Final Report: Mapping Fishmeal Supply Chain in Songkhla by Sal Forest

MAPPING SHRIMP FEED SUPPLY CHAIN IN SONGKHLA PROVINCE TO FACILITATE FEED DIALOGUE FULL REPORT SUBMITTED TO OXFAM THAILAND

Lead Researcher: Research Team:

Sarinee Achavanuntakul Srisakul Piromwarakorn James True Pattraporn Yamla-Or Sasiwimon Khlongakkhara Koranis Tanangsnakool

March, 2014

TABLE OF contents 1. Research Background

1.1 Objective of this project

1.2 Objective of this report

1.3 Methodology and Limitations of Research

2. Overview of Fishmeal Industry

2.1 Thailandâ&#x20AC;&#x2122;s Fisheries from the Past

2.2 Why trawlers and push nets are banned

2.3 Characteristics of Fishmeal

2.4 Overview of Fishmeal Industry

2.4.1 Global

2.4.2 Thailand Fishmeal Production

2.4.3 Thailand Fishmeal Consumption

2.4.4 Thailand Fishmeal Exports

2.4.5 Thailand Fishmeal Imports

2.4.6 Songkhla Fishmeal

2.5 Fishmeal Price

2.6 Classification

2.7 Government policies and regulations

3. Literature review: impact of trash fish industry on ecosystems

4. Literature review: Changes and Impact on Local Artisanal Fishing Community

4.1 Definitions of Artisanal Fisheries

4.2 Thailandâ&#x20AC;&#x2122;s Artisanal Fishing Communities

4.3 Conflicts between Commercial Fishermen and Artisanal Fishermen

4.4 Impact of Commercial Fisheries in the 3,000-Meter Prohibited Areas on Artisanal Fishermen

5. Existing regulations and standards relating to trash fishing and Thailand implementation

5.1 FAO Code of Conduct for Responsible Fisheries and the EU regulation on IUU fishing

5.1.1 The development of IPOA-IUU

5.1.2 The definition of illegal, unreported and unregistered fishing activities

5.1.3 The European Union regulation to combat IUU fishing

5.2 Standards on trash fishing at an international level

5.2.1 Marine Stewardship Council

5.2.2 Aquaculture Stewardship Council

5.2.3 The certification standard for the Responsible Supply of Fishmeal and Fish Oil

5.2.4 Best Aquaculture Practices

5.2.5 Global Good Agricultural Practice (Global G.A.P)

5.2.6 Friend of the Sea

5.2.7 ASC, GAA, and Global G.A.P. agreement on responsible sourcing of fishmeal and fish oil 60

5.3 National regulations and standards

5.3.1 Thai fisheries law

5.3.2 Control of IUU fishing

5.3.3 Compliance to the EU Requirements: Thailand catch certificate scheme

5.3.4 Fishmeal certificate scheme in Thailand

5.3.5 A Roadmap for Sustainable Development of Thailand’s Fisheries

6. Estimates of biomass diverted to fishmeal supply chain

6.1 Preamble

6.2 Data collection summary

6.3 Biomass analysis conclusion

7. Supply Chain of Fishmeal Industry in Songkhla and Its Activities

7.1 Supply Chain and Stakeholders’ activities

7.2 Responsible sourcing of fishmeal raw material

112

7.2.1 Animal feed mills

112

7.2.2 Fishmeal producers

114

7.2.3 Suppliers of raw materials

115

7.3 Supplementary information: field research at Ta Sa-aan Port

116

8. Case Study: Sustainable Fishing in Peru

120

8.1 Overview of Peru’s anchoveta industry

120

8.2 History of the Peruvian anchoveta fishery

121

8.3 Toward fishery sustainability

124

8.4 Lessons from Peruvian sustainability

129

9. Impact of Supply Chain Activities, Gap Analysis, and Recommendations

132

9.1 Direct Impacts on Thai marine ecosystem

132

9.2 Indirect Impacts on Thai marine ecosystem

132

9.3 Gap analysis and recommendations

135

Appendix

149

TABLE OF FIGURES Figure 1: Marine Production in Thailand from 1950 - 2011 Figure 2: Catch Per Unit Effort from 1961 – 2010 (kilograms per hour) Figure 3: Thailand’s EEZ map Figure 4: Number of fishing boats by type, 2011 Figure 5: Volume of wild-caught marine production by type of fishing gears, 2010 (tons, % of total) Figure 6: Main species and share of global output and export Figure 7: Species of fish usually found in trash fish Figure 8: Production process of fishmeal and fish oil Figure 9: Composition of 1st, 2nd, and 3rd grade fishmeal Figure 10: World’s fishmeal production, 1988 - 2009 Figure 11: Top six fishmeal producing countries (thousand tons) Figure 12: Top six fishmeal consuming countries (thousand tons) Figure 13: Top six fishmeal exporting countries (thousand tons) Figure 14: Top six fishmeal importing countries (thousand tons) Figure 15: Thailand’s fishmeal production by year, 2006-2011 Figure 16: Thailand’s fishmeal production and producers, 1987 - 2011 Figure 17: Thailand’s top five fishmeal producing provinces in 2011 Figure 18: Raw materials of fishmeal, 1987 - 2011 Figure 19: Thailand’s fishmeal export by year, 2008-2013* Figure 20: Thailand’s fishmeal export by category, 2007 – 2013* Figure 21: Thailand’s fishmeal export by category, 2008 – 2013* Figure 22: Raw materials of fishmeal in Songkhla, 1999 – 2011, divided into trash fish, trimmings (by-product) and other fish Figure 23: Average prices of fishmeal by province in 2011 (Baht per kilogram) Figure 24: Peruvian fishmeal price from 1980 – 2013 (US$ per ton) Figure 25: Prices of trash fish, 1st and 2nd grade fishmeal, and Peruvian fishmeal, 2007-2011 (Baht per kilogram) Figure 26: Estimated quantity of livestock and feed ingredients required for sufficient animal feed in Thailand, 2003-2012 (tons)* Figure 27: Reported finfish landing in the Gulf of Thailand Figure 28: MSY model Figure 29: Simplified coastal food webs Figure 30: Average daily income per boat of artisanal fishermen in Songkhla during 1993-1999 Figure 31: Average daily cost per boat of artisanal fishermen in Songkhla during 1993-1999 Figure 32: Average daily profit/loss per boat of artisanal fishermen in Songkhla during 1993-1999 Figure 33: Requirement for Sourcing of fishmeal and fish oil of BAP, ASC, G.A.P. Figure 34: Summary of international standards and certified Thai companies Figure 35: Figure 35: Key features of Fisheries Act 1947, compared to draft of the new fisheries act Figure 36: Vessels registration process Figure 37: Number of registered Thai fishing vessels, 2010-2013

17 18 19 21 21 22 23 25 26 27 27 27 28 28 29 29 30 30 32 33 33 34 35 36 36 37 43 44 46 51 52 53 61 62 69 71 71

Figure 38: Process of acquiring fishing license and fishing permit in Thai waters 72 Figure 39: Process of acquiring fishing license and fishing permit in overseas waters 73 Figure 40: Number of fishing vessels receiving and returning fishing logbook from 2010-2013 74 Figure 41: Catch Certificate Scheme 75 Figure 42: Amount of certified marine products exported to the EU and number of catch certificate issued from 2010-2013 76 Figure 43: Fishmeal certificate scheme 78 Figure 44: Number of fishmeal certificate (submitted for verification), amount of materials, and amount of fishmeal by source of materials from 10 June – 31 December 2013 78 Figure 45: Summary of various schemes 79 Figure 46: Pla pet condition in Songkhla 82 Figure 47: Reported finfish landings in the Gulf of Thailand 83 Figure 48: Volume of marine fish landed at Songkhla (Ta sa-aan) 84 Figure 49: The fisheries pier at Songkhla just before dawn (Image S. Arunrugstichai) 86 Figure 50: Results – composition of landed product at Songkhla 87 Figure 51: Summary of catch statistics for the vessels interviewed for this study 88 Figure 52: Selections of pla pet found at port 89 Figure 53: Department of Fisheries Catch per Unit Effort (CPUE) figures for 2010/11. 90 Figure 54: Composition of pla pet from a vessel offloading at Songkhla in August 90 Figure 55: Example composition of pla pet from a vessel offloading at Songkhla in September 91 Figure 56: Summary of the diversity of biota landed as pla pet in Songkhla in August and September 91 Figure 57: Average species composition of the “food fish” component of catches landed at Songkhla 92 Figure 58: A multispecies basket of fish landed in Songkhla 93 Figure 59: crustaceans, squids and fish mashed together into unrecognizability 94 Figure 60: Ta Sa-aan “Afterwards 95 Figure 61: Peruvian fishmeal and fish oil supply chain 97 Figure 62: Map of fishmeal supply chain in central and eastern regions of Thailand 98 Figure 63: Map of fishmeal supply chain on Andaman Sea side 99 Figure 64: Map of fishmeal supply chain on Gulf of Thailand side 99 Figure 65: Map of fishmeal supply chain in Songkhla 100 Figure 66: Fishmeal producers in Songkhla, ranked from largest to the smallest 102 Figure 67: Raw materials of fishmeal in Songkhla, 1999 – 2013, divided into trash fish, by-products and other fish 102 Figure 68: Relationships between top five fishmeal producers in Songkhla and fish-processing manufacturers 103 Figure 69: Fishmeal prices at Bangkok market announced by CPF on February 8, 2014 104 Figure 70: Fishmeal operation flow chart 105 Figure 71: Summary of trash fish usage (highlighted in red) and map of supply chain of fishmeal industry in Songkhla 108 Figure 72: Activity map of fishmeal supply chain and practices under Thailand’s fishmeal certificate 111 Figure 73: Animal feed mills based on fishmeal traceability, ranked from highest % to lowest % 114 Figure 74: Fishmeal produced from whole fish and fishmeal produced from non-traceable whole fish by purchasers (percentage) 116 Figure 75: Ta Sa-aan Port 117 Figure 76: Ta Sa-aan Port Landing Area 118 Figure 77: Peruvian anchoveta 121 Figure 78: Historical Peruvian anchoveta landing, major El Niño and fishery phases 122 Figure 79: Fleet size and number of fishmeal factories: 1950–2006 124 Figure 80: Peruvian rapid decision flow on fishing closure (IFFO 2009) 127 Figure 81: Stakeholders’ activities and their impacts on Thai marine ecosystem 134 Figure 82: Gulf of Thailand at night, as seen from space 136

TABLE OF abbreviations ABBREVIATIONS

APFIC ASC BAP CC CD CPF CPUE DFT DOF EEZ EU FAO FAO-COFI FIP FMFO FSARG FOS GAA Global G.A.P. GoT IDH IFFO IFFO RS IMARPE IPOA IUCN IUU IVQ MCPD MCPD-FM MCTD MOAC MSC NPOA-IUU

RFMO RPOA-IUU

SFP SNP TAC TFMA TFM TFPA TUF UNGA WWF

The Asia-Pacific Fishery Commission The Aquaculture Stewardship Council Best Aquaculture Practices Catch Certificate Customs Department, Ministry of Finance Charoen Pokphand Foods Catch Per Unit Effort Department of Foreign Trade, Ministry of Commerce Department of Fisheries Exclusive Economic Zone European Union Food and Agriculture Organization Food and Agriculture Organization Committee on Fisheries Fishery Improvement Project Fishmeal and Fish Oil Fishery Statistics Analysis and Research Group Friend of the sea Global Aquaculture Alliance Global Good Agricultural Practices Gulf of Thailand Sustainable Trade Initiative (Initiatief Duurzame Handel) International Fishmeal and Fish Oil Organization Responsible Supply of Fishmeal and Fish Oil The Instituto del March del Peru The international plans of action The International Union for Conservation of Nature Illegal, Unreported, and Unregulated Fishing Individual Vessel Quota Marine Catch Purchasing Document Marine Catch Purchasing Document – Fishmeal Marine Catch Trans-shipping Document Ministry of Agriculture and Cooperatives Marine Stewardship Council National Plan of Action to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing Regional Fisheries Management Organizations Regional Plan of Action to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing Sustainable Fisheries Partnership Sociedad Nacional de Pesqueria (Peru’s National Fisheries Society) Total Allowable Catch Thai Feed Mill Association Thaiunion Feedmill Thai Fishmeal Producers Association Thaiunion Frozen Products United Nations General Assembly World Wildlife Fund

FOREWORD This research contributes to the Economic Justice Programme of Oxfam Thailand. Oxfam is an international development agency that works in more than 90 countries worldwide. We have the mission to work with partners to end poverty and inequality. In Thailand, the Economic Justice Programme empowers people’s organizations with knowledge and information, and partners with key stakeholders in the country and regions to achieve equal economic opportunities. Two main target groups are the fisherfolk and the small scale farmers. With close consultations with Oxfam’s partners, we are working to achieve the community right to joint natural resources management, climate change adaptation and gendered enterprise and market. This research is aimed to inform the Association of Thai Fisherfolk Federations, civil society, relevant public and private sectors and hope it will springboard discussions towards more sustainable marine management which also takes fisherfolk’s right into account. Oxfam Thailand would also like to thank Thai Sea Watch Association (TSWA), our partner, whose support for field coordination and information was crucial to the success of this research.

Executive Summary This research project is predicated on the premise that in order to constructively engage shrimp industry in Thailand to implement more sustainable supply chain practices, one of the most important first steps is to pinpoint the impact of fishmeal (shrimp feed) industry on the livelihood of coastal communities in Thailand, as well as map their supply chain in order to get a clearer picture of business conducts of key stakeholders for use in evaluating potentially fruitful engagement strategies. Fishmeal is a main protein ingredient for animal feed, especially for fish and shrimp feed. During this research, we encountered many different accounts of ratio between whole fish, trimmings, and trash fish used in fishmeal production. While the global norm for fishmeal is that 75% of raw materials comprise whole fish (including “trash fish” in international definition, i.e. undesirable or unpalatable fish), and 25% trimmings, Thai Feed Mill Association claims that raw materials of fishmeal in Thailand are: 35% trimmings from canned fish manufacturers, 18% trash fish, 15% sardinellas and other fish, 20% trimmings from Surimi producers, 2% trash fish from overseas waters and the remaining 10% are trimmings from other fish processing manufacturers. In part, this variance can be explained by the imprecision of the phrase “trash fish”. Whereas in Western countries, trash fish means undesirable or unpalatable fish, in modern Thailand, it means exclusively that fraction of

product which is completely unsaleable in any other market (especially used in reference to badly damaged or putrescent products). In Thai fisheries parlance, such “trash” fish is known as pla pet and does not refer to low-value, but otherwise edible fish. This research finds that Thailand’s demersal fishery has been severely depleted by overfishing. Excess fishing capacity over the past four decades has meant that Catch Per Unit Effort (CPUE) has been declining continuously since 1961 from almost 300 kilogrammes per hour to 17.8 kilogrammes in 2010. The rapid depletion, contrasts with published production figures, suggesting that Thailand has been depending on resources from other countries for a long time. It is now widely recognized that unselective fishing aimed at maximizing the total catch, such as bottom trawling which yields the kind of trash fish used in Thailand’s fishmeal production, tends to dramatically change marine ecosystem. Small fish and invertebrates such as squids that feed mainly on plankton will become over- represented in the ocean, and will quickly d o m i n a t e t h e s y s t e m . O v e r fi s h i n g i s increasingly understood to result in changes in the structure and functions of marine habitat, especially organisms’ relative positions in the food chain (technically called “trophic level” of an ecosystem). Since populations of many small fish species depend on adding new members (“recruitment” in scientific term), overfishing has

9 been suggested as the main reason for the declining fish stock that is available to artisanal fishermen. This of course has tremendous consequence to the livelihood and food security of artisanal fishermen who rely on natural replenishment of coastal fish stock. It also affects industrial fishermen who target adult fish population. From the statistics of small-scale fishing households, we found that the majority of the artisanal fishermen in Thailand use small outboard powered boats. In Songkhla, the percentage of artisanal fishermen who used such boats was 63.64% or 3,930 households in 2000, and about 27.5% or 1,683 households did not use any fishing vessel. Severe overcapacity in the industrial fishing industry resulting in the depletion of near-shore marine resources, has left local artisanal fishermen with very limited choices as 1) their boats, if any, were relatively small, so they could not go to fish very far from shore 2) many of them had no skill other than fishing. When the previously abundant coastal sea became barren, local artisanal fishermen faced a lot of problems, both financial and social. Financial problems include decreasing incomes and increasing costs of fisheries eventually leading to informal debts. One research in five villages in Songkhla during 1993-1999 showed that local fishermen’s income in 1999 fell 3-40 times from the 1993 level. O u r fi e l d r e s e a r c h f o r t h i s p r o j e c t discovered that, with the exception of a single vessel interviewed in August, the vessels interviewed in September 2013 were landing around 4 tons of commercial fish per trip on Songkhla fishing port, after spending anywhere between one and two weeks at sea. This catch was supplemented by roughly 6.5 tons of pla pet. All of the skippers interviewed stated that their fishing was conducted in the vicinity of Mu Koh Kra (an offshore group of islands in Nakhorn Sri Thammarat province). The vessels were all “standard” medium otter-board trawlers

(24-40m in length, crew of 5-6, powered by 275-315 horsepower diesel engines, and deploying trawl nets with 10 metre gape), and represent a reasonable sample of the types of medium-sized commercial fishing vessels returning product to Songkhla at that time of year. The figures presented here represent an average total return on fishing effort (CPUE) of approximately 49(±17) kilogramme/hour for the vessels landing catch in August and September. The high catch rates of juvenile and trash fish in demersal trawls can be explained by inappropriately fine mesh used in the cod-ends of nets. The Thai Department of Fisheries Master Plan suggests that 40 millimetres is an appropriate mesh size for demersal trawl fisheries in the Gulf of Thailand. None of the vessels surveyed used mesh larger than 25 millimetres, and most used 20 millimetres or less. Push-net fishermen use even finer meshed nets (as little as 10 millimetres) and frequently target areas utilised as nurseries by many species of fish and crustaceans. Juveniles of commercially valuable species and those important in food security for local people are killed in large numbers, wasting their potential. The wastefulness of overly-fine mesh sizes is compounded by the use of long trawl duration, often 6 hours or more, meaning that any product captured during the first few hours of the tow even if it is of commercially valuable species will become ruined and unsalable and will become “pla pet”. Tossapornpitakkul et al. (2008) reported that the average pla pet composition of catches in Nakhon Sri Thammarat and Songkhla averaged 42.08% of the annual capture for small otter board trawlers such as those we interviewed. These authors also suggested that the catch composition changes throughout the year (with pla pet being 40% of the catch in the Northeast monsoon, 47% between the monsoons, and 40% during the Southwest monsoon). However, we found an

10 average of 62% pla pet in catches landed in September, at the end of the Southwest monsoon. This suggests that the situation has worsened. Likewise, the volume of pla pet per vessel landing (averaging slightly more than 6 tons) coincides with Songkhla fisheries records (roughly 4000 vessel landings, for a total of 25,000 tons of pla pet.) Theoretically, 100% of pla pet landed at Songkhla could be sold to fishmeal producers, as could any other wasted or degraded product. However, most of the pla pet was too decomposed to be used as feedstock for the high grade fishmeal preferred for shrimp food production, so they are sold to factories that produce lower-grade fishmeal at lesser value. In-depth interviews with fishmeal factories based in Songkhla found that, of the 25,000 tons total estimated pla pet amount landed every year, approximately 5,760 tons or 23% are sent to fishmeal producers based in Songkhla; the remaining 77% probably went to fishmeal producers in other provinces. The main raw materials used in fishmeal production in Songkhla are trimmings from fish-processing manufacturers e.g. surimi, tuna canning; fish ball producers as well as anchovy producers and fish retailers at the markets which accounted about 80% of the estimated total raw materials of 100,215 tons, or 79,964 tons in 2013. Fishmeal producers also buy raw materials directly from commercial fishing boats, as well as brokers who collect trash fish from local fishing boats from Songkhla and other provinces. This accounted for 20% of raw materials or 20,250 tons. Of this amount, 62% or about 12,609 tons were fish landed in Songkhla (which includes 5,760 tons of trash fish or pla pet); the remaining 38% or 7,641 tons were fish from other provinces such as Satun and Pattani, as well as imported fish. Animal feed mills’ activities that cause indirect impacts are similar to those of fishmeal

factories, as animal feed mills are major users of fishmeal produced from trash fish or fish caught unsustainably. In effect, they are the ones that create demands for trash fish. It starts when they set buying criteria. Many feed mills set buying criteria and prices based on the qualities of the fishmeal alone, not by how fish – raw materials of fishmeal – were caught. Thus, fishmeal produced from trash fish caught by trawlers and push nets that destroy marine ecosystem can be sold to animal feed mills. This encourages fishing boat owners to continue their unsustainable fishing practices. The good news is that currently several feed mills in Thailand already implement various sustainable procurement practices, to varying degrees of success, partly owing to pressures from the ultimate buyers of frozen food exports, particularly the European Union. For example, as of March 2014 both Charoen Pokphand Foods (CPF) and Thaiunion Frozen Products (TUF), two major feed mills, are certified Best Aquaculture Practices (BAP) 4-star or top level status. CPF is also certified under Global Good Agricultural Practice (Global G.A.P). CPF is far and away the largest buyer of fishmeal produced in Songkhla, with 45% market share of fishmeal sold to animal feed mills, followed by Betagro (17%), Thaiunion Feedmill (11%), Lee Pattana (9%), and Krungthai Feedmill (3%). Top three players – CPF, Betagro, and Thaiunion – have 73% share of the market combined. Our analysis of biomass catch as well as fishmeal supply chain in Songkhla show that there is significant room for improvement in sustainable sourcing. Only fishmeal used by Betagro and Krungthai Feedmill is currently 100% traceable, since they both buy 100% fishmeal from one single fishmeal producer that is 100% traceable. Among major feed mill players, CPF, Lee Pattana, and Thaiunion Feedmill have the highest share of fishmeal produced from non-traceable sources – 74% combined.

% Share of Fishmeal from Songkhla Sold to Animal Feed Mills

% of Traceability

Traceable Fishmeal Amount (tons)

CPF

45%

81%

6,839

Betagro

17%

100%

3,270

Thaiunion Feedmill

11%

47%

972

Lee Pattana

36%

600

Krungthai

100%

600

Company

Our analysis of biomass catch as well as fishmeal supply chain in Songkhla show that there is significant room for improvement in sustainable sourcing. Only fishmeal used by Betagro and Krungthai Feedmill is currently 100% traceable, since they both buy 100% fishmeal from one single fishmeal producer that is 100% traceable. Among major feed mill players, CPF, Lee Pattana, and Thaiunion Feedmill have the highest share of fishmeal produced from non-traceable sources – 74% combined. Complicating the picture is the fact that, since trash fishing is not yet considered categorically illegal in Thailand, it is possible even for traceable fishmeal (i.e. complying with the standards) to include trash fish raw material. In other words, currently there is no sustainability standard or fishmeal certificate scheme in Thailand that can ensure that no trash fish was used in fishmeal production. For example, there were 575 tons of fishmeal produced from trash fish sold to CPF, about half of this amount was traceable and got the fishmeal certification under private sectors’ fishmeal certification scheme. We observe three key limitations of current sustainability standards and certificate schemes as currently practiced in Thailand: 1. There is currently no sustainable sourcing scheme or standard that all major feed mills subscribe to. Unless any scheme/standard

incorporates all large feed mills, there would still be a market for fishmeal produced from irresponsibly-sourced raw materials such as trash fish, and therefore this practice will continue. 2. Most schemes rely on a self-report mechanism. Nothing can assure full traceability or guarantee that the fishermen themselves fill out the necessary documentation. More specifically, the source of fishmeal raw materials cannot be verified due to the lack of locationspecific audit mechanisms, e.g. satellite- positioning tools to ascertain that the fishing boat is really fishing at the stated location. Therefore, it is currently only possible to check whether the documents are filled out correctly, not the correctness of the document contents. 3. Currently every sustainable sourcing scheme and standard is based on the internationally accepted definition of IUU Fishing – the catch must not be Illegal, Unreported, and Unregulated (IUU) to fit under this definition. But due to Thailand’s o u t d a t e d fi s h e r y l a w, w h a t i s w i d e l y considered damaging fishing conduct e.g. small mesh size of trawls, is not illegal in Thailand. In addition, every illegal conduct under fisheries law is considered illegal only when the fisherman is caught in the act. Therefore, damaging fishing in Thailand is not considered IUU Fishing, and therefore no standard based on IUU can effectively discourage trash fish trawling. This is

12 exacerbated by insufficient control and monitoring systems due to limited resources. Consequently, illegally-caught marine products can be landed legally. Lessons that Thailand can learn from the case study of Peru’s sustainable fishing industry also show “gaps” in the current attempts toward sustainable practices as follows: 1. Since overfishing and destructive fishing are “tragedy of the commons” problem in economics parlance, where efforts of a few unscrupulous players i.e. “free riders” can ruin the resources for everyone, it is necessary to implement solutions and standards across the board, i.e. encompassing every stakeholder. Peru successfully utilizes a combination of laws (e.g. Individual Vessel Quota (IVQs), mesh size, by-catch regulation, seasonal closure, fishing rights) and industry involvement and self- regulation (participation of SNP (Peru’s National Fisheries Society) in setting quota and resolving conflicts) across the board, while Thailand still has serious gaps from the legal definition (e.g. trash fishing still not categorically illegal, practices considered only illegal when caught in the act), weak enforcement, to piecemeal participation of standards and voluntary schemes (e.g. only one feed mill is offering monetary incentives under fishmeal certificate scheme). 2. Science-based data and technology are both vital to ensure fisheries sustainability and effective enforcement. IMARPE, major government marine research agency in Peru, is recognized globally as a world class authority, continually reporting maximum sustainable yield, ecosystem conservation, and resource sustainability considerations to the government on which to base decisions such as quota setting. On the technology front, all commercial fishing vessels in Peru are required to install satellite tracking devices to ensure enforcement of seasonal closures and individual quotas, since the government can

track the movement and location of vessels in real-time. In Thailand, there is yet no sustainability standard or scheme which includes satellite tracking of fishing boats to ensure that traceability documentation is correct, and maximum sustainable yield is not yet a part of systematic decision-making at policy level. 3. The clearer the “business case for sustainability,” the more incentives players have to comply with sustainability laws/standards/ schemes. In Peru, IVQs helped encourage fleet operators to maximize their efficiency through carefully fishing trip scheduling, accounting for abundance, and proximity to shore to achieve shorter and more successful fishing trips. Consequently, the fleet receives fresher landings, providing higher-quality fishmeal production and ultimately higher profits with lower costs due to less fuel consumption. In contrast, there is as yet no clear business case for sustainability in Thailand’s fishmeal industry in Songkhla; most fishmeal producers that participate in the fishmeal certificate scheme do so only because they are paid a price premium by the buyer (currently only CPF), or they must do it as part of the buyer’s requirement. There is only one fishmeal producer that cites “competitiveness” as the reason they participate in the scheme; since they cannot compete on quality, they offer full traceability to build credibility and trustworthiness. Given the above major gaps between current practices and “best practice” in Peru, we believe it is imperative that all current efforts to move the fishmeal industry in Thailand towards a more sustainable pathway – from new fisheries law to the industry’s latest Fisheries Improvement Project – are synchronized and truly encompass all stakeholders, designed to close the above gaps as much as possible with a view toward long-term sustainability of marine ecosystems in Thailand.

Research Background

Aquaculture is one of the fastest growing food production systems with the total economic value around 150 billion USD worldwide. This industry is controversial for its extensive impact on society and ecosystems. Yet it also presents significant food production and economic opportunities for developing countries as dominant aquaculture producers, including the rural areas in which that production takes place. Thailand is the world’s largest exporter of shrimp, and therefore has one of the largest shrimp feed industries in the world. However, the feed industry in Thailand is still little concerned with quality issues and less incentivized to try and comply with existing sustainability standard setting mechanisms (or eco-labels) such as RSPO, RTRS, SAN, MSC, FT and/or organic voluntary standards. In addition, the use of genetically-modified organisms (GMO) in these commodities is less transparent. Moreover, from a sustainability perspective, there is a blatant ecological inefficiency in the system: it has been estimated that 2 kilograms of feed is required to produce 1 kilograms of aqua-cultured fish. The problem is that increasing demand for lesser quality fish, grains, and soy for aquaculture feeds drives growing unsustainable negative impact on global food production systems as well as livelihoods of poor people in fisheries and agriculture. This takes place particularly in developing countries; affecting agriculture potential in rural areas, access to land for rural poor; and/or ecosystem services for those depending food production systems such as capture fisheries and forestry. Protein is the major component for shrimp feeds and animal proteins have long been considered essential, since they are nutritionally appropriate and readily digestible. Fishmeal has been the

traditional choice amongst all animal proteins in aquaculture feeds for its protein quality, palatability and as a source of essential amino acids. It has been estimated that almost 50% of by-catch and (legally) under-sized catch in fisheries goes into aquaculture feed. What this means for the coastal artisanal fishers of Thailand is largely unknown. Oxfam in Thailand has been working with civil society on community rights to coastal resource management and access to agricultural land rights. Globally, Oxfam has been engaged in the development of the Aquaculture Stewardship Council (ASC; see: www. ascworldwide.org) and several standards this certification system houses, in particular with regards to shrimp. One of the main drawbacks of the ASC system as a tool towards responsible or sustainable aquaculture was and is that the feed that goes into the aquaculture ponds is still insufficiently ‘captured’ by the ASC standards. Thus, despite the ASC being a tool to drive aquaculture practices towards sustainability, there is still a huge door open to negative impact (indirectly) caused by aquaculture; namely through the supply of aquaculture feed and feed ingredients. The ASC has recently announced the start of “Feed Dialogues” and invited interest stakeholders to participate. In order to constructively engage major shrimp feed companies in Thailand, one of the most important first steps is to pinpoint, as accurately as possible, the impact of shrimp feed industry on the livelihood of coastal communities in Thailand, as well as map their supply chain in order to get a clearer picture of shrimp feed industry business conduct for use in evaluating potentially fruitful engagement strategies.

14 1.1 Objective of this project 1) To establish and quantify, as much as possible, the impact of shrimp feed industry on the livelihood of local fishing communities in Songkhla; 2) To map the supply chain of shrimp feed industry in Songkhla, including market shares and key activities of major stakeholders in the supply chain; and 3) To spur more awareness and support for the issue from the general public via an effective communication plan that will be executed in conjunction with research.

1.2 Objective of this report 1) Review background documents related to depletion of coastal resources and livelihood of local fishing communities in Songkhla as well as other relevant research papers and literature; 2) Discuss with Oxfam teams and local NGOs involved in Oxfamâ&#x20AC;&#x2122;s ongoing program in Songkhla, as well as others which have carried out similar works to gain further understanding of local condition and trend; 3) Establish and quantify, as much as possible, the impact of shrimp feed industry on the livelihood of local fishing communities in Songkhla; 4) Submit a full analysis on the linkage between shrimp feed industry and livelihood of local fishermen in Songkhla; 5) Identify key companies involved in both upstream and downstream of shrimp feed business in Songkhla, review their business practices, and identify potentials for more socially and environmentally responsible business conducts; and 6) Review environmentally sustainable business practices carried out in the similar context and formulate practical recommendations for further discussions with business stakeholders

15 1.3 Methodology and Limitations of Research For this research, the research team conducted field research on the following issues: 1) Supply chain structure and practices of fishmeal industry in Songkhla; and 2) Estimate and analysis of catch landed at Songkhla Ta Sa-aan Port In addition, the team conducted desk research and interviews on the following issues: 1) Literature review on the impact of trash fishing on marine ecosystem in Songkhla; 2) Literature review on the impact of trash fishing on livelihood of local artisanal fishing communities in Songkhla; 3) Overview of the fishmeal industry in Thailand and Songkhla; 4) Existing regulations and standards and proposed revisions; and 5) Literature review on sustainable fishing in Peru

The research team found that existing research on the impact of trash fishing on the livelihood of local artisanal fishing communities in Songkhla is very limited. There appears to be no research on this specific topic; the closest we were able to uncover were a few reports on the impact of push net fisheries in Pattani, and impact of anchovy fishing using luring light in Songkhla. The latter includes quantitative data of incomes of local fishermen during 1993 â&#x20AC;&#x201C; 1999; this data was used to support the suggestion that destructive fishing like anchovy fishing using luring light had impact on local fishermen. The use of quantitative data in this research is rare; most reports simply contain descriptions of the causes, impact, and adaptations of local fishermen. We still cite the aforementioned research in this report because we believe that, the aforementioned reservations notwithstanding, research data shows that local fishermen in Songkhla were affected from the reduction of marine resources caused by destructive fishing. When one considers declining marine resources, it is difficult to distinguish the effects of trawlers and push nets from the effects of anchovy fishing using luring light. Even if it were doable, no such data was collected or available at this point. Apart from limited information and/ or literature available, much of the information i s a l s o o u t d a t e d . B o t h p i e c e s o f t h e aforementioned research reports we reviewed for this report were written in 2000, over 13 years ago. Not only are research reports outdated, but key data e.g. Marine Fishery Census, which records income of small-scale fishing households, is also outdated. For example, Marine Fishery Census, which was conducted every 10 years, was discontinued after the 2000 Intercensal Survey of Marine Fishery (B.E. 2543). Similarly, the Income of Small-Scale Fishing Households Survey was also last conducted in 2000 or B.E. 2543.

Overview of Fishmeal Industry

2.1 Thailand’s Fisheries from the Past Commercial fisheries in Thailand can be traced back to before World War II. Fishing gears used in the early days were simple, e.g. hooks, pots, stow nets, set nets, or beach seines, and most of the fishing boats were non-powered boats such as sailboats, rowboats or paddle boats. In 1945, there were only 65 powered boats and 2,513 non-powered boats. Between 1953 – 1960, trawlers were introduced to Thailand, but they were not particularly successful because fishermen did not know the characteristics of the sea bottom where they trawled, and the prices of the demersal1 fish were very low because Thai people at that time did not know demersal fish; they preferred pelagic 2 fish like Indo-Pacific anchovy (Department of Fisheries, n.d.). However, in 1960, the German government sent experts to train Thai fishermen to use trawlers; they were very successful. They found that marine resources in the Gulf of Thailand were very rich, and that the most efficient gear to catch demersal fauna was the Otter Board Trawl (OBT). Almost instantly, trawlers became very popular. At that time, the Thai Department of Fisheries (DoF) itself also supported the

1 2 3

use of pair trawlers (PT). They modified and converted Chinese purse seiners to function as trawlers, and trained fishermen in trawl fishing. The trawl fishery was booming, spurring the acquisition of more and bigger trawlers. In 1960, there were only 99 trawlers, but in 1966 the number had skyrocketed to 2,695, equivalent to a 2,600% growth rate within six years. Meanwhile, marine production increased by over 600%, from 63,711 tons in 1960 to 448,554 tons in 1966 (Boonwanich & Boonpakdee, 2009.). From 1967, Thai trawlers began fishing in the marine zones of Cambodia, Myanmar, Vietnam, and Malaysia, increasing “Thai” marine production to 1,548,157 tons in 1972; Thailand became a “top ten” marine productproducing country (DoF, n.d.). In 1987, the marine production topped 2 million tons, of which 68% was demersal fauna, composed of 41% of demersal fish, 39% of trash fish3, 9%, of squids and other miscellaneous organisms, including shrimps (Kongprom et al., 2007). It stayed at levels of 2.4 – 2.8 million tons during 1990 – 2006, reaching its peak of 2,827,400 tons in 1995. Since then it has gradually declined (Fishery Information Technology Center [FITC], 2012).

Demersal fish are fish living at/near the seafloor e.g. sea bass, shark, red snapper, ray, grouper, flatfish, sea catfish, bream. Pelagic fish are ocean fish which live in schools in the upper sea levels e.g. anchovy, mackerel, tuna, sardine, mullet, pomfret. Trash fish are a term fishermen call small-sized, non-commercial fish and/or spoiled fish that cannot be sold for human consumption. In Songkhla, trash fish or Pla Kai is a specific term for assorted small-sized, non-commercial fish sold to fishmeal producers. If the same fish is sold to fish farms, it will be called “bait fish” or Pla Yue. Fish and other marine fauna that have badly handled, smashed by the trawl net or are putrescent are termed Pla Pet.

Figure 1: Marine Production in Thailand from 1950 - 2011 3000000 2500000

tons

2000000 1500000 1000000 500000

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

1970

1968

1966

1964

1962

1960

1958

1956

1954

1952

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

1950

years Source: Oceans in the Balance, Thailand in Focus, 2013

Although Thailand’s marine production kept growing during the period 1960 – 1995, the Catch Per Unit Effort (CPUE)4 has been declining continuously since 1961 from almost 300 kgs per hour to 17.8 kgs in 2010 (Boonwanich & Boonpakdee, 2009). This suggests that marine resources of Thailand have been declining, and that Thailand’s fishery production has been depending on resources from other countries for a long time. When Malaysia and Indonesia began imposing new regulations that disallow foreign boats to fish in their maritime zones, Thai fishing boats in those

waters had to be registered as Malaysian and Indonesian boats. When landing the catches from these boats, the catches were considered “imported fish”. Thailand’s marine production, therefore, sharply dropped to 1,644,800 tons in 2008 (DoF, 2013) while the CPUE did not change much. Even so, the official Fisheries Statistics of Thailand does not accurately reflect the amount of fish caught in Thai waters, because the official figures include fish caught in the un-policed EEZs of Cambodia (in the Gulf of Thailand figures) and Myanmar and on the high seas (in Andaman Sea catch figures)5.

Catch Per Unit Effort (CPUE) is a reference number used to indirectly measure the abundance of the marine resources. It is the total catch divided by the total amount of effort spent on the catch. Reported CPUE is calculated as weighted number of CPUEs reported by 85 stations of Marine Fisheries Research and Development Bureau in Gulf of Thailand (64) and Andaman Sea (21); CPUE is calculated using standard vessels which will trawl for one hour using Otter Board Trawls with 2.5 cm mesh size during January to June every year (Marine Fisheries Research and Development Bureau, 2012). From interview conducted with Marine Fisheries Research and Development Bureau, 2013.

18 Figure 2: Catch Per Unit Effort from 1961 – 2010 (kilograms per hour) 350

297.8 kg./hr.

300

CPUE (kg./hr.)

250 200 150

17.8 kg./hr.

100 50

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Source: Boonwanich & Boonpakdee, 2009.

