Live Reef Fish Trade Overview by Gareth Lott

Aquanue – Live Reef Food Fish Trade Overview November 2011

Live Reef Food Fish Trade Introduction Groupers form the basis of the multimillion-dollar Live Reef Food Fish (LRFF) trade based in Hong Kong. They are large predatory reef fishes of worldwide tropical/warm-temperate seas. Groupers live on coral reefs, preferring to spend most of their juvenile and adult life in one area, and shelter between hard corals and rocks, or in shelters they excavate in the sand and gravel on the reef floor. Groupers can live to over 50 years old with some species reaching up to 300kg weight and up to 2.7m in length Many aggregate in large numbers to spawn, and these aggregations are a favoured target for fishers. Spawning is typically triggered by a change (increase) in water temperature. A healthy female can produce a million eggs a day for several days during spawning close to the full moon.

Variations in annual trade volumes are a result of supply. There are very few occasions where there are any unsold live 1 grouper left in the Hong Kong markets . Downward pressure on supply is driven by increasing regulatory controls and continuing decline in wild population - caused by several factors: 

Over-fishing

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Destructive fishing

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Targeting of spawning aggregations

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Consumer preference for 0.6-0.8kg fish – too small to have reached sexual maturity (typically larger than 3kg)

Upward pressure on demand is primarily a result of increasing population and affluence in China. Ethnic Chinese are the largest consumers of live Grouper, and the global trade is centered in Hong Kong with up to 60% re-exported into mainland China. Imports direct into China have increased over recent years.

Market Manager Hong Kong Fish Marketing Organization

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Aquanue – Live Reef Food Fish Trade Overview November 2011

History In the 1970s the Live Reef Food Fish trade was supplied through wild catch in local waters. The fishing grounds shifted rapidly in response to increasing demand through the 1980s and 90s. Reefs near Hong Kong, China were quickly depleted and sources of capture now extend well into both the Pacific and Indian oceans, broadly the Indo-Pacific region. With few exceptions, the fishery for market-sized fish tends to remain in one area for a short period, often no more than a few years until the target fish become hard to find, then moves on; thus, it is characterized, from the point of view of the countries concerned, as a sequence of “boom-and-bust” operations.

Source Countries for Live Reef Food Fish Imported into Hong Kong

Global production Live Reef Food Fish are supplied by up to 20 countries in the Asia-Pacific region and at least 60 percent of the international trade is exported to Hong Kong where as much as 50 percent is re-exported to mainland China2 . A lot of local seafood is transported live including grouper in South China, and from Southeast Asia, Europe and Australia. The majority of the live marine fish consumed in Hong Kong is imported by sea or air. At its peak in 1997, the volume of fish in the LRFF trade was estimated3 at about 50,000T. More recently in 2008 the total reported4 live fish trade in Hong Kong was 38,155T.

Increasing demand for live Market-size Grouper: Groupers fetch higher prices live than any other group of top-grade fish, and a price of 3-5 times or more is paid for live specimens at the right size - 600-1000 grams. A premium is also paid on products with “clean”, “green” and “organic” credentials (10% - 50% premium for foods carrying China’s Green Food certification), which are a focus of the Aquanue marketing and product sales strategy.

Economics and marketing of the Live Reef ﬁsh Trade in Asia–Paciﬁc: ACIAR Working Paper No. 60. Summary of regional survey of fry/fingerling supply for grouper mariculture in Southeast Asia, Yvonne Sadovy, 01/99 4 Data provided to CBMS by Austrade 3

Aquanue – Live Reef Food Fish Trade Overview November 2011

Countries who supply The major grouper fishing nations and their landings in 2001 were: 

Indonesia (52,000T),

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People’s Republic of China (45,000T),

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Pakistan (16,000T),

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Philippines (13,000T), and

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Malaysia (10,000T).

It is estimated that 50 per cent of all live reef fish now originates from Indonesia.

China's fishing industry is stepping up the worldwide search for new fishery resources as competition for depleted global fish stocks intensifies among leading fishing nations.

