance of poaching has quickly shaped the policy debates in the regional, and to some extent global, trade in seafood. Up to two years ago, Indonesia’s seafood entered the world markets without proper accounting and controls.

Thailand, with its Thai Union Group, is the largest canned tuna exporter in the world, but it imports 90 percent of its tuna sources, mainly from Indonesia. In the past, a large number of Thai fishing vessels operated illegally in Maluku waters, employing migrant workers in slavery-like conditions, exposed only after the Indonesian government slapped a fisheries licensing moratorium and transshipment ban in late 2014.

Thai Union’s revenue in 2014 stood at $3.44 billion, completely dwarfing Maluku’s regional revenue from fisheries, which amounted to less than $1million that year.

Stark numbers have also emerged in Merauke in Papua, where the Chinese fishing firm Pingtan Marine Enterprise Ltd (NASDAQ: PME) has operated in the rich waters of Arafura. In its public investor presentation, PME reported a decline in revenue from $233 million in 2014 to $60.7 million in 2015. The report detailed that 156 of their Chinese-flagged fishing vessels stopped operating in Indonesian waters following the moratorium policy, a bizarre statement given that foreign-flagged vessels have been banned from operating in Indonesia since 2005.

PME claims that a vessel operating in Arafura can earn a net income up to $1 million per year, which as it happens equals Papua’s total revenue from fisheries in 2014.

Reforms are underway to realign the gap in Indonesia’s seafood potential with actual performance. Those who have benefited from shady past practices dislike such reforms and continue to fight policies implemented by the government, claiming that such policies have “hurt” exports and the industry.

It is naive to only see the performance of Indonesia’s seafood industry through its export figures. Domestic seafood consumption should instead top our concern, since protein from cattle will not be enough. Indonesia still largely imports its beef, despite the fact that its prices have been volatile and lower income groups cannot afford to buy it.

Hence, people will resort to seafood as an alternative source of protein. The Indonesian Central Statistics Bureau (BPS) has reported a deflation trend from 2014-2016 for fish prices in the domestic market, meaning fish has become more affordable for consumers.

As is the case for China, Indonesia needs to realize that prioritizing domestic demand will be a challenging task with 260 million mouths to feed, the fourth-largest population in the world after China, India and the US.

Making sure that there is enough fish caught by Indonesian fishermen for generations to come, through proper sustainability measures, is the only way to ensure the President’s vision of making the “oceans the future of the nation” a reality.

As published on The Jakarta Post by Fika Fawzia

Posted by Food Security Policy/Climate Change/Transportation

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