Therefore, in order to maintain or increase the volume of marine production of the country, Thailand has to search for more abundant fishing grounds, exert more effort, use ‘undiscriminating’ fishing gears that can catch almost everything, and/or build more boats.

Fishing Grounds

Thailand covers an area of 514,000 km2, and has two coastlines 2,600 km long. The coastline on the Gulf of Thailand (GoT) side is 1,840 km in length, and that of the Andaman Sea is 865 km. According to Fishery and Aquaculture Country Profiles of the Kingdom of Thailand (FAO, n.d.), the main fishing ground for Thai fishing boats is GoT which accounts for 41% of total wild-caught fish and

seafood. (19% in the Andaman Sea and 40% in the waters outside Thailand’s EEZ (Exclusive Economic Zone) According to the United Nations Convention on the Law of the Sea (UNCLOS), EEZ is defined as the area within 200 nautical miles (nm) from baseline. Each country has the sovereign right to explore, exploit, conserve, and manage the marine resources – both living and non-living – in the waters superjacent to the sea-bed, sea-bed, and subsoil within the EEZ. Thailand’s EEZ covers an area of 323,488.326 km2 (120,812.12 km2 of the Andaman Sea and 202,676.20 km2 of GoT) (Hydrographic Department, Royal Thai Navy, 2012 cited in Department of Marine and Coastal Resources, n.d.).

There are many numbers of Thailand’s EEZ e.g. 316,000 km2 (FAO), 316,118.3 km2 (Greenpeace Southeast Asia), 420,280 km2 (Khemakorn, 2009), 306,365 (See Around Us Project), but we use the one from Department of Marine and Coastal Resources which cited from Hydrographic Department, Royal Thai Navy.

Figure 3: Thailand’s EEZ map

คำ�อธิบายสัญลักษณ์

Explanation of Map Symbols

ข้อมูลพื้นฐานทางทะเลและชายฝั่ง

Basic Marine and Coastal Information

ตำ�แหน่งจังหวัด

Province Location ถนน Road เส้นทางน้ำ� Waterway

อาณาเขตจังหวัด

Province Boundary

อาณาเขตทางทะเลของประเทศไทย Maritime Zone of Thailand

น่านน้ำ�ภายใน

Internal Water

ทะเลอาณาเขต

Territorial Sea

เขตต่อเนื่อง

Contiguous Zone

เขตเศรษฐกิจจำ�เพาะ

Exclusive Economic Zone

พื้นที่พัฒนาร่วม ไทย-มาเลเซีย

Malaysia - Thailand Joint Development Area

Source: Hydrographic Department, Royal Thai Navy, 2012 cited in Department of Marine and Coastal Resources, n.d.

20 Apart from EEZ, UNCLOS also defined “shelf area”7 that each country can claim its rights. In 1971, Vietnam imposed law on its shelf area, and so did Cambodia in 1972. To protect its rights, Thailand claimed its shelf area in 1973. The claims over shelf areas of the three countries created the overlapping areas that cause disputes between the three nations. The overlapping areas are as follows: 1. Thailand – Cambodia 8,733 nm2 2. Thailand – Vietnam 3,903 nm2 3. Cambodia – Vietnam 18,311 nm2 After both Vietnam and Cambodia laid claims over shelf areas, they claimed on EEZ which directly affected Thai fishery industry as it lost around 300,000 nm2 of high seas that Thai fishing boats used to fish, making fishing boats smaller than 22 meters to return to Thai waters and compete with the same size or smaller fishing boats fishing there trying to catch as much as possible. Middle-sized boats, on the other hand, bought concessions to fish at the same areas or operate illegally while large boats went even further to fish in the high seas that were not claimed. Those small fishing boats including trawlers that returned to fish in Thai waters worsened the overcapacity problems in GoT, and had conflicts with other small fishing boats that already were fishing in these areas. Thus, later on, Ministry of Agriculture and Cooperatives (MOAC) enacted regulations concerning trawlers, trawl fishing, push nets, and push net fishing, e.g. Ministry of Agriculture and Cooperatives decree on forbidden zones to use trawlers and push nets B.E. 2515 (1972), regulation on the practice of reducing trawlers and push nets B.E. 2523 (1980), and regulation on the control of trawlers and push nets B.E. 2539 (1996).

2.2 Why trawlers and push nets are banned T h e M i n i s t r y o f A g r i c u l t u r e a n d Cooperatives’ (MOAC) latest regulation on trawlers and push nets, issued in B.E. 2539 (1996), stipulates that the Thai government will no longer grant licenses to new trawlers; only those who already own the licenses can apply for license renewal. As a result, the number of registered trawlers and push nets has been declining. For example, in 1989, there were 13,113 trawlers, but in 2011, the number was 3,466 (Boonwanich & Boonpakdee, 2009; FITC, 2013). The reasons MOAC enacted these regulations were because they realized that marine resources were exploited faster than the reproductive ability of nature, which could lead to depletion of the resources which would eventually affect the economy. Also, there were too many fishing boats, particularly trawlers and push nets, and trawlers and push nets are destructive fishing gears that catch everything indiscriminately (Boonwanich & Boonpakdee, 2009). Trawlers and push nets catch fish and other marine fauna living at or near the seafloor. They sweep everything including juveniles of commercial fish into the cod-end as well as destroy coral reefs, spawn grounds and habitats of fish when they drag pass, making the sea-bed smooth, plain, muddy seafloor (Plathong, 2012). There are three types of trawls: 1) otter board trawl (most popular), 2) pair trawl, and 3) beam trawl. In 2011, of 17,203 registered fishing boats, 20.1% or 3,466 were trawlers. Of the total number of the trawlers, 65.1% (2,256) were registered as otter board trawlers, 31.5% (1,092) were pair trawlers, and 3.4% (118) were beam trawlers. Although trawlers account for only 20.1% of the total number of fishing boats, capture by trawlers comprised 773,317 tons, or 48% of the wild-caught marine production total of 1,610,418.

Shelf area is the area of the seafloor that naturally extends from the land until it merges with the continental margin or within 200 nm from the baseline.

Figure 4: Number of fishing boats by type, 2011 375, 2%

11, 0%

32, 0%

274, 2%

32, 0%

3,466, 20%

trawlers purse seine gill nets and entangling nets

3,719,22%

falling nets

1,498, 9%

lift nets push nets other nets hook & lines miscellaneouse

7,825, 45% Source: Fishery Information Technology Center, 2013

Figure 5: Volume of wild-caught marine production by type of fishing gears, 2010 (tons, % of total)

3,352, 0%

16,596, 1%

123,222, 8%

trawlers

60,384, 4%

purse seine

22,682, 1%

gill nets and entangling nets falling nets

77, 849, 5% 773,317, 48%

533,016, 33%

lift nets push nets other nets hook & lines miscellaneouse

Source: Fishery Information Technology Center, 2012

The composition of fish caught by trawlers reveals why they are considered destructive fishing gears. Kongprom et al. (2007) reported that of the total fish and seafood caught by trawlers â&#x20AC;&#x201C; small otter board trawls, medium otter board trawls and pair trawls, 36.08% - 71.94% were trash fish, of which between 15.18% - 54.57% were juveniles of commercial fish. If these juveniles had not been caught and allowed to grow, they would have much higher economic values both as larger fish and as a source of replenishment of the exploitable stock when they recruited to the spawning population.

22 2.3 Characteristics of Fishmeal Fishmeal is brown powder made from cooking, drying, and squeezing trash fish8 and/ or trimmings of fish (Nordahl, 2011). Raw materials used to produce fishmeal include whole fish and trimmings (i.e. trimmings) from fish production such as fish heads, bones, etc. According to C.J. Shepherd and A.J. Jackson (2012) from International Fishmeal and Fish Oil Organisation (IFFO), the global norm for fishmeal is that 75% of raw materials comprise whole fish (including “trash fish” in international parlance, i.e. undesirable or unpalatable fish), and the remaining 25% are trimmings. However, according to the Thai Fishmeal Producers Association (TFPA), fishmeal produced in Thailand is made from 65% trimmings and 35% trash fish (Personal

communication, August 13, 2013). Yet another set of figures is cited by the animal feed industry. According to Thai Feed Mill Association, raw materials of fishmeal come from 35% trimmings from canned fish manufacturers, 18% trash fish, 15% sardinellas and other fish, 20% trimmings from Surimi producers, 2% trash fish from overseas waters, and the remaining 10% are trimmings from other fish processing manufacturers (Fishmeal, 2011). The species of whole fish used in fishmeal production vary from region to region. For example, in South America, the main species are anchovy and Northern Europe blue whiting while in Thailand, various species are used to produce fishmeal.

Figure 6: Main species and share of global output and export Country/Region of production

Main species used in production

Global production share 2007

Global export share 2007

Peru

Anchove

25%

41%

Chile

Jack Mackerel, Anchovy, Sardines

13%

16%

China

Various

19%

Thailand

Various

USA

Menhaden, Alaske pollock

Iceland

Blue-whiting, Herring, trimmings

Norway

Blue-whiting, Capelin, trimmings

Denmark

Sandeel, Sprat, Blue-whiting, Herring

Japan

Sadine, Pilchard

81%

73%

Total

Source: FAO Fishstat 2009 cited in Nordahl, 2011

Based on Bureau of Agricultural Economics Research, species of fish caught depend on the fishing gears fishermen used. If the fishermen use gillnets or purse seines, fish caught will be pelagic fish only such as Sardinellas. But if they use trawlers – otter board trawl, pair trawl or bottom trawl – or push nets, most of the fish caught will be demersal fish which consist of various kinds of species usually referred to as Pla Benchapan (literally means five kinds of fish) or trash fish. Figure 7 show the species of fish usually found in trash fish. 8

Trash fish is an all-encompassing term used to describe low economic-value fish, usually small species that are not preferred by consumers. They are bycatch from non-selective fisheries; in some countries, trash fish will be discarded while in many countries they are used for 1) making fishmeal for animal feed, 2) direct animal feed, and 3) human consumption. In Thailand, trash fish or Pla Ped/Pla Kai is usually referred to small size fish (both true trash fish which is still small when maturing e.g. sardinella and juveniles of high economic value fish) and damaged fish, which are used to produce fishmeal.

Figure 7: Species of fish usually found in trash fish

สัตว์น�้ำที่พบมากในปลาเป็ด

Figure 7 (continued)

Source: Thai Fishmeal Producers Association, 2013

25 Production Seasons

Fishmeal Production Process

Peru – the world’s major fishmeal producer and exporter – has two fishing seasons. The first Peruvian fishing season starts from May to July, and the second season runs from November until January (IFFO, 2009). The fishing seasons in each region of Thailand are as follows:

Fishmeal production process in Peru is different from the process practiced in Thailand. In Thailand, the producers do not separate fish oil from fishmeal, so the fishmeal contains a lot of fat resulting in a short shelf life. The fishmeal and fish oil production process in Peru as shown in figure 8 is divided into three steps: 1) cook 2) squeeze, and 3) dry. The first step is to check, clean, and cook the fish at around 95 degree Celcius. The second step is to squeeze the liquid out of the cooked fish, and the third step is to dry the fish (Nordahl, 2011). The oil is extracted between stages 2 and 3.

1. Southeast region (Andaman Sea): November – April 2. Southwest region (Gulf of Thailand): May – October 3. East region (Gulf of Thailand): September – April (Bureau of Agricultural Economics Research, 2012)

In Thailand, fishmeal production season is principally in the non-Monsoon period from April – July; the fishmeal producers receive a lot of raw materials during this period. The composition of product that is diverted to fishmeal production changes during the year, with a larger proportion of juveniles and “true” trash fish after the recruitment pulses that coincide with monsoon seasons.

In Thailand, there are two types of fishmeal production process: 1) squeezing and 2) drying. The “squeezing” system is the traditional process that causes water pollution. This system can be described in four steps: 1) cook 2) squeeze 3) dry and 4) grind. Fishmeal produced by the system has low protein and fat because some of protein and fat are lost during the squeezing step. The “drying” system consists of four steps: 1) chop 2) cook 3) dry and 4) grind. Fishmeal produced by this system will contain 58-65% protein, but it has a short shelf life (Bureau of Agricultural Economics Research, 2012).

Figure 8: Production process of fishmeal and fish oil Step 1

Step 2

Flame Dried (low quality fishmeal)

Pelagic fish (globally 75% of input) Trimmings (globally 25% of input)

Step 3

Cooked at 95oC

Squeezed

Steam Dried (high quality fishmeal)

Crude fishoil Fishoil yield 2.5 - 4.5%

Fishoil yield 22 - 24% Source: Nordahl, 2011

26 From IFFO estimates, outputs from the Peruvian production process include 4.79% fish oil, 22.5% fishmeal, and 72.8% water steam (Shepherd and Jackson, 2012). According to IFFO9 , composition of fishmeal includes 60-72% of protein, 10-20% of ash, 5-12% of fat as well as the fatty acids EPA and DHA or omega-3. This breakdown is similar to the Study of Economic production and Market of Fishmeal under the Quality Assurance System that states that fishmeal contains protein, ash, salt, humidity, and remains (Kak). According to Ministry of Agriculture and Cooperatives of Thailand, fishmeal is graded by its composition as shown in Figure 9. Figure 9: Composition of 1st, 2nd, and 3rd grade fishmeal

Fishmeal

1st Grade

2nd Grade

3rd Grade

Protein (not less than)

60%

55%

50%

Ash (not more than)

26%

28%

30%

Salt (not more than)

Humidity (not more than)

10%

Remaining (not less than)

Source: Bureau of Agricultural Economics Research, Ministry of Agriculture and Cooperatives of Thailand, 2012

2.4 Overview of Fishmeal Industry 2.4.1 Global Fishmeal is a main protein ingredient for animal feed, especially for fish and shrimp feed. The global production of fishmeal in 2012 was 4.73 million tons (Bureau of Agricultural Economics Research, 2012); however, the trend is declining because of the El Niño that causes the reduction of fish stock which is the raw material of fishmeal. Also, Peru – a major fishmeal producer and exporter – introduced a fishing quota. It produced 1.34 million tons of high quality fishmeal with 65%+ protein in 2009 while Chile – the second largest producer – produced 0.65 million tons in the same year. The two countries accounted for 41.63% of the

total fishmeal production, so when they introduced fishing quotas, it affected the global supply of fishmeal and resulted in increasing prices. Other major fishmeal producers include Thailand, USA, Japan and Denmark. Even though globally there is high demand for aqua-cultured animals, the trend of fishmeal consumption is declining because of the growing prices of fishmeal (Fishmeal, 2013). The major consumers are China who in 2004 used 1.528 million ton, Japan 0.703, Chile 0.467, Thailand 0.409, and Norway 0.309. China is also the biggest importer of fishmeal. In 2009, China alone imported about 1.31 million tons while Peru exported about 1.583 million tons of fishmeal (Seafish, 2011).

cited in “Is the Aquaculture Industry Caught in a Fishmeal Trap?” by Per Gunnar Nor (2011)

Figure 10: World’s fishmeal production, 1988 - 2009

World’s Fishmeal Production 1988 - 2009 8000000 7000000

tons

6000000 5000000 4000000 3000000 2000000

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1000000

years World’s Fishmeal Production ๅตคค ข /จจต Source: IFFO, 2010 cited in Seafish, 2011

Figure 11: Top six fishmeal producing countries (thousand tons) Country

2001

2002

2003

2004

2005

2006

2007

2008

2009

Total

5,997.4

6,201.7

5,401.6

6,274.5

6,022.7

5,230

5,052.8

5,006.8

4,775.2

Peru

1,844

1,941

1,251

1,982.7

2,019.9

1,378

1,407

1,430.3

1,346.9

Chile

699

839

664

933.1

870.4

854.7

781.9

729.7

641

Thailand

381

387

397

403

473.4

461.2

428

468

381.2

USA

342

337

318

353

268.8

232

251

216.2

249

Japan

227

225

230

295

221.9

219.6

210

202.9

192

Denmark

299

311

246

259.2

213.1

209.4

166

161.3

180.9

Source: IFFO, 2010 cited in Seafish, 2011. No revision has been made to the figures.

Figure 12: Top six fishmeal consuming countries (thousand tons) Country

1996

1997

1998

1999

2000

2001

2002

2003

2004

China

1,240

1,516

1,113

1,366

2,030

1,682

1,406

1,183

1,528

Japan

802

792

699

744

710

691

687

596

703

Chile

293

261

149

351

270

222

351

467

Thailand

566

466

418

481

504

484

408

405

409

Norway

232

320

247

223

361

276

246

289

309

308

315

303

254

253

250

Taiwan

Source: IFFO, 2005 cited in Seafish, 2011. No revision has been made. Figure of Chile in 2003 is believed to be a typo.

Figure 13: Top six fishmeal exporting countries (thousand tons) Country

2001

2002

2003

2004

2005

2006

2007

2008

2009

Peru

1,937

1,520

1,372

1,751

2,000

1,338

1,219

1,561

1,583

Chile

491

497

576

494

709

470

474

478

609

Denmark

307

305

203

247

254

253

161

210

240

190

125

126

158

104

Iceland Mexico Morocco

Source: IFFO, 2010 cited in Seafish, 2011. No revision has been made.

Figure 14: Top six fishmeal importing countries (thousand tons) Country

2001

2002

2003

2004

2005

2006

2007

2008

2009

China & Hong Kong

984

976

797

1,147

1,598

980

986

1,352

1,310

Norway

143

127

150

162

202

211

220

242

328

Japan

478

480

388

402

376

412

350

309

281

Taiwan

295

242

239

238

234

213

152

150

180

Vietnam

104

114

115

233

192

184

143

138

143

114

Source: IFFO, 2010 cited in Seafish, 2011. No revision has been made.

2.4.2 Thailand Fishmeal Production Thailand’s fishmeal production was estimated to be around 0.43 – 0.50 million tons during 2008 – 2013. These numbers are estimated numbers from Thai Fishmeal Producers Association (TFPA) since Thailand does not have any report or record of actual fishmeal production. These statistics are also different from those from Fishery Statistics Analysis and Research Group (FSARG) at Department of Fisheries (DoF), which are quite

low compared to TFPA’s figures: FSRAG estimated annual fishmeal production at 0.33 – 0.35 million tons between 2007 – 2011. According to interviews with both organizations, we found that they use different methods to estimate annual production, and these different methods lead to different figures. TFPA has local committees in each province estimate their monthly fishmeal productions, while FSARG has fishmeal producers in each province report their productions to DoF’s provincial office.

Figure 15: Thailand’s fishmeal production by year, 2006-2011

Thailand’s Fishmeal Productions 2006 - 2011 600000

Production (tons)

500000 400000 TFPA

300000

DoF

200000 100000 0

2006

2007

2008

2009

2010

2011

Source: Thai Fishmeal Producers Association (TFPA), 2013; Fishery Statistics Analysis and Research Group (DoF), 2013

From Figure 15, the production of fishmeal in recent years is quite stable. Despite the increasing demands for animal feed, declining fish stock in Thai waters meant that production fell behind demand, even compensated by trimmings from fish processing manufacturers (Fishmeal, 2010a) Apart from declining supplies of raw materials, decreasing production capacity – the number of fishmeal producers, also affects the total fishmeal production, as shown in Figure 16. Figure 16: Thailand’s fishmeal production and producers, 1987 - 2011

Number of fishmeal producers

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

Fishmeal productions (tons)

130 120 110 100 90 80 70 60

Number of fishmeal producers

Years

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000

1987

Fishmeal productions (tons)

Thailand’s fishmeal productions and producers

Source: Fishery Statistics Analysis and Research Group (FSARG), DoF, 2013

According to the Thai Fishmeal Producers Association (TFPA), there are 64 fishmeal producers registered as members of the association. The total production of these producers combined accounts for approximately 80% of national production (Personal communication10, August 13, 2013). Fishmeal industry consists of many medium and small players who try to work together to negotiate fishmeal prices. The industry landscape is unlike animal feed industry in that there is no dominant producer; most members of the association are similar in size, and no company is as large or as powerful as any of the major animal feed mills. Because of this, and because animal feed mills 10

Interview with Khun Sanguansak Akaravarinechai, President and Khun Nichkamol Kumaree, Manager on August 7, 2013; email from TFPA on August 13, 2013.

30 are the main purchaser of fishmeal and mandate quality, animal feed mills therefore have vast bargaining power to set fishmeal prices (Bureau of Agricultural Economics Research, 2009). In Thailand, the largest fishmeal producing province is Samutsakorn; in 2011, it produced 138,420 tons or 27.51% of total production according to TFPA, and 115,668 tons or 35.3% according to Department of Fisheries (DoF). Production in other provinces differs according to the various estimates used by TFPA and DoF (Figure 17). Figure 17: Thailand’s top five fishmeal producing provinces in 2011 Rank

TFPA

DoF

Samutsakorn, 138,420 tons or 27.51%

Samutsakorn, 115,668 tons or 35.3%

Nakorn Sithammarat, 66,490 tons or 13.21%

Songkhla, 39,402 tons or 12.03%

Songkhla, 56,960 tons or 11.32%

Ranong, 31,640 tons or 9.66%

Pattani, 42,459 tons or 8.41%

Phuket, 25,127 tons or 7.67%

Trang, 37,840 tons or 7.52%

Pattani, 24,243 tons or 7.4%

Source: Thai Fishmeal Producers Association, 2013; Fishery Statistics Analysis and Research Group (DoF), 2013

As mentioned in an earlier section, raw materials of fishmeal produced in Thailand consist of whole fish and trimmings. According to TFPA, in 2012, fishmeal raw materials comprised 30% trimmings from fishing canning manufacturers, 25% trimmings from Surimi producers, 10% trimmings from fish processing manufacturers 10%, and the remaining 35% are whole fish (interview with TFPA, August 13, 2013). This is similar to data reported by FSARG indicating that in 2011, fishmeal raw materials consisted of 39% whole fish (comprising 28%

trash fish – labeled in the report as pla pet, and 11% true trash fish – meaning not-yet- decomposed fish that are used as fishmeal raw materials, i.e. in line with international standards – and juveniles) and 61% trimmings. From the past until 1996, raw materials of fishmeal were whole fish (trash fish, true trash fish, and juveniles). But beginning in 1997, trimmings have played a more important role as main raw material for fishmeal, while the percentage and amount of whole fish have been declining continuously as shown in Figure 18.

Figure 18: Raw materials of fishmeal, 1987 - 2011

Raw materials of fishmeal

1,500,000.00 1,000,000.00

trash fish

Years

other fish

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

500,000.00 1987

Tons

2,000,000.00

trimmings

Source: Fishery Statistics Analysis and Research Group (DoF), 2013

31 2.4.3 Thailand Fishmeal Consumption Since it is not required for fishmeal producers in Thailand to report the amount of fishmeal they produce, we obtained estimated figures of fishmeal production with some details on provincial data from TFPA and DoF. Fishmeal consumption figures are far more obscure and inconsistent than production figures. According to Bureau of Agricultural Economic Research (2012), Thailand in 2012 consumed around 0.45 – 0.48 million tons of fishmeal, mainly for aquaculture especially for Whiteleg shrimps. This is similar to figures in Animal Feed Business magazine volume 135, November – December 2010 that showed that fishmeal consumptions during 2006 – 2010 were around 0.42 – 0.52 million tons (Fishmeal, 2010a). Nevertheless, they were conflicted with figures shown in Animal Feed Business magazine volume 134, September – October 2010 that said “…the increasing livestock populations increase the demand for fishmeal as follow ... in 2009 total demands are 0.556 million tons, and in 2010 total demands are 0.578 million tons” (Fishmeal, 2010b, p. 27). These numbers were derived from tables of livestock populations, amount of animal feed, and amount of raw material in 2009 and 2010 published on Thai Feed Mill Association website (www.thaifeed mill.com). Once again, the above figures are estimated, and we found that the figures do not reflect the actual demands for fishmeal. For example, based on an interview with TFPA and an official of DoF, fishmeal is no longer used to produce animal feed for chicken, and it is used very little in feed for pigs – only for pig breeding stock. However, in the TFPA-published table of livestock populations, the amount of animal feed, and amount of raw material in 2013, demands of fishmeal for all types of chicken still account for a high proportion – almost 50% of the total estimated demands. This is because figures for such published table are still calculated theoretically from the amount of livestock, as opposed to using actual figures.

Similar to fishmeal production and consumption figures, there is no public data on the amount or percentage of fishmeal used by major animal feed producers; nonetheless, based on an interview with Thai Fishmeal P r o d u c e r s A s s o c i a t i o n ( T F PA ) , T F PA representative estimated that Charoen Phokphand Foods (CPF) is the largest fishmeal buyer in Thailand; the company is thought to purchase approximately 40-50% of fishmeal produced domestically every year. Major fishmeal buyers include CPF, Krungthai Feedmill, Thaiunion Feedmill, and Lee Pattana. Based on their reported financials in 2012, CPF was ranked the first with 56,471 million Baht revenues, followed by Krungthai Feedmill at 5,294 million Baht, Thaiunion Feedmill 4,951 million Baht, and Lee Pattana 4,071 million Baht. In 2010, CPF was the world’s largest animal feed producer, with annual production of approximately 23.2 million metric tons.

2.4.4 Thailand Fishmeal Exports Unlike production and consumption, imports and exports of fishmeal are subject to customs process, so we then have official records of imported and exported fishmeal, but again we found the conflicts between numbers published by the Office of Commodity Standards (OCS), Department of Foreign Trade (DFT), Ministry of Commerce (MOC) and the Customs Department (CD), Ministry of Finance. OCS publishes data of exported fishmeal dividing it into three grades: 1st grade, 2nd grade, and 3rd grade; while CD categorizes data according to Harmonized System Codes (HS Code), and fishmeal is divided into four categories: fishmeal with >60% protein content, fishmeal with <60% protein content, meals of crustaceans, molluscs, and other aquatic invertebrates; and others.

Figure 19: Thailand’s fishmeal export by year, 2008-2013*

Fishmeal Export, 2008 -2013 120,000.00

Tons

100,000.00 80,000.00 60,000.00 40,000.00 20,000.00

2008

2009

2010

2011

2012

2013

Years Customs Department

Office of Commodity Standards

Source: Office of Commodity Standards, Department of Foreign Trade, 2013; the Customs Department, 2013

Note:* Number in 2013 of OCS is from Jan. – Oct. while that of CD is from Jan. – Nov. For OCS, we use data of all three grades of fishmeal, and for CD, we use two categories of fishmeal: fishmeal with >60% protein content (HS CODE 2301.20.20), and fishmeal with <60% protein content (HS CODE 2301.20.10)

Looking at Figure 19, we see although the numbers are different, particularly in 2010 and 2011, the trends are very similar; actually in 2012 and 2013 their figures are very close – 54,534,47 (CD), 58,365.61 (OCS) in 2012, and 110,848.54 (CD), 109,213.09 (OCS) in 2013. Compared to the figures in 2012, fishmeal export doubled in 2013. This is probably because in 2013 Thailand’s shrimp industry faced Early Mortality Syndrome (EMS) problem, causing shrimp production to reduce by half to 0.25 million tons (Shrimp Export Shrinks, 2013). This led to the decline of shrimp feed demands followed by the reduction of the domestic demands for fishmeal; therefore, fishmeal producers had to sell their stocks to export markets. Accordingly, if Thailand’s shrimp industry faces the same problem in 2014, fishmeal producers will probably have to rely on export again. Thailand’s major export markets for fishmeal include Vietnam, China, Taiwan, and Indonesia. According to OCS and CD, in 2013, Thailand exported around 42,000 tons of fishmeal to Vietnam and around 24,000 tons to

China accounting about 38% and 22% of total exported fishmeal. Vietnam has a growing feed industry with annual growth rate of 15-17%. This high growth is due to the fact that local ingredients were not enough to supply local feed production demand, so they had to import about 60-70% of the ingredients. 90-95% of dried soybean cakes and fishmeal are imported (Hoang Anh, 2012). As for China, in 2011, it beat the USA and became the world’s largest feed producer with 175 million metric tons of feed production, and kept increasing in 2012 to 191 million metric tons. Despite the growing feed production, China’s local supply of fishmeal is still low, making it necessary for China to import fishmeal to fill the fishmeal demand-supply gap. In 2012, it was estimated that China imported about 1.2 million ton of fishmeal (USDA, 2012). Considering the quality of exported fishmeal, based on export data from both OCS and CD, Thailand mainly exports 1st grade fishmeal, defined as fishmeal with >60% protein content, as shown in Figure 20 and 21.

Figure 20: Thailand’s fishmeal export by category, 2007 – 2013*

Fishmeal Export, 2007 -2013* 120,000.00 100,000.00 Tons

80,000.00 60,000.00 40,000.00 20,000.00 2007

2008

2009

2010

2011

2012

2013

Years Fishmeal with >60% protein content

Fishmeal with <60% protein content Source: The Customs Department, 2013

* From Jan. – Nov. 2013

Figure 21: Thailand’s fishmeal export by category, 2008 – 2013*

Fishmeal Export, 2008 -2013* 120,000.00 100,000.00

Tons

80,000.00 60,000.00 40,000.00 20,000.00 2008

2009

1st grade Fishmeal

2010

2011

Years

2nd grade Fishmeal

2012

2013

3rd grade Fishmeal

Source: Office of Commodity Standards, DFT, MOC, 2013

* From Jan. – Oct. 2013

2.4.5 Thailand Fishmeal Imports Since Thailand can produce only 25% of high protein (60%+) fishmeal, it has to import highprotein fishmeal from other countries (Animal Feed Business, 2011) According to CD records, in 2013 Thailand imported around 6,092 tons of fishmeal mainly from Myanmar (45.87%) and Vietnam (36.68%). However and again, we found the conflicts of fishmeal import figures even from the same source. For example, in Animal Feed Business magazine volume 134, September – October 2010, it says that in 2008 Thailand imported 12,968 tons of fishmeal, in 2009 the number increased to 16,755 tons, and in the first half of 2010, Thailand imported about 7,220 tons of fishmeal (Fishmeal,

34 2010b). However, these figures conflict with those in the next issue – volume 135, November – December 2010 – that says in 2010 Thailand imported only around 1,000 tons of fishmeal reducing from 2,000 tons in 2009 (Fishmeal, 2010a). The figures in the volume 135, however, match the figures we get from the Customs Department.

2.4.6 Songkhla Fishmeal Currently fishmeal industry in Songkhla consists of 9 fishmeal producers, according to The Thai Fishmeal Producers Association, declining from 18 producers listed on the website of Department of Internal Trade (www. dit.go.th) as of 2010. Based on their revenues in 2012, the top five fishmeal producers in Songkhla were 1) Jana Fish Industries with 28.6% share of total revenues 2) Paesae Songkhla 16.1% 3) Pacific Fishmeal Industrial 14.7% 4) Samila Fishmeal 11.8%, and 5) Thai Charoen feed mill 10.4%.

According to TFPA, in 2013, Songkhla produced around 41,000 tons of fishmeal, equivalent to about 8.2% of total production of the country. This makes Songkhla the second largest fishmeal producer in the Southern region and fourth largest nationally, after Samutsakorn, Samutprakarn and Nakhon Si Thammarat. Based on data from DoF, most raw materials used to produce fishmeal in Songkhla are trimmings (by-product) as shown in Figure 22. In 2011, 94.95% of total raw materials or 134,986 tons were trimmings while only 5.05% or 7,178 tons were whole fish (of which 5,428 tons were trash fish). However, please note that of the figure for trash fish here was of those going to fishmeal producers at Songkhla, not trash fish landed at Songkhla. Based on interviews with DoF officials, TFPA representatives, and fishmeal producers’ people, we found that fishmeal producers source their raw materials across provinces.

Figure 22: Raw materials of fishmeal in Songkhla, 1999 – 2011, divided into trash fish, trimmings (by-product) and other fish

Tons

Raw materials of fishmeal in Songkhla, 1999 - 2011 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Years Trash fish

Other fish

Byproduct

Source: Fishery Statistics Analysis and Research Group (FSARG), DoF, 2013

For the prices in 2011, the average 1st grade fishmeal with 60%+ protein at Songkhla was 30.43 Baht per kilogram (Office of Internal Trade Songkhla, 2013) or 0.30 and 6.21 Baht lower when compared with 30.73 Baht of the national average price, and 36.64 Baht of Peruvian F.O.B. price.

35 In 2011, the average trash fish price at Songkhla was 4.33 Baht per kilogram, 4.27 Baht lower than the national average price of 8.60 Baht (Office of Agricultural Economics, 2012). When we look at the average prices of fishmeal by province in 2011, the price of fishmeal at Songkhla was among the cheapest prices, ranking number 3 from the bottom. This reflects the relatively poor quality of fishmeal produced in Songkhla, which depends largely on the quality of raw materials. Figure 23: Average prices of fishmeal by province in 2011 (Baht per kilogram)

ri n n ri n g g am bu aka Bu ha non ran atu a K T r S n h i g R Ra nt um ha t P Cho hir P Son ha mu K Ch C ab ut Sa hu m c a a S Pr ng

n ng

r kh

n la ni kh atta kho g n P Sa So ut m Sa

Province

o ay

a Tr

45.00 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00

Baht

Average price of fishmeal by province, 2011

n Average price of fishmeal sold at the province Source: Fishery Statistics Analysis and Research Group (FSARG), DoF, 2013.

(Note: Fishmeal prices of all grades are the same throughout the country, but differences in the average prices here reflect different grades of fishmeal sold at the provinces.)

For details of estimated market shares in Songkhla of animal feed mills, and estimates of quantities of fishmeal produced in Songkhla, see Chapter 7 of this report.

2.5 Fishmeal Price Fishmeal price has been trending upwards due to high demand of fishmeal for aquaculture feed, especially from China, and low supply for the major fishmeal producers due to disruptions caused by El Niño phenomenon and decreasing marine resources (Globefish, 2009-2013; Mavromichalis, 2013). As shown in Figure 19, the price started climbing since 2009 as fishmeal production decreased in conjunction

with high demand for fishmeal and expected El Niño. Subsequently, one of major fishmeal p r o d u c e r s – C h i l e – w a s d a m a g e d b y earthquake in 2010, coupled with low stock in China, so the price climbed back up. However, when the price became very high, buyers were hesitant to buy and turned to substitute products that also have high protein content, such as soybean instead. Furthermore, fishmeal production decreased in the second half of 2011, and this resulted in price drop. In 2012, demand for animal feed from aquaculture and livestock industries were positive again, while low catches and low fishmeal production were reported, so the price went up and remained high during the first two months of 2013. (Globefish, 2009-2013)

Figure 24: Peruvian fishmeal price from 1980 â&#x20AC;&#x201C; 2013 (US$ per ton) 2,500 2,000 1,500 1,000

1/1/2013

1/7/2011

1/1/2010

1/7/2008

1/1/2007

1/7/2005

1/1/2004

1/7/2002

1/1/2001

1/7/1999

1/1/1998

1/7/1996

1/1/1995

1/7/1993

1/1/1992

1/7/1990

1/1/1989

1/7/1987

1/1/1986

1/7/1984

1/1/1983

1/7/1981

1/1/1980

500

Source: International Monetary Fund (IMF), 2013

Figure 25: Prices of trash fish, 1st and 2nd grade fishmeal, and Peruvian fishmeal, 2007-2011 (Baht per kilogram) 50 45

Price of assorted trash fish

Second grade fishmeal with <60% protein

40 30 25 20 15 10 5 0

First grade fishmeal with >60% protein FOB price of Peruvian fishmeal

Source: Bureau of Agricultural Economic, 2012; Fishmeal, 2010

Figure 25 showed that fishmeal prices in Thailand increased significantly in 2008, then has held steady thereafter. In practice, prices in Thailand are set and announced by CPF, a major feed mill company, and these prices will determine the prices of trash fish used to produce fishmeal. Typically, trash fish is used to produce fishmeal in the ratio of 4:1, i.e. 4 units of trash fish are required to produce 1 unit of fishmeal. (Bureau of Agricultural Economics Research, 2009). Factors that affect the prices of fishmeal include 1) demand for animal feed, 2) supply of

fishmeal, 3) reference prices of Peruvian and Chilean fishmeal, and 4) prices of protein substitutes such as soybean (Office of Agricultural Economics, 2012).

1) Demand for fishmeal Since fishmeal is a main protein ingredient used in animal feed production, especially aqua-cultured animals, which use higher percentage of fishmeal in their feeds, the demand for animal feed therefore drives the demand for fishmeal. The demand for animal feed has been rising due to an increasing

Figure 26: Estimated quantity of livestock and feed ingredients required for sufficient animal feed in Thailand, 2003-2012 (tons)* 18,000,000 16,000,000 14,000,000

Fishmeal

12,000,000

Soybean meal

10,000,000

Maize

8,000,000

Broken rice

6,000,000 4,000,000

Livestock

2,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source: Thai Feed Mill Association, 2003-2012

(Note: *As mentioned earlier, these figures are still calculated theoretically from the amount of livestock, as opposed to using actual figures.)

number of farmed animals, which in turn has been increasing to meet the demand for food from a growing global population. In addition, prices of substitutes such as soybean meal and meat bone meal (MBM) affect the demand for fishmeal. Both soybean meal and MBM give lower percentages of protein than fishmeal, but when the prices of fishmeal are high, animal feed mills will use them instead of more expensive fishmeal.

2) Supply of fishmeal The supply of fishmeal has been on a slight decline since 2008. According to “Oceans in the Balance, Thailand in Focus” report by Greenpeace Southeast Asia (2013), Thailand’s fisheries are declining due to deteriorating resources caused by overfishing and the use of destructive fishing gears such as bottom trawl and push nets. Fish caught by trawlers comprises 40% of target species, 40.8% trash fish, and 19.8% of juvenile target species. Statistics from the Department of Fishery cited in this publication shows that catch per unit effort has declined from 300 kg per hour in 1961 to 25 kg per hour in 2011.

3) Reference prices of Peruvian fishmeal

Peru is the world’s largest fishmeal producer and exporter. Its FOB prices are used as reference prices. These prices are affected by the Peruvian fishmeal production and China’s fishmeal imports, which in turn mostly depend on fishmeal stocks and demands from China’s aquaculture.