Countries who buy Hong Kong is the largest consumer of LRFF worldwide, and some 60% of the trade arrives into Hong Kong by air6. In 2008 the import by air of live groupers alone into HK totaled 6,766T (reported, uncorrected) worth HKD788 million (USD101m)7. Austrade reports8 that in 2009 Hong Kong imported more than 38,000T of live fish. Singapore is the second largest market in the region for live groupers, importing in 2008 1,228T worth SGD14,097,000 (USD10m)9. China imported 6,111T live food fish in 2008 (mainly reef fish), and 7,711T in 200910. These figures are import data and not consumption data. They do not include supply from locally registered boats in each country, nor do they include local production supply.

While Stocks Last: the live reef food fish trade http://www.aares.info/files/2006_muldoon.pdf http://www.epasarikan.com/admin/Bulletins/issues29_09.doc 8 Data provided to CBMS by Austrade 9 AVA, Singapore, Imports of Live Fish for Human Consumption, 2006-2008 10 Data provided by Austrade 6 7

Aquanue â&#x20AC;&#x201C; Live Reef Food Fish Trade Overview November 2011

Current Australian export Austrade figures11 show that Hong Kong imported 952T of live seafood from Australia in 2008. In 2009 Australia exported12 592,790 kg of live fish, 99.4% of which went to Hong Kong. Almost all of this was transported by air freight and, the Directors believe, most of it was Grouper (mainly Leopard Coral Grouper) from Queensland. Every week at least three international flights leave Cairns carrying large blue boxes destined for Hong Kong or Singapore, consigned by one major exporter. Each box weighs about one metric tonne (T) and carries a maximum of 200kg of live Coral Trout. The number of fish boxes on each flight can vary from one to six, depending on the availability of freight space. Exporters identify the availability of freight space on the airlines, not the need to use air transport, as a major problem for the industry.

China growth China has 1.3 billion people but, according to Arthur Kroeber13, director of Dragonomics Research and editor of China Economic Quarterly, there are 110 million viable Chinese consumers - the Consuming China category. He predicts that Consuming China will grow to some 270 million a decade from now, with average household consumption rising from US$5,000 to US$10,000 in that time. These younger consumers are aware of environmental issues affecting their food supply and prefer green, clean product. China has seen dramatic growth in its per-capita fish consumption, with an average growth rate of 5.7 percent per year since 1961.14. 80% of wealthy Chinese consumers are below 45 years old, and the wealthy spend 17% of their household income on dining out15. Of the 90% who say they are worried about food safety, half say they would be willing to pay a premium for better food safety16. A 2009 report from Roland Berger Strategy Consultants17 indicates that between 84% and 88% of respondents professed a preference for green products, and over 90% said they would choose green products.

TO CONTACT: Gareth Lott Founder & CEO Aquanue Mobile: +61 404 887 666 Email: aquanue@gmail.com Skype: aquanue

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Data provided to Aquanue by Austrade Data provided to Aquanue by Austrade http://www.businessweek.com/globalbiz/content/may2007/gb20070509_866451.htm 14 The State of World Fisheries and Aquaculture 2010 15 http://www.mckinsey.com/locations/greaterchina/mckonchina/reports/mcKinsey_wealthy_consumer_report.pdf 16 http://www.mckinsey.com/locations/greaterchina/McKinsey_2008_Chinese_Consumer_Survey.pdf 17 http://www.rolandberger.com/media/pdf/Roland_Berger_think_act_Issue06_20090625.pdf 12 13

COPYRIGHT ÂŠ ALL RIGHTS RESERVED GARETH LOTT/AQUANUE. THE CONTENTS OF THIS DOCUMENT ARE STRICTLY COMMERCIAL IN CONFIDENCE. UNAUTHORIZED READING, COPYING, OTHER DISTRIBUTION OR RELIANCE BY ANY PERSON OTHER THAN A NOMINATED RECIPIENT IS NOT PERMITTED.