2.6 Classification Fishmeal is divided into grades depending on “quality” defined by the following criteria 1) percentage of protein 2) odor 3) TVBN (Total Volatile Basic Nitrogen – a commonly used indicator of freshness) and 4) percentage of humidity. Fishmeal is also classified by quality into 6 grades: 1) shrimp grade 2) first grade fishmeal 3) second grade fishmeal 4) third grade fishmeal 5) fish head grade, and 5) leftover grade (Bureau of Agricultural Economics Research, 2012). The quality of fishmeal depends largely on the quality of raw materials. Fish caught by gillnet are the best-quality raw materials that can be used to produce shrimp

38 grade fishmeal. This is because fish caught by gillnet belong to the pelagic school of fish; they are not mixed in with other marine creatures or mud. In contrast, fish caught by trawler, especially bottom trawlers, have lower quality than those caught by gillnet. Pair trawls use less time to catch fish than bottom trawlers do, so the fish caught by this gear are fresher than those by bottom trawlers. T r i m m i n g s f r o m fi s h p r o c e s s i n g manufacturers such as fish heads, bones, tails or guts can be used to produce fishmeal, but the resulting fishmeal is low protein fishmeal; it will be either third or fish head grade fishmeal. A useful rule of thumb in estimating trash fish usage in fishmeal production is the fact that trash fish or pla pet as currently defined (badly damaged or putrescent; completely unsalable otherwise) can only be used to produce third grade (#3 grade) fishmeal and below. Second grade (#2 grade) fishmeal and above cannot utilize trash fish. However, since there is not much discrepancy of protein between different grades, some fishmeal producers will mix highprotein fishmeal with lower-protein fishmeal in order to upgrade fishmeal to sell for better prices. This creates demands for low protein fishmeal as fishmeal producers know that it can be mixed to increase the percentage of protein later on. More details of fishmeal classification and processes are found in Chapter 7 of this report.

2.7 Government policies and regulations Import – export policies Import policies depend on government policies during each period and existing trade agreements. For example, import tariff of ASEAN-China for fishmeal with 60%+ protein in 2006-2007 was 15%, and then was dropped to 8% in 2008-2009, and further reduced to 0% in 2010. Import policies related to fishmeal since 2010 are as follows: 1. Import tariff for fishmeal with 60%+ protein imported under normal condition is 15%. But it can be imported without quota at any time. 2. For fishmeal with protein lower than 60%, importers have to obtain import permission from the Department of Foreign Trade. The tariff levied for this type of fishmeal under normal condition is 6%.

3. All grades of fishmeal are levied 0% tariff if imported under:

1) ASEAN Free Trade Agreement (AFTA) 2) Thailand-New Zealand Free Trade Agreement (FTA) 3) Thailand-Australia Free Trade Agreement (FTA) 4) ASEAN-China Free Trade Agreement

4. All grades of fishmeal are levied 5% tariff if imported during January – March and 3.33% during April – December under Japan – Thailand Economics Partners Agreement (JTEPA) 5. All grades of fishmeal are levied 10% tariff if imported under ASEAN – Korea Free Trade Agreement (AKFTA). For exports, exporters can export freely; there is no export tariff.

Literature review: impact of trash fish industry on ecosystems

Fisheries in Thailand are a large component of the export industry, both in terms of wild-caught and farmed products. Department of Fisheries claims about 4.2 million tons of fish and seafood are produced per year, 90 percent of which is destined for the export market, earning around US$ 7.3 billion in 2011 (Department of Fisheries (DoF), 2013). An increasing proportion of undersized fish and decreasing volume of commercially important species in the composition of the wild fish catch in recent years suggest symptoms of biological overfishing and loss of coastal habitat, declining stocks, with concomitant falling profits of individual vessels indicate that economically overfished fish stocks threaten the viability of wild fisheries in the Gulf (Ahmed et al. 2007, Nasuchon & Charles 2010). The term “trash fish” is misleading because it suggests this part of the catch has no ecological or commercial value. Clearly this is not the case. The AFPIC Regional Workshop on “The production and use of low value/trash fish from marine fisheries in the Asia-Pacific region” (Funge-Smith et al 2005) suggests that uses of trash fish are diverse and include:

1) local consumption (e.g. fresh, dried)11,

2) direct feed (e.g. livestock, high value species aquaculture),

3) fishmeal production (e.g. for poultry, aquaculture) and

4) value-added products (e.g. fish sauce, surimi, protein concentrates).

In the context of this study, however, we will concentrate on that fraction of the fisheries capture that is diverted towards fishmeal processing. This fraction includes not only the “trash fish” component of the landed catch, but also offcuts from economic fish that are pre- processed at the landing for canning or surimi production (Fishmeal 6_2556). In most economically developed polities, such as Europe or Australia, much of the non-targeted trawl catch and juveniles caught are discarded in the sea (whether during the sorting phase of the harvest or by the use of specialised Bycatch Reduction Devices fitted to the nets). In countries where there is a strong market for trash fish such as Thailand, on the other hand, non-target catch and under-sized fish are also landed and may comprise a substantial portion of fishermen’ incomes ( S u p o n g p a n & B o o n c h u w o n g 2 0 1 0 , Boopendranath et al. 2013). A report prepared for FAO (Kungsawan 1996) asserted that very little discarding now takes place at sea in the Thai fishing industry; this gels with field observations made at fish landings in southern Thailand. The problems have been exacerbated by inappropriate or uncoordinated policies within and between government agencies, for example, the protection of the fishmeal industry has a direct impact on fisheries, since it has encouraged capture of small trash fish, often leading to high catches of juveniles of important species (Lebel et al. 2002, Pauly & Chuenpagdee 2003, Boonchuwongse & Dechboon 2003, Stobutzki et al. 2006, Saikliang

Note that this is quite rare in Songkhla, and coastal Thailand generally; almost universally, the landed product that is regarded as “trash fish” has been damaged beyond suitability for human consumption, or is composed of species that are never eaten by locals; the trawler fishermen are able to sell not only “genuine” trash fish, but also the damaged remains of fish and invertebrates that accumulates in the cod end of the net during long trawls (often degraded to the point of putrescence).

40 2007). The enormously over-capacity trawl fishery of the Gulf has in many ways become the fishmeal producer that has enabled the aquaculture industry to develop into a huge export industry with relatively low feed costs. However, the quality of the meal produced from the Thai fisheries these day is not sufficient by itself for aquaculture due to the poor quality of the landings (predominantly damaged, or degraded product) and consequently the aquaculture meal industry supplements Thai fishmeal with imported meal (World Bank 1991). Thailand once exported the bulk of their fishmeal (60% in 1980), but thereafter steadily decreasing the export quantities to less than 1% by 1992 and thereafter. Thailand became a net importer of meal in 1992 (Deutsch et al 2007). An APFIC workshop on the exploitation of trash fish and other low-value capture fisheries (APFIC, 2005) found great difficulties in defining the expression “trash fish” in a meaningful context – either ecologically or economically; they now prefer the expression “low value fish”. The problem arises partly because of the widely variant interpretations of what constitutes trash fish in any given fishery; in specialist fisheries, any low value non-target species is regarded as “trash fish”, whereas in heavilyexploited multi-species fisheries such as Songkhla the definition of trash fish is much more nebulous. Most fishermen rely on harvesting different species for their livelihood and seldom target one particular species (although they may prefer certain species for their economic value). Moreover, as the fishery in the Gulf of Thailand has changed under exploitation and the most desirable species have become rarer, species that were previously discarded or sent directly to fishmeal processors are now classified as “economic” fish (Tossapornpitakkul et al., 2008). Supongpan & Boonchuwong (2010) reported that trash fish were the most numerous component of research vessel catches everywhere in the Gulf of Thailand. Khemakorn et al. (2005) reported also that fishermen would sort damaged specimens of “economic” fish and

those that had spoiled in transit into the trash fish bins for sale at landings. Comparisons of recent with historical estimates of trash fish versus economic species in fisheries production thus are – at best – tenuous. Consequently, the fishermen and fisheries officials usually find it difficult to clearly define and understand the by-catch issue, and even between agencies, the definition of “trash fish” fluctuates. Some theoretical fisheries context is of assistance in aid of understanding this terminological problem. Firstly, it is widely recognised that unselective fishing aimed at maximising the total catch (the so-called “biomass trash fish production” industry model) will tend to reduce average trophic level in a system’s food web (Pauly & Chuenpagdee 2003). Small fish and invertebrates such as squids and crustaceans that feed mainly on plankton will become over-represented in the marine community and will quickly dominate the system in terms of biomass. A large proportion of the catch from any vessel operating these days in the Gulf of Thailand will be cephalopods, indicating severe depletion of finfish stocks (in early years, finfish comprised the bulk of catches: Pauly 1985). Increasingly in the Gulf of Thailand, the total catch has a higher proportion of “trash” fish (consisting of undesirable or unpalatable by-catch), much of which goes to fishmeal. A survey by Patthananurak & Phoonsawat (2003) concurs with Department of Fisheries summaries that indicate around 1/3 of the product landed by trawlers in the Gulf of Thailand is classified as trash fish; however, the proportions of juveniles and undersized individuals of target species are typically not included in the Fisheries figures. Tossapornpitakkul et al (2008) described the catch of trawlers in Songkhla as (on average) composed of 53% economic fish and 47% trash fish, of which 38.5% were juveniles of economic species. These numbers varied considerably throughout the year, with juveniles being over-represented in catches during the monsoon period coinciding with reproduction.

Reasons for bycatch

Different types of bycatch reduction technologies have been developed in the fishing industry around the world with a view to reduce the bycatch and discards from trawling, however, with the exception of TEDs (Turtle Exclusion Devices), uptake of the technology in tropical countries such as Thailand has been miniscule (Ekmaharaj 2006, Boopendranath et al. 2013). For some fishermen, trash fish may generate over one-third of their income from the catch (Funge-Smith et al 2005). Bycatch reduction devices can reduce the volume of juveniles and non-target species captured by as much as 40% (Eayrs 2007, Boopendranath et al. 2013).

The size of the mesh at the cod-end of a trawl net can make a very large difference in the amount of juveniles caught as bycatch (In Thailand, cod-end mesh size may be as small as 15mm (5/8”) and very few animals escape (Eayrs 2007, Davies et al. 2009). Pauly (1985) suggested that the minimum appropriate net cod-end mesh size for the inner Gulf of Thailand, where the bulk of the catch was made at that time, should be 45–55mm; Pauly apparently assumed, like Broadhurst et al. (2000) that the goal of the fishery was long term profitability rather than simply volume extraction, and that the 60% reduction in bycatch offered by the >45mm mesh was thus desirable12. Larger mesh sizes greatly increase the chances of juvenile fish and prawns escaping the trawl (Boonchuwong & Dechboon (2008) report that seasonal prohibitions of mesh sizes smaller than 47mm apply to certain areas of the Gulf, for this reason). The Thai Department of Fisheries Masterplan (DoF 2008) suggests that this gear restriction is a primary source of non-compliance and illegal fishing in the Gulf of Thailand. Tossapornpitakkul et al. (2008) reported that mesh sizes used by fishermen in the Gulf of Thailand range from 19.05-25 mm (3/4 -1”), with most fishermen using a mesh of 22mm (7/8”).

Fishing strategy contributes to the large bycatch figures published by the Department of Fisheries; it can be seen that gear selection can strongly influence the capture composition. For instance, large otter trawls return most of the catch as trash fish (comprising 45.4 - 62.5% of the total catch), whereas edible fish comprises only 14.4 - 29.1% of the total catch (Boonchuwongse & Dechboon 2003); the trade-off for the operators is that CPUE is much greater for the larger vessels, since they are towing much larger nets. The decline in mesh sizes as overall CPUE diminishes means that the increase in the trash fish fraction subsidizes the lower catch rate of the target species (Dayton et al 1995, Khemakorn et al. 2005). Undersized juveniles of various demersal and some pelagic species are trapped by the fine mesh sizes of trawls indiscriminately harvesting marine products in prolonged trawling operations. In social and economic terms the total commercial biomass extracted in the GoT may be more important than sustainability, i.e. the unstated fishery management objective is to maximize the catch, irrespective of the species composition (in fact the DoF website, English version {http://www. fisheries.go.th/english/introduction.html} states that its goals are achieving catch targets for the

An earlier study (Sahat 1994 in Tossapornpitakkul et al., 2008) produced roughly similar numbers (economic: trash fish ≈ 55:45, juvenile: trash ≈ 47:53), although the previously mentioned reclassification of species suggests that the proportion of juveniles of economically useful species are declining as a proportion of the total catch (i.e. there has been a large reduction in the amount of juveniles available to catch in recent years, even with an expanded list of species). Supongpan and Boonchuwong (2010) place the fraction of juveniles in the trash fish component as 35%.

It might be worth noting that the assumptions made in many of the theoretical discussions of fisheries in the literature make this same assumption: that the goal of the fishermen and management authorities is to balance long-term viability with shortterm profitability. This is usually wrong in Asia, since historical laxity and lack of knowledge about how to apply inappropriate (mostly temperate, single-species) fisheries models to a disparate, multi-species tropical fishery have hampered understanding of both the industry and the resource (Ruddle & Hickey 2008, Ye et al. 2011).

42 fishery rather preserving the resource for future generations). The ratio of undersized fish to the total catch is huge in a multi-species fishery that is concerned only with maximising the volume of product landed. Overfishing in GoT This is not new information; a stream of documentation dating back several decades has consistently warned of the massive overcapacity in the GoT fishery since the 1980’s (e.g. Hongsul 1980); in fact, Payaotou & Jetanavanich (1987, p44) stated: “…by 1973 the inshore catch reached 803,000 tonnes which is indicative of overfishing not only when compared to the MSY but also when the declining catches in subsequent years are considered”. Pauly (1985) went further “… fortunes were made, but the bottom line is blight – the Gulf of Thailand became barren...”. The overfishing problem was repeatedly highlighted in subsequent years, in a variety of reports (e.g. Boonwanich 1992, Janetkitkosol et al., 2003, Kongprom et al. 2003, Pauly & Chuenpagdee 2003, Boonchuwongse & Dechboon 2003, Stobutzki et al. 2006). The Gulf of Thailand is one of the mostdocumented examples of resource depletion in fisheries literature; by 1995 the total biomass estimates had declined to less than 8% of the 1965 estimates (Stobutzki et al. 2006). Moreover, the impact of unregulated ecosystem overfishing in the GoT has been highlighted in several key national documents prepared for regional and global fisheries organisations (Payaotou & Jetanavanich 1987, Kongprom et al. 2003, Lymer et al 2008). When the trawl fishery began in the 1950’s, inappropriate gears and inexperience ensured that fishing pressure was minimal; a substantial technical upgrade in the 1960’s saw rapid increase in capacity, helped by CPUE in the order of around three hundred kilograms per hour. The standing biomass and CPUE rapidly declined as the easily harvested portion of the stock was exploited by a rapidly expanding fishing fleet (Pauly & Chuenpagdee 2003) –

trawlable biomass in the GoT declined from 680 000t in 1961to 560 000t in 1995, attributed mainly to overcapacity in the fishing industry (Funge-Smith et al. 2012). Subsequent declines in Thailand’s marine fisheries resources can be attributed to a number of additional factors, including the use of destructive fishing gear (e.g. trawl, push nets) and methods (e.g. large scale trawling in near shore areas, use of push nets near coral reefs). Industrial fishing in Thailand is characterised by an almost ubiquitous culture of violation of both fisheries regulations (e.g. fishing in fish spawning grounds during periods of temporary fishing bans) and coastal zone exploitation bans, and a Malthusian extraction of marine resources, resulting in destruction of fish habitats, such as mangroves, seagrass meadows, and coral reefs. It is actually quite difficult to establish the real intensity of fishing pressure in the Gulf of Thailand, because the information released by the Department of Fisheries is inconsistent, at times obfuscatory and apparently self- contradicting. For instance, the capture levels reported in the documents available from the DoF website conflict with those reported to FAO and other organisations, partly because figures included product landed at Thai ports but sourced elsewhere (usually Indonesia, where several hundred nominally Thai boats fly Indonesian flags: Morgan et al. 2007). Moreover, there is no clear estimate of the amount of fish illegally harvested by commercial operators within the 3km coastal limit that is supposed to be reserved for local fishermen (Barbier 2002). The research vessels used to calculate the Fishery Department’s MSY and CPUE figures use a 40mm cod-end mesh (Payaotou & Jetanavanich 1987, Kongchai et al. 2003, Kongprom et al. 2003); since small nets retain disproportionately more juveniles and trash fish, this has the effect of making the Department of Fisheries capture and effort figures underestimates of the true catch (in all size classes).

Figure 27: Reported finfish landing in the Gulf of Thailand

Reported finfish landings in the gulf of Thailand total fish food fish

Landings (tons)

trash fish

1,500

1,000

500

1985

1990

1995

Year

2000

2005

2010

Figure 27. Landings of finfish abstracted from DoF reports, 1986-2011. The sharp rise in the early 1990’s reflects the growing importance of the pelagic tuna fishery (only a fraction of which is actually captured in the GoT). The circled area indicates a reclassification of several species from “trash fish” to “food fish”. The “crash” evident in the landings in the period after 2005 probably reflects a “tipping point” in the ecosystem towards a lower productivity system with a higher proportion of low trophic level species caused by chronic overexploitation of demersal species. Part of this change may be explained by some Thai fishing boats changing registration to Malaysia and Indonesia domicile, in order to comply with more stringent Malaysian and Indonesian regulations.

An adequate management system based on single-species and single- fleet reference points is probably infeasible in the context of the Gulf of Thailand. A substantial proportion of the landings at Songkhla port are sourced from vessels operating in international waters (or from the EEZs of neighbouring countries), yet are included in production statistics (FAO 2009), something which tends to validate the expectation of unreliability of official fisheries estimates for the southern GoT fishery. Likewise the Department of Fisheries first

included Tunas as a separate entry in the Indian Ocean catch statistics in 2005 (and switched Barracuda from “demersal” to “pelagic”); these are likely to be mostly products of offshore fishing vessels operating outside Thailand’s EEZ (Lymer et al 2008). It can be said without hesitation, however, that most demersal resources and almost all groups of pelagic fish are over-exploited. Furthermore, the catch rates recorded by government research vessels have shown persistently decreasing trends since 1966 (FAO 2009).

44 Within the Gulf of Thailand, fishing effort has increased as catches have declined. P a y a o t o u & J e t a n a v a n i c h ( 1 9 8 7 ) highlighted the rapidity of the decline in CPUE (Catch per Unit Effort) of GoT fisheries, as well as the change in trash fish composition of the catch, and related it to overcapacity. Kongprom et.al. (2003) suggested that the 1995 level of fishing effort was about twice the effort necessary to harvest Maximum Sustainable Yield (MSY), which indicated that the demersal and other fishery resources were already severely over-fished. Supongpan and Boonchuwong, (2010) assessed demersal fish caught by trawl fisheries in the Gulf of Thailand and reported a calculated MSY of 277,027 metric tons (approximately one third of that estimated by Payaotou & Jetanavanich (1987) a decade earlier) at an optimum fishing effort (fMSY) of 31.4 million trawling hours. Demersal catches in 2005 reported by the Department of Fisheries amounted to 315,418 tons captured during 49.3 million hours of fishing effort. The reported effort

expended in capturing demersal fish exceeded optimum by 60% and the safely extractable resource of demersal fish was overexploited by more than 50%. It can be seen easily here that the economic benefit of the extra effort followed the classic law of diminishing returns, and that the demersal shrimp industry in particular was unprofitable at its current level of effort (Boonchuwongse & Dechboon 2003). A calculation of optimal fishing effort by Ahmed et al (2007) indicates the overcapacity problem clearly (Figure 21 below). Not exploiting fisheries resources at MSY or MEY leads to the loss of production and rents from the fisheries; this is a 2-tailed relationship in that under- exploitation means the resource is not providing as much as it might, whereas overexploitation means that the resource is being degraded (Guillen et al. 2012). Over the decades since industrial fishing was introduced, fisheries development in the Gulf of Thailand has concentrated on increasing fishing effort to maintain or increase the production volume.

Figure 28: MSY model

Figure 28. In this model, the MSY figure represents the apex of the cost-benefit curve; excessive effort, such as that reported by the Department of Fisheries, is greatly sub-optimal, and approximately twice the effort that would produce MEY (Maximum Economic Yield). From Ahmed et al. 2007.

45 Evidence for massive changes in species composition in the Gulf of Thailand was obtained from analysis of trawl survey data between 1963 and 1972 (Pauly, 1985). It has been shown that fishing can affect, directly or indirectly, the structure of demersal fish assemblages (Suvavepun, 1991 Kongprom et al., 2003). Nevertheless, this continued expansion of the GoT fishery was economically driven, despite local and overseas experiences and the recommendations of experts within Thailand (Boonchuwongse & Dechboon 2003), apparently under the impression that the stock was inexhaustible. The extreme overcapacity which was apparent in the 1990’s has seen successive collapses in fisheries production, to the extent that reported CPUE was reduced to around from around 300kg/hour in the 1960’s to 17kg/hour in 2010 (Pauly & Chuenpagdee 2003, Boonchuwongse & Dechboon 2003, สงวนสิน [Fisheries Director] (unpubl 2010)). Other research has placed actual CPUE in the GoT much lower: a trawl survey conducted by SEAFDEC in 2004-5 indicated that the highest average catch rate in the GoT was 11.9kg/hour, with an average CPUE of 10.3kg/ hours (Rugpan & Bunleudaj, 2012). The much reduced CPUE has, in turn, led the fishermen to employ increasingly long trawl times (up to 6 hours) between net retrievals. The extraordinary length of tow times highlights the increasingly patchy resource distribution in the trawl areas; chronic fishing disturbance leads to the removal of high-biomass species and declines in total community biomass, biomass of larger macrofauna, and a total production decline (Duplisea et al. 2001, 2003, Jennings et al 2002, Queiros et al 2006). It also leads to greater amounts of “patchinesss” in the resource, as the areas disturbed by trawling take time to recover (Thrush & Dayton 1991). Tossapornpitakkul et al., (2008) reported that three major strategies exist for commercial fishing operators: diurnal, daylight or nocturnal. The diurnal fishermen (around 32% of vessels) conduct operations of 1-13 days’ duration (average ≈6+3.5 days), during which they customarily trawl twice during the day and 2-3

times per night, with each tow being 4-5 hours duration. They use the same capture equipment for both daytime and night time operations. Daytime-only operators (around 7% of vessels) conduct trips of 1-10 days’ duration, although they tend to prefer short trips (≈2.3+3 days). They conduct 2-3 trawls per day, each lasting 4-6 hours. The nocturnal fishermen (around 61% of vessels) likewise preferred short (≈2 days) trips and also trawled 2-3 times per night, with tows being 3-6 hours long. These very long trawl times increase the proportion of damaged product and bycatch in the trawls, as the early catch is smashed against the back of the net and forms a solid lining over the net mesh through which nothing escapes. The great weakness of surplus production models such as the one presented here is that they make certain assumptions about the generation times of the fishery stock; the most egregious of these is to assume that the high-turnover species which dominate the catch of the highest ecological and economic value. This is seldom true in a complex multispecies fishery such as the Gulf of Thailand. In multi-species and multi-fleet fisheries, single species assessments, and consequently MSY and MEY reference points, are often not valid, and so catch targets are often gross over- estimations (Guillen et al 2013). Unfortunately, it is impossible to adequately model the complexity of the demersal assemblage in the GoT in any meaningful way. The consequences of adopting a simplified model are profound, however: the remaining stocks become increasingly reliant on recruitment to maintain population, and thus undergo larger variations i n b i o m a s s a s r e c r u i t m e n t fl u c t u a t e s stochastically between years. Fisheries returns thus become increasingly difficult to predict, particularly for artisanal fishermen who have limited scope for migration to different localities if fish become scarce. The effects of juvenile overfishing Overfishing is increasingly understood to result in indirect alterations of habitat structure and function, particularly in regards to trophic

46 levels (Valentine & Heck, 2005). The roles that small fish species may play as prey, competitors, predators and herbivores make them potential key members of communities and key determinants of the fate of other populations (Forster & Vincent 2010). It is trivial to predict that the integrity of juvenile populations is crucial if ecosystems are to function effectively. Truncation of age structure by fishing has been suggested as the main reason for the increased higher variability in recruitment of exploited species (Hsieh et al., 2006), and hugely reducing the number of individuals available for capture by artisanal fishing techniques (Gislason

2001, Najmudeen & Sathiasdhas 2008). This, of course has tremendous consequence for the livelihood and food security of artisanal fishermen who rely on coastal replenishment, and also for the industrial fishermen who target the adult population (Figure 29). The reduction in habitat heterogeneity is a major deterrent in the survival and recruitment of a multitude of marine organisms, including many species that are commercially important (Kumar & Deepthi 2006). Substantial increases in profitability of fishing would be achieved, at lower harvest rates, if juvenile fishing were reduced (Vibunpant et al. 2003).

Figure 29: Simplified coastal food webs

BEFORE FISHING

AFTER FISHING

Figure 29. Simplified coastal food webs showing changes in some of the important top-down interactions due to overfishing; before (left side) and after (right side) fishing. Bold font represents abundant; normal font represents rare; â&#x20AC;&#x153;crossed-outâ&#x20AC;? represents extinct. Thick arrows represent strong interactions; thin arrows represent weak interactions. Severe overfishing drives species to ecological extinction because overfished populations no longer interact significantly with other species in the community (From Jackson et al. 2001)

47 Even in a system that is targeting only the largest individuals, as the level of fishing mortality increases, the population dynamics are increasingly dominated by recruitment, and at the limit the population variability is equal to the variability of recruitment (Hsieh et al., 2006, Froese et al., 2008). Fisheries biologists tend to partition overfishing into several overlapping components, depending on the industry practices. Recruitment (or reproductive) overfishing can be defined as depleting the reproductive part of the stock by so much that recruitment is impaired. Growth overfishing can be defined as where inefficiently small specimens are targeted, depleting the young part of the stock before it has reached its full biological and economic potential (Diekert et al. 2010). The common perception is that growth-overfishing is the more wide-spread form of overfishing, whereas recruitment- overfishing has more disastrous consequences since it directly impedes the future viability of fish stocks. Avoidance of recruitment overfishing is the stated main theoretical basis for fisheries stock management in the Gulf of Thailand; the Department of Fisheries (notionally) seeks to avoid reducing the spawning stock to a level that the catchable stock diminishes over time because of a lack of recruits. In truth, the processes overlap considerably, but the removal of juveniles from the potential spawning population has a more insidious effect. Severe overfishing drives species to ecological extinction because overfished populations no longer interact significantly with other species in the community (Jackson et al. 2001). The use of single-species reference points is questionable when species interactions are important (Stergiou 2002). Rapid declines in mean trophic level of captured fish (i.e. â&#x20AC;&#x153;fishing down the food webâ&#x20AC;?) reflects profound modifications in the ecosystem, and leads to a cascade of undesirable consequences (Pauly & Chuenpagdee 2003, Srinivasan et al 2010, Rochet & Benoit, 2011). In a multi-gear multi-species fishery such as the Gulf of Thailand, where undersized and otherwise undesirable components of the catch are a key

part of fishermenâ&#x20AC;&#x2122; income, the proliferating impact of juvenile fishing is much more intense (cf Najmudeen & Sathiahas 2008). Disproportionately large-scale removal and destruction of young and juveniles of fish and crustaceans are especially detrimental to the fishery because when juvenile mortality is increased the future catches and subsequent recruitment will be affected. The estimates made (by fisheries biologists) of growth, mortality and recruitment are thus invalidated, because the progression of juveniles into the spawning population is compromised. Changes to the community composition are an obvious and pernicious effect of overfishing and trophic decline. The creation of ponds for marine shrimp aquaculture under the impetus of this push has led to the destruction of thousands of hectares of mangroves and coastal wetlands. This is important to local artisanal fishermen because they provide nursery grounds for various young aquatic animals including commercially important fish, and their destruction can lead to substantial economic losses for commercial fisheries (Stobutzki et al 2006, Allsopp et al 2008) and livelihood risks for local people heavily reliant on fishing as both income and food security (Fleishman 2006, Pomeroy et al. 2007). It is important to note at some stage that trawl bycatch is not the only source of juvenile mortality in the system. The cage culture of food fish widely-promoted as an alternative income stream for local fishermen uses predominantly wild-caught juveniles as stock (Tanyaros et al 2008, Songrak et al 2008, Sheriff et al 2008), and also uses whole or sectioned trash fish (including many juveniles) as stock feed (Bunlipatanon et al 2012). Since the mangrove creeks where cage culture is practiced are also key nursery areas for many economically important species, this represents a significant potential threat to recruitment and trophic integrity of the system, over and above the threat posed by industrial fishing (FAO 2008, Allsopp et al. 2013).

Literature review: Changes and Impact on Local Artisanal Fishing Community

Whenever marine resources are depleted, every fisherman is affected, both artisanal and commercial alike. However, artisanal fishermen seem to be more gravely affected, as their fishing capacity is a lot lower than the commercial fishermen in term of fishing gears and vessels. They seem to be victims of overfishing by commercial fishermen, particularly those using trawlers and push nets which are the main trash fish suppliers to fishmeal producers.

In the context of this study, although the research team focuses on analysing the impact of trash fishing on the local artisanal fishing communities in Songkhla, it is difficult to separate the impact of trash fishing by trawlers and push nets from anchovy fishing using luring light, so in this section of literature review, we will include impact from both push nets fishing and anchovy fishing with luring light as both of them are destructive fisheries that highly affect the marine ecosystem and eventually have impact on the artisanal fishermen. It will show how the artisanal fishermen were impacted and what the results were.

4.1 Definitions of Artisanal Fisheries Before we talk about changes and impact of trash fishing on local artisanal fishing communities, we should firstly define the term artisanal fishery (การประมงพื้นบ้าน) so that we have a clear picture and scope of what it is in this research. The term artisanal fishery is sometimes used interchangeably with the terms coastal fishery (การประมงชายฝั่ง) and small-scale fishery (การประมงขนาดเล็ก) (Artisanal Fisheries,

2012; DoF, 2005; FAO, n.d.; Kijthavorn et al., 2000; Panjarat, 2008; Sirichai, 2003). This is because artisanal fisheries are usually small-scale, and the fishing grounds are inshore or operate within three km. off the coastline. However, the word “artisanal” also connotes low-level technology, and the use of small amount of capital and labor (FAO, n.d.). We can summarize key characteristics of “artisanal fisheries” as follows: 1) Not using any fishing vessels or using small size fishing vessels with or without power not more than 10 meters long e.g. sailboats, Kolae boats, Hua-Tong boats 2) Using low-tech fishing gears specifically for target species e.g. nets, hooks, lines, traps, crab gill nets, shrimp gill nets 3) Operating not far from the shoreline usually within three km. from the coast 4) Using labors within households from 1-3 persons In some countries, artisanal fisheries are defined by type and size of boats. For example, in Brunei, artisanal fishermen are those who use non-powered or powered boats not longer than 60 ft.; in Hong Kong, not longer than 40 ft.; in Malaysia, not over 10 G.T. (gross ton); the Philippines, not over 3 G.T) (Distinguishing and Types, n.d.). A similar criteria was used by National Statistical Office (NSO) and DoF (2001) when they conducted a survey on the income of small-scale fishing households in 2001. They defined small-scale fishing household by type of boats including no-fishing vessel, non-powered boats, outboard powered boats, inboard powered boats less than 5 G.T., and inboard powered boats between 5-9 G.T.

49 In some countries, artisanal fisheries are defined by type and size of boats. For example, in Brunei, artisanal fishermen are those who use non-powered or powered boats not longer than 60 ft.; in Hong Kong, not longer than 40 ft.; in Malaysia, not over 10 G.T. (gross ton); the Philippines, not over 3 G.T) (Distinguishing and Types, n.d.). A similar criteria was used by National Statistical Office (NSO) and DoF (2001) when they conducted a survey on the income of small-scale fishing households in 2001. They defined small-scale fishing household by type of boats including no-fishing vessel, non-powered boats, outboard powered boats, inboard powered boats less than 5 G.T., and inboard powered boats between 5-9 G.T.

4.2 Thailand’s Artisanal Fishing Communities Much research has focused that Thailand’s context, artisanal fishery concept goes beyond key characteristics mentioned earlier; it also includes traditional, handed-down wisdom from previous generations, and the responsibilities to protecting and preserving the sea which is unlike commercial fisheries that focus on getting the most out of the sea. The wisdom teaches them not only when, where and how to fish (e.g. they learn that shrimps and fish are abundant during Monsoon season; they use gears specifically for target species with large mesh size, so mostly, they catch mature fish and/or other fauna; for example, they will use crab gill nets with 7 cm mesh size to catch crabs), but also how to maintain the abundance of fish in the sea. (They learn not to overfish and make artificial corals or Sung for the fish to live in.) This is because in many cases, fishing is just for subsistence, and it is the only thing they know how to do, so their lives and their family members’ depend on the sea (Sirichai, 2003). According to the Report of the 2000

Income of Small-Scale Marine Capture Fishery Household Survey by NSO and DoF (2001), t h e r e w e r e 5 3 , 3 4 3 s m a l l - s c a l e fi s h i n g households country wide13. 86.1% or 41,225 were fishing households with outboard powered boats (long-tailed boats, เรือหางตัด). Songkhla had the highest number of small-scale fishing households, i.e. 6,175 households which were 86.71% of the total marine fishery households in Songkhla (7,121 households). Of the total number of small-scale fishing households, 63.64% or 3,930 households operated with outboard powered boats, and 27.5% or 1,683 did not use fishing vessels. During peak season, there were 16,340 fishermen working, of which 61.2% or 10,001 worked in small-scale fisheries.

4.3 Conflicts between Commercial Fishermen and Artisanal Fishermen In modern day, artisanal fishermen do not capture fish only for their own consumption but as main income of the households. They preserve and protect the sea by capturing mature fish to give them a chance to reproduce and creating artificial corals for fish. Problems occurred when commercial fishing, particularly push nets and trawlers, came to fish within fishing grounds of artisanal fishermen, or within 3,000 meters off the shore which is fish spawning grounds. These push nets and trawlers 1) depleted marine resources by sweeping almost everything unselectively into their cod-ends, 2) broke fishing gears of local artisanal fishermen stationed in the sea, and 3) destroyed the sea grass and coral reefs as well as artificial corals made by local fishermen, which were habitats and spawning grounds of the fish (Boonwanich & Boonpakdee, 2009). In The Roles of Fisherfolk Community in Natural Resources Management and Law Enforcement in the Area of Pattani Bay: Case Study at Tanyongpao Village14, Moo 4, Tagamsa

In this report, the small-scale fishing households include those who do not using fishing boats, use non-powered boats, use outboard powered boats, and inboard powered boats not over 9 G.T.

Tanyongpao village is a fishermen’s village in Tambon Tagamsam, Amphoe Nongchik, Pattani. The village has around 236 households with the population of 1,154 people, of which 99% were Muslim and 80% were artisanal fishermen.

50 Subdistrict, Ampoe Nongchik, Pattani, Piya Kijthavorn et al. (2000) also found that the intrusion of push net fishing boats, which were fuelled by fishmeal business since 1970, destroyed fishing gears of local fishermen as well as the traditional artificial corals or Sung, and depleted coastal resources, reducing the amount of marine animals that local fishermen could catch. These findings are similar to those of Chalita Bandhuwong (2000) (cited in Suwimon Piriyathanalai et al., 2011) in the paper titled “Huatong” Development, Characteristics, and Adaptations of Andaman Fisherfolk. She states that there are two problems caused by trawl and push net fishing; one is that the fishing gears of the local fishermen were destroyed, and the other is the reduction of marine animals. In case of anchovy purse seines with luring light, even though they did not destroy the fishing gears of the local artisanal fishermen, the way they catch fish – using light to lure them at night – is very destructive to the marine ecosystem, because the light lured not only anchovy that was target species, but also other juveniles of economic fish. Of the total fish caught by this method, 69-78% was anchovy, and the rest was juveniles; in some areas e.g. Prachuab Kirikhan, the percentage of anchovy went down to 55%. These juveniles would then be sold cheaply to fishmeal producers as trash fish. In the contrary, if they were let to live, they would have much higher economic values (Dachapimon, 2000). Conflicts between commercial fishermen and artisanal fishermen can be dated back to 1964 when push nets and trawlers were booming. Ministry of Agriculture had to enact regulations prohibiting powered boats with push nets and trawlers to operate within 1,000 meters off the coast, as they destroyed the fishing gears of the local fishermen causing the conflicts between them. The situation did not improve; in fact it worsened after many countries claimed their EEZ and shelf areas, causing Thai fishing boats to lose their about 300,000 km2 fishing grounds when high seas they used to fish were turned into shelf areas of other countries. Thus, some of them came back to fish in Thai waters

encroaching upon the preserved areas (Boonwanich & Boonpakdee, 2009; Sirichai, 2003). Suwimon Piriyathanalai et al. (2011) studied fishing communities in Pattani and wrote a paper titled the Project of Adaptation of Fisherfolk in Pattani. It states that fishermen communities in Pattani have faced destructive fishing problem caused by push net fishing for more than 30 years, and the problem became more severe during the past 15 years. Main reasons that the commercial fishing boats violated the laws that prohibited the commercial fisheries within 3,000 meters off the coast are 1) marine resources outside the preserved areas have been used up 2) the laws are not clear, e.g. when one province enacted regulations that prohibited push nets from operating in that province, it is not clear where the line is in the sea because there was no map attached, and 3) the penalties are low compared to the returns they would get from violating the laws (Sirichai, 2003; Office of Natural Resources and Environmental Policy and Planning).

4.4 Impact of Commercial Fisheries in the 3,000-Meter Prohibited Areas on Artisanal Fishermen From the statistics of small-scale fishing households, we found that the majority of the artisanal fishermen in Thailand use small outboard powered boats. In Songkhla, the percentage of artisanal fishermen who use such boats went down to 63.64% in 2000, but about 27.5% did not use any fishing vessel. Thus, when commercial fishing boats violated laws and caught fish within 3,000-meter area, resulting in the depletion of marine resources, this left local artisanal fishermen with very limited choices as 1) their boats, if any, were relatively small, so they could not go to fish somewhere else very far from the shore 2) many of them have no other skills but fishing (Sirichai, 2003). Similarly, Sutira Chairuksa (2001) reported in her research The Way of Life of the Local Fishing Households: Comparative Studies

51 Two Areas, That Are Between the Gulf of Thailand Area and Songkhla Lake Area, Songkhla that 82.9% of heads of the local fishing households of the sample group (92 households) at Ban Bor-It village 15 said they had not done anything else before they became fishermen while the percentage went up to 94.2% from the sample group of 120 households at Ban Ta-Sao village16. Trin Suknuan (cited in Suwimon Piriyathanalai et al., 2011) wrote in his research entitled “Adaptation of Fisherfolk Communities at Pak Phanang River Basin After Pak Phanang River Basin Development Project” that the abilities of local fishermen to adapt themselves depended on many conditions – most importantly resource condition, economic condition, and social and cultural condition. Those who only worked on fishery and had no land would have low chances and abilities to adapt themselves. Those who could not adapt had to relocate.

When the sea was not abundant any longer, local artisanal fishermen then faced a lot of problems, both financial and social. Financial problems include decreasing incomes and increasing costs of fisheries eventually leading to informal debts (Dachapimon, 2000). Figure 30 shows average daily incomes per boat of artisanal fishermen in Songkhla in five villages during 1993 – 1999 (Piya Kijthavorn, cited in Dachapimon, 2000), which was a downward trend. Interestingly, in 1993, their incomes varied widely, e.g. fishermen in Ban Le could earn as much as 2,000 Baht per day while fishermen in Ban Pang Chang Tie only earned around 600 Baht per day. However, in 1999, their income fell to around 200-400 Baht per day, except in Ban Le that the income collapsed to 50 Baht per day, 40 times or 4,000% lower than their income in 1993.

Figure 30: Average daily income per boat of artisanal fishermen in Songkhla during 1993-1999

2500 2000

Ban Hua Wa ra, Ranode Ban Pang Chang Tie, Sathingpra

1500

Ban Muang Ngam, Singhanakorn

1000

Ban Le, Singhanakorn Ban Taling Chan, Chana

500 0

1993

1994

1995

1996

1997

1998

1999

Source: Piya Kijthavorn cited in Dachapimon, 2000.

Ban Bor-It village is a local fishing community along the coast of GoT in Tambon Koh-Taew, Amphoe Mueang, Songkhla. There are about 300 households with the population about 1,500 people. The majority are artisanal fishermen operating in GoT.

Ban Ta-Sao village is a local fishing community by Songkhla Lake in Tambon Satingmor, Amphoe Singhanakorn, Songkhla. There are about 270 households with the population about 2,850 people. The majority are artisanal fishermen operating in Songkhla Lake.

52 When we look at local fishermen’s costs, we will see that they are quite stable throughout the 7-year period. There are significant changes in costs at two villages: Ban Pang Chang Tie and Ban Muang Ngam, during 1996-1997. From 1993-1996, the average cost of artisanal fishermen at Ban Pang Chang Tie was 300 Baht per day, and that of Ban Muang Ngam was 460 Baht, but in 1997, the costs dropped to 150 Baht and 120 Baht. This is probably not because the costs themselves decreased, but because the fishermen reduced their fishing efforts – time spent on fisheries and distance offshore – as they could not bear the costs any longer. This will become clearer when we look at the Figure 30 which shows average profits/losses of the artisanal fishermen at five villages. In 1996 the fishermen in Ban Pang Chang Tie broke even, while those at Ban Muang Ngam made losses. Probably because of the clear downward trend of their income, the fishermen decided to reduce the efforts so that they can save costs and have some money left.

In Figure 31, the graph looks similar to the one in Figure 22 in that it is also a downward slope. Since average incomes varied widely in 1993 while the costs were not much different, the profits fishermen made also varied widely along with incomes. However, in 1999 after their income had been consistently decreasing for many years, the profits they made were around 50 – 150 Baht except for Ban Le. Out of the five villages, the fishermen from Ban Le village made the highest incomes of 2,000 Baht in 1993-1994, but after that their average income sharply dropped to 1,000 Baht (50% decrease). It continued to decline until it was 150 Baht per day in 1998 which was below cost, resulting in 50-Baht loss. Then, in 1999, their cost went up 50% from 200 Baht per day to 300 Baht (probably because they put more efforts for the hope that they might be able to catch more fish and earn more money), but it turned out that they could make only around 50 Baht, or 66% less than they earned in the previous year.

Figure 31: Average daily cost per boat of artisanal fishermen in Songkhla during 1993-1999

2500 2000

Ban Hua Wa ra, Ranode Ban Pang Chang Tie, Sathingpra

1500

Ban Muang Ngam, Singhanakorn

1000

Ban Le, Singhanakorn Ban Taling Chan, Chana

500 0

1993

1994

1995

1996

1997

1998

1999

Source: Piya Kijthavorn cited in Dachapimon, 2000.

Figure 32: Average daily profit/loss per boat of artisanal fishermen in Songkhla during 1993-1999

2200 1700

Ban Hua Wa ra, Ranode Ban Pang Chang Tie, Sathingpra

1200

Ban Muang Ngam, Singhanakorn

700

Ban Le, Singhanakorn Ban Taling Chan, Chana

200 -300

1993

1994

1995

1996

1997

1998

1999

Source: Piya Kijthavorn cited in Dachapimon, 2000.

When the returns were not worth the efforts, many fishermen stopped fishing, sold their boats, and found other jobs e.g. they became workers in commercial fishing boats, factories, or at the construction sites; a considerable number became unemployed. For those who still carried on fishing to maintain their household cash flows as well as invest in their boats, fishing gears, and fuels as they put in more effort and went further offshore, they had to turn to middlemen for loans. This is because most artisanal fishermen were not qualified to borrow money from the bank e.g. they could offer no collateral and had little savings (Dachapimon, 2000; Sirichai 2003). As household debts increased and incomes declined, men spent more time away at sea, while women had to leave their homes to work. Some could not afford to send their kids to school, and these kids were then illiterate (Kijthavorn et al., 2000).

For those who decided to find other jobs to solve financial problems, many faced social problems instead. When fishermen went to work on big commercial boats, in the cities or overseas, they were exposed to new environments, new cultures, as well as drugs. Some of these people brought back drugs to the communities (Kijthavorn et al., 2000). Moreover, people who work on commercial fishing boats or at the port tend to commit a crime because they are addicted to drugs. When adults move to the city or another country and leave their children behind, the children are not well- educated and tend to have problems; some of them became drug addicts (Piriyathanalai et al, 2011). However, if the parents took their children with them, the children will not be educated. Kijthavorn et al. (2000) reported that some fishermen went to work illegally in Malaysia and brought their children with them. Their children were then not educated, while some had children while they worked as illegal aliens, making the children born in Malaysia illegal children.

Existing regulations and standards relating to trash fishing and Thailand implementation

5.1 FAO Code of Conduct for Responsible Fisheries and the EU regulation on IUU fishing

Concerns of depletion of marine resources, damages to the marine ecosystems, and s o c i o e c o n o m i c i m p a c t s t h a t t h r e a t e n sustainability in the long-run have been expressed at various international stages. The Code of Conduct for Responsible Fisheries h a d b e e n d e v e l o p e d a c c o r d i n g t o t he recommendation from the Nineteenth Session of the FAO Committee on Fisheries (COFI) held in 1991 and was eventually adopted by the Twenty-Eighth Session of the FAO Conference on 31 October 1995 (FAO1, 2014). The code provides principles, guidance, and instruments for all involved in fisheries to achieve the ultimate goal of sustainability (FAO, 1995). The international plans of action (IPOAs) are voluntary instruments elaborated within the framework of the Code of Conduct for Responsible Fisheries. In practice, they function as international agreements to manage issues relating to responsible fishing practices. Four IPOAs include (FAO2, 2014):

1) International Plan of Action for Reducing Incidental Catch of Seabirds in Longline Fisheries 2) International Plan of Action for Conservation and Management of Sharks 3) International Plan of Action for the Management of Fishing Capacity 4) International Plan of Action to Prevent, Deter, and Eliminate Illegal, Unreported and Unregulated Fishing (IPOA-IUU) – this is the pertinent standard for trash fishing and will be elaborated in the subsequent sections of this report.

5.1.1 The development of IPOA-IUU “Illegal, unreported and unregulated fishing,” (IUU) is a concept which has gained widespread use in recent years (FAO, 2001). Overfishing and irresponsible fishing activities have led to marine resources depletion as well as damaged aquatic biodiversity and environment. In addition, IUU fishing also entails socio-economic impact. Overexploited fishing causes a decline in fish stock which in turn affects the size and quality of marine catches, leading to lower profitability and job losses. Moreover, IUU fishing brings about an unfair competition between those players following the rules and those who do not. International laws and regulations on IUU fishing have been widely discussed for decades. Initially, the term “IUU” had not been clearly defined; only ideas and measures were discussed. These have been developed into guidelines and enhanced into more concrete regulations many decades later (Chanrachkij et al., n.d.). Food and Agriculture Organization of the United Nations (FAO) has played a leading role in promoting international efforts to address and combat IUU fishing and was the first organization to define IUU fishing (Chanrachkij et al., n.d.). An international effort to prevent, deter and eliminate IUU fishing stemmed from the Rome Declaration (1999) on the Implementation of the Code of Conduct for Responsible Fisheries, which states that all countries would develop a global action plan to fight IUU fishing. This provided the framework f o r FA O t o d e v e l o p a n d e x p o u n d t h e International Plan of Action to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing (IPOA-IUU) (Chanrachkij et al., n.d.; Kongrawd, 2006).

55 IPOA-IUU was adopted in 2001 to address many problems that emerged from IUU fishing. It encourages countries to develop regional plan and national plan of action to combat IUU fishing in order to establish sustainable fisheries. However, IPOA-IUU is a voluntary non-legal binding instrument; it acts as a toolbox for all countries to adapt and design their measures to meet their situations (Chanrachkij et al., n.d.; Kongrawd, 2006). Problems regarding IUU fishing are complex and multi-faceted due to the differences in marine biodiversity, environment, and socio-economic situations in any particular country. Therefore, it is impossible to design one-size-fits-all IUU Fishing guidelines that can ‘work’ everywhere; the instrument must be adjusted to respond to specific circumstances (Chanrachkij et al., n.d). Fishing in states’ waters has been monitored and controlled by each coastal state’s laws and regulations, and the state can fully enforce its laws on IUU fishing. However, there are many economic species in the high seas where state-level law is inapplicable. For this reason, IPOA-IUU suggests that regional organization play a leading role in designing and executing measures for sustainably managing marine resources and combating against IUU fishing (Chanrachkij et al., n.d). Regional Fisheries Management Organizations (RFMO) was mentioned for the first time in the United Nations Convention on the Law of the Sea 1982 about the collaboration between 2 coastal states in managing marine resources. Thailand is a member of The Asia-Pacific Fishery Commission 17 (APFIC), the RFMO that monitors fishing areas where the largest share of world marine products comes from. APFIC as a regional organization plays role to s t r e n g t h e n fi s h e r i e s m a n a g e m e n t a n d conservation in the region by providing technical support and development guidelines. It acts as an advisory body for RPOA-IUU, which was endorsed in the Meeting of Ministers responsible for fisheries from 11 participating

countries, including Thailand (DoF, n.d.). RPOAIUU covers the area of Southeast Asian region including the South China Sea, Sulu-Sulawesi Seas (Celebes Sea) and the Arafura-Timor Seas (APFIC, 2007). According to APFIC Strategic Plan 20122018 (2012), the overall objective of APFIC is to promote regional arrangements and regional processes in order to improve responsible fisheries and aquaculture in the region. It works through the regional consultative forum where member countries, regional fisheries and aquaculture organizations gather to identify emerging issues in fisheries sector. During the period 2005-2012 APFIC has addressed key issues for every 2 years which covers:

1) Co-management in fisheries; Low value/ trash fish (2005-2006) 2) Certification in aquaculture & fisheries; Capacity management and reduction of IUU fishing (2007-2008) 3) Livelihoods & ecosystem approach (2009-2010) 4) Use of assessments for improved m a n a g e m e n t & a d d r e s s i n g t h e implications of climate change in the APFIC region (2011-2012).

In addition, there are numbers of regional technical projects APFIC coordinates with FAO which have resulted in capacity building activities in the various areas; namely, strengthen management of fisheries, raise awareness on climate change impacts adaptation and mitigation related to fisheries and aquaculture, contribute to combating IUU fishing, promote reduction of fishing overcapacity, etc (APFIC, 2012). At a national level, APFIC assists its members to develop National Plan of Action to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing (NPOA-IUU). This is in accordance with FAO guideline that encour-

Current members of APFIC are Australia, Bangladesh, Cambodia, China, France, India, Indonesia, Japan, Malaysia, Myanmar, Nepal, New Zealand, Pakistan, the Philippines, Republic of Korea, Sri Lanka, Timor Leste, Thailand, United Kingdom, United States of America, and Vietnam (APFIC, 2014).

56 ages all states to establish NPOA-IUU. FAO suggested procedures for nations to effectively develop NPOA; for examples, a nation should review their fisheries policy and agreement, improve cooperation between states’ agencies, evaluate marine resources and IUU fishing. Currently, Thailand’s NPOA-IUU is under drafting process and expected to be complete in 201418. This does not mean that IUU issues have been neglected; measures to combat IUU concerns were included in country’s fisheries roadmap called “Marine Master Plan,” which covers the period of 10 years from 2009 to 2018. That IUU fishing might threaten export of marine products to the EU was the underlying reason that IUU issue was incorporated into the Plan (Cabinet Resolution, 2009). This has led to the development of catch certificate scheme, and subsequently the implementation of logbook report and measures to promote vessel and fishing gear registration (see 5.3.2). Moreover, the Marine Master Plan has recommended that outdated Fisheries Act B.E.2490 be revised so as to be in line with current fishing activities (see 5.3.1) (Ministry of Agriculture and Cooperatives, 2010).

5.1.2 The definition of illegal, unreported and unregistered fishing activities According to Kongrawd (2006), the definition of IUU fishing has developed through many discussions at an international level; for example, United Nations General Assembly (UNGA), Food and Agriculture Organization Committee on Fisheries (FAO-COFI), and UN Commission on Sustainable Development. The definition of IUU fishing adopted by the International Plan of Action to Prevent, Deter and Eliminate IUU Fishing (IPOA-IUU) is as follows (FAO, 2001): Illegal Fishing refers to activities: - conducted by national or foreign vessels in waters under the jurisdiction of a State, without the permission of that State, or in 18

contravention of its laws and regulations; - conducted by vessels flying the flag of States that are parties to a relevant regional fisheries management organization but operate in contravention of the conservation and management measures adopted by that organization and by which the States are bound, or relevant provisions of the applicable international law; or - i n v i o l a t i o n o f n a t i o n a l l a w s o r international obligations, including those undertaken by cooperating States to a relevant regional fisheries management organization. Unreported fishing refers to fishing activities: - which have not been reported, or have been misreported, to the relevant national authority, in contravention of national laws and regulations; or - undertaken in the area of competence of a relevant regional fisheries management organization which have not been reported or have been misreported, in contravention of the reporting procedures of that organization. ties:

Unregulated fishing refers to fishing activi-

- in the area of application of a relevant regional fisheries management organization that are conducted by vessels without nationality, or by those flying the flag of a State not party to that organization, or by a fishing entity, in a m a n n e r t h a t i s n o t c o n s i s t e n t w i t h o r contravenes the conservation and management measures of that organization; or - in areas or for fish stocks in relation to which there are no applicable conservation or management measures and where such fishing activities are conducted in a manner inconsistent with State responsibilities for the conservation of living marine resources under international law.

From an interview with Marine Fisheries Research and Development Bureau, Department of Fisheries (4 December 2013).

57 Overall, IUU fishing refers to the acts of fi s h i n g t h a t o b s t r u c t , v i o l a t e , o r h a r m conservation management measures. This included an act of noncompliance and false or falsified report. IUU fishing can be conducted not only by large commercial vessels but also small coastal vessels and in any waters both high seas and states’ water. Therefore, in an attempt to combat IUU activities, action plan and measures need to be adjusted to various circumstances at different levels; namely international level, regional level, and national level (Chanrachkij et al., n.d.).

5.1.3 The European Union regulation to combat IUU fishing The EC IUU Regulation is the outcome of the European Commission efforts to combat IUU fishing. The European Commission has applied the Council Regulation (EC) No. 1005/2008 on September 29, 2008 in order to establish an EU system to prevent, deter and eliminate IUU fishing. This regulation is directly driven by the FAO IPOA-IUU adopted in 2001 and likewise contains the objective to fight against IUU fishing to ensure sustainable harvesting of marine resources. The IUU Regulation applies to catches made from January 1, 2010. According to the Handbook on the practical application of Council Regulation (EC) No. 1005/2008 (2009), the IUU Regulation aims to prevent, deter and eliminate IUU fishing activities in any maritime waters relating to the European Community through trade flows, or the flag of fishing vessels, or the nationality of operators. After the EU’s IUU regulation was adopted (hereinafter referred as IUU Regulation), information of this new instrument and advises of future implementation were given to all third countries through various seminars and meetings. The regulation is transparent and non-discriminatory between European community and third-country fisheries. The instrument is applied to all fishing vessels, under any flag, in all marine waters, t h a t p r o d u c t s a r e t r a d e d w i t h t h e E U community or community’s vessels involved in

IUU fishing. The IUU Regulation is a voluntary instrument providing general requirements in which countries can adapt to suit their particular challenges. It relies on the responsibility and commitment of third countries. A catch certificate scheme was adopted to ensure full traceability of all aquatic fishery products traded with the EU community. This is a core part viewed as a tool to assist in the control and compliance of the regulation. To affirm that none of products in the EU Community market is sourced from IUU fishing, catch certificate is required for marine products exported to the Community. On the other hand, the catch certificate scheme may also apply to products exported from the EU, if certificate is required by the country of destination.

5.2 Standards on trash fishing at an international level There are 6 most popular international standards in the area of marine feed ingredients including the Marine Stewardship Council (MSC), the Aquaculture Stewardship Council (ASC), the IFFO Global Standard Responsible Supply of Fishmeal and Fish Oil (IFFO RS), the Global Aquaculture Alliance Best Aquaculture Practice (BAP), the Global G.A.P. standard, and the Friend of the Sea (FOS) (IFFO, 2012). All of these six standards are applied on a voluntary basis, but the certification process is audited, i.e. not self-report by producers.

5.2.1 Marine Stewardship Council The MSC is the most widely recognized and the world’s largest standard to certify sustainability in wild-caught fisheries (Seafish1, 2012). On a voluntary basis, the MSC uses it certification process and blue eco-label to influence consumers’ choices. The certified label will assure that fish products come from sustainable and well-managed sources (MSC, 2010).

58 The MSC environmental standard for sustainable fishing and MSC chain of custody standard for seafood traceability are at the core of the program. The sustainable fishing standard is only applied for wild-captured fisheries not to farmed fish. Fishery will be assessed against three principles including sustainable fish stocks, minimizing environmental impact, and effective management. Once a fishery has been certified, companies who wish to sell product from certified fisheries must have MSC Chain of Custody certification and apply for eco-label before using. To get Chain of Custody certification, businesses must be examined that they have effective traceability, storage and record-keeping systems. This helps to prevent illegally-caught fish from entering the seafood supply chain and ensure that fish sold with the MSC eco-label comes from a certified sustainable fishery (MSC1, 2014). Currently, there is neither certified fishery nor fishery in assessment under MSC system in Thailand (MSC2 and MSC3, 2014).

5.2.2 Aquaculture Stewardship Council The Aquaculture Stewardship Council (ASC) was found in 2010 by World Wildlife Fund (WWF) in cooperation with the Dutch Sustainable Trade Initiative (IDH). The main objective is to enhance responsible aquaculture through a global set of standards and to promote “the best environmental and social practices in farmed seafood”. The standard covers fish farm and crustacean, for which each different species has its own standard (IFFO, 2012). Similar to MSC, ASC develop its label to influence consumers’ choices and assure they are buying responsibly farmed fish, crustaceans and shellfish. Once a fishery has been certified, ASC chain of custody helps ensure that products delivered in the supply chain originate from ASC-certified farms. So far, there is neither certified farm nor farm in assessment under ASC in Thailand; therefore, there is no certified supplier in the chain of custody standard (ASC1 and ASC2, 2014). 19

ASC is currently developing a feed standard to promote ‘Environmentally Sound and Socially Responsible Feed in the Global Aquaculture Industry’ (ASC3, 2014). This has begun in the second quarter of 2013 and the approval is projected by the end of 2015. The output will be a single ASC Feed Standard that is applicable globally to all types of aquaculture feed production facilities and usable by all certification programs. The following outcomes are expected (ASC4, 2014):

1) A more environmentally sound and socially responsibly produced feed for aquaculture 2) Stronger market-based incentives for more environmentally sound and socially responsible feed production 3) An improved sourcing of the feed components, using ingredients from credible certified sources.

5.2.3 The certification standard for the Responsible Supply of Fishmeal and Fish Oil T h e c e r t i fi c a t i o n s t a n d a r d f o r t h e Responsible Supply of Fishmeal and Fish Oil (IFFO RS) is designed to certify responsible practice in raw material sourcing, and fishmeal and fish oil manufacturing both for direct human consumption and for animal feed usage (IFFO, 2012). The standard contains three essential c o m p o n e n t s o f r e s p o n s i b l e s o u r c i n g , responsible manufacturing, and responsible traceability, which are key eligibility criteria to become certified (IFFO1, 2014). To be certified, a fishmeal and fish oil factory must be able to demonstrate that it responsibly sources its raw materials showing where all its raw materials come from. Fish products must be sourced from well managed fisheries19. The factory then must be able to prove that it has full and effective traceability system. For responsible manufacturing, the factory must implement systems demonstrating

Sustainable fisheries are fisheries managed according to the FAO Code of Conduct for Responsible Fisheries. One way to demonstrate this is to use a fishery that has been certified by the MSC.

59 good manufacturing practices, such as FEMAS and GMP+ (IFFO, 2012). The “IFFO Assured” certification mark has been developed to represent compliance to the IFFO Standard. At present, IFFO members include producers, traders, feed companies, edible oil refiners, retailers, financial institutions, g o v e r n m e n t a l a n d n o n - g o v e r n m e n t a l organizations in more than 30 countries. Its members account for over 50% of world production and 75% of the fishmeal and fish oil traded worldwide (IFFO2, 2014). There are currently 103 factories in 9 different countries that have been successfully certified to the RS standard including Peruvian Anchovy and Alaskan Pollock, two of the largest sustainably managed fisheries (IFFO3, 2014). Currently, there is neither approved IFFO RS factory (IFFO4, 2014) nor a certified chain of custody unit in Thailand (IFFO5, 2014). However, Charoen Pokphand Foods and T.C. Union Agrotech are members of IFFO (IFFO6, 2014).

5.2.4 Best Aquaculture Practices Best Aquaculture Practices (BAP) is an audited certification standard for hatcheries, farms, processing facilities and feed mills developed by the Global Aquaculture Alliance (GAA) to promote the use of responsible aquaculture practices. The BAP standards address environmental and social responsibility, animal welfare, food safety and traceability in a voluntary certification program for aquaculture facilities. The BAP program outlines standards for each type of facility as follows (GAA1, 2014):

1) BAP Seafood Processing/Repacking Plant Standard 2) BAP Seafood Processing Plant Standard 3) BAP Finfish and Crustacean Farm Standard 4) BAP Salmon Farm Standard 5) BAP Mussel Farm Standard 6) BAP Shrimp Hatchery Standar

7) BAP feed mill Standard

BAP standards are also illustrated on retail packaging ranging from 2-star to 4-star 20 . Four-star status reflects “top level” in the BAP program, signifying that the marine product is produced from BAP-certified at all four facilities; that is from BAP-certified hatcheries through BAP-certified farms, processed at a BAP certified processing plants, and aquaculture feed used is produced from a BAP-certified feed mills (GAA, 2011). According to the BAP feed mill Standard (GAA, 2010), certified feed mill must fulfill requirements regarding fishmeal and fish oil conservation in order to be certified. It requires a feed mill to indicate feed fish ingredients on products labels, packaging, shipping documents or invoices for all feeds produced under the BAP program. The feed mill must also obtain declarations of species and fishery origins from suppliers, keep full traceability record of feed, and must implement effective procedures to separate feed produced under BAP from other, non-BAP feed. For future standard, it requires that: 1) (Future critical standard.) After June 1, 2015, at least 50% of the fishmeal and fish oil derived from reduction fisheries shall come from approved certified sources. 2) (Future critical standard.) After June 1, 2015, at least 50% of the fishmeal or fish oil derived from fishery by-products such as trimmings and offal shall come from approved certified sources. Currently in Thailand, there are 29 BAPcertified processing plants, 34 certified farms, 8 BAP-certified hatcheries, and 6 BAP-certified feed mills (BAP4, 2014). Charoen Pokphand Foods (CPF) and Thai Union Frozen Products (TUF) are the only two companies that

Shrimp products can bear a mark with up to 4 stars (for feed mills, hatcheries, farms, and processing plants), while marks on packaging for other species including salmon, mussels, other finfish and crustacean have up to 3 stars (since BAP standards for hatchery facilities have not yet been developed) (GAA3, 2014) .

60 announced they have achieved BAP 4-star status (BAP1, 2014). There are 7 Thai companies certified BAP 3-star (BAP2, 2014), and 6 companies certified BAP 2-star (BAP3, 2014).

5.2.5 Global Good Agricultural Practice (Global G.A.P) Global G.A.P standards are intended to assure consumers that food is sustainably produced by minimizing environmental impacts, reducing chemicals use, and ensuring a responsible practice to animal welfare and to worker health and safety. The standards certify “Good Agricultural Practice” in agricultural and aquaculture products. There are currently six different standards within Global G.A.P which are (seafish2, 2012):

1) Integrated Farm Assurance (IFA) - including a module for aquaculture 2) Compound Feed Manufacturing (CFM) - covering feeds for both livestock and aquaculture 3) Livestock Transport (LT) 4) Plant Propogation Material (PPM) 5) Risk Assessment in Social Practice (GRASP) 6) Chain of Custody

According to the List of Certified Compound Feed Manufacturing Companies as of 8 February, 2013 (GlobalGAP1, 2013), three animal feed companies in Thailand, namely Thaiunion Feedmill, Charoen Pokphand Food, and Krungthai Feedmill, have certified CFM standard. However, as of February 2014, only Charoen Pokphand Food is certified (GlobalGAP, 2014) under this standard; Thaiunion Feedmill and Krungthai Feedmill certificates have expired since June 2013 and August 2013 respectively (GlobalGAP1, 2013).

5.2.6 Friend of the Sea Friend of the Sea was founded to promote the conservation of the marine habitat. The organization’s most well-known project is the Dolphin-safe Project which has been able to save millions of dolphins from dying in tuna nets. This program is considered by some observers to be the starting point of sustainable seafood movement. Friend of the Sea label was created to assure that the products were produced and sourced sustainably; therefore, consumers can make their choices. Certified products comprise products originating from fisheries and aquaculture, covering food fish and widely traded species, fishmeal, fishfeed, and Omega-3 fish oil. However, requirement regarding fishmeal used in aquaculture has not been addressed (Friend of the Sea1, 2014). The first and only Thai seafood product approved for Friend of the Sea label is wild-caught Meretrix, under Panapesca brand by Thai Spring Fish (Friend of the Sea2, 2014).

5.2.7 ASC, GAA, and Global G.A.P. agreement on responsible sourcing of fishmeal and fish oil Aquaculture Stewardship Council (ASC), Global Aquaculture Alliance (GAA) and GLOBAL G.A.P. have announced and signed a joint Memorandum of Understanding on common requirements for sourcing of fishmeal and fish oil (FMFO). This will harmonize requirements between certification schemes and can be considered as the first step towards their mutual goal to improve aquaculture p r a c t i c e . T h e t h r e e p a r t i e s i d e n t i fi e d crosscutting elements covered in all three standards. This helps feed companies when consider to get engaged in one or more of these standards. Sourcing requirements of FMFO under the three standards are summarized in the following picture. The identified common criteria are (GlobalGAP, 2013; SeafoodSource, 2013):

Thai Spring Fish is a subsidiary company of the PanaPesca Group (http://www.friendofthesea.org/public/catalogo/Checklist%20FoS%20Wild%20Catch%20Fisheries%20-%20Thai%20Spring%20Fish%202010%2006%2029.docx)

1) Traceability to the species and to the country of origin. 2) No use of raw material sourced from endangered species based on the International Union for Conservation of Natureâ&#x20AC;&#x2122;s (IUCN) red list for fishmeal and fish oil.

3) Avoidance of fish sourced from illegal, unreported and unregulated fishing (IUU). 4) Preference for feed manufacturers with evidence of responsible sourcing.

Figure 33: Requirement for Sourcing of fishmeal and fish oil of BAP, ASC, G.A.P.

Requirements for sourcing of fishmeal and fish oil (from whole fish and fishery by-products)

BAP

ASC 50% MSC or IFFO RS certified by 2015 for both fisheries and industrial by-products; l Use material from Fisheries Improvements Projects when available. l

100% MSC (or ISEAL) certified by 2017; l IFFO RS fishmeal up to 2017 (Pangasius only_; l Fishsource score â&#x2030;Ľ 6 with no l Traceability to speces and country of origin; individual < 6.0 or N/A in stock l No endangered species (IUCN red assessment category list) used for fishmeal/-oil; l No CITES l Preference for feed manufacturers with evidence of responsible sourching; l Avoicance of IUU l

Clear written plan for responsible sourcing; l Free of undesirable substances (food safety related). l

Report % FAO CCRF compliant (e.g. MSC or IFFO RS certified) for fisheries origin; rd l 3 party accredited certified origin for industrial byproducts. l

GLOBALG.A.P.

NOTE: AN ASC requirements included at form level standards, most BAP and GLOBALG.A.P. requirements included as feed mill standards. Source: http://www.thefishsite.com/uploads/files/news/gaa%20-%20Copy.gif

what is covered

wild fishery

fish farm/aquaculture

fishmeal plant

Standards

MSC

ASC

IFFO RS

whole fish and byproducts

whole fish and by-products

None; applies to only wild caught fishery

Inclusion of fishmeal sourcing

None

Traceability to origin, non-IUU fishing, no use of endangered species (marine ingredients to come from MSC certified fisheries) None Full traceability from the fishery to the fishmeal factory. Sourcing from responsibly managed fisheries include: • Whole fish must come from fisheries scientifically assessed and meeting the key principles of the FAO Code of Conduct for Responsible Fisheries • MSC certification is accepted as evidence of compliance • Fish by-products must come from well managed stocks and not include IUU or IUCN red listed fish stocks • Fish and by-products from IUU are excluded IFFO RS products must be separated from non-IFFO RS products

None

Companies

Plants

(italics = company with Songkhla-based plant certified)

Thai companies that have plants certified

None

Requirements for sourcing fishmeal

Figure 34: Summary of international standards and certified Thai companies

Inclusion of fishmeal sourcing

whole fish and byproducts

what is covered

fish farm and feed mill

Standards

BAP

Keep record â&#x20AC;&#x153;one up, one downâ&#x20AC;?. Traceability to origin, non-IUU fishing, no use of endangered species. The feed mill standard requires 50% of the marine ingredients used come from certified ingredients (can be MSC and IFFO RS certified).

Requirements for sourcing fishmeal

Thai companies that have plants certified

Plants

Processing plants (1) Farms (2) Hatcheries (2) Feed mills (4) Processing plants (2) Farms (1) Processing plants (1) Farms (4 Processing plants (1) Farms (2) Feed mills (1) Processing plants (1) Farms (1) Processing plants (1)

Charoen Pokphand Foods and subsidiaries

Pakfood Public Company Thai Royal Frozen Food Grobest Frozen Foods

Seafresh Indistries Thai I-Mei Frozen Food

Thai Union Frozen Prod- Processing plants (3) Farms (10) ucts and subsidiaries Hatcheries (1) Feed mills (1)

Companies

(italics = company with Songkhla-based plant certified)

Standards

what is covered

Inclusion of fishmeal sourcing Requirements for sourcing fishmeal

Thai companies that have plants certified

Processing plants (6) Farms (2) Hatcheries (2) Processing plants (1) Farms (1) Processing plants (1) Farms (1) Processing plants (1) Farms (1) Processing plants (1) Farms (2) Processing plants (1) Farms (2) Processing plants (1) Farms (2) Processing plants (1)

Starfood Industries Group Ongkorn Cold Storage Group Good Luck Products Group May Ao Foods Group Marine Gold Group Xian-ning Seafood Co. Ltd. Group Tey Seng Cold Storage Co.,Ltd.

Plants

Rubicon Resources Group

Companies

(italics = company with Songkhla-based plant certified)

Standards

what is covered

Inclusion of fishmeal sourcing Requirements for sourcing fishmeal

Processing plants (1) Processing plants (1) Processing plants (1) Processing plants (1) Processing plants (1) Processing plants (1) Processing plants (1) Farms (1) Farms (1)

Kongphop Frozen Foods Co., Ltd. Kitchens of the Oceans (Thailand) Ltd. Narong Seafood Co., Ltd. Asian Seafoods Coldstorage Public Co., Ltd. Narong Seafood Co., Ltd. Inter-Pacific Marine Products Co., Ltd. Best Aquaculture Partners TCM Fishery Co., Ltd.

Plants

Kingfisher Holdings Limited

Companies

(italics = company with Songkhla-based plant certified)

Thai companies that have plants certified

whole fish and byproducts

fish farm/aquaculture

wild fishery, fish farm, fishmeal plant, feed mill

Global G.A.P.

Friend of the Sea

Inclusion of fishmeal sourcing

what is covered

Standards

Hatcheries (1) Hatcheries (1)

Syaqua Siam Co., Ltd. Taksin Marine Group

None (only wildcaught fisheries certified)

N/A Charoen Pokphand Foods Public Co., Ltd. (Compound Feed Manufacturer Standard)

Farms (1)

Plants

East Asia Aquaculture Co., Ltd.

Companies

(italics = company with Songkhla-based plant certified)

Thai Spring Fish Co., Different standards covering the whole Ltd. value-chain from fishery to farm. Certified products must be separated from other non-certified products. Traceability to the origin of the products including the fishing area and the fishing method used. Uses all available interconnected traceability methods (including GPS and Internet technology) for all larger boats.

Traceability to origin, non-IUU fishing. Marine feed ingredients must not come from endangered species of fish.

Requirements for sourcing fishmeal

Thai companies that have plants certified

67 5.3 National regulations and standards 5.3.1 Thai fisheries law The Fisheries Act, B.E.2490 (1947) is the principal legislation on fishery industry in Thailand. The Act has been amended twice in 1953 and 1985. It not only established baseline regulation for the registration and licensing of fishing equipment, but also empowers competent authority to regulate types of fishing techniques. In addition, the Act requires permit for those engaging in fishing operation. The Act comprises six chapters, covering the areas of fisheries management and conservation, aquaculture, registration and application for permission, collection and fixation of fisheries tax, fisheries statistics, and penalties. 1) Management measures under the Fisheries Act In order to handle depleted fisheries resources, management measures have been designed and implemented under Thai Fisheries Act. According to the national fishery sector overview conducted by FAO (2009), key fishery management measures are as follows: l

Area and seasonal closures

Initially, area and seasonal closures are imposed to recover important economic marine species; such as the Indo-Pacific anchovy. Various regulations have been implemented since 1984; for example, from 1 February to 31 March and from 1 April to 15 May, trawlers and purse seiners using gear with mesh size smaller than 4.7 cm have been prohibited from fishing in the upper southern area of the Gulf of Thailand. l

Gear Restrictions

To preserve coastal resources, trawlers and push net are prohibited within 3,000 m. from shore since these gears are very destructive

especially operated inshore. This is because they catch trash fish, a large portion of which are juveniles of economically valuable species. In additions, repeated dragging of trawlers may damage benthic habitats and demersal resources. l

Limited Entry

In an attempt to control numbers of trawl and push nets, in 1980 Department of Fisheries announced a protocol requiring trawl and push net to be registered and form then no more licensed would be issued. Therefore, only those trawlers and push netters with licenses could annually extend their fishing licenses. The licenses are transferable only to fishermenâ&#x20AC;&#x2122;s heir and are not applicable if gears have been changed.

2) Shortcomings of Thai fishery law

Thai fishery is facing a severe overfishing crisis. Aquatic animals have been harvested at a faster rate than their replenishment, resulting in a continuously decline in capture fisheries (Apaipakdee, n.d.). Competition for marine resources has been more severe since coastal neighboring countries proclaimed Exclusive Economic Zone (EEZ) 22, which resulted in Thailandâ&#x20AC;&#x2122;s loss of 300,000 sq. mile access to fishing area (Apaipakdee, n.d.; Panjarat, 2008). Moreover, Thailand has lost its direct access to high seas from the Gulf of Thailand; some medium and large Thai vessels, without a l i c e n s e , i l l e g a l l y p a s s i n g n e i g h b o r i n g countriesâ&#x20AC;&#x2122; EEZ were frequently arrested (Apaipakdee, n.d.; Panjarat, 2008; FAO, 2009). Not only competition among commercial fishermen became more severe, but also conflicts between commercial and local fishermen arose (Apaipakdee, n.d.). Intense competition is exacerbated by ineffective and improper fisheries law and regulations. The Fisheries Act was drawn up before the development of marine fisheries.

Myanmar and Vietnam in 1977, Cambodia and the Philippines in 1978, Indonesia and Malaysia in 1980

68 There have been significant changes in fishing activities during the past 66 years, such as an increase in the number of vessels and fishing gears capacity. Therefore, the Fisheries Act B.E.2490 is considered inappropriate in the following aspects: Outdated regulations and problems of enforcement l

It is necessary to make change in regulations in response to those changes in fishing activities so that the government authorities are armed with proper instruments for effectively handling and regulating fisheries (Karnjanakesorn and Yen-Eng, n.d.). According to Panjarat (2008), the Fisheries Act does not effectively respond to present situation of marine capture regarding the development of fishing gears and methods. An increasing catch capacity of vessels and gears, a declining in fish stock, and an inefficient control over destructive fishing gears and equipment, especially mesh size of trawls (Apaipakdee, n.d.), have led to a capture of increasing proportion of trash fish including juvenile economic valuable species. As of March 2014, Department of Fisheries is conducting a research on impact from increasing minimum trawl mesh size from 2.5 cm. to 4 cm. 23 Moreover, because legal fishing ground in each province is not clearly demarcated and well-known, fishermen are likely to misuse licensed destructive gears (Madadam, 2012). The most recognized consequence is the damages trawlers made on sea floors and local fisheries in the coastal area24. The outcome of such outdated regulations is that damaging fishing practices such as bottom-trawling for trash fish is not yet illegal in Thailand. In addition, penalties including fine and imprisonment are not sufficiently stringent (Apaipakdee, n.d.; Madadam, 2012). Perhaps most importantly, every violation of fisheries law is only considered a violation if the wrongdoer

is caught in the act.25 For these reasons, there have always been instances of legal violations and illegal fishing. l

Barriers to participation

The present Fisheries Act empowers Minister of Agriculture and Cooperative and Provincial Governor to regulate and enforce fishery related activities (Karnjanakesorn and Yen-Eng, n.d.; Artisanal Fishermen Association of Thailand, 2011). It does not allow local fishermen as key stakeholders to participate in the fisheries resources management and establishment of fisheries law (Panjarat, 2008). This has led to a limited acceptance by fishermen, contributing to violation of regulations and conflicts among stakeholders. Decentralization by empowering local organizations in fisheries administration, management and development will help improve marine resource management by monitoring and controlling of illegal acts (Association of Thai Fisherfolk Federations, 2011).

3) Draft of the New Fisheries Act

Having been the main regulatory apparatus for decades, the existing Fisheries Act is considered outdated and inadequate for some of the reasons outlined above (Madadam, 2012) and is agreed among stakeholders that it should be revised (IOM, 2011). There have been many efforts to draft and adopt new fisheries legislation. The latest attempt as of February 2014 has resulted in a draft of the new fisheries act which modifies inappropriate and/or outdated content as summarized in Figure 35. Of all the proposed changes, clearer demarcation of legal fishing grounds, as well as defined authority to mandate type, number, size, and components of allowed fishing gear and fishing methods in each area, should finally help make damaging practices such as trash fishing by bottom-trawling illegal in Thailand.

â&#x20AC;&#x153;Problems and Future Management of Local Fishing Communitiesâ&#x20AC;? Conference at Department of Fisheries, 21 February 2014.

Notification of Ministry of Agriculture and Cooperatives, Subject: Prohibited area of motorized fishing vessels using trawl nets and push nets usage (1964).

More specifically, Clause 57 in the Fisheries Act stipulates that the authorities must find all three of the following components at once at the time of arrest: fishing boat, fishing gear, and catch. In other words, violators must be caught in the act.

Figure 35: Key features of Fisheries Act 1947, compared to draft of the new fisheries act

The Fisheries Act, B.E.2490 (1947)

Draft of the new fisheries act

1. Fishing Ground and Fishing Methods Fishing area is not clearly identified, leading to the conflict between commercial fisheries and coastal (artisanal) fisheries.

Fishing ground is divided into 3 areas: coastal fisheries area, offshore fisheries area, and inland fisheries area. l Minister or provincial governor has the authority to mandate type, number, size, and components of allowed fishing gear, fishing methods, and no-fishing seasons in each area. l

2. Promoting and Controlling of Aquaculture There have been problems relating to aquaculture; high chemical usage and mangrove forest intrusion. However, promoting and controlling of aquaculture has not been stated on the Act.

Principles relating to aquaculture promotion and control are established.

3. Hygienic Control Contaminated export aquaculture and its related products have been detected, resulting from an absence of clear standard.

Impose catch and post-catch standards for aquaculture.

4. Public Participation Lack of cooperation among stakeholders in fisheries management.

Department of Fisheries shall play a leading role in promoting cooperation among stakeholders as well as supporting community-based fisheries management.

5. National Fisheries Policy Commission -not mention-

National Fisheries Policy Commission, which comprises Minister of Agriculture and Cooperation, as a chairman, and committees from related parties from both private and public sectors, works as policymaker managing and controlling fisheries.

6. Penalties Fine and imprisonment are imposed to those violating the Act. - Fine from 50 Baht to 20,000 Baht. - Imprisonment from 1 month to 6 years.

Increase the severity of penalties to - Fine from 5,000 Baht to 600,000 Baht. - Imprisonment from 1 month to 6 years. Source: Department of Fisheries, cited in Madadam (2012)

70 Prior to parliament dissolution on 9 December, 2013, draft of the new fisheries act has passed two readings at the commission level; it is only pending the third and final reading, which is the vote in the senate. Since the parliament has been dissolved, Council of State will compile pending draft laws and will propose to the new government and parliament, whenever Thailand has a new parliament, to consider. As of March 2014, the Department of Fisheries has notified the Council of State of its intention to submit this draft law to the senate.26

5.3.2 Control of IUU fishing Thailand has developed National Plan of Action to Prevent, Deter and Eliminate IUU Fishing (NPOA-IUU) in accordance with IPOAIUU to preserve marine resources and subsequently achieve sustainable fisheries. However, Thailand’s NPOA is still in drafting process and expected to be complete in 201427. At present, there are three state unit involving in fishery management in Thailand; namely, 1) Department of Fisheries, Ministry of Agriculture and Cooperation, 2) Department of Marine and Coastal Resources, Ministry of Natural Resources and Environment, and 3)Marine Department, Ministry of Transport and Communication. These units collaboratively monitor and control illegal, unreported and unregulated fishing in the country (Jantrarotai, 2013). 1) Control of illegal fishing Currently the Thai authorities combat illegal fishing via three methods: enforcement of laws and regulations, vessel registration, and fishing permit and licensing. l

Fishing under Thai laws and regulations

All vessels fishing and cultivating marine animals in Thai waters must comply with the law, rules, regulations, and conditions approved and imposed by the state. The principal legislative mechanism for fisheries activities is the Fisheries Act, B.E.2490 (1947). The Act is governed by the Ministry of Agriculture and Cooperation and executed by Department of Fisheries, which is the main government agency responsible for managing fishery. According to Jithlang (n.d.), other fisheries law and regulation related to combating against IUU fishing include Navigation in Thai Waters Act, B.E.2456 (1913), and Thai Vessels Act, B.E.2481 (1938). Other regulations include Notification of Ministry of Agriculture and Cooperatives, Notification of Department of Fisheries, and RFMO28 regulation. l

Vessel registration and vessel license

Vessel registration and vessel licensing are issued by Marine Department. According to Thai Vessel Law29, all motorized vessels and above 6 GT non-motorized vessels require vessel registration (Department of Fisheries, 2009). Vessel registration certificate is a lifetime certificate indicating registration number, state flag, vessel ownership, and the vessel’s physical characteristics. Vessel license identifies vessel type and usage, name of certified vessel crew, as well as the locations of permitted sailing water. The license must be renewed annually. Department of Fisheries of Thailand collaborate with Marine Department to establish persuasive measures to encourage vessel registration, namely registration fee reduction for small vessels (less than 14 meters or less than 20 GT), which mostly are local artisanal vessels. In addition, registered vessels are entitled for natural disaster compensation30.

From a conference “Problems and Future Management of Local Fishing Communities” at Department of Fisheries (21 February 2014)

From an interview with Marine Fisheries Research and Development Bureau, Department of Fisheries (4 December 2013).

Regional Fisheries Management Organizations are international organizations working towards sustainable fisheries management in a particular region (European Commission, 2013).

Thai Vessels Act, B.E.2481 (1938) section 8

From an interview with Marine Fisheries Research and Development Bureau, Department of Fisheries (4 Dec 2013).

Figure 36: Vessels registration process

Marine Department/ Vessel Standard Bureau Vessel owner Fill application form (Kor 5, Bor57) Vessel inspection Vessel owner File an application with document support Vessel Standard Registration Vessel owner receives Certificate of Vessel Registration

Certificate of Vessel Registration/ Vessel license Source: Department of Fisheries (2009) and Jithlang (n.d.)

The Department of Fisheries has set a vessel registration target to register 40,000 fishing vessels within four years (2010-2013). This target accounts around 70% of total fishing vessels in Thai water31; however, the number of registered vessels has not reached the target as shown in Figure 37. Figure 37: Number of registered Thai fishing vessels, 2010-2013

Fiscal year

Number of registered vessels Goal

Result

2010

7,000

4,356

62.23

2011

11,000

7,350

66.82

2012

11,000

6,631

60.28

2013

11,000

1,521

13.83

Total

40,000

19,858

49.65

Source: Marine Fisheries Research and Development Bureau, Department of Fisheries

Despite failing to meet the goal, Department of Fisheries has decided to continue setting annual target of 11,000 vessels for 2014. It is worth noting that the problem of inconsistent data has arisen from the lack of cooperation 31

between government agencies, namely D e p a r t m e n t o f F i s h e r i e s a n d M a r i n e Department. The number of fishing vessels operating in Thai water individually collected by each unit is unmatched which led confusion to

A survey by Marine Fisheries Research and Development Bureau in 2011 indicated a total of 57,141 fishing vessels operating in Thai water both the Gulf of Thailand and Andaman Sea.

72 the EU inspecting officials. For this reason, MOU on information sharing, particularly on vessel registration, was signed by both units in 201332. l

Fishing permit and fishing license

To legally engage in fishing operation, fishing permit and fishing license are required. These are issued by a competent official Department of Fisheries. According to the Fisheries Act 1947, ‘permit’ refers to license issued to a person to fish and to cultivate aquatic animals in the reserved fisheries and ‘license’ refers to license issued to a licensee to use fishing implement . A person is permitted to

use fishing license only when the license in his name has been issued and the fishery tax has been paid. Each fisherman is allowed to use a specific type of fishing gear, out of 12 categories, that is indicated in a fishing license. Fishing information and the validity of a license commence annually from April 1 to March 31 of the following year (Fisheries Act, 1947). There are 3 types of fishing gears that are restricted; their renewal will only be issued to those fishermen entitled in the previous harvesting season. These include trawl nets, push nets, and anchovy lift nets which are recognized as highly destructive gears.

Figure 38: Process of acquiring fishing license and fishing permit in Thai waters

Fisheries District Office Vessel owner Existing fishing license (if any) - Thai nationality, ID card - Thai Domicile - Power of Attorney - Copy of vessel registration certificate - Copy of vessel license - Names of crews who are allowed to use the fishing gear

Document check

Submit to the District Chief

Record and collect fee

Fishing License (Aor 1) and Fishing Permit (Aor 6) Source: Jithlang (n.d.)

32 33 34

From an interview with Marine Fisheries Research and Development Bureau, Department of Fisheries (4 Dec 2013). Reserved fisheries are fisheries in which a person has been permitted to fish or to cultivate aquatic animals, and include trapping pond (the Fisheries Act 1947). Fishing Implement includes machinery, instrument, accessories, component parts, arms, stakes, or vessels used in fishing (the Fisheries Act 1947).

Figure 39: Process of acquiring fishing license and fishing permit in overseas waters

Fisheries District Office

Vessel owner Fill application form Existing fishing license (if any) - Thai nationality, ID card - Thai Domicile - Power of Attorney - Copy of vessel registration certificate - Copy of vessel license - Agreement of contract for fishing in the oversea water - Fishing License for vessels which authorized by other countries

Document check

Submit to the District Chief

Record and collect fee

Fishing License (Aor 1) and Fishing Permit (Aor 6) Source: Jithlang (n.d.)

Apart from complying with laws and regulations, fishing activities are not legal under Thai law unless both fishing vessel and fishing gear are legalized, by registering vessel and acquiring fishing license (Aor 1) as mentioned above. For less than 14-meter fishing vessels, mostly local artisanal vessels, vessel registration and fishing license are not necessary in case fishing permit (Aor6) has already been acquired. 2) Control of unreported fishing In an attempt to control unreported fishing, Thai authority has adopted a fishing logbook scheme as part of fisheries regulations. It is used to facilitate and encourage report of fishing conduct; in other words, to eliminate unreported fishing. A fishing logbook is used to record information relating to vessels and catch. It needs to be endorsed by a vessel master then submitted to the authorities35 of the vesselâ&#x20AC;&#x2122;s flag state. In addition, a fishing logbook is necessary for an exporter since it is required to obtain a catch certificate in the first place. Data collected in a fishing logbook are as follows (Department 35

of Fisheries, 2009 and Prompoj, 2011);

a. Fishing Vessel Registration (indicating vesselâ&#x20AC;&#x2122;s name, registration number, and size of vessel) b. Fishing License Number c. Type of Fishing Gear d. Fishing Ground/Area e. Fishing Duration f. Port of Departure/Arrival (indicating date for departure and arrival) g. Species/quantity of catches h. Certified by Vessel Master

There are 6 types of fishing logbook classified by types of fishing gear; 1) Fishing logbook for trawler and push net, 2) Fishing logbook for purse seine, 3) Fishing logbook for gill net, 4) Fishing logbook for lift net, 5) Fishing logbook for trap, and 6) Fishing logbook for other gears (Prompoj, 2011). Statistics of fishing logbook Marine Fisheries Research and Development Bureau has distributed to and received from registered fishing vessels are shown in Figure 40.

Fishing logbook shall be submitted to one of twenty-two Department of Fisheries Coastal Provincial Offices or Fisheries Inspection Offices at ports (Bangkok, Ladkrabang, Songkhla, Samutsakorn, and Ranong).Fisheries Act 1947).

Figure 40: Number of fishing vessels receiving and returning fishing logbook from 2010-2013

Fiscal year

Number of fishing vessels receiving fishing logbook

Number of fishing vessels returning fishing logbook

2010

3,589

2,082

2011

2,061

1,549

2012

1,462

1,57336

2013

291

355

Total

7,283

5,559

Source: Marine Fisheries Research and Development Bureau

3) Control of unregulated fishing Unregulated fishing essentially involves with fishing inconsistent with laws and regulations or that conducts in any area where no measures, laws, and regulations are applicable. This can be controlled by effective monitoring and surveillance system; for example, offshore patrols and licensing schemes (Kongrawd, 2006). In doing so, Department of Fisheries established 12 fi s h e r i e s s u p p r e s s i o n a n d p r e v e n t i o n centers, including 7 centers for freshwater fisheries and 5 centers for marine fisheries (Department of Fisheries, 2014). Songkhla marine fisheries suppression and prevention center is responsible for monitoring and regulating fisheries in lower-southern GoT of 136.6 kilometers. Main obstacles to control o f i l l e g a l c o n d u c ts c o m p r i s e r e s o u r c e insufficiency, including human resource and financial resource, and limitation of fisheries law37 (as stated in 5.3.1)38.

5.3.3 Compliance to the EU Requirements: Thailand catch certificate scheme The EC IUU Regulation applies 1) to all marine fishery products, both processed and 36 37 38 39 40

not, that originates from third country fishing vessel and exported to the EU Community; and 2) to products originating from EU Community fishing vessels exported to third countries (European Commission, 2009). Thus, Thailand, as an exporter, needs to comply with the IUU Regulation 39 . Suppliers need to provide certificate of marine product41 demonstrating that the raw material is sourced in compliance with EU regulation on IUU fishing (European Parliament, 2013). The EU requires each flag state to establish Competent Authority to control fishery and aquaculture products and their production chain. This was designated to the Department of Fisheries of the Ministry of Agriculture and Cooperatives. Its powers and responsibilities include access to premises and all documentation related to fishery p r o d u c t i o n , t h e s u s p e n s i o n o f e x p o r t certification, the removal from the list of establishments approved to export to the EU and the possibility of seizing products (European Parliament, 2013). Since catch certificate scheme is a key instrument to exclude IUU products from the markets and to promote responsible fishing, an essential part of this scheme is traceability of product supply chain. Accordingly, Thailand

Number of fishing vessels returning logbook can exceed those of receiving since the logbook paper is not an annual basis. A person violating fisheries law is only to be caught in the act of committing an offence From an in-depth interview with Chief of Songkhla marine fisheries suppression and prevention center This is mainly applied to food fish which is an important product exported to the EU. However, it is a crucial starting point that later expanded into a fishmeal certificate scheme. Some marine products are excluded from the scope of the EC IUU Regulation (Handbook of the EC IUU Regulation, 2009).

75 information including vessels, catches, and sellers/buyers along the supply chain from fishing vessels to the processors.

Catch Certification scheme has been in practice since January 1, 2010. Three procedures have been exercised to ensure full traceability of aquatic fishery products and three documents from each procedure are required when apply for a catch certificate (Department of Fisheries, 2009). Fish Inspection and Quality Control Division is the official controller of this scheme (Prompoj, 2011).

According to European Parliament (2013), Thai fishery products were audited by Food and Veterinary Office in 2011 and 2012. It was observed that existing measures are insufficient in assuring that fish products exported to the EU are obtained, managed and processed in authorized establishments. To address this problem, Department of Fisheries as the competent authority has informed the Thai Frozen Food Association and Thai Food Processorsâ&#x20AC;&#x2122; Association that only raw materials obtained from EU-approved sources, caught by EU approved freezer vessels that comply with relevant EU legislation, can be exported to the EU.

Required documents under catch certificate scheme include:

a. Fishing Logbook to record information relating to vessels and catches (as mentioned earlier). b. Marine Catch Transshipping Document (MCTD) indicates trans-shipping information, signed by fishing vessels and carrier vessels. c. Marine Catch Purchasing Document (MCPD) demonstrates purchasing

There is a number of other official standards

Figure 41: Catch Certificate Scheme

- Sign MCPD when catch sold Fishing Vessel

(2) Sign and submit recorded logbook and MCTD (if any) when fish landed

Fishing Port

(3)

- Authorized officers validate MCPD - Receive a copy of recorded fishing logbook and MCTD (if any)

(3)

Fish Collector MCPD 1

Fish Collector MCPD 2

Logbook

(1) Provide logbook to fishermen

(4) MCPD

Daily upload

-Database Network

Remarks : CC = Catch Certificate Logbook = Fishing logbook MCPD = Marine Catch Purchasing Document MCTD = Marine Catch Transship Document

(4) MCPD Apply for a catch certificate

Fishery Provincial Offices or Fisheries Inspection Offices

- record catch data from receiving recorded logbook into DOF fishing record system database

Factory A

k hec ss-c ase Cro datab k h wit etwor n

Issue a catch certificate

Fish Inspection and Quality Control Division (CA Office) - validate information in MCPD(s) and fishing record from database then issue Catch Certificate for the processors/exporters

Source: Prompoj, 2011 41

Food and Veterinary Office carried out an audit on fishery products (including live bivalve molluscs) and monitoring of residues and contaminants in live animals and animal products.

76 compatible with EU legislation, including Notification of the Ministry of Public Health on Food Labelling, Notification of the Ministry of Public Health on standard for some chemical contaminations in foods, Notification of the Ministry of Public Health on veterinary drugs residues in foods, and Notification of the Ministry of Industry on the list of hazardous substances. These standards are not imposed specifically on fishery and aquaculture products but rather on commodities and food in general; however, they represent conformity and compliance of Thai legislation to EU requirements (European Parliament, 2013). There are 314 fish processing establishments that comply with the above procedures and approved by Department of Fisheries (as of November 13, 2013).42 Currently 254 licensed fish processing plants, including freezing vessels, are authorized to export to the EU (August 28, 2013)43. As of 2013, 126 Thai companies have been issued catch certificate44. The number of catch certificate issued and quantity of marine products exported to the EU from 2010 to 2013 are as follows: Figure 42: Amount of certified marine products exported to the EU and number of catch certificate issued from 2010-2013

Fiscal year

Certified marine products exported to the EU (ton)

Number of catch certificate issued

2010

23,317.35

3,254

2011

68,258.01

8,854

2012

57,245.78

8,510

2013

58,353.48

7,523

Total

207,174.61

28,141

Source: Marine Fisheries Research and Development Bureau

5.3.4 Fishmeal certificate scheme in Thailand In 2013, the Department of Fisheries established a separate certificate scheme for fishmeal production. This is mainly to assure that the process of obtaining raw materials for fishmeal production is unharmful to the environment45. The scheme involves players at all stages along the fishmeal supply chain from fishing vessels to feed mills. The scheme, first implemented on 1 July 2013, is a collaboration of 5 organizations: Department of Fisheries, Thai Fishmeal Producers Association, Thai Feed Mill Association, Department of Livestock

42 43 44 45

Development, and the National Fisheries Association of Thailand. The Department of Fisheries plays lead role in facilitating the system and validating all documents. Similar to the catch certificate scheme, fishing vessels and fishing gears that seek fishmeal certificate need to be legal. This can be done by registering vessels and acquiring fishing license as mentioned earlier. Fishing logbook is employed as a reporting measure indicating origin of fish, type of gear, type of fish, etc. Fishmeal producers need to collect documents demonstrating origins of raw materials used in their fishmeal production.

http://www.fisheries.go.th/quality/DOF%12820list.pdf https://webgate.ec.europa.eu/sanco/traces/output/TH/FFP_TH_en.pdf From an interview with Marine Fisheries Research and Development Bureau, Department of Fisheries (26 November 2013). From an interview with Marine Fisheries Research and Development Bureau, Department of Fisheries (26 November 2013).

77 There are 5 types of documents that fishmeal producers need to collect. These include Marine Catch Purchasing Document – F i s h m e a l ( M C P D - F M ) , M a r i n e C a t c h P u r c h a s i n g D o c u m e n t ( M C P D ) , C a t c h Certificate, Form A, and Form B. Whichever documents fishmeal producers must collect depends on the types of raw materials and suppliers as follows: 1) Whole fish – (whether from vessels, brokers, or piers) Fishmeal producers need to request Marine Catch Purchasing Document -Fishmeal (MCPD-FM) which demonstrates fishing activities including types and amount of fish as well as fishing area. 2) By-products (surimi) – Fishmeal producers need to collect Marine Catch Purchasing Document (MCPD) and document form A, which indicates suppliers, types and amount of fish.

agent managing or governing the scheme, but acts as “facilitator” by validating information with its database. Feed mills must offer incentives for players in their supply chain, from vessels to fishmeal factories, to join the scheme. As of March 2014, offering a price premium for traceable products is the only incentive for stakeholders to join the scheme46. Between 10 June and 31 December 2013, there was only one feed mill, namely market leader Charoen Pokphand Foods (CPF) that submitted documents and request Department of Fisheries to help examine. There were 1,752 fishmeal certificates from 26 fishmeal producers submitted for verification which accounted for the total of 29,724, 841 kilograms of fishmeal (Figure 44).

3) B y - p r o d u c t s ( t u n a ) – F i s h m e a l producers need to collect a catch certificate or captain’s statement of imported tuna. And document form B that illustrates processing plants, types and amount of fish, fishing area, vessels and fishing gears used. After that, Thai Fishmeal Producers Association will certify batch of fishmeal produced from traceable raw materials and i s s u e a fi s h m e a l c e r t i fi c a t e . H o w e v e r, practically, fishmeal producers will issue a fishmeal certificate by themselves on behalf of the Association since the scheme is self- reported. Then, fishmeal producers will submit all documents to feed mills when delivering products. Subsequently, feed mills will pass those documents to Department of Fisheries for validation. The process of fishmeal certificate scheme is demonstrated in Figure 43. It is worth noting that the fishmeal certificate scheme is a purely voluntary measure. Department of Fisheries is not an authorized

From an interview with Marine Fisheries Research and Development Bureau, Department of Fisheries (26 Nov 2013).

Figure 43: Fishmeal certificate scheme

Fishing vessel

import

Fish pier owner

Catch certificate/ captain statement

(issue MCPD-FM)

Processors

Submit MCPD-FM

(provide proofs of raw materials sources) Document form A + copy of MCPD

Fishmeal producers

(issue MCPD-FM if purchase directly from fishing vessels)

DOF

MCPD-FM + form A,B

validate all documents by checking with IUU database (Information acquired from fishing logbook)

Fishmeal certificate and MCPD-FM/ MCPD + form A/ Catch cec. + form B

Document form B + copy of catch certificate of captain statement

Feed Mills

(Submit all document to DOF for validation)

DOF: Department of Fisheries MCPD - FM: for Marine Catch Purchasing Document - Fishmeal Form A records amount of raw materials from trimmings (surimi) Form B records amount of raw materials from trimmings (tuna), and foreign vessel information Source: Department of Fisheries

Figure 44: Number of fishmeal certificate (submitted for verification), amount of materials, and amount of fishmeal by source of materials from 10 June â&#x20AC;&#x201C; 31 December 2013

Fishmeal certificate

Amount of materials (kg.)

Amount of fishmeal (kg.)

1,119

75,183,563

19,302,989

Offcuts from domestic Surimi production

167

9,664,123

2,860,026

Imported offcuts from tuna production

292

17,005,650

4,974,515

Other offcuts

171

9,289,366

2,542,671

Unidentified

44,640

1,752

111,142,702

29,724,841

Source of materials Wild-Caught

Total

Source: Marine Fisheries Research and Development Bureau, Department of Fisheries

Figure 45: Summary of various schemes

Thai principal law

Certificate Scheme

Plan of Action

Objectives/Core ideas

Responsible Unit

Relation to IUU

IPOA-IUU

To prevent, deter and eliminate IUU fishing by Providing a guidelines for all countries to adapt and design their measures to meet their situations

FAO, All states

IUU terms as defined by FAO 2001

RPOA-IUU

To prevent, deter and eliminate IUU fishing. Emphasize the cooperation among member states in monitoring and managing marine resources in the high seas

Member states

IUU terms as defined by FAO 2001

NPOA-IUU

To prevent, deter and eliminate IUU fishing by selecting suitable instrument form IPOA-IUU and adapt to specific conditions.

Particular state

IUU terms as defined by FAO 2001

The EC regulation

To prevent, deter and eliminate EU community and IUU terms as defined IUU fishing. To exclude products third countries traded by FAO 2001 from IUU fishing from EU market with the EU using catch certificate scheme as the main instrument.

Catch Certificate Scheme

Adopted by the EU community to ensure full traceability of all aquatic fishery products. To affirm that none of products appear in the EU market is derived from IUU fishing.

EU community and the third countries traded with the EU. Third countriesâ&#x20AC;&#x2122; authorized agent (Department of Fisheries, Thailand)

IUU terms as defined by FAO 2001

Fishmeal Certificate Scheme

To ensure full traceability of raw materials for Fishmeal production. To assure responsible sourcing of raw materials.

Department of Fisheries, Thai Fishmeal Producers Association, Thai Feed Mill Association, Department of Livestock, and the National Fisheries Association of Thailand

IUU terms as defined by FAO 2001. The scheme is expanded from a catch certificate scheme.

Thai Fisheries Act 1947

To regulate all fishing activities in Thailand as the principal legislation on fishery industry.

Ministry of Agriculture Consistent with and Cooperatives IPOA-IUU guidelines to review a countryâ&#x20AC;&#x2122;s fishery law and regulations.

Draft of the new fisheries act

To update the Fisheries Act

Source: Marine Fisheries Research and Development Bureau, Department of Fisheries

80 5.3.5 A Roadmap for Sustainable Development of Thailand’s Fisheries Given shortcomings of the existing standards and regulations outlined above, Thai Feed Mill Association is currently drafting a roadmap for sustainable development of Thailand’s fisheries. This is to further ensure that supply chain and food production are sustainable, i.e. fishmeal is made from legal and responsible sources, not from trash fishing that harm marine resources. The drafting process is assisted by World Wildlife Fund (WWF) and Sustainable Fisheries Partnership (SFP). They proposed Fishery Improvement Project (FIP) be initiated as a guideline for the development of this roadmap. Preliminary studies of the FIP are expected to be completed in February 2014 and be discussed with all stakeholders. It will then be developed into the roadmap which is projected to be complete in July 2014 and subsequently implemented in August of the same year.

The framework, guideline, and stakeholders’ activities will be clarified in the roadmap. This is expected to lead Thai fisheries sector toward sustainability within the next 5 years. All stakeholders are encouraged to participate in the FIP, especially eight major seafood and food producer associations which are major consumers of Thailand’s fishmeal production. Other organizations that are participating in this project include the National Fisheries Association of Thailand, the Thai Overseas Fisheries Association, the Thai Fishmeal Producers Association, the Thai Frozen Foods Association, the Thai Feed Mill Association, the Thai Shrimp Association, the Thai Tuna Industry Association and the Thai Food Processors’ Association. These 8 organizations have signed the Memorandum of Understanding (MoU) to jointly develop Thailand’s seafood manufacturing system in November 2013 (Bangkok Post, 2014; Manager, 2014).

Estimates of biomass diverted to fishmeal supply chain

6.1 Preamble

The term “trash fish” travels poorly. In the understanding of FAO and fisheries biologists outside of Asia, “trash fish” are not synonymous with “bycatch”, low-value products or “discards” from a fishery. For instance, in western countries the term refers to bycatch fish that are either discarded at sea or used primarily for livestock/fish food, while in other countries (particularly in developing countries) it covers low value fisheries products used for both livestock/fish food and human food. Thailand uses the term “trash fish” (pla pet: ปลาเป็ด) only for marine products that are utilized for animal feed. Fisheries officers in Thailand may occasionally use the term “low value fish” for those fish destined for processing prior to human use, or may class everything unusable as “trash fish” and fish with any market value at all as “food fish” or “economic fish”. These low value fish include many species that are elsewhere designated as trash fish. Bycatch itself means little in the modern Thai fishery, since trawl fishermen do not target specific stocks (e.g. shrimps) and everything can be sold; nothing at all is discarded. Fisheries researchers quite often refer to several categories of product being sold by commercial boats that traditionally have been grouped collectively as “trash fish”. Note that only the first one is prevalent overseas: Bycatch fish that are frequently unsaleable even in good condition (they are regarded as unpalatable or not worth the effort) – this is the category reported in the FAO literature as “low value or trash fish”;

fish (including crustaceans) of commercial species that are unsaleable because they are damaged or degraded by poor post-capture handling; and

pla pet ปลาเป็ด l

the mashed-up detritus of fish, crustaceans and other marine biota that coats the back of the cod-end of the net after a prolonged trawl.

Our researchers found only the last two categories of fish and other biota that are too damaged or degraded for either fresh markets or for sale to food processors – collectively known as “pla pet” in Thailand – are universally synonymised with “trash fish” in Thai fisheries literature and general vernacular. T h a t i s t o s a y, n e i t h e r T h a i l a n d ’s Department of Fisheries officers nor local people in Thailand recognised the first category (undesirable or unpalatable species)

by the term “trash fish”. Any catch statistics reported by the Department of Fisheries in the past decade or so refer to the lower two categories of degraded product (particularly the last). This has not always been the case. Tossapornpitakkul et al. (2008) suggested that around 61.5% of what was termed “trash fish” could be construed as “true trash fish” (ปลา เป็ดแท้), while the remainder was composed of juveniles of “economic” fish, but this distinction was not particularly evident in the current study.

82 The fishermen can reliably sell virtually any landed marine species of any size/maturity in good condition to the fishball processing factories either locally or in the major distribution markets (e.g. Mahachai in Samut Songkram), so referring to a product as “food fish” or “economic fish”, is nowadays the same as saying it is “not pla pet”. The variance in usage may have resulted from a mistranslation of the sense of the slang word “trash” into Thai or – more likely – it may

have mutated over the years (as the fishery has become more Malthusian) to mean only degraded and damaged product. The usage is a crucial variance from international understanding of what constitutes “trash fish” sensu strictu, however, and fundamentally changes the interpretation of Thai fisheries statistics. To reduce confusion, we will use the Thai term pla pet in its native sense henceforth to refer to the entire proportion of catch that is unsuitable for human consumption, without regard to species or stage of maturity.

Figure 46: Pla pet condition in Songkhla

Figure 46. Fish that have degraded into noticeable putrescence by poor storage or handling during transportation are highly valued by the fishmeal factors because of the high protein content, but are a relatively minor component of the pla pet market. However, it is an unpredictable resource and does not appear on fisheries statistics as pla pet. (Image S Piromvaragorn)

In presenting the following results, it is worth noting that the published results of Department of Fisheries surveys and research literature indicate that the composition of fishing boat landings at Songkhla varies throughout the year, with the effects of the monsoon on both community composition of the fished populations and the locations fished by the fishermen. This is consistent with expectations of a trophically-degraded system where catchable stocks are heavily dependent on stochastic fluctuations in recruitment. An increasing proportion of undersized fish and

83 decreasing volume of commercially important species in the composition of the wild fish catch in recent years suggest symptoms of biological overfishing and loss of coastal habitat, declining stocks, with concomitant falling profits of

individual vessels indicate that economically overfished fish stocks threaten the viability of wild fisheries in the Gulf (Ahmed et al. 2007, Nasuchon & Charles 2010).

Figure 47: Reported finfish landings in the Gulf of Thailand

Reported finfish landings in the gulf of Thailand total fish food fish

Landings (tons)

trash fish

1,500

1,000

500

1985

1990

1995

Year

2000

2005

2010

Figure 47. Landings of finfish abstracted from DoF reports, 1986-2011. The sharp rise in the early 1990’s coincides with the growing importance of the pelagic tuna fishery (only a fraction of which is actually captured in the GoT). The circled area indicates the endpoint of a progressive reclassification of several species from “trash fish” to “food fish” as the term trash fish came to mean exclusively pla pet. This type of reclassification has occurred several times over the past decades, and reflects the process of “fishing down the food chain” as more desirable species have become rare. The “crash” evident in the landings in the period after 2005 probably reflects a “tipping point” in the ecosystem towards a lower productivity system with a higher proportion of low trophic level species caused by chronic overexploitation of demersal species. Part of this change may be explained by some Thai fishing boats changing registration to Malaysia and Indonesia domicile, in order to comply with more stringent Malaysian and Indonesian regulations. Note that these landings contain a variable (but impossible to separate) component of fish caught outside Thailand’s EEZ, but landed in ports such as Songkhla by courier boats.

There is a paucity of published data about the way the catch changes over the year, and the fishermen range over a substantial portion of the Gulf of Thailand, meaning that the effects on the local fisheries resource are quite hard to predict. Seasonal changes in population structure (the proportion of juvenile fish in the population) of the fished resources is likely to change the proportion of product landed by the fishermen that is unsalable in the fresh market, and is therefore likely to have an effect on the proportion allocated to the surimi/fishball and “trash fish” portions sold by the fishermen. This is an important caveat to the generality of the results presented here, also; because of the time constraints of the project, the data presented are merely a “snapshot” of the landings at Songkhla.

84 It is likely, however, given the geographically wide hunting range of the fishermen we interviewed, that any direct effects on resources targeted by artisanal fishermen will be diffuse, and will probably reflect the overall decline in fisheries resources of the Gulf of Thailand evident in data published from recent years by the Department of Fisheries. Payaotou & Jetanavanich (1987, p44) stated: “…by 1973 the inshore catch reached 803,000 t which is indicative of overfishing not only when compared to the MSY but also when the declining catches in subsequent years are considered”. Thailand’s fisheries have been operating greatly over their sustainable capacity for several decades, and the overall trophic level of the catch has declined substantially. This means the intense fishing pressure has depauperised a previously abundant resource; in recent years, despite an increase in effort, the total catch has declined.

The effects of the commercial fishing are noticed by artisanal fishermen for two main reasons: the general decline in resource abundance means that spawning stocks have been depleted, so that the large pulses of recruitment previously observed are no longer occurring (this means, in turn, that the local fishermen perceive the decline); secondly, it means that the composition of the catch has changed over time –the high value food fish are no longer a dominant portion of the catch. The pla pet itself is usually divided into several categories, depending on its state of degradation (or putrescence). Since the sale price of fishmeal depends on both its protein content, and its aroma, the lowest value pla pet is purchased by the buyers only reluctantly, since its putrescence will pervade any fishmeal of which it is a component; generally, the buyers prefer to purchase their production quota of the

Figure 48: Volume of marine fish landed at Songkhla (Ta sa-aan)

Year Figure 48. Fisheries data for Songkhla (Songkhla Department of Fisheries report, 2013). Note the precipitous decline in fish landings in the early part of the last decade (mirroring the decline seen in the previous figure for the entire Gulf of Thailand fishery), and the commensurate drop in effort (vessel trips) as returns diminished. The “crossover” of food fish and trash fish landings in 2008 reflects an overall decline in the quantities of fish available for capture and the enormously protracted trawl times common in the fishery.

85 better classes of pla pet, and offcuts. The fishmeal producers purchase all available categories of low value and pla pet, as well as the offal and offcuts of commercial species that are processed for sale or canning at the docks. This last category (production waste) has become an increasingly valuable proportion of feedstock for fishmeal, but its availability is severely limited. Noteworthy however, are “throwaway comments” by fishmeal production buyers about the decline in both supply and quality of trash fish and pla pet in recent years – once upon a time the buyers would arrange to have several trucks lined up to receive feedstock, and could nominate the quality ahead of time; nowadays, they complained, they were lucky to get enough to start the processors on a given day, and had to carefully adulterate the product with low value (putrescent) pla pet to make up production quotas. Some producers suggested that it was no longer possible to consistently produce the highest quality of fishmeal because the supply of high quality trash fish had diminished so much. In recent years as the supply of “high quality” feedstock has declined, and the proportion of pla pet in the fishmeal supply has become dominant. The vessels observed unloading product at the fishery pier of Songkhla were of two main types: otter-board trawlers and “courier” boats. The otter-board trawlers were operated by local fishermen, but tended to operate far from the home port – seeking trawl grounds with the highest returns within the southern Gulf of Thailand. The courier boats were not engaged in fishing (although they were built on the same lines), but were mostly engaged in ferrying product from large vessels operating offshore, or outside Thailand’s EEZ. They landed substantial amounts of trash fish and pla pet, but were not available for interview. The workers at the landings described most of the high value food fish landed by such vessels as originating in “Indonesia” (although this description was vague enough to simply mean “elsewhere than Thailand”). There were significantly more of these vessels unloading

at the port during the days our researchers were present than “local” boats; this may reflect a change in the importance of the Gulf of Thailand as a primary source of fish landings for Songkhla, but there is very little data available one way or another. The latest Department of Fisheries statistics available (for 2011: http://www.fisheries.go.th/ i t - s t a t / y e a r b o o k / d a t a _ 2 5 5 4 / Ye a r b o o k / Yearbook2011-4.1.pdf) indicate that a total of 82,913 tons of marine fish were landed at Songkhla in that year (out of total marine landings of 90,363 tons), 70% of which (57,783 tons) was classed as food fish. This figure includes the product landed by the “offshore” boats, however, and is not a reflection of the situation faced by fishermen in coastal waters. Moreover, the breakdown of landings supplied by the Songkhla Department of Fisheries office gave a slightly different story: they report that total landings at Ta Sa-aan fishing port were 88,341 tons, comprised of 56,074tons of food fish, 7,082 tons of other economic biota and 25,185 tons of trash fish (slightly more trash fish than reported by the Department of Fisheries Yearbook data). FD statistics indicate also that in 2011, all the trashfish landed, plus around one sixth of food fish were converted into fishmeal. As previously mentioned, these statistics do not distinguish between Gulf and Andaman fisheries, nor do they distinguish between food fish caught specifically to feed the fishmeal industry (un-knowable) or “surplus production” that was otherwise unsalable at market (essentially zero in all cases, since buyers from other provinces bought whatever was available).

6.2 Data collection summary PSU researchers interviewed the captains of “local” Thai fishing boats unloading at the fishing pier at Songkhla on three occasions (in August and September 2013), completing nine key-informant interviews regarding fishing practices and gear. The boat captains were

86 informally engaged in conversation and questioned about their vessel and gears employed, (roughly) where and how they fished, and where they sold their product. The data obtained in these interviews was checked against published fisheries data to develop a point estimate of the total effort and production landed at Songkhla fishing port. The estimate can only be applied to the period during which interviews occurred, because (as noted) the fishery varies during the year, according to seasonal changes in conditions and stocks. That being said, however, we believe it is valid to make some broad assumptions based on the material developed in this study. The researchers also undertook detailed analysis of the catch composition of the products unloaded by 9 vessels (both the August and September landings), concentrating o n t h e c o m p o s i t i o n o f t h e c o m p o n e n t

designated “trash fish”. Within the pla pet samples, finfish were tabulated at family level, where possible since many were juveniles and hence difficult to identify at a lower taxonomic level. Fishes that were sufficiently damaged that they were not identifiable to family level were grouped as “others”. Other landed products were identified to broad biotic category (e.g. “crustaceans”), or grouped into a miscellaneous category (mostly composed of various molluscs and echinoderms). Note that the same caveat about seasonal variations in catch composition already mentioned will also apply to these data. While at the landing site, the researchers also informally interviewed the buyers who were waiting to receive various products from the fishing boats. They were asked about the supply of pla pet, and invited to share insights about the industry from their perspective.

Figure 49: The fisheries pier at Songkhla just before dawn (Image S. Arunrugstichai)

Figure 50: Results – composition of landed product at Songkhla

Product landed at Songkla - Aug-Sept 2013 14

= August (single vessel interviewed) = September (8 vessels interviewed)

12000

8000

6000

4000

2000

Day fishing

Commercial Fish

Pla pet

Kg landed (+SD)

10000

10 Days (+SD)

14000

Figure 50. (LHS) average number of days spent actively fishing by vesels that offloaded product at Songkhla. (RHS) average landings by category; note that while catch composition of the landings varied widely, on average trash fish composed 2/3 of the landed product, substantially more than is reported in Department of Fisheries statistics. Of the “commercial fish category” perhaps 10% was composed of various species of squid and prawns, the remainder being finfish.

With the exception of a single vessel interviewed in August, the vessels landing product at Songkhla fishing port were landing around 4 tons of commercial fish per trip, after spending anywhere between one and two weeks at sea. This catch was supplemented by roughly 6.5 tons of pla pet. All of the skippers interviewed stated that their fishing was conducted in the vicinity of Mu Koh Kra (an offshore group of islands in Nakhorn Sri Thammarat province). The vessels were all “standard” small otter-board trawlers (24-40m in length, crew of 5-6, powered by 275-315HP diesel engines, and deploying trawl nets with 10m gape), and represent a reasonable sample of the types of medium-sized commercial fishing vessels returning product to Songkhla at that time of year. The fishermen worked in pulses; for the week before and after the full moon, nets were deployed and trawled 24 hours per day, for 5-6 hours per tow. For the remainder of the month, the trawlermen deployed their nets only during daylight hours (again, generally in 6 hour tows),

because of changes in the diurnal behaviour (and therefore catchability) of their target species. The use of sonar technology was pervasive: the fishermen would search for bottom structure such as boulders or reefs, and plan their tow-path to pass as close as possible to the potential fish attracting structure. The figures presented here represent an average return on fishing effort (CPUE) of approximately 49(±17)kg/hour for the vessels landing product in August and September. This is almost three times the published Department of Fisheries average CPUE for the far southern region for 2011 (Figure 68). The disparity has several interpretations: the region where all the fishermen declared they were fishing (near Koh Kra) is more than 50 kilometres from the mainland, and is quite likely to be a different ecological system from that sampled by the Department of Fisheries. It may be that there is a strong seasonal component to the catch and capture rates – for instance, the vessel interviewed in August (Figure 65) had a much higher proportion of economic fish than trash

88 fish, in strong contrast to the September landings. Because the Department of Fisheries does not publish figures reflecting monthly samples, it is difficult not to believe that the published Department of Fisheries figures are an amalgamation of many months sampling and thus strongly average both catch rates and composition. It is more likely, however, that the fishermen surveyed in this study were fishing a completely different ecosystem from the inshore grounds routinely surveyed by Department of Fisheries vessels, and that published capture rates should be viewed with skepticism. August was a month of very little activity from the fishermen of Songkhla, many of whom (being Muslim) greatly reduced their fishing activity during Ramadan. It is possible that this reduction in effort allowed the vessel

interviewed in this study to fish with little competition, increasing their CPUE and proportional catch of food fish, but it seems unlikely. The phase of the moon also influences fishermen’s activity, such that many choose not to fish during the less productive times, when they can only profitably fish during the daytime. The vessel we interviewed was the only vessel to land product at the “small pier” during that week, although the courier boats unloaded at a rate of 4-8 per day. The rates of capture and the effort described in the National Department of Fisheries reports do not seem to closely reflect what this study observed at Songkhla (although the Songkhla-originating reports tally well, suggesting that the National reports average and therefore mask substantial regional variation).

Figure 51: Summary of catch statistics for the vessels interviewed for this study

Vessel Month number

Length of trip

Total Catch CPUE % Economic % Remarks (kg) (kg/hour) fish Trash fish

1 August 14 18,720 56 67.9 32.1 2 September 7 10,160 60 21.3 78.7 3 September 7 12,000 71 50.0 50.0 4 September 9 14,400 67 30.6 69.4 Left their 5 September 14 14,800 44 32.4 67.6 product with boat # 4 6 September 12 7,300 25 38.4 61.6 7 September 7 7,360 44 45.7 54.3 Left their 8 September 9 5,800 27 48.3 51.7 product with

September

800

Had engine trouble

boat # 6

Source: vessels interviews

Figure 51. Summary of catch statistics for the vessels interviewed for this study. It is evident that groups of fishermen operate cooperatively and that the resource is extremely patchy. Notwithstanding this, the Catch per Unit Effort (CPUE) for all of these fishermen is between 2 and 3 times the catch rate stated by the Department of Fisheries researchers using the same gear. Moreover, the relatively low proportion of trash fish quoted by the Department of Fisheries is realised only in one vessel (that fished in August), suggesting a) strong seasonal variation in trash fish abundance relative to economic fish, and b) the catch statistics used to represent Songkhla region are unlikely to be accurate, since all of these operators were fishing around Koh Kra, offshore of Nakhon Sri Thammarat province.

Figure 52: Selections of pla pet found at port

Figure 52. a, b, d – selections of pla pet identified in the laboratory (after cleaning and fixation to prevent further degradation); c –Thai Department of Fisheries officers from Songkhla regional office identifying samples of pla pet at the pie; e – a typical basket of “quite high quality” pla pet unloaded from a trawler; f – fish heads that are discarded by on-pier processors are eagerly sought by the fishmeal producers. (Images: a-d: W. Klagnurak, e: S. Arunrugstichai, f: S. Piromvaragorn)

Figure 53: Department of Fisheries Catch per Unit Effort (CPUE) figures for 2010/11.

CPUE figures by fishing ground in the Gulf of Thailand (Unit:kg/hr)

fishing ground 2010 1 24.800 2 19.282 3 13.372 4 11.469 5 27.957 6 29.292 7 10.170 8 13.287 9 15.485 Gulf of Thailand 18.559

2011 +/- 19.814 (-4.986) 16.950 (-2.333) 9.480 (-3.892) 13.090 1.621 52.897 24.940 48.650 19.358 8.990 (-1.179) 12.335 (-0.952) 16.069 25.015 6.456

% (-20.10%) (-12.10%) (-29.11%) 14.13% 89.21% 66.09% (-11.60%) (-7.16%) 3.77% 34.78%

Figure 53. Highlighted area reflects the putative fishing grounds of vessels landing product at Songkhla. Note that published CPUE varies widely between years, suggesting that the resource is unstable. Note also the degree of variation in capture rates between regions – only the central regions (5 and 6) approach the CPUEs reported by the Songkhla fishermen.

The composition of the pla pet varies widely, probably reflecting the fishing practices of the vessels. Figure 54: Composition of pla pet from a vessel offloading at Songkhla in August OtherComposition of pla pet landed from vessel #1 at Songkhla (27/8/2013)

Figure 54. Composition of fish categorised as pla pet from a vessel offloading at Songkhla in August. The “other” category includes fish that are damaged to unrecognisability and also some non-teleost biota.

Figure 55: Example composition of pla pet from a vessel offloading at Songkhla in September Composition of pla pet from vessel # 4 (23-9-13)

Figure 56: Summary of the diversity of biota landed as pla pet in Songkhla in August and September Average composition of pla pet in landings at Songkhla

57: Average species composition of the “food fish” component of catches landed at Songkhla

Figure 57. Average species composition of the “food fish” component of catches landed at Songkhla. The “mix” categories contain some duplicate names because the baskets often comprised a varied collection of miscellaneous fish cotaining a high proportion of juveniles, which were difficult to identify in the time available (the fishermen were understandably keen to shift the catch as rapidly as possible). Note, however, that the proportions of some trash fish families (see above) are significant in the total catch, and that many juveniles of economic species also find their way into the pla pet bins.

Figure 58: A multispecies basket of fish landed in Songkhla

Figure 58. A multispecies basket of fish landed in Songkhla, bought by middlemen for sale to a seafood factory via Mahachai market in Samut Songkram. Note that several of the species (and most of the size classes) would see this basket classified as “trash fish” in countries such as Australia. (Image: W.Klangnurak)

Forecasting the amount of pla pet landed a t S o n g k h l a r e q u i r e s s o m e d e g r e e o f assumption about harvesting rates, fishermen’s activity levels and seasonal variations in both capture rates and catch composition. As is demonstrated by the Department of Fisheries statistics, such assumptions are inherently flawed, and should only be used as a rough guide to the behaviour of the system. From the very limited data available, it would seem that

the volume of trash fish caught by each vessel is roughly similar – both between vessels and between months. However, the composition of the catch, and the proportion of trash fish in landings varies quite strongly, both between vessels and between months. The rate of transfer of trash fish to local fishmeal factories appears to be highly variable, also, and very difficult to predict.

Figure 59: crustaceans, squids and fish mashed together into unrecognizability

Figure 59. Crustaceans, squids and fish mashed together into unrecognizability - up to 70% of the product of Thailandâ&#x20AC;&#x2122;s trawl-capture fishery looks like this at landing. (Image S. Arunrugstichai)

Even so, it appears that the results obtained in this rapid survey concur with previous studies to a reasonable degree: the proportion of trash fish in the total catch is broadly similar to that reported by Tossapornpitakkul et al. (2008) for the same time of year. Likewise, the volume of pla pet per vessel (averaging slightly more than 6 tons) coincides with Songkhla fisheries records (roughly 4000 vessel-landings, for a total of 25,000 tons of pla pet in 2012). The elevated catch rates reported here may reflect the trend towards reduced fishing effort as fishermen decide the returns from landing mostly pla pet are insufficient to pay for the fuel and maintenance required to fish constantly. They are therefore pulse-fishing by targeting higher-efficiency strategies (such as 24hour fishing days around the full moon, rest phases when the moon is unsuitable).

Likewise, if these data are indicative of the scale of variation in catches of economic fish (which seems plausible given the wide variation in published Department of Fisheries figures), then it is reasonable to model the pla pet component of the catch as mostly static, while the economic fish proportion supplies most of the variation in landing volumes. Moreover, it suggests that the proportion of food fish in the landings reported by the Department of Fisheries is likely to be strongly buffered by the â&#x20AC;&#x153;offshoreâ&#x20AC;? fishing industry which lands product at Songkhla and by the extremely variable supply of economic fish during the remainder of the year.

Figure 60: Ta Sa-aan “Afterwards”

Afterwards”. Image: S. Piromvaragorn

6.3 Biomass analysis conclusion Fishmeal production for shrimp food is probably not the primary driver of the decline in artisanal fisheries in southern Thailand, but it is certainly contributory. The trawler fishermen do not distinguish between “trash fish species” and “ruined fish” in their catch – any fish catch in good condition is sorted out into saleable categories and the ruined catch is agglomerated as pla pet, and is kept only because there is always a market for it. Much of the reason for the high catch rates of juvenile fish in demersal trawls can be explained by inappropriately fine mesh used in the cod-ends of nets. The Thai Department of Fisheries Master Plan suggests that 40mm is an appropriate mesh size for demersal trawl fisheries in the Gulf of Thailand. None of the vessels surveyed here used mesh larger than 25mm, and most used 20mm or less. Push-net

fishermen use even finer meshed nets (as little as 10mm) and frequently target areas utilised as nurseries by many species of fish and crustaceans. Juveniles of commercially valuable species and those important in food security for local people are killed in large numbers, wasting their potential. The wastefulness of overly-fine mesh sizes is compounded by the use of long trawl durations. Trawl times reported by the fishermen here are extraordinarily long. The extreme duration of tows (often 6 hours or more) means that any product captured during the early part of the tow (say, the first few hours) is guaranteed to be damaged or unsalable (i.e. ruined) and will become “pla pet”, even if it is of commercially valuable species. The pla pet coating the cod-end of the net forms an inescapable barrier to juvenile fish. The very fine mesh used by all vessels and the prolonged tow duration means that very little escapes from the nets

96 during normal fishing, and also that a significant component of what is caught will be smashed into uselessness. That the fishermen reported CPUEs far exceeding (up to three fold) those reported by the Department of Fisheries suggests that long trawl durations are completely unnecessary, and lower the economic return by degrading the value of the catch. While the time spent deploying and retrieving the trawl net seems to be counted as “lost effort” by many fishermen, the added value of product that has not been pulverised and rendered unsaleable by hours of being dragged along the seafloor is likely to far outweigh any lost productivity. Bycatch reduction devices can reduce the volume of juveniles and non-target species captured by as much as 40% (Eayrs 2007, Boopendranath et al. 2013). This is not seen as a benefit by fishermen. However counter- intuitive it seems to degrade the bulk of their catch for minor increases in volume, the existence of a ready market for pla pet means that the fishermen have no inclination to install bycatch reduction devices on their nets or in any way reduce the waste component of their catch. Tossapornpitakkul et al. (2008) reported that the average pla pet composition of catches in Nakhon Sri Thammarat and Songkhla averaged 42.08% of the annual capture for small otter board trawlers such as those we interviewed. These authors also suggested that the catch composition changes throughout the year (with pla pet being 40% of the catch in the NE monsoon, 47% between the monsoons, and 40% during the SW monsoon). However, we found an average of 62% pla pet in catches landed in September, at the end of the SW monsoon, with the possible exception of the August boat discussed above. That is, more than 2/3 of the fish landed by local commercial trawl fishermen in Songkhla during September were smashed and degraded beyond the possibility of being used for human food. This represents a tremendous wastage of biomass and ecosystem potential.

100% of pla pet landed at Songkhla could be sold to fishmeal producers, as could any other wasted or degraded product. This is a potential supply of around 25,000 tons per year of pla pet plus several hundred tons of offcuts and spoiled products from seafood factory production. However, most of the pla pet was too decomposed to be used as feedstock for the high grade fishmeal preferred for shrimp food production, and very little low value product was available for sale to the fishmeal factories. With the steady decline in pla pet volume and quality over the past decades as it moves ever further from the international definition of “trash fish” (and closer to the word “garbage”), it is difficult to imagine that the current shrimp food production industry relies as strongly on local production as it used to.

Supply Chain of Fishmeal Industry in Songkhla and Its Activities

7.1 Supply Chain and

Stakeholders’ activities So far, there are two studies on economics of fishmeal production and market which includes the supply chain of fishmeal industry in Thailand: one by Bureau of Agricultural Economics Research in 2012, and the other by 8 Regional Office of Agricultural Economics in 2007. But, the latter is more specific on fishmeal industry in the upper southern region. However, before going through the studies of fishmeal supply chain in Thailand, this section will start with the Peruvian fishmeal supply chain.

distributed through agents, representatives, brokers, and direct sales. And finally they are sold to the markets for animal consumption which can be divided into 58% aquaculture and 42% animal feed (IFFO, 2011 cited in Nordahl, 2011). The supply chain of fishmeal in Thailand is slightly different from that of Peru on three aspects. First, Peru uses whole fish as raw materials for fishmeal while Thailand uses both whole fish and trimmings from fish processing manufacturers. Second, in Peru, fish are supplied directly to the fishmeal production

Figure 61: Peruvian fishmeal and fish oil supply chain

Source: Copeinca, 2010 cited in Nordahl, 2011

Figure 61 illustrates the Peruvian fishmeal and fish oil supply chain of Copeinca47. The chain starts with the supply of raw materials – anchovy – received from anchovy fishing. Then, the fish are sent to the fishmeal production plants to be inspected, cleaned and cooked. The outputs from this process are 22% of fishmeal and 3.5% of fish oil. After that they are

plant whereas in Thailand, unless it is the fishmeal producer’s fishing boats, fishmeal producers buy trash fish from piers who act as middlemen between the fishing boats and the fishmeal producers. Lastly, outputs of Peruvian production are fishmeal and fish oil while in Thailand, the output is only fishmeal with crab shell meal as trimmings.

Copeinca is a Norway-based company operating in fishing industry, producing fishmeal and fish oil.

98 Figure 62 show the supply chain of fishmeal industry in the central and eastern regions of Thailand as studied by Bureau of Agricultural Economics Research (2012). It shows that raw materials for the fishmeal production come from 55.31% of whole fish (trash fish) and 44.69% of trimmings, and that trash fish is used to produce not only the fishmeal but also fish sauce, fertilizers, and as baits in fish farms. After the fishmeal was produced, it is then sold mostly to animal feed mills (94.85%), to farmers (0.47%), to brokers (3.03%) who later sells it to animal feed mills and exports it. Only 1.65% is exported. This piece of research is the only one that mentions export in the supply chain.

However, the big differences between them are the percentages of trimmings used in the fishmeal production. In the central and eastern regions, trimmings are 44.69% of raw materials while in the southern region, trimmings from fish processing manufacturers are used only as 1-3% of raw materials for fishmeal. When comparing the supply chain of fishmeal industry on Andaman Sea side with that of Gulf of Thailand side, they are not very different – only slight changes in percentages, and that fishmeal producers on Gulf of Thailand side also buy trash fish from brokers who collect trash fish from local coastal fishermen.

Figure 62: Map of fishmeal supply chain in central and eastern regions of Thailand

Trash Fish 100%

Fertilizers 1%

Piers 95%

55.1% Fishmeal producers’ fishing boats

Farmers 0.47%

0.21%

Fishmeal producers 92%

Animal feed mills 94.86%

Fish farms 4%

Fish sauce 3% 44.69%

Fish processing manufacturers

Brokers 3.03%

Export 1.65%

Source: Bureau of Agricultural Economics Research, 2012

8 t h R e g i o n a l O f fi c e o f A g r i c u l t u r a l Economics conducted a similar research on the economics of fishmeal production and market of fishmeal industry in the upper southern region in 2007. Fishmeal supply chain studied in this research is separated into two supply chains between Andaman Sea side and Gulf of Thailand side. Both of them are slightly different from the fishmeal supply chain in the central and eastern regions as they do not mention export in the supply chains, and they do not show the distribution of trash fish.

The different percentages are the percentage of trash fish from fishmeal producers’ fishing boats and the percentage of fishmeal sold to brokers. On the Andaman Sea side, trash fish from the fishmeal producers’ boats account for 20.97% of raw material while it is only 3.34% on the Gulf of Thailand side. This means that fishmeal producers on the Andaman Sea side own more fishing boats than those on the Gulf of Thailand side. This is probably because there are enough fish worth operating their own fishing boats.

Figure 63: Map of fishmeal supply chain on Andaman Sea side

Fishing boats of fishmeal producers

Fishmeal producers

Farmers

0.01% 95.48%

Animal feed

in m

Commercial fishing boats

Piers

77.69% Trash fish

tri m

Local fishing boats

20.97% Trash fish

4.51%

1.34%

Brokers

Crab shell meal

Fish procerssing manufacturers

Others Crab shell meal processing factory Source: 8 Regional Office of Agricultural Economics, 2007

Figure 64: Map of fishmeal supply chain on Gulf of Thailand side

Fishing boats of fishmeal producers

92.11% Trash fish

in gs Tr as h

Fish procerssing manufacturers

Coastal fishermen

Brokers

0.72%

Fishmeal producers

3.4%

fis h

tri

Commercial fishing boats

Piers

3.34% Trash fish

m m

Local fishing boats

Farmers

78.07%

21.21% Crab shell meal

1.15%

Animal feed Brokers Others

Crab shell meal processing factory Source: 8 Regional Office of Agricultural Economics, 2007

Supply Chain of Fishmeal Industry in Songkhla Our understanding of the structure, activities, and market shares of fishmeal supply chain in Songkhla is formed from the information received from both secondary research and personal in-depth interviews with representatives of major animal feed mills, managers of fishmeal producers in Songkhla, trash fish brokers, and a pier owner. For the fishmeal producers, we interviewed 8 out

100 of 9 existing fishmeal producers that are based in Songkhla. The supply chain is more complicated and involves more players than those written in “A Study of Economics of Fishmeal Production and Market under the Quality Assurance System” by Bureau of A g r i c u l t u r a l E c o n o m i c s R e s e a r c h a n d

producers, to the most influential player in the chain – animal feed mills, to the users – farmer, and finally to markets, both exports and domestic. However, the main focus of this research is the first four links – fishery business to animal feed mills, so there will be no details on activities of fifth and sixth link.

Figure 65: Map of fishmeal supply chain in Songkhla

Source: Interviews and analysis

“Economics of Fishmeal Production and Market in Upper South Region in 2007” by 8 Regional Office of Agricultural Economics, Bureau of Agricultural Economics Research which we have reviewed earlier in this chapter. In short, the fishmeal supply chain in Songkhla is formed from six links starting from the fishery business who supply the raw materials, to the middlemen at the pier (Pae Pla), to the core of the chain – fishmeal

First link of the supply chain of fishmeal industry in Songkhla is the fishery business which supplies raw materials to the fishmeal producers. There are two types of boats overall: 1) fishing boats and 2) transporting boats (tour boats). Function of fishing boats is to capture fish while that of transporting boats is to provide necessities e.g. foods, water, salt to the fishing boats so that they can continue fishing without returning to the port for the foods or water. Meanwhile, the tour boats will transport catch

101 back to the port to ensure that they are still fresh.

Activities of fish pier (Pae Pla) and brokers

There are two types of fishing boats: 1) local fishing boats and 2) commercial fishing boats. The local fishing boats are smaller than the commercial fishing boats, and usually run by family members. They fish within Thailand’s maritime zone. All the catches land at the port, and for trash fish, they will sell them to brokers who collect trash fish from many boats to sell to fishmeal producers. For the commercial fishing boats, some belong to fish processing manufacturers or fishmeal producers, so they supply all the catches to their owners’ companies. For those that do not belong to fishmeal producers, they will usually sell to their regular customers. We estimate that approximately 5,760 tons48 of trash fish that were landed at Songkhla’s port in 2013 went to fishmeal producers in Songkhla (see Figure 35 for details).

After the boats arrive at the port, economic fish catches will land at the port first, and Pae Pla will auction for the fish they want. Then they will sort the fish by size, and in some case they will cut the heads off for the customers. After that they will sell the fish to exporters, foreign clients, anchovy producers, and seafood wholesalers. Both anchovy producers and seafood retailers will sell the trimmings such as fish head, fish bones and guts to fishmeal producers. After the auctions of economic fish is over, then “Pla Rong-ngan” or factory fish (whole finish that is unpalatable) will be sold to fish processing manufacturers such as canned fish producers, or Surimi producers. For those boats belonging to fishmeal producers, the fish will be sent directly to the mills.

Activities of fishery businesses Their activities can be grouped into three stages: 1) preparing 2) fishing, and 3) landing. During preparing stage, fishing boat owners will borrow money to fund their fishing trips and then buy supplies for the trip including food, water, ice, salt and gas. The next stage is fishing, in which fish is caught by various types of fishing gears depending on target fish. However, some gears i.e. trawlers or push nets, catch everything in their waves. In the sea, caught fish will be sorted by species, stored, and fermented. After that, in landing stage, they will be transported back and landed at the port. Second link is Pae Pla or fish piers and brokers that buy fish from the fishing boats. Piers or Pae Pla here do not refer to a physical structure of port, but rather refer to a type of business that auctions fish from the fishing boats to re-sell; they act like a broker; however, they also provide other services such as sorting and cutting off the heads and separating the offal.

48 49

Then, the fish whose sizes do not meet the standards of fish processing manufacturers but are still fresh are sold to fishball producers. After that process, the fish are sold to fish farmers. After all the factory fish are landed, trash fish are finally landed; they are the last to land among all catch types, and are typically segregated in separate landing areas. Remainders from factory fish and trash fish are then sold together to fishmeal producers. Brokers will collect undersized fish, trash fish and offcuts, and sell them to fishmeal producers. Third link is fishmeal producers. In Songkhla, there are currently nine fishmeal producers still in operation. In 2013, the top five players –Thai Charoen Animal Feed, Pacific Fishmeal Industrial, Paesae Songkhla, Samila Fishmeal, and Jana Fish Industries – together produce approximately 81% of Songkhla’s total fishmeal production of 29,300 tons49. Figure 66 shows the relative sizes of fishmeal producers in Songkhla based on their productions from the largest to smallest.

Interviews with fishmeal producers in Songkhla. Interviews with fishmeal producers and their 2012 income statements.

102

Figure 66: Fishmeal producers in Songkhla, ranked from largest to the smallest

Fishmeal Producer 1. Thai Charoen Animal Feed Co. Ltd. 2. Pacific Fishmeal Industrial Co. Ltd. 3. Paesae Songkhla Co. Ltd. 4. Samila Fishmeal Co. Ltd. 5. Jana Fish Industries Co. Ltd. 6. Songkhla Marine Products Co., Ltd. 7. Southern Fish Powder Factory 1969 Co., Ltd. 8. Sangcharoen Wattana Fisheries Co., Ltd.50 9. Songkhla Fishery Trading Limited Partnership Source: In-depth interviews

The main raw materials used in fishmeal production in Songkhla are trimmings from fish-processing manufacturers e.g. surimi, tuna canning; fish ball producers as well as anchovy producers and fish retailers at the markets which accounted about 80% of the estimated total raw materials of 100,215 tons, or 79,964 tons in2013. Apart from this, fishmeal producers also buy raw materials directly from commercial

fishing boats, as well as brokers who collect trash fish from local fishing boats from both Songkhla and other provinces. This accounted for 20% of raw materials or 20,250 tons. Of this amount, 62% or about 12,609 tons were fish landed in Songkhla; the remaining 38% or 7,641 tons were fish from other provinces such as Satun and Pattani, as well as imported fish.

Figure 67: Raw materials of fishmeal in Songkhla, 1999 â&#x20AC;&#x201C; 2013, divided into trash fish, by-products and other fish

Tons

Raw materials of fishmeal in Songkhla, 1999 - 2011 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Years Trash fish

Other fish

Byproduct

Source: Fishery Statistics Analysis and Research Group (FSARG), DoF, 2013

Since we could not interview Sangcharoen Wattana Fisheries, we estimated its relative size from the 2012 income statement compared with other fishmeal producers.

103 Among 12,609 tons of whole fish landed in Songkhla and went to fishmeal producers in the province, 5,760 tons or 46% were trash fish. Thus, this means that of 25,000 tons of trash fish which we estimated to be landed in Songkhla’s port, only 23% went to fishmeal producers in Songkhla; the remaining 77% or 19,240 tons probably went to fishmeal producers in other provinces. Accordingly, when we incorporate data of raw materials used in 2013 with data from DoF, we get a raw material chart of Songkhla’s fishmeal producers as shown in Figure 67. Since raw materials are crucial to the fishmeal producers, and wild-caught fish are rarer, offcuts from fish-processing manufacturers have played an important role. Fishmeal producers that have fish-processing manufacturers as parent companies will be supplied with trimmings regularly, so their operations are more stable and predictable;

therefore, they can produce more fishmeal than those that do not have fish-processing companies in the group. We also found that all of the top five players have fish-processing manufacturers as their parent companies or own by the same major shareholders as shown in Figure 68. Of the total fishmeal produced in Songkhla in 2013, 36.8% were #2B grade (surimi), 22.9% were fish head grade, 23.2% were #2 grade, and 17.1% were #3 grade. This corresponds with relative quality of fishmeal raw materials in Songkhla as we mentioned earlier, in that the main raw materials are by-products from fish-processing manufacturers. However, if we look the grade of fishmeal produced from Songkhla from the past, we find that Songkhla fishmeal is #3 grade on average. Due to the low quality of trash fish, fishmeal produced with trash fish as main raw material

Figure 68: Relationships between top five fishmeal producers in Songkhla and fish-processing manufacturers Fishmeal producers

Fish-processing manufacturers

Relationships

Thai Charoen Animal Feed Co. Ltd.

Chotiwat Manufacturing Co. Ltd.

Four major shareholders of Chotiwat Manufacturing hold 55% shares of Thai Charoen Animal Feed.

Pacific Fishmeal Industrial Co. Ltd.

Pacific Fish Processing Co. Ltd.

All shareholders of Pacific Fishmeal Industrial are major shareholders of Pacific Fish Processing.

Paesae Songkhla Co. Ltd.

Man A Frozen Foods Co. Ltd.

Four major shareholders of Man A Frozen Foods hold 96.92% of shares of Paesae Songkhla.

Samila Fishmeal Co. Ltd.

Siam International Food Co. Ltd.

Samila Fishmeal holds 11% of shares of Siam International Food, and five major shareholders of Siam International Food hold 69.92% of shares of Samila Fishemal.

Jana Fish Indutries Co. Ltd

Songkhla Canning Co. Ltd

One major shareholder of Songkhla Canning holds 30% of shares of Jana Fish Industries.

Source: Fishery Statistics Analysis and Research Group (FSARG), DoF, 2013 51

Sold grade fishmeal is the lowest grade of fishmeal usually produced from very bad condition trash fish. The smell is very bad and the percentage of protein is the lowest of all fishmeal. In Thai, it is called pla kai (ปลาขาย).

104 is always #3 grade or lower (sold grade51). If we look at historical trends of fishmeal raw material usage â&#x20AC;&#x201C; both Songkhla and Thailand, we observe that the percentages of by-products have increased continuously, while whole fish usage including trash fish has been declining steadily. This confirms the trend shown in Figure 67 that from 2004 onwards, fishmeal producers in Songkhla have shifted from trash fish toward by-products as the main raw material in fishmeal production. Among the top five fishmeal producers, two receive by-products from surimi producers, and three from tuna canning manufacturers. The differences between #2B and fish head grade are 1) freshness 2) percentage of protein 3) odor and 4) percentage of fat. #2B fishmeal is very fresh as it was produced from offcuts of fish used to produce surimi which is for human consumption, so they are fresh and clean. The trimmings from surimi producers usually have fish flesh with them, so they yield high percentage of protein and low fat. Because they

are very fresh and clean, fishmeal produced from them smells good. For offcuts from tuna canning manufacturers, they are heads, guts, and bones that were cut off the fish and barely had any fish flesh left, so the percentage of protein is lower than that of #2B while the percentage of fat is higher because fish heads are full of fat. When compared with trimmings from surimi producers, by-products from tuna canning are less fresh, so the smell of fish head grade fishmeal is then not as good as #2B grade. Grading of fishmeal in animal feed industry is more complicated than official figures cited earlier in Chapter 2 which divides fishmeal into three grades. Figure 69 shows an example of prices of fishmeal announced by CPF on February 8, 2014. Please note that officially CPF is not the one who quotes the prices of fishmeal, but because CPF is the largest fishmeal buyer in Thailand, its prices are commonly used as reference prices in both fishmeal industry and animal feed industry.

Figure 69: Fishmeal prices at Bangkok market announced by CPF on February 8, 2014

Fishmeal

Former prices (Baht) Changes New prices (Baht) January 28, 2014

(+/-)

February 8, 2014

Shrimp grade protein 65% - 99.99%

31.80

+ 1.50

33.30

#1 protein 60% - 99.99%

30.90

+ 1.50

32.40

#1 protein 57% - 59.99%

30.70

+ 1.50

32.20

#2 protein 60% - 99.99%

30.20

+ 1.50

31.70

#2 protein 54% - 59.99%

29.20

0.00

29.20

#2B (Surimi) protein 58% - 99%

31.60

0.00

31.60

#2B (Surimi) protein 52% - 57%

29.30

0.00

29.30

#3 protein 60% - 99.99%

26.00

+ 1.50

27.50

#3 protein 52% - 59.99%

24.80

+ 1.50

26.30

Sold grade

15.30

0.00

15.30

Fish head grade protein 45% - 54.99%

28.10

+ 1.50

29.60

Source: Thai Fishmeal Producers Association, 2014

105 A major difference between rough three grades of fishmeal cited in Chapter 2 and 11 grades in Figure 69 above is that those three grades are further subdivided into: shrimp grade, #2B grade (surimi), sold grade, fish head grade, and #1-3 grades divided into upper and lower. Percentages of protein require for #1-3 upper grade are all between 60%-99.99%. What sets them apart is clearly not the percentage of protein; it is the smell. The smell is the most significant criteria in grading fishmeal, and it usually correlates with TVBN (measure of freshness), i.e. smelly fishmeal usually has high TVBN. Smell of fishmeal will attract fish, shrimp, and livestock to eat the feed while percentage of protein will affect growth rate, so the key grading criteria are smell, protein, and TVBN. Activities of fishmeal producers Their activities can be divided into three stages: 1) pre-processing 2) processing, and 3) post-processing. In pre-processing, their activities include buying criteria setting, supplier screening, buying, raw materials receiving, raw materials checking, and documents checking52 . Fishmeal producers will set buying criteria based on grades of fishmeal they produce, and after that they will screen suppliers so that they get raw materials that meet their criteria. Then, when they agree to buy, fishmeal producers will send a truck to pick up raw materials, but in some cases, suppliers will deliver them at the fishmeal producersâ&#x20AC;&#x2122; factories. After that, they will check the quality of the raw materials if they are as agreed or if they are acceptable. Then, the documents will be checked (for those who require documents). In processing stage, the activities vary depending on their operations whether they produce fishmeal only or they also produce fish oil. This depends on their raw materials. If they use a lot of offcuts, especially fish heads that are full of fat, they usually produce fish oil. If they produce fish oil cooking and squeezing process will be added. Trash fish usage has no effect on the operation â&#x20AC;&#x201C; even it is mixed up with 52

Only fishmeal producers that require documents e.g. MCPD

Figure 70: Fishmeal operation flow chart

Raw material receiving Raw material checking CookingSqueezing Drying Sieving 1st temperature reducing Additive adding Grinding 2nd temperature reducing Quality checking Mixing Packing Source: In-depth interviews and factory visits

mud. But if the trash fish is very mashed up until it becomes liquid, solid raw materials must be added so that they can be moved by a screw conveyor to a cooker. There are two types of fishmeal operation system in Songkhla: steaming system and hot oil system. The only difference between the two is one uses steam in the drying process, and the other uses hot oil. The rest of the operations

106 a r e t h e s a m e . H o w e v e r, i n S o n g k h l a steaming system is more popular; only a few use hot oil system, and it is believed that fishmeal produced by hot oil system can be contaminated from substances in the oil. Their operations start after raw material received and checked for the quality of raw materials i.e. freshness, and contaminants such as rubber gloves. Then, they are moved by a screw conveyor to a cooker (in case that they will produce fish oil) after that the cooked offcuts are squeezed the liquid out. The liquid will be piped to fish oil operation, and fishmeal will be transported to a dryer. If they do not produce fish oil, raw materials are transported to dryers after they were received. When they are dried, either by steam or hot oil, they will be sieved to separate big bones, and then cooled. After that additives are added, and fishmeal is ground and reduced temperature again. In post-processing stage, fishmeal will be checked for its quality e.g. color, humidity, odor, and mixed with other lots of fishmeal so that it matches with a specification of each buyer. After that it is packed and delivered to the buyers. The fishmeal operation flow chart is shown in the Figure 70. Fourth link is animal feed mills. After the fishmeal producers produce fishmeal, mostly they will sell it to animal feed mills, and sell some to farms that mix their own feed. Some will be sold to brokers who add values by mixing different grades of fishmeal and then sell it to animal feed mills or farms. Animal feed mills inspect the quality of the fishmeal and grade them. If the fishmeal producers do not agree with their inspection and are not satisfied with the prices they offer, they have to bring the fishmeal back and bare the transportation cost. From our study of Songkhla’s fishmeal industry supply chain, we found that in 2013, 66% of fishmeal produced in Songkhla went to animal feed mills, 24% were bought by brokers, and the remaining 10% were sold to farms. And the largest and most important buyer of fishmeal in Songkhla is CPF because of 66% of fishmeal

sold to animal feed mills, CPF bought about 8,463 tons or 45%, and six out of eight fishmeal producers said they sold their fishmeal to CPF. The next largest buyer is Betagro buying 3,270 tons or 17% followed by Thaiunion Feedmill (TFM, 51% owned by Thaiunion Frozen Foods) and Lee Pattana at 2,052 tons (11%) and 1,680 tons (9%) respectively. Krungthai Feedmill only bought 600 tons of fishmeal or 3%, while the remaining 15% went to other small and medium size animal feed mills. 5,760 tons of trash fish could produce 1,527 tons of #3 grade fishmeal, of which 37.6% or 575 tons were sold to CPF, 42.7% or 652 tons to brokers, and 19.7% or 300 tons to farms. Nevertheless, CPF bought various grades of fishmeal - #2, #2B, #3, and fish head grade – from six fishmeal producers while other animal feed mills bought only one or two grades from a single or a couple of fishmeal producers which are their regular suppliers. Summary of trash fish usage and map of Songkhla’s fishmeal industry supply chain with details is shown in Figure 71. Activities of animal feed mills Activities in the pre-processing stage include criteria setting, quality checking, and document checking. First, each animal feed mill will set the buying criteria such as the grades of fishmeal, percentage of protein, TVBN, temperature, and contamination. They specify the grades and the prices they will buy according to types of animal feeds they produce as different types of animal feeds use different types of fishmeal; for example, feeds for duck may contain “fishier” fishmeal than other types, while piglet feeds cannot use fishmeal containing crab shell meals as it will hurt stomachs of piglets. While livestock and poultry feeds can use low protein fishmeal, aquaculture feeds need high protein fishmeal, especially shrimp feeds and feeds for fish that eats meats. Some animal feed mills may buy more fishmeal produced from by-products as they want to shift from bycatches to by-products that are perceived to have less environmental impacts. TFM, for example, has products which are “zero

107 bycatch”. These products, accounting for 33.5% of the total, use fishmeal produced from by-products only. The second step is a quality checking process. After fishmeal producers whose fishmeal meet the criteria of the animal feed mill and agree with the offered prices, fishmeal will be delivered to the animal feed mill. On the arrival, a fishmeal truck will be queuing for the first sampling. Sample will be taken from every bag possible from the top and the back row using a “bag probe.” A sample taker will look if there are insects mixed in the fishmeal, if there are, they will be rejected. And then he will look at the color of fishmeal. If the color is different from a previous bag, it will be kept in a separate bag. Then the sample taker will touch sample of fishmeal to sense the temperature. If it is quite hot, they will use a digital temperature checker to re-check if it is acceptable. After touching, a sample taker will smell the fishmeal to see if they smell the same or different. If they smell different, it will be kept in a separate bag. Then, all the samples will be mixed and tested in the lab. After the first sampling, bags of fishmeal will be loaded. Then, sample will be taken from every bag. The samples will be mixed, tested in the lab, and kept for three months just in case that there is a problem and the sample is needed to be re-tested. Then, documents of the fishmeal will be checked if animal feed mills require the documents. During the processing stage, raw materials will be cooked so that they can be ground easily, and then they will be sieved and ground in order to be mixed easily. After that they will be cooled, mixed and sent to a pellet mill. Then,

feed pellets will be dried and cooled one more time before they are filtered. For postprocessing stage, feeds will be packed and delivered to customers (Pollution Control Department, Ministry of Natural Resources and Environment, 2005). Fifth link is farms – both livestock and aqua-cultured farms. They buy animal feeds produced by the animal feed mills of the fourth link which use fishmeal as a main protein ingredient. However, some farms will buy all the ingredients and mix them themselves. Of the total fishmeal produced in Songkhla in 2013, 10% or 2,850 tons were sold to farms. Aqua-cultured animals – fish and shrimps – need to be fed by high protein feeds. Therefore, when shrimp farms were hit by Early Mortality Syndrome (EMS), the demands for shrimp feeds dramatically declined, and it affected the domestic demands for fishmeal as well. S i x t h l i n k i s e x p o r t a n d d o m e s t i c consumption. Since January 1, 2010, EC requires catch certificates from the exporters who will export marine products. This affects the supply chain of fishmeal industry because shrimp exporters will need catch certificates from the animal feed mills who produce shrimp feeds to show that the exported shrimps were not fed by shrimp feeds produced from IUUfishing trash fish. This effectively forces animal feed mill exporters to require catch certificates from the fishmeal producers who need to ask for the fishing logbooks from the fishing boats. Overall, fishmeal supply chain in Songkhla and market shares of major players in the chain is summarized in Figure 71.

Pattani 1,108 tons without MCPD-FM (15%)

Satun 5,910 tons without MCPD-FM (77%)

Imports 623 tons with MCPD (8%)

Other whole fish 6,849 tons (54%)

Trash fish 5,760 tons (46%)

Others 7,641 tons (38%)

Songkla 12,609 tons (62%)

Without MCPD 9,641 tons (12%)

With MCPD 70,324 tons (88%)

Whole fish 20,250 tons (20%)

Trimmings 79,965 tons (80%)

Other provinces 19,240 tons (77%)

1,308 tons (19%) Fish head grade 100% traceability

3,257 tons (48%) #3 grade

Source: In-depth interviews and telephone interviews with 8 out of 9 fishmeal producers in Songkhla

2,605 tons (80%) traceability

625 tons (20%) non-traceability (made from trash fish)

1,800 tons (26%) #2B grade 100% traceability

480 tons (7%) #2 grade 100% traceability

Brokers 6,845 tons (24%)

Animal feed mills 18,814 tons (66%)

Farms (10%) 2,850 tons 100% traceability

600 tons #3 grade (21%)

8 Fishmeal producers 100,215 tons of raw materials 28,509 tons of fishmeal

300 tons (50%) (made from trash fish)

- 5,760 tons or 5.7% of 100,215 tons of raw materials were trash fish. - 2,400 tons or 42% of 5,760 tons of trash fish had MCPD-FM. - 3,360 tons or 58% of 5,760 tons of trash fish do not have MCPD-FM. - 1,527 tons or 5.3% of 28,509 tons of fishmeal produced from trash fish. - 652 tons or 42.7% of 1,527 tons of fishmeal produced from trash fish were sold to brokers. - 575 tons or 37.6% of 1,527 tons of fishmeal produced from trash fish were sold to CPF. - 300 tons or 19.7% of 1,527 tons of fishmeal produced from trash fish were sold to farm. - 100% of 652 tons of fishmeal produced from trash fish that were sold to brokers could not be traceable. - 300 tons or 52.2% of 575 tons of fishmeal produced from trash fish that were sold to CPF could be traceable - 100% of 300 tons of fishmeal produced from trash fish that were sold to fram could not be traceable.

Summary of trash fish usage in supply chain of fishmeal industry in Songkhla

Without MCPD-FM 2,349 tons (34%)

With MCPD-FM 4,500 tons (66%)

Without MCPD-FM 3,360 tons (58%)

With MCPD-FM 2,400 tons (42%)

Songkla 5,760 tons (23%)

Trash fish landed in Songkla 25,000 tons

2,250 tons #2B grade (79%)

Other 2,748 tons (15%) #2 grade 100% traceability

Krungthai 600 tons (3%) #2B grade 100% traceability

Leepattana 1,680 tons (9%)

TFM 2,052 tons (11%) #2 grade

Betagro 3,270 tons (17%) fish head grade 100% traceability

CPF (45%) 8,464 tons

600 tons (36%) #2B grade traceability

1,080 tons (64%) #2 grade non-traceability

972 tons (47%) traceability

1,080 tons (53%) non-traceability

6,839 tons (81%) traceability

1,625 tons (19%) non-traceability

1,962 tons (29%) fish headgrade

737 tons (11%) #3 grade

3,900 tons (57%) #2B grade

240 tons (3%) #2 grade

300 tons (41%) (made from trash fish)

275 tons (17%) #3 grade (made from trash fish)

1,350 tons (83%) #2B grade

CPF = Charoen Pokphand Foods, TFM = Thaiunion Feedmill (subsidiary of Thaiunion Frozen Products), Lee Pattana = Lee Pattana feed mill, Krung Thai = Krung Thai feed mill; red items = trash fish usage

Figure 71: Summary of trash fish usage (highlighted in red) and map of supply chain of fishmeal industry in Songkhla

108

109 Data source and calculation methodology In in-depth interviews with fishmeal producers, we asked them to average the amount of raw materials they used monthly, percentage of their raw materials with MCPD or MCPD-FM, their production ratios, grade of fishmeal they produce, and percentage of each major customer (animal feed mill) who purchase their products. 1) Raw materials Trimmings We found that eight fishmeal producers used about 100,215 tons of raw materials to produce around 28,509 tons of fishmeal. Of 100,215 tons of raw materials, 80% or 79,965 tons were offcuts from fish-processing manufacturers e.g. surimi producers, fish ball producers, or fish canning manufacturers; and 20% or 20,250 tons were whole fish. Since trimmings were from fish-processing manufacturers for human consumption, 88% of the total offcuts or about 70,324 tons were by-products that had MCPD which tells where the fish came from or where they were caught by which vessels. Only 12% or 9,641 tons did not have MCPD. Some of these by-products actually had MCPD, but the fish-processing manufacturer did not release the MCPD, saying it was trade secret. l

Whole fish Of 20,250 tons of whole fish, 62% or 12,609 tons were fish landed in Songkhla, and 38% or 7,641 tons were from other provinces including imports. Fish landed in Songkhla can divided into two groups: trash fish and other whole fish (true trash fish and undersized fish left over at the pier). For the trash fish, in case that they did not tell us directly, we evaluated from the grade of fishmeal they produce and the source of the fish. From our calculation, around 5,760 tons of trash fish landed in Songkhla were used to produce fishmeal; this was 46% of the whole fish from Songkhla. The other whole fish were 6,849 tons or 54% of the whole fish from Songkhla. 66% of these or about 4,500 tons l

had MCPD-FM, and the rest 34% or 2,349 tons did not have. For the fish from other places, 5,910 tons or 77% of 7,641 tons were from Satun, and 1,108 tons or 15% were from Pattani. Fish from both provinces were without MCPD-FM. Please note that these fish were bought by one fishmeal producer who did not require the documents. The rest 8% or 623 tons were imported with MCPD. The fishmeal producer did not import the fish by itself, but these fish were undersized imported fish sold from a fish canning manufacturer. 2) Fishmeal After we knew each fishmeal producerâ&#x20AC;&#x2122;s average monthly amount of raw materials used, their production ratios, and grade of fishmeal they produce, we then calculated the amount of each grade of fishmeal produced by each fishmeal producer. Of 28,509 tons of fishmeal produced in Songkhla in 2013, 36.8% or 10,500 tons were #2B grade, 23.2% or 6,600 tons were #2 grade, 22.9% or 6,540 tons were fish head grade, and 17.1% or 4,869 tons were #3 grade. And among 4,869 tons of #3 grade fishmeal, 1,527 tons or 31.4% were fishmeal produced from trash fish. 3) Fishmeal Buyers After we calculated each grade of fishmeal each fishmeal producer produce, we then asked them whom they sold it to at what percentage, and after that we calculated the amount of each grade of fishmeal each fishmeal buyer bought. Fishmeal buyers can be divided into three groups: 1) animal feed mills 2) brokers and 3) farms. Animal feed mills are the largest group, buying 18,814 tons or 66% of 28,509 tons in 2013, while brokers bought around 6,845 tons or 24%, and farms bought 2,850 tons or 10%. Major animal feed mill buyers consist of five major animal feed mills and unidentified small and medium animal feed mills which we labeled

110 as “others”. The five major animal feed mills include Charoen Pokphand Foods (CPF), Betagro, Thaiunion Feedmill (TFM), Lee Pattana, and Krungthai. CPF bought 8,464 tons or 45% of 18,814 tons, Betagro 3,270 tons or 17%, TFM 2,052 tons or 11%, Lee Pattana 1,680 tons or 9%, Krungthai 600 tons or 3%, and others 2,748 tons or 15%.

Lee Pattana Lee Pattana bought 1,680 tons of fishmeal 64% of which or 1,080 tons were #2 fishmeal with no documents for traceability. And the other 36% or 600 tons were #2B fishmeal produced from raw materials with documents for traceability. l

Krungthai Krungthai bought 600 tons of #2B fishmeal, all of which were produced from raw materials with documents for traceability. Like Betagro, Krungthai bought the fishmeal from a single source that can have documents for traceability of all of fishmeal it produces. l

CPF Of 8,464 tons of fishmeal CPF bought, 81% or 6,839 tons were fishmeal produced from raw materials with documents for traceability, and in case of CPF, they were fishmeal certificates. The others 19% or 1,625 tons were fishmeal without fishmeal certificate. Among 6,839 tons of fishmeal with fishmeal certificates, 3,900 tons or 57% were #2B fishmeal, 1,962 tons or 29% were fish head grade, 737 tons or 11% were #3 grade, and 240 tons or 3% were #2 grade. Of 737 tons of #3 fishmeal, 300 tons or 41% were fishmeal produced from trash fish. As for 1,625 tons of fishmeal without fishmeal certificates, 1,350 tons or 83% were #2B grade, and 275 tons or 17% were #3 grade fishmeal produced from trash fish. In total, CPF bought about 575 tons of fishmeal produced from trash fish or 6.8% of fishmeal CPF bought from Songkhla. l

Betagro Betagro bought 3,270 tons of fish head grade fishmeal all, of which had fishmeal certificates. This is because Betagro bought the fishmeal from a single fishmeal producer that can provide fishmeal certificates to all of the fishmeal it produces as its raw materials are byproducts from the mother company which already has MCPD of fish it bought, so the mother company then provided MCPD – documents for traceability – to the fishmeal producer. l

TFM TFM bought 2,052 tons of #2 fishmeal 47% of which or 972 tons were produced from raw materials with documents for traceability. And the other 53% or 1,080 tons had no documents. l

Others Unidentified small and medium animal feed mills altogether bought 2,748 tons of #2 fishmeal produced from raw materials with documents for traceability. l

Brokers Brokers bought 6,845 tons of four different grades of fishmeal including 3,257 tons of #3 or 48% of the total fishmeal they bought, 1,800 tons of #2B produced from raw materials with documents for traceability or 26%, 1,308 tons of fish head grade with document for traceability or 19%, and 480 tons of #2 produced from raw materials with documents for traceability or 7%. l

Of 3,257 tons of #3 fishmeal, 2,605 tons or 80% were produced from raw materials with documents for traceability, and the other 20% or 652 tons were produced from trash fish without documents for traceability. Farms Farms bought 2,850 tons of two grades of fishmeal produced from raw materials with documents for traceability. Of 2,850 tons, 79% or 2,250 tons were #2B, and the other 21% or 600 tons were #3 50% of which or 300 tons were produced from trash fish. l

Activities

ii) fishing license (to legalize fishing gears and to combat illegal fishing)

ii) MCPD-FM whole fish when i) vessel purchased registration (to combat (to legalize unreported vessel and to fishing and combat to ensure illegal traceability)) fishing)

Caught fish will be sorted by species, stored, and fermented.

i) logbook (to combat unreported fishing)

Fish will be transported back and landed at the port

Catch fish by various types of fishing gears depending on their target fish.

Fishing boat owners will borrow money to fund their fishing trips.

Buy foods, water, ice, salt and gas.

Landing

Fishing

Preparing

Fishing vessels

Collect undersized fish, trash fish and offcuts, and sell them to fishmeal producers.

Auction for the fish they want.

i) MCPDFM whole fish when purchased (to combat unreported fishing and to ensure traceability

Re-sell

i) MCPDFM whole fish when purchased (to combat unreported fishing and to ensure traceability)

Collecting

Sorting

Sort the fish by size, and in some case they will cut the heads off for the customers.

Brokers

Piers

i) MCPD-FM for whole fish (to combat unreported fishing and to ensure traceability) ii) MCPD, catch certificate, form A, form B for by-product from processors (to combat unreported fishing and to ensure traceability))

Check documents

Check the quality of the raw materials if they are as agreed or if they are acceptable.

Receive raw materials.

Screen suppliers so that they get raw materials that meet their criteria.

Set buying criteria based on grades of fishmeal they produce.

Preprocessing Raw materials are cooked squeezed dried sieved 1st cooled added additives ground 2nd cooled

Processing

i) MCPD and fishmeal certificate (to combat unreported fishing and to ensure traceability)

It is packed and delivered to the buyers.

i) collect and submit all documents to DoF in order to be verified. (MCPD-FM, MCPD, catch certificate, form A, form B, and fishmeal certificate)

Set the buying criteria such as the grades of fishmeal, percentage of protein, TVBN, temperature, and contamination. Check the quality by sampling and testing the fishmeal.

Fishmeal will be checked for its quality. Fishmeal is mixed with other lots of fishmeal so that it matches with a specification of each buyer.

Preprocessing Raw materials are cooked sieved ground 1st cooled mixed pelleted dried 2nd cooled filtered

Processing

Animal feed mills Postprocessing

Fishmeal producers

Figure 72: Activity map of fishmeal supply chain and practices under Thailandâ&#x20AC;&#x2122;s fishmeal certificate

Feeds are packed and delivered.

Postprocessing

111

112 7.2 Responsible sourcing of fishmeal raw material As stated in chapter 5, standards on fishery are designed to promote responsible fishing practices to achieve the goal of long-term sustainability. Standards in the area of fishmeal, namely IFFO RS, ASC, Global G.A.P., and BAP, all require responsible practices from sourcing material to end products. Animal feed mills aiming to get certified are inevitable but to fulfil the qualifications. CPF and Thai union are examples of Thai feed mills that actively respond to the requirements, although there remain significant gaps due to shortcomings of Thailand’s current fisheries law and lack of location-based tracking. Standards that both firms engage in53 set the criteria for fishmeal sourcing to be traced back to where and how raw materials originate. Fishmeal must be produced from traceable, non-IUU fishing, and uses no endangered species as raw materials. Consequently, feed mills attempt to incorporate suppliers’ practices into their practices and invent measures to better manage their supply chain. As stated earlier, the fishmeal supply chain in Songkhla comprises six links from fishery to animal feed market. The focus of this research is, however, on the first four links which involves three groups of players, namely suppliers of raw materials54, fishmeal producers, and animal feed mills. Their activities regarding responsible sourcing of fishmeal are summarized by key players below.

7.2.1 Animal feed mills A call for responsible sourcing from an international market, particularly the European Union, is the key factor driving animal feed mills to respond by inventing program to enhance their supply chain management and to display

53 54 55 56

their intention toward sustainability. As the most influential payers in the chain, feed mills are the most capable of motivating changes in their suppliers’ practices. 1) Thaiunion Feedmill Thaiunion Feedmill (TFM), a subsidiary of Thaiunion Frozen Products (TUF), is currently developing the program to promote responsible sourcing as a part of sustainability project of its mother company, TUF. Monetary incentive is to be adopted in order to increase players’ participation which is the essence of the program. Pilot projects will be launched this year (2014) in Phang-Nga and Chumphon province, where large share of supply come from55. Presently, the company is committed to BAP standard; accordingly, it needs to obtain declarations from suppliers on the species and fishery origins of each batch of fishmeal, and keep record of “one up, one down”. According to field interviews, 2,052 tons of fishmeal produced in Songkhla was sold to the company last year; none is originated from Songkhla trash fishing56. Forty-seven percents of this amount come from affiliated surimi firm, therefore, it is traceable. Fishmeal producer is requested to fills the form provided by the company. This form identifies species and amount of raw materials as well as fishing area. However, it is a self-reported form and the company does not require other proofs of raw material sourcing from the suppliers’ suppliers since the company only complies with one down traceability. Despite being certified under BAP standard, 53% of fishmeal the company bought from Songkhla in 2013 is without declarations of species and origins of raw materials. Around 70% of untraceable fishmeal is sourced from

Suppliers of raw materials include fishing vessels, brokers, Pae Pla, and processing plants. From an interview. Evaluate from grade of fishmeal. Fishmeal grade 3 and below are made from trash fish. Thaiunion Feedmilldid not buy grade 3, or below, fishmeal last year. Evaluation by grade of fishmeal. Fishmeal grade 3 and below are made from trash fish. Thaiunion Feedmill did not buy grade 3 or below fishmeal in 2013.

113 wild fishery, though, not from trash fishing, nothing can assure responsible fishing practices. 2) CPF T h a t T h a i l a n d fi s h e r y i n d u s t r y i s internationally known for unsustainable and irresponsible fishing would harm CPF credibility and competitiveness in a global market. In response to the market pressure, the company has entered IFFO last year and is currently in preparation stage for applying the IFFO RS. For this reason CPF very active in co-inventing and promoting the fishmeal certificate and is so far the only feed mill engaging in the scheme. The objective of the scheme is to ensure responsible fishing practice and fishmeal is produced from raw materials that exclude IUU fishing. Documents, as mentioned earlier in chapter 5, were designed to fulfil the scheme requirements. Participation of all players in the chain is necessary for enabling a full traceability. For this reason, CPF offers a price premium of 3 baht per kilogram to fishmeal producers for batches of fishmeal, of which its sourcing can be traced back, whether produced from by-product or whole fish and regardless the grade of fishmeal 57. The company expects fishmeal producers to requests proof of document from their suppliers and also expects the suppliers to request document from the previous ones. This way a full traceability is assured. According to CPF, before the scheme implementation all fishmeal is considered non-traceable and cannot be claimed to be responsibly sourced. In earlier 2014, around 50% of fishmeal sold to CPF is traceable and certified. The number is different for fishmeal supplied from Songkhla â&#x20AC;&#x201C; around 80% of fishmeal is certified while only 20% is not. This represents that a monetary i n c e n t i v e i s c o n s i d e r e d p e r s u a s i v e t o incorporate players into the scheme. However, it is a challenge for CPF to reduce fishmeal

57 58 59

produced from untraceable sources so as to meet IFFO RS standard. That CPF does not have the mechanism to monitor or manage the allocation of a price premium may exclude some players out of the scheme and obstruct the company to reach a goal of full-certified fishmeal. In addition, that IFFO RS requires certified product to be segregated to those uncertified would necessitate CPF to develop a monitoring system in the future. Lastly, it is worth noting that there were 575 ton of fishmeal produced from trash fish sold to CPF, about half was traceable and got a fishmeal certification. This indicates that the scheme is not capable of excluding trash fishing from fishmeal production. 3) Other feed mills Other feed mills refer to Betagro, Lee Pattana, and Krungthai Feedmill. All of them have engaged in neither a fishmeal certificate scheme nor any international standards58. Betagro and Krungthai Feedmill purchased 3,270 and 600 ton of fishmeal from Songkhla fishmeal producers last year respectively. All fishmeal sourcing is traceable. Betagro were supplied from fishmeal producer whose raw materials were sourced from its tuna processing mother Company. Likewise, Krungthai Feedmill got supplied mostly from by-product fishmeal producer. Therefore, the product was 100% traceable and the fishmeal producers are able to prepare documentary proof, though, not requested by both feed mills. As for Lee Pattana, 36% of fishmeal bought from Songkhla fishmeal producers last year was traceable. Fifty-eight percents of total fishmeal were produced from non-traceable whole fish59. This indicates a market for irresponsible sourcing fishmeal that allows unsustainable fishing practice to continue.

Interview with CPF, 13 February 2014. No information about reasons behind their decisions or information about their future plan toward sustainable sourcing of fishmeal as they all reject an interview Mostly from Pattani and Satun

114 Figure 73 ranks five major animal feed mills based on the percentages of fishmeal traceability from the highest to the lowest. Please note that traceability here does not exclusively mean a fishmeal certificate. Traceability here includes fishmeal produced from raw materials with documents for traceability such as MCPD and MCPD-FM, but it will not have a fishmeal certificate with it if the fishmeal producer did not issue the fishmeal certificate. Some fishmeal producers issue fishmeal certificates for the fishmeal produced from raw materials with MCPD or MCPD-FM; these fishmeal producers usually are those who sell to CPF since CPF gives monetary incentives of three baht per kilogram for fishmeal with valid fishmeal certificates. However, some fishmeal producers see this as an extra process which they will not do unless the buyer will request and/or pay for it.

2) fishmeal producers influenced by monetary incentive, and 3) fishmeal producers influenced by other factors. 1) Fishmeal producers with no incentive There are two out of eight interviewed fishmeal producers that do not trade with CPF ; therefore, they are excluded from the scheme. One of them stated that it had no incentive to trace its raw materials or prepare document in order to be certified. There was no benefit of doing so since its trading partners did not request any certification. Ninety percent of its total raw materials are whole fish, of which sourcing practice; including IUU fishing, cannot be traced. However, it only produces grade-2 fishmeal, which implies that probably no trash fish is used as raw material.

Figure 73: Animal feed mills based on fishmeal traceability, ranked from highest % to lowest % Company

% of Traceability

Amount (tons)

Note

Betagro

100%

3,270

Buys 100% from a single fishmeal producer that is 100% traceable

Krungthai

100%

600

Buys 100% from a single fishmeal producer that is 100% traceable

CPF

81%

6,839

TFM

47%

972

Lee Pattana

36%

600 Source: Field interviews by research team, 2014.

7.2.2 Fishmeal producers None of fishmeal producer in Songkhla gets their plant certified under any international standards. The only scheme they currently join is Thailand’s fishmeal certificate scheme. In order to identify their activities and incentives regarding responsible sourcing of fishmeal under this scheme, fishmeal producers in Songkhla can be divided into 3 groups as follows: 1) fishmeal producers with no incentive, 60

The other fishmeal producer is a subsidiary of Thaiunion Group, and this is likely to be the reason for not selling to CPF. It was requested by Thaiunion Feedmill to fill the form declaring species and amount of raw materials as well as fishing area; however, fishmeal sold to Thaiunion Feedmill accounted for 30% of total fishmeal, leaving another 70% without any documentary verification. Nevertheless, the factory manager stated that raw materials mostly come from its mother company’s surimi

The reasons for not trading with CPF – one of them is a subsidiary of Thaiunion Group, the other is due to product qualification.

115 processing plant, while a small portion comes from whole fish. The fishmeal producer claims that all raw material used are traceable. 2) Fishmeal producers influenced by monetary incentive There are five fishmeal producers in this category. From interviews, they all agreed that to fulfil the scheme requirement and prepare all documents increased their administrative cost, training employees and instructing suppliers in particular. They would not participate in the scheme unless a price premium is given. Three of five producers are supplied with raw materials from their mother processing company so it is easier for them to request documents compare to those purchasing from vessels, Pae Pla, or brokers. Shares of price premium allocated to suppliers of raw materials vary from 0.2-1 baht per kilogram of raw materials. However, none of these fishmeal producers shares the received price premium with its mother processing company. They stated that whether or not they requested, their mother company need to prepare those documents for export anyway. Fishmeal producers in this group only prepare traceability document for fishmeal batches that are sold to CPF, but not all fishmeal sold to CPF is traceable. Last year, 6,501 ton of fishmeal from producers in this group were sold to CPF, 75% are of traceable while the rest of 25% are non-traceable. The proportion is compatible when considering fishmeal sold to others, 80% is traceable and 20% is non- traceable. When considering types of raw materials, fishmeal sold to CPF is around 81% of by-products and 19% of whole fish; fishmeal sold to other is 80% by-products and 20% whole fish. It can be concluded from these figures and interviews that a fishmeal certification scheme does not affect how raw materials are selected. 3) Fishmeal producer influenced by other factors There is only fishmeal producer in this group. Unlike others, it is not influenced by a price premium offered by CPF. It is supplied by

tuna processing plant which is its mother company; hence, its fishmeal is totally traceable. Documentary proof of product sourcing is 100% prepared, declared to the purchasers regardless of their requests. According to an interview with the factory officer, this is because fishmeal produced here contains low protein compare to others. It cannot compete in quality when protein is an essential component, therefore, documentary proof demonstrating full traceability of raw materials origin is offered to build credibility and trustworthiness. This indicates that the key factor influencing this fishmeal producer is competitiveness rather than monetary incentive.

7.2.3 Suppliers of raw materials Suppliers of raw materials can be classified into 2 groups which are 1) processing plants, and 2) fishing vessels, Pae Pla, and brokers. 1) Processing plants As stated in the previous chapter, 5 of 8 fishmeal producers are supplied by their processing plants, which are their mother company. Processing plants practices to show their conformity to a fishmeal certificate scheme is to provide traceability document when required. Documents for surimi processing plant and tuna processing plant are slightly different as mentioned in chapter 5. According to interviews, the processing plants never get a share of a price premium but they still provide all documents requested in order to facilitate their subsidiary. 2) Fishing vessels, Pae Pla, and brokers Unlike processing plants, players in this group are requested to prepare MCPD-FM as a proof of responsible sourcing. For fishing vessels, it is necessary to legalize their vessel and gear as well as submit their logbook to the authority when land. These players will receive share of a price premium range from 0.2-1 baht per kilogram of raw material if batch of fishmeal produced from their supply is certified. Figure 74 presents proportions of fishmeal produced from total whole fish and non-traceable whole fish by purchasers.

116

Figure 74: Fishmeal produced from whole fish and fishmeal produced from non-traceable whole fish by purchasers (percentage)

Share of fishmeal produced from whole fish (%)

Share of fishmeal produced from non-traceable whole fish (%)

CPF

Lee Pattana

Thaiunion Feedmill

Krungthai

Betagro

Other feed mills

brokers

farms

Total

100

Source: calculated from interviews with 8 fishmeal producers in Songkhla

Figure 74 shows that CPF accounts for 24% of fishmeal that produced from whole fish. This number declines when considering only fishmeal produced from non-traceable whole fish. This indicates the effect of a fishmeal certificate scheme on CPF purchasing of fishmeal from Songkhla. The impact on wild fish sourcing may not be significant since there is still a big market for non-traceable whole fish.

7.3 Supplementary information:

field research at Ta Sa-aan Port

â&#x20AC;&#x153;Songkhla (Ta Sa-aan) Fishing Portâ&#x20AC;? is the biggest fishery port in Songkhla operated by the Fish Marketing Organization (State Enterprises), under the ministry of Agricultural and Cooperatives. The fish are caught from both domestic waters as well as from Malaysian and Indonesian territorial waters. It could be considered as a small regional fishery market where all types and all qualities of marine animals are sorted, auctioned, and distributed to domestic and international seafood markets worldwide.

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Landing and Logistics of the Port Ta Sa-aan (ท่าสะอ้าน) Port can be divided into three main areas: markets worldwide. Figure 75: Ta Sa-aan Port

1) Local fishing boat landing area. (North) 2) Economic fish landing area (Middle) 3) Trash fish landing area (South)

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Figure 76: Ta Sa-aan Port Landing Area

Firstly, commercial fishing boats land at economic fish landing area (2), where the most valuable sea products are immediately sorted by the workers and auctioned by the middlemen or Pae-Pla (แพปลา) who usually have ties with exporters and international buyers, as well as major domestic markets. From field observation, we found that significant amount of fish from commercial fishery boats are juvenile marine animals which should not be caught at these sizes and ages. Most marine animals landed here will be exported to international brokers.61

Fishmeal Supply Chain at Ta Sa-aan Pier Commercial Fishery Boats

After all valuable sea products have been moved from boats to the pier and sorted, these commercial fishery boats will later move to the trash fish landing area (3). The trash fish that are normally stored at the bottommost area of the boats will be moved to the pier and transported directly to the fishmeal factories.

Fishmeal processors usually deal with boats directly to secure their supply chain. It is unlikely that the trash fish will be auctioned at the pier like other types of marine products. Each boat owner has his own relationship with a certain fishmeal processor and usually contacts his buyer directly prior to landing. Since one of the major threats in this industry is the sharp decline in fish stocks and marine animal supplies, in some cases, the fishmeal processors provide financial assistance in form of credit called “Giaw” ( เกี๊ ย ว ). The credit is normally given to the boat owner in advance to help with their petrol, labor and other costs, under the condition that the later would only deliver fish to the creditor.62

Local fishermen usually land at the local fishing boat landing area (1), where their marine animals, namely squid and small fish, are sorted then sold to small middlemen. The products landed here are normally sold to local and domestic markets.

Some of the middlemen at the port are representatives of the fishmeal processing companies. For example, the owner of Wallop (วัลลภ) Pae-pla also owns a fishmeal factory called Sang Charoen. Moreover, Wallop PaePla also owns 11 boats. Together with other

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Interview with Mr.Rai (Maliwan Pae-pla) Interview with Mr.Rai (Maliwan Pae-pla) and representative of Wallop Pae-Pla

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boats in its networks, this middleman alone delivers trash fish directly to its mill 10-20 tons a day.63 Local Fishery Boats Although with less amount, these smaller players also have trash fish products to sale. Unlike the commercial fishery boats which contact factories directly, the local fishermen sale their trash fish to the “broker” which will collect and then later deliver trash fish to fishmeal factories. Major Brokers at Ta Sa-aan According to the interviews, there are two major brokers who buy and collect the trash fish and fish parts from the port for sending to fishmeal factories, namely “Jane-Jub” and “Choke Sai Thong” Normally the Jane-Jub Pae-Pla buys trash fish from smaller brokers or the smaller middlemen who doesn’t have direct tie with factories64. Another source of their supplies comes from fish parts and fish heads which are primarily separated at the port. The left over parts will be sold to Jane-Jub. Like the big boats, Jane-Jub also has a long-term relationship with couple of factories which it regularly sends the trash fish to, for example, “Pacific (PFP)” and “Sripitak”. At the moment, Jane-Jub delivers approximately 6-7 tons of trash fish to factories daily. While 10 years ago, they delivered about 20-30 tons/day.

63 64

Other Information It is very difficult to find official data that would represent the real number of trash fish amount landed and delivered from this port. Although there are records kept at the Fish Marketing Organization, these numbers could not portray the real amount which could be many times more than what have been recorded. l

The economic fish products from this port are considered very fresh compared to fish landed at Mahachai Area. However, the trash fish here has very low quality because the fishermen don’t really pay attention at keeping the quality high by sorting out the non-protein substances and using ice to keep them fresh. This is because the ice cost as much as the value of trash fish. The high-quality trash fish usually comes from Andaman Sea. l

Annually, the trash fish supplies increase during the month of January to May. Therefore it is hard to calculate the yearly trash fish amount from a month or two months records because amount of seafood supply differs during and between the years. l

The price of trash fish are not really fixed to the price set by the Thai Fishmeal Association. It differs depending on the quality, t h e b r o k e r s , fi n a n c i a l c o n d i t i o n s , a n d relationship between seller and buyer. For example Jane-Jub sale fish heads at 3.50 Baht/ kg and 4.3-5 Baht/kg for other types of trash fish (with more protein content).

Sang Charoen factory’s capacity is 100 ton/day (if operates 24 hrs.) Interview with Khun Jane or Mr.Theerawat Puttharo (082-036-1898)

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Case Study: Sustainable Fishing in Peru At present, global fisheries are facing consequences from unsustainable use of natural resources. Nearly one in four fisheries collapsed during the period 1950-2000 (Mullon et al. 2005), where collapsed is defined as 90% reduction of a wild fish stock. There has been a continuous decline in global catches since late 1980s (Pauly et al. 2003). Peruvian fishery has been a famous case study on sustainable fishing for many years. Proven sustainability of fishery in Peru was not achieved in a short period of time, but gradually developed through 50 years of trial and error and continuous improvement. Peru faced various issues stemming from the lack of proper institutions, including regulations, measures and enforcement. Such deficiencies resulted in over-exploitation and collapse of fisheries in 1970, before recovery that have been continuing for two decades. The Fisheries Center at the University of British Columbia ranked Peru’s fisheries and marine ecosystem as the most sustainable in the world out of 53 marine countries (IFFO 2009).Meanwhile, Chavez et al. (2008) also described Peru as the most intense and successful fishery worldwide. Peru’s experience is of particular interest for Thailand because Peru is the largest fishmeal exporter in the world.

8.1 Overview of Peru’s anchoveta industry The Peruvian anchovy Engraulis ringens fishery has been described as the largest mono-specific fishery that has ever existed on Earth (Bakun and Weeks 2008, Aranda 2009b). This large-scale enterprise accounts almost 10% of the world’s marine fishery landings (FAO 2010), covers the catching area of 14,000 km2 with a potential biomass of 15-20 million tons annually (Pauly 1992; Niquen et all. 2000). The Peruvian anchoveta fleet has the capacity to land in three days when fishing fleets from other countries such as Colombia, Germany, Australia, Panama, Poland and Sweden usually land in one year. (Arias Schreiber 2013) Since 1950, rapid industry growth and increase in harvest led Peru to become one of the world’s largest exporters of fishmeal and fish oil (FAO 2008). Peruvian fishing industry produces 30-40% of the global production of fishmeal and fish oil, and is the second largest industry of the country after mining (Tacon 2003, PRODUCE 2005, 2008 a). The fishing industry employs tens of thousands of jobs along its complex supply chains. In 2010, exported fishmeal and fish oil reached 1 million tons, valued at US$1.9 billion (SNP 2010). Approximate 1,300 purse seiners are in the industry and target only the Peruvian anchovy.

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Figure 77: Peruvian anchoveta

Photos Credit: www.sfgate.com and www.worldfishingnet.com

Peruvian anchoveta is a marine, pelagic, coastal species which can be found at approximately 80-150 km off the coast of Peru. Anchovies breed throughout the year with a major spawning in winter/spring (August to September) with lesser spawning in summer (February and March). They typically grow to 8-9 cm in length in 5-6 months, 10 cm in 12 months and 12 cm in 18 months with longevity about three years, reaching a maximum of 20 cm. (IFFO 2009). The productivity of anchoveta catch is highly variable based on fluctuations in climate, oceanographic, ecosystem conditions, and seasons. One vital factor that affects the amount of landings is the El Niño Southern-Oscillation phenomenon. (Ñiquen 2004) The El Niño results in limiting nutrient flux (Barber and Chavez 1983), creating changes in plankton assemblage composition that leads to the disruption of the anchoveta food web (Chavez 2005). In addition, warmer waters during El Niño cause reduction of habitat, leading to extensive anchovy biomass losses (Bertrand et al. 2004). Since 1973, two anchovy populations have been recognized in Peru: the north central stock from 04°30’ to 15° S, and the southern stock from 15° S to the southern limit of the Peruvian maritime domain. (Checkley et al. 2009) The north central stock is wholly in Peru’s territory, i.e. country has the full authority in the area. On the other hand, the southern stock waters are shared with Chile. Sustainability practices and enforcements such as closed fishing seasons

to reserve the stock are not responded by Chilean authorities. 98% of anchovy catches are converted to fishmeal and fish oil in Peru to be exported to international markets for aquaculture and animal feed; the remaining 2% is canned or frozen for local human consumption. FAO (2013) estimated that the majority of Peruvian fishmeal was sold to China (52%), followed by Germany (15%) and Japan (9%). The anchovy processing industry offers a variety of fishmeal products with different grades to the international market. Processing plants produce mainly the traditional “fair average quality” of FAQ fishmeal, amounting to 57% of the total, although with current investments made in new processing machinery and equipment, there is a growing trend towards the production of high quality fishmeal (Sánchez and Gallo 2009). Another main export is fish oil. The strongest export markets for Peruvian fish oil continue to be Belgium, Chile and Denmark. (FAO 2013) Fish oil is sold principally for the aquaculture feed market. With its richness in long chain omega-3 fatty acids, it is also produced as a product for direct human consumption.

8.2 History of the Peruvian anchoveta fishery The sustainability of the Peruvian anchovy has evolved over five decades. Categorized by amount of fishery landings, Arias Schrieber

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(2012) identified four distinct phases of the anchovy fishery in Peru. 1) Mid 1950s to 1972 – the first growth and unsustainable phase Fisheries in Peru were established in mid-1950s. In order to increase exports, the government mandated the construction of fishmeal plants since early 1940s. (Laws 1997, Olazo 2000) Growth was spurred by capital investment, foreign technology transfer, state support, deregulations, and expansions into international markets. (Glantz 1979, Aguilar Ibarra et al. 2000) During this anchoveta boom period, Peruvian fishery was conducted in an open-access resource without barriers to entry, characterized by explosive and uncontrolled growth. During 1960-1970s, three organizations which became key stakeholders of the industry were founded. First, The Instituto del March

del Peru (IMARPE) is a scientific institution set up to provide information and expertise in oceanographic conditions and marine resources to the government. Even though IMARPE has no legislative power in managing the anchovy stock (Hammergren 1981), they play a significant role of assessing sustainable yields, monitoring and determining the habitat and distribution of this resource (“Marcación ...”1970a) and recommends fishing quota or suspension of quota to the authorities. The founding of IMARPE was considered the beginning of science-based decision making in Peruvian fishery. Second, in the business sector, Sociedad Nacional de Pesqueria (SNP- the National Fisheries Society) was established. Currently SNP membership comprises approximately 70% of fishing companies. In 1970s, the government empowered SNP to act as the agent in assigning export licenses in conformity with world market quotas (“Perú ratifica ...”

Figure 78: Historical Peruvian anchoveta landing, major El Niño and fishery phases

Source: Arias Schreiber, M., and A. Halliday. 2013

123 1961). SNP has engaged in intensive lobbying on taxation and credit policy (Hammergren 1981) and facilitated conflicts between resource users. In 1970, the Ministry of Fisheries was created to dedicate to fishery management and oversee IMARPE. At the end of 1960s, the sharp growth with unsustainable practices had continued. In 1971, landing peaked at 12.3 million tons, the highest level ever experienced for a single-species fishery in the world. The collapse occurred in 1972, likely due to a combination of overfishing, an unfavorable, decadal-scale ecosystem regime shift; and a strong El Niño event that year (Bakun and Broad 2003; Bertrand et al. 2004; Ñiquen and Bouchon 2004). 2) 1972 – 1984 – the collapsed phase After the collapse, the anchoveta population was severely depressed. Anchoveta biomass and landings remained low at the average of under 2.5 million tons per year before reaching the lowest point during the second El Niño in 1982–1983, with the harvest of only 0.024 million tons. (Olazo 2000) During the military government’s state control, the whole industry was nationalized in 1973 through the expropriation of both fishing fleet and fishmeal-processing facilities. As a public corporation, PESCAPERU (Empresa Pública de Producción de Harinay Aceite de Pescado) was formed under state ownership with flexibility to consolidate holdings and r estructure efforts, with the focus on profit maximization, not sustainability. (Deligiannis 2000) 3) 1985 – 1993– the second growth phase In this phase, anchovy catches grew dramatically without the effect from the warm climatic change and reached the landings of approximately 10 million tons in 1994. The recovery of anchovy catches during this period was a direct result of a slew of new laws and regulations.

A number of legislative measures were enacted. In 1988, the new General Fisheries Law replaced the original 1971 law, and the catch quota violation sanctions were established. Later on, permits are required for anchoveta fishing, followed by closing of fishery access. No new industrial license was issued during this period, while the anchoveta vessel size was capped by law. In 1991, juvenile catches were regulated. The General Fisheries Law was renewed again in 1992 with new regulations to promote the sustainability development and ensure its continuity as an important source of food, employment and income (Arias Schreiber 2013); further amendments in 1994 added licensing required for artisanal fleets and environmental mandates. 4) 1993-present – the sustainable period Annual landings in Peru have been stable at around 5-9 million tons in years with propitious oceanographic conditions and have recovered quickly from perturbations caused climate change, including the extreme El Nino in 1997-1998. (Arias Schreiber 2012) In order to promote fishery sustainability, various new government directives have continuously been enacted and enforced. The General Fisheries Law was revised again in 2001 with emphasis on sustainability, conservation, and socio-economic development, e.g. promoting direct human consumption market. In 2002, decision-making and all management regulations authority were transferred to the Vice-Ministry of Fisheries, a subdivision of the Ministry of Production (PRODUCE) based on scientific reports from IMARPE, after the abolishment of the Ministry of Fisheries. In 2008, installation and use of satellite positioning systems and database integration to prevent illegal and over-quota catches became mandatory. At the same time, the new quotas for individual fishing vessels (Individual Vessel Quota: IVQ) was introduced and substantially altered some key, long-standing, institutional features of Peruvian fishery. (Aranda 2009a, Arias Schreiber 2012)

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8.3 Toward fishery sustainability Overcapacity Problem Aranda (2009) pointed out that throughout history of Peruvian fishery, the continuous enlargement of fishing capacity has been detrimental to its sustainability. During the first unsustainable growth period, access to fishery resources was wide open. The rapid growth numbers of fishing vessels and fishmeal processing factories had broadly followed changes in the amount of anchovies. In addition, the availability of funding and the incentives from a global quota system poured into Peru. Both resulted in the overcapitalization of the industry (Ibarra et al. 2000, Thorpe et al. 2000, FrĂŠon et al. 2008, Aranda 2009a), in the form of excess fleet and processing plant capacity. (Lemay 1998; GrĂŠboval and Munro 1999)

Even though the fishing licenses system was introduced to limit the access to resources as early as 1956, it only increased corruption before the system was abandoned in 1962 (Thorp and Bertran 1978). The amount of r e g i s t e r e d fi s h i n g v e s s e l s i n c r e a s e d significantly from 52 in 1953 to 1,309 in 1972, despite declining from the peak of 1,744 vessels in 1964 (Aranda 2009b). After the collapse in 1972, with the forming of PESCAPERU under the government, the fishing fleet was nationalized and large numbers of vessels and processing facilities were decommissioned by applying a moratorium on vessel licensing and construction (Laws 1997). The number of vessels and processing facilities dramatically declined. Later on, with unaffordability in subsidizing, the government decided to denationalize the fishing fleet. (Glants 1979) Many of idle purse seiners were exported to other countries in Latin-America (Suerico 1996) to decrease the number of fleets.

Figure 79: Fleet size and number of fishmeal factories: 1950â&#x20AC;&#x201C;2006

Source: Adapted from Freon et al. 2008.

125 In addition to accelerated depletion of natural resource, overcapacity decimated the economics of the fishing industry and caused social tensions. This problem increased the political pressure to achieve higher and increasing quotas (Deligiannis 2000). During seasons of the previous collapse or scarcity period like El Niño, excess capacity became damaging as debt accumulated and costs increased, leading to widespread bankruptcies. (Clark 1976; Hammergren 1981). In 1990s, the recovery of the anchoveta stocks incentivized the industry to once again expand fleet and processing factories. The government revised the General Law of Fisheries to prevent capacity building, such as requiring the new vessel entries to be balanced by decommissioning older fleet (close of entry). Many companies were authorized to build vessels only for human-consumption fishery; some tried later on to adjust the vessel to fit anchoveta fishing (Thrope et al. 2000). None of these measures prevent overcapacity. Furthermore, the effort of the government to support economics need of the artisanal fleet sector by issuing the law to permit the “Viking” fleet (the wooden fleet of artisanal boats larger than 30m3 capacity) to catch anchovy for the fishmeal industry created substantially more fishing boats. (Aranda 2009) In 2007, maximum annual sustainable yield for the entire Peru was estimated at 8 million tons in an average season; the level of overcapacity was 70% for the entire Peruvian fleet and 89% for the processing factories. Estimated overcapacity actually fluctuates with annual quota assignments (Paredes and Gutierrez 2008). In fact, the quota measure was applied since the first phase of fishery to control overcapacity. IMARPE recommended the government to use Total Allowable Catch (TAC) since 1960s, but the enforcement was not sufficiently strong to ensure compliance. TAC unintentionally gave the incentive for fleets to take a bigger piece of the quota and “race for fish”. When fishers invested in larger vessels with more modern catching equipment (Grevobal and Munro, 1999), improved

efficiency drastically resulted in shortening fishing seasons because quotas were being reached even faster e.g. as short as 54 days in 2006 (PRODUCE 2006) and unavoidably often shortened seasons of crew employment to under 100 days/year. (Freón et al. 2008) In addition to the government’s attempt in relieving overcapacity problem, overcapacity has been a major concern of stakeholders too. SNP, the most influential association of fishing companies, also proposed a decommissioning program in 1998. SNP proposed that any company that wishes to stay in the industry must buy out 25,000 m3 fleet from those who wishes to exit. The association additionally proposed a fund contributed by fishmeal producers with a fee of $10 per ton of fishmeal exported (Anon 1998). Later in 2007, the association of small-scale fleet operators requested the government to buy back fleets for them to be able to leave the industry, and suggested a fund contributed by boat owners with a fee of $2 per ton of anchoveta landing. (PRODUCE 2007) Since 2006, levels of capacity largely depends on the concentration by largest operators, for instance, the seven biggest companies own 50% of fish-hold capacity (Arroyo 2007). There has been an ongoing consolidation in the industry. Large fishing firms purchased fishing capacity to grow (Anon 2007) As of early 2009, the Peruvian industry consisted of 140 fishmeal processing plants with fleet of 608 steel industrial and 592 wooden vessels. (Aranda 2009)

Individual Vessel Quotas (IVQs) Despite numerous efforts from the government and SNP, overcapacity challenges remained. In 2008, Peru adopted a new approach called Individual Vessel Quotas (IVQs) to control capacity and eliminate the “race for fish”. Industry consolidation, driven by expectation of IVQ legislation, helped alleviate overcapacity problem, and the measure itself is widely considered a “regulatory innovation.” (Orlic 2011)

126 An IVQ system assigns rights to the resource by allocating a share of the year’s total allowable catch (TAC) to each fishing unit i.e., each vessel in the anchoveta fishing fleet. (Gréboval and Munro 1999; Perman et al. 2003).The large-scale and the small-scale fleets can apply for initial allocation of TAC with distinctive criteria for each group. Rights allocation is based on the best years of landing in 2004 applied to 60% of industrial vessels. The remaining 40% is determined by fish-hold capacity licensing. Specific season quotas are determined by multiplying these coefficients by that year’s TAC which is set by IMARPE. Every fishing vessel must install satellite tracking devices to ensure enforcement of seasonal closures, and to ensure that harvesting will stop after reaching individual quotas. The IVQ allocation is carried out on a temporary basis with the validity of 10 years. Rights are attached with the vessel itself and the fishing license. If a vessel is decommissioned, its remaining quota shall be assigned to other boats under the same owner. Additionally, if a boat does not utilize its quota within a given season, the quota cannot be carried over to the next season. The model does not allow full right transferability, a characteristic which may lead to concentration of wealth among a few operators, nor allow any new entries. Orlic (2011) suggests that IVQ ends the competition for increasingly larger shares of the TAC and allows effort to be distributed over longer fishing seasons. Fleet operators maximize their efficiency through careful planning of fishing trip schedules, accounting for abundance and proximity to shore to achieve shorter and more successful fishing trips. Consequently, the fleet overall delivers fresher landings, allowing for higher-quality fishmeal production and ultimately higher profits with lower costs due to less fuel consumption. Since the IVQ legislation was issued in 2008 and implemented in 2009, it is still too early to identify the impact. However, the first season showed promising results towards achieving sustainability. (Orlic 2011) First, the competition to increase larger portion of the TAC

quota no longer existed. Second, the average daily catch has declined by more than 100,000 million tons per day to approx. 35,000 million tons per day, which extended the catching season to be longer than 100 days, from the previous average of less than 55 days. Third, unused vessels were scrapped, sold or shifted the focus to other pelagic species; which directly contributed to reduction of overcapacity. In addition, the whole fishery gained economics saving. Petrol consumption of the fleet was only 60% from the previous season. Costs of fishmeal production plunged around 3 0 % . M o s t s a v i n g s w e r e f r o m v e s s e l decommission and shortened journey. Fishmeal processing facilities also benefited from higher-quality grade, generating 10% price premium in the export market. Despite the early proven success of the IVQ scheme, a diverse set of challenges have been identified. On the one hand, the IVQ system improves efficiency of companies that remain profitable. On the other hand, in an overcapitalized fishery, many companies cannot be assigned a sufficient quota to cover their investment and operating costs. As a result, such risks can lead to bankruptcy and unemployment. However, in Peru, alternative employment for fishermen has long been adopted from regular shortened seasons from overcapitalized fishery. For instance, The Fishers Compensation Fund (Fondo de Cooperación para el Desarollo Social, FONCOPES) was founded to relieve fishermen’s burden; this organization is funded by fleet owners on a mandatory basis. The fund supports early and voluntary retirement of their staff with upgraded pension and severance packages. The fund also includes re-education funds for worker relocation into others industries. Overfishing and El Niño events El Niño and severe overfishing were major challenges that cause sharp plunge of the Peruvian anchoveta industry, to the point of collapse in the 1970s. To achieve sustainability in later phases, the Peruvian authorities have made decisions since 1964 based on continuously collected science-based data from IMARPE.

127 IMARPE is a government marine research agency recognized as a world class authority by UN FAO, UNESCO, ICES and CIAT (IFFO 2009). They produce reports to the authorities on maximum sustainable yield, ecosystem conservation, and resource sustainability considerations. IMARPE conducts acoustic surveys to assess fish populations three times a year, together with plankton surveys to estimate fish abundance based on egg and larvae density in situ. Further analysis is conducted on data from the satellite or in situ monitoring, including information on the spatial distribution, size structure and school depth of fish and water temperature, and daily real time verification of landings from all ports.

Figure 80: Peruvian rapid decision flow on fishing closure (IFFO 2009)

These are essential pieces of information that the Vice-Ministry of Fisheries uses to regulate fishing. Prior to setting of TAC or the recent-launched TVQ quota of each season, IMARPE plays a key role in making quota r e c o m m e n d a t i o n t o e n s u r e r e s o u r c e sustainability. Since 1994, any management measure has had to be backed up by a written recommendation from IMARPE. Scientists and politicians agree that dynamic changes in anchoveta stock call for an equally dynamic response e.g. fishing suspension can be implemented in 36 hours (IFFO 2009). Several ministerial solutions enforced to regulate the industry tend to increase during the El Niño events when the resource is vulnerable and depressed. Arias Schreiber and Haliday (2013) described that congruence between rules and local environment conditions of the resource has always been an important feature of the Peruvian anchoveta fishery’s sustainability. The first closed season was announced in 1965 for a month long (“Agosto….” 1965) in the peak spawning period of anchovy population (Checklet et al. 2009). Measures were taken to ban catching if 50% or more of the catch consisted of fish that are 12 cm long or less (The average size is 14 cm and the maximum size is 20 cm (Froese et. al 2012) and a weekend landing prohibition was applied.

I n g e n e r a l , M a y – J u l y a n d A u g u s t – September are two closed annual seasons to allow spawning. During periods of instant oceanographic or climate changes, short-term closures are recommended on an ad hoc basis. In the past 40 years, catch quota limits were enacted with annual limits between 8-9 million tons, in line with IMARPE’s sustainable yield assessment. (Clark 1976, Chavez et al. 2008) As a rule of thumb, the level of exploitation or the amount of fish which can be taken must ensure that at least around 5 million tons of spawning biomass remains at sea (Arias Schreiber 2013).

128 At present, annual expenses of IMARPE are around $15 million (De La Puente et al. 2011), 60% of which is used for anchovy population monitoring. These expenses represent less than 1% of annual export values of the Peruvian anchoveta fishery. Another key challenge of the Peruvian fishery is El Niño event. Despite decades of monitoring the key resource data to ensure sustainability, the degree of control that multi-decadal climate variability exerts on anchoveta stocks still remains uncertain, with catch data and biomass estimates only available for a few decades (only about two Pacific Decadal Oscillation (PDO) cycles). Uncertainty about the impact of climate change compounds these challenges, as discrepancies between model predictions exist (Bakun 1990; Bakun and Weeks 2008), making it more difficult to enact effective long-term fisheries policy. The idea of setting up a fund to stabilize the industry has been suggested to mitigate the economic risks during extended closed seasons on future El Niño events; such initiative has not yet been rolled out. Illegal fishing The monitoring to ensure compliance with rules has become more extensive, intensive and effective during the sustainable phase in Peru, compared to the previous unsustainable phase when IMARPE’s personnel undertook catches monitoring but did not have an authority to enforce compliance. With limited of resources, monitoring a large amount of fishing vessels during the long fishing season, for example, 223 days per year, while controlling overall fishing activities was very problematic. In the past when location tracking device was not available, IMARPE’s landing assessment was usually underestimated by 20% between 1952 and 1982 (Castillo and Mendo 1987) In the sustainable phase, although the number of vessels decreased, the monitoring one of the world’s largest fisheries continues to be challenging. Since 1999, by legislation, each

fishing fleet has been obliged to pay fishing rights (“drechos de pesca”) equivalent to $3 per ton of anchoveta landing. The collected funds are used to finance the operations of related government units including IMARPE. Nonpayment will cause the sanction in the form of fishing license withdraw. In 2000, the law required all fishing vessels to be equipped with Vessel Monitoring System with satellite tracking system. (Gobeirno del Peru, Ministerio de Pesqueria, 2000) All commercial vessels which must operate outside 5 nautical-mile-limit reserved for artisanal boats (by law) are fitted with the monitoring system. Therefore, the government can track the vessel’s real-time movement and location to ensure enforcement of seasonal closures, non-catching activities after reaching individual quotas, and catching territory regulations. For instance, spatial restrictions allow only artisanal boats to operate within five miles of the coast; commercial vessels that possess fishing license are permitted to fish within the 200-mile limit. The vessel monitoring system is on 24-hour independent recording and reporting of landings at 134 unloading points, to ensure that the entire fleet is complying with the rules in each territory. The cost of this monitoring system is absorbed by fleet owners. The tracking system allows IMARPE and inspectors from the Fishing and Landing Monitoring and Surveillance program to monitor landings at all ports before transferring the surveillance of regulations compliance to an independent international company that is financially supported by fishing firms. Annual cost of this monitoring system was budgeted at $7 million from the fund raised by a levy of $1.4 per ton of landing. Fishing operator must keep track of announcements published in Peru’s stateowned newspaper and online through the Ministry’s website, for information on when the fisheries are open and closed. There will be temporal restrictions and ports closures when landings report more than 10% of juvenile by-catch.

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tion

Pollution and Environmental Degrada-

Direct impact of fishery exploitation includes ecosystem impacts from by-catch of nontarget species and trophic linkage degradation. These have been shown to impact ecosystem productivity, stability, and resilience (Brunner et al. 2009). To lessen environmental impact, Peruvian government released a maximum 10% by-catch regulation; the mesh size is at the minimum of ½ inch (13 mm) and begun outlining marine protected areas for future implementation. In addition to the catching activities, the fishmeal processing industry has created both air and water pollution. In 2008, Peru passed a law to regulate both fishmeal plant water discharge in pH value, solid and lipid content; (PRODUCE 2008b), and introduced Maximum Permissible Limits (MPLs) on emissions in 2009 with the policy to introduce clean technologies. In 2004, a scheme, at the center city of fishmeal processing, Apropisco, was introduced at the port of Pisco which comprises the treatment of effluent at each of the seven fishmeal plants (which is the case for every plant) and then the treated effluent is pumped to a central station from where it is pumped far out to sea. The scheme continued in 2007, when a decree was introduced to implement a similar scheme at Chimbote for all sea product factories - that is treated waste from fishmeal, and freezing and canning. (IFFO 2009) There are also other requirements from the government to control the processing industry. Today, the Peru’s total fishmeal plant capacity has been capped, and licenses are only issued to move, merge, or replace previously existing plants. Fishmeal plants must possess a working permit conferred by the Ministry of Production and a health certification from Peruvian Technological Institute (Instituto Tecnológico Pesquero or ITP) to ensure compliance with safety regulations and controlling capacity g r o w t h a n d d i s t r i b u t i o n t o m a n a g e environmental impact (FIN 2006; PRODUCE 2006). Every day, the Ministry of Production will

publish on its website (www.produce.gob.pe) the name of the vessels authorized to go out fishing, as well as names of the vessels that are prohibited from doing so; processing plants are not permitted to receive fish coming from vessels without a valid license or not listed on the Ministries’ website. Furthermore, in case of any failure in the processing equipment, the processing plant must stop receiving fish if there is as well as in their equipment to protect the environment. Processing plants are also not allowed to operate outside the fishing season. Orlic (2011) found from the fishmeal processing facility survey that some leading fishmeal companies mitigated their environmental impact through applying new technology to both recover waste from fishmeal plant water discharge, and reduce air emissions by replacing conventional meal dryers with steam dryers, with the added benefit of higher quality production and increased operational margins.

8.4 Lessons from Peruvian sustainability In general, fishery sustainability cannot be achieved by relying on one or more institutional changes or any one player’s initiatives alone. The sustainability of the Peruvian fishery is the result of a multi-faceted and continuing process of historical transformation and adaptations (Arias Schreiber 2013). Constant attempts have not been focused on a particular set of issues or any one stakeholder group. A broader set of solutions covering numerous stakeholders have been implemented in order to manage this complex and large industry. Key factors of success in achieving fishery sustainability in Peru include the following: 1) Continuation of flexible, adaptive and rapid management strategies Throughout decades, the Peruvian government has applied the best available long-record and latest science data to base management decision in managing the fishery.

130 Political expediency allows Peru to rapidly drive regulative actions, for example, announcement of statutory and temporal restrictions and ports closures when finding more than 10% of juvenile by-catch which could be achieved within 36 hours. The authorities also carefully consider climate cycles with an effort to improve predicting the variability and frequency of relevant climate variables which can cause anchovy population vulnerability. 2) Strong collaboration among various group of stakeholders Stock quotas in the form of both TAC and IVQ schemes are effective and necessary tools to accomplish sustainability in Peru. The catch quota in each season is established via consensus among the working group of scientists and politicians. For fishing companies, trade association SNP acts as an institution responsible for the resolution of conflicts between resource users and actively lobbies for tax and policy benefits for its members. In addition, the government and diverse stakeholders in the sector founded “Sectorial Working Commission” to discuss and provide advice to the authorities when conflict arises or when the country enters a resource-crisis period. The commission is comprised of officials from the Ministry of Production, Treasury, and industry representatives from SNP. 3) Congruence with local environment conditions and costs and benefits Periodic closure of fishing seasons has been one of the key tools to accomplish sustainability. As mentioned, Peruvian general management measures such as quota recommendation or temporal restrictions are made on ad hoc basis based on scientific information from IMARPE. During El Niño events, numbers of ministerial resolutions tend to increase to relieve stress and instability of the affected resource. Congruence between costs and benefits has always been high since taxes, fishing licenses; and funds to cover management, monitoring and scientific research have been calculated based on

amount of landings or fishmeal processed. The practices are straightforward and enable the fishery industry to maintain the equivalence between cost and benefit in a way that resources users perceive fairness (Arias Schreiber and Halliday 2013). 4) Clearly established boundaries with regular adjustments of rules and regulations The main General Fisheries Law provided the basis for sustainable management by clearly setting boundaries i.e. determining who is permitted to participate in the fishery, what is their level of access, what are different rights and boundaries between commercial and artisanal fleets, etc. Through five decades, Peru’s fishery law has been amended several times to add the context of sustainability, environmental conservation, and socio- economic development. Extended groups of stakeholders have been integrated into the law e.g. artisanal fishers. When previous measures led to weak results, such as the “total allowable catch (TAC) which resulted in the “race for fish” crisis, the authorities learn from the outcome and successfully improved it into the present successful Individual Vessel Quota (IVQ) scheme. 5) Centralized top-down management In the past few decades, Peru was ruled by the military which then transited to democratic governments, but the line of legislative control has not been changed from the centralized top down management. A top down regime may not hinder sustainability in the anchoveta fishery. Being a commercial large-scale industry comprised of numerous fishing companies in complex tiers of chains; all possibly seeking to maximize profits on scarce common resources, the government’s top-down management approach may be the most appropriate institution. For instance, in solving the decade-long overcapacity problems, enforcement from centralized authorities was quite efficient in interconnecting and controlling numerous fleet owners in both the commercial and artisanal scales, processing companies as

131 well as others who felt impact from the changes. 6) Applying technology in monitoring and enforcement Because the Peruvian’s fishery measures and policies have been launched, planned and improved based on scientific oceanographic and landing data, precision of information is vital. Mandatorily funded by fishing companies, the government has invested in a robust monitoring system under the operation of IMARPE e.g. using acoustic techniques to estimate fish biomass. The recent launch of Vessel Monitoring System with satellite tracking system enforced in every vessel allows the government to track the fleets on real-time movement to ensure their regulation and quota compliance. Despite being one of the world’s largescale fisheries working with a vast network of

stakeholders and complex tiers of supply chains, Peru has successfully proven that fishery sustainability is a possible in practice. Even though the country, as the world’s leading exporter of fish oil and fishmeal with strong incentive to increase production to respond to rising demand in world market, the Peruvian authorities have seriously managed anchoveta resources to achieve long-term sustainability, such as closing fishing grounds when there is a resource crisis or natural disasters. The Peruvian fishery, the country’s second largest industry, is clearly in pursuit of long-term environmental and social impact rather than short-term financial gains. Lessons learned from suffering for over a decade from the landing collapse, as well as ongoing climate changes, have driven Peru’s fishery to move to a path of sustainable development, to ensure that Peru can maintain their competitiveness and grow a robust sector without depleting key marine resources.

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Impact of Supply Chain Activities, Gap Analysis, and Recommendations

9.1 Direct Impacts on Thai marine ecosystem A main activity that creates direct impacts on Thai marine system is fishing, particularly by otter board trawlers and push nets which are considered destructive fishing gears. Fishmeal and animal feed industries are usually said to be one of the causes of problems because fishmeal producers buy trash fish caught by trawlers and push nets that destroy marine ecosystem and usually overfish, while animal feed mills buy fishmeal produced from these trash fish. Trawlers and push nets create negative impacts on Thai marine ecosystem in three ways: 1) they sweep the bottom of the sea and destroy coral reef which is habitats of fish and other marine fauna causing the change of marine ecosystem structure 2) they usually use small size mesh which will catch juvenile fish, and 3) they usually overfish.

9.2 Indirect Impacts on Thai marine ecosystem Some activities of players in the supply chain may not cause direct impacts to the marine ecosystem; however, they support continued existence of problems. The two stakeholders whose activities cause the most indirect impacts on Thai sea ecosystem are fishmeal producers and animal feed mills. Fishmeal producersâ&#x20AC;&#x2122; activities create economic incentives for fishery businesses to continue their unsustainable practices in four ways: First, without buying criteria and supplier screening, trawlers and push nets are economically incentivized to continue their practices as whatever they captured, no matter how bad its condition is, can be sold to fishmeal producers as it still yields high enough protein. In Songkhla, most fishmeal producers set their buying criteria and screen their suppliers; they usually buy from their regular suppliers, and they do not buy very bad conditioned trash fish caught by trawlers usually for two reasons: 1) their factories are in the communities, and using t h e s e t r a s h fi s h i s t o o s m e l l y f o r t h e communities, and 2) their factories produce good grade fishmeal e.g. 2nd grade, so they cannot buy these trash fish that will yield lower grade fishmeal. However, there is one fishmeal producer in Songkhla that does not have buying criteria for trash fish sold to its factory, because the fishing boats owners are relatives of the factory owners; Therefore, this fishmeal producer will buy whatever is sold to it no matter how bad the

133 condition, and the condition is usually bad; trash fish is mashed up, spoiled and very smelly. In this case, fishing boat owners are encouraged to continue their unsustainable practices as they know that they can always sell to at least this one fishmeal producer. Second, buying trash fish creates demands for them. Thus, when the fishing boat owners know that trash fish can always be sold, they will continue their practices as mentioned earlier that income from trash fish is one third of some trawlers which is better than nothing. If they know that there is a market for it, why would they throw away their extra income, and a fishing trip itself costs a lot of money – wages, gas, foods, water etc. Third, mixing fishmeal can upgrade fishmeal to be sold for a better price. Different qualities of raw materials yield different grades of fishmeal, and different grades of fishmeal can be sold at different prices. However, since there is not much discrepancy of protein between different grades, some fishmeal producers will mix high-protein fishmeal with lower-protein fishmeal in order to upgrade fishmeal to sell for better prices. This creates demands for low protein fishmeal as fishmeal producers know that it can be mixed to increase the percentage of protein later on. Therefore, demands for low-quality trash fish continue unabated, and therefore unsustainable trash fishing continues. Animal feed mills’ activities that cause indirect impacts are similar to those of fishmeal producers, since animal feed mills are the main consumers of fishmeal produced from trash fish or fish caught unsustainably; therefore they are the ones who actually create demands for trash fish. It starts when they set buying criteria. Animal feed mills set buying criteria and prices based on qualities of the fishmeal alone, not by how fish – raw materials of fishmeal – were caught. Thus, fishmeal produced from trash fish caught by trawlers and push nets that destroy marine ecosystem can be sold to animal feed mills. This encourages fishing boat owners to continue their unsustainable fishing practices.

We observe three key limitations of current sustainability standards and certificate schemes as currently practiced in Thailand: 1. There is currently no sustainable sourcing scheme or standard that all major feed mills subscribe to. Unless any scheme/standard incorporates all large feed mills, there would still be a market for fishmeal produced from irresponsibly-sourced raw materials such as trash fish, and therefore this practice will continue. 2. Most schemes rely on a self-report mechanism. Nothing can assure full traceability or guarantee that the fishermen themselves fill out the necessary documentation. More specifically, the source of fishmeal raw materials cannot be verified due to the lack of locationspecific audit mechanisms, e.g. satellite- positioning tools to ascertain that the fishing boat is really fishing at the stated location. Therefore, it is currently only possible to check whether the documents are filled out correctly, not the correctness of the document contents. 3. Currently every sustainable sourcing scheme and standard is based on the internationally accepted definition of IUU Fishing – the catch must not be Illegal, Unreported, and Unregulated to fit under this definition. But due to Thailand’s outdated fishery law, what is widely considered destructive fishing conduct e.g. small mesh size of trawls, is not illegal in Thailand. In addition, every illegal conduct under fisheries law is considered illegal only when the fisherman is caught in the act. Therefore, d e s t r u c t i v e fi s h i n g i n T h a i l a n d i s n o t considered IUU Fishing, and therefore no standard based on IUU can effectively discourage trash fish trawling. This is exacerbated by insufficient control and m o n i t o r i n g s y s t e m s d u e t o l i m i t e d resources. Consequently, illegally-caught marine products can be landed legally. Key stakeholders’ activities and impacts on Thai marine ecosystem are summarized in Figure 81.

Animal feed mills

Fishmeal producers

Fishing

Fishing vessels

Preprocessing

Post-processing

Stage

Stakeholders

Checking documents (according to sustainability standards and/or fishmeal certificate scheme)

Setting buying criteria

Mixing low protein fishmeal with high protein fishmeal Animal feed mills

Checking documents (according to fishmeal certificate scheme)

Buying

Screening suppliers

Indirect

Direct

Impact

Setting buying criteria

Fishing by using trawlers and push nets

Activity

Figure 81: Stakeholders’ activities and their impacts on Thai marine ecosystem

Some fishing practices cannot be checked whether they are correctly reported or not. In addition, trash fishing is not categorically illegal and therefore does not fall under “IUU fishing.” The result is not only full traceability cannot be assured, but unsustainable practices can also continue even with document-checking process.

Setting buying criteria and prices based on quality of fishmeal encourages unsustainable fishing practices as fish caught by these practices can be sold to animal feed mills.

Even though fishmeal produced from bad-conditioned trash fish is low grade fishmeal with low percentage of protein, it can be mixed with high protein fishmeal to upgrade the percentage of protein.

Unsustainable fishing is legitimized by counterfeiting document (e.g. lying about fishing location due to lack of location tracking system).

Buying trash fish creates demands and economic incentives for fishing boat owners to continue trash fishing.

Without buying criteria and screening suppliers, trawlers are economically incentivized to continue unsustainable fishing practices, since whatever they captured can be sold.

1) Otter board trawlers and push nets destroy coral reef and fish habitats 2) Small mesh size captures juvenile fish 3) Overfishing

Details

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9.3 Gap analysis and recommendations Lessons that Thailand can learn from the case study of Peru’s sustainable fishing industry also show “gaps” in the current attempts toward sustainable practices as follows: 1. Since overfishing and destructive fishing are “tragedy of the commons” problem in economics parlance, where efforts of a few unscrupulous players i.e. “free riders” can ruin the resources for everyone, it is necessary to implement solutions and standards across the board, i.e. encompassing every stakeholder. Peru successfully utilizes a combination of laws (e.g. IVQs, mesh size, by-catch regulation, seasonal closure, fishing rights) and industry involvement and self-regulation (SNP’s participation in setting quota and resolving conflicts) across the board, while Thailand still has serious gaps from the legal definition (e.g. trash fishing still not categorically illegal, practices considered only illegal when caught in the act), weak enforcement, to piecemeal participation of standards and voluntary schemes (e.g. only one feed mill is offering monetary incentives under fishmeal certificate scheme). 2. Science-based data and technology are both vital to ensure fisheries sustainability and effective enforcement. IMARPE, major government marine research agency in Peru, is recognized globally as a world class authority, continually reporting maximum sustainable yield, ecosystem conservation, and resource sustainability considerations to the government

on which to base decisions such as quota setting. On the technology front, all commercial fishing vessels in Peru are required to install satellite tracking devices to ensure enforcement of seasonal closures and individual quotas, since the government can track the movement and location of vessels in real-time. In Thailand, there is yet no sustainability standard or scheme which includes satellite tracking of fishing boats to ensure that traceability documentation is correct, and maximum sustainable yield is not yet a part of systematic decision-making at policy level. 3. The clearer the “business case for sustainability,” the more incentives players have to comply with sustainability laws/standards/ schemes. In Peru, IVQs helped encourage fleet operators to maximize their efficiency through carefully fishing trip scheduling, accounting for abundance, and proximity to shore to achieve shorter and more successful fishing trips. Consequently, the fleet receives fresher landings, providing higher-quality fishmeal production and ultimately higher profits with lower costs due to less fuel consumption. In contrast, there is as yet no clear business case for sustainability in Thailand’s fishmeal industry in Songkhla; most fishmeal producers that participate in the fishmeal certificate scheme do so only because they are paid a price premium by the buyer (currently only CPF), or they must do it as part of the buyer’s requirement. There is only one fishmeal producer that cites “competitiveness” as the reason they participate in the scheme; since they cannot compete on quality, they offer full traceability to build credibility and trustworthiness.

136 Given the above major gaps between current practices and “best practice” in Peru, we believe it is imperative that all current efforts to move the fishmeal industry in Thailand towards a more sustainable pathway – from new fisheries law to the industry’s latest Fisheries

Improvement Project – are synchronized and truly encompass all stakeholders, designed to close the above gaps as much as possible with a view toward long-term sustainability of marine ecosystems in Thailand.

Figure 82: Gulf of Thailand at night, as seen from space

Figure 82. Thousands of fishing boats doing “lit fishing” show up as green lights clustered the Gulf of Thailand are seen in this still from a night video of East Asia taken by astronauts aboard the International Space Station, 65 released by NASA in February, 2014.

Sara Schonhardt, “What’s the One Thing in Thailand Visible From Space?”, Wall Street Journal, February 28, 2014. http:// blogs.wsj.com/searealtime/2014/02/28/whats-the-one-thing-in-thailand-visible-from-space/

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globalgap SeafoodSource (2013). ASC, GAA, GlobalGAP sign MoU for fishmeal, fish oil sourcing. Retrieved February 12, 2014 from http://www.seafoodsource.com/ en/news/environment-sustainability/24810-ascgaa-globalgap-sign-mou-for-fishmeal-fish-oilsourcing Sirichai, L. (2003). Artisanal Fishermen: Who and How? (Translated from Thai). In Local Wisdom, Carry on and Develop Thais (Translated from Thai). Nakorn Si Thammarat: Walailak University. Summary of the cabinet-council’s conclusion (2009). April 21, 2009. Marine Master Plan 2009-2018. Retrieved February 25, 2014 from http://www. soc.soc.go.th/SLK/SHOWLISTALL.ASP?BDate =2009/04/01&EDate=2009/04/30&Showdate=2 009/04/21&Pagegroup=1

Chapter 6

Ahmed M, Boonchuwongse P, Dechboon W, Squires D 2007. Overfishing in the Gulf of Thailand: policy challenges and bioeconomic analysis Environment and Development Economics 12: 145–172 Boopendranath MR, pravin P, Gibinkumar TR, Sabu S, Madhu VR. 2013. Investigations on juvenile fish excluder cum shrimp sorting device (JFE-SSD). SpringerPlus 2013, 2:271 Eayrs S. 2007. A Guide to Bycatch Reduction in Tropical Shrimp-Trawl Fisheries (Revised Edition). Rome, FAO. 2007. 108 p. Nasuchon N and Charles A. 2010. Community involvement in fisheries management: Experiences in the Gulf of Thailand countries. Marine Policy 34 : 163–169 Panayotou T and Jetanavanich S. 1987. The economics and management of Thai marine fisheries. ICLARM Studies and Reviews 14, 82 p. International Center for Living Aquatic Resources Management, Manila, Philippines and Winrock International Institute for Agricultural Development, Arkansas, USA. ISSN 0115-4389 Tossapornpitakkul S. Khemakorn P, Kongporom A, Vibunpant K, Chumpuvorn S. 2008. Small Otter Board Trawl Fisheries in the Area of Nakhon Si Thammarat and Songkhla Provinces. Marine Fisheries Research and Development Bureau, Department of Fisheries. Technical paper No.10/2008: 41 p.

Chapter 7

Bureau of Agricultural Economics Research (BAER), Ministry of Agriculture and Cooperatives (MOAC). (2012). A Study of Economics of Fishmeal Production and Market in Quality Assurance System (Translated from Thai). (Agricultural Economics Research 113). Bangkok: Bureau of Agricultural Economics Research.

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Nordahl, P. G. (2011). Is the Aquaculture Industry Caught in a Fishmeal Trap?: An examination of the fishmeal-soybean meal relationship and research initiatives aimed at reducing the fishmeal inclusion level in fish feeds (Master Thesis). Bergen: NHH. Pollution Control Department (PDC), Ministry of Natural Resources and Environment. (2005). Code of Practices for Pollution Prevention and Mitigation: Animal Feed Industry (Translated from Thai). Issue 5/8. Bangkok: Pollution Control Department. Thai Fishmeal Producers Association (TFPA). (2014). Fishmeal Prices at Bangkok Market by CPF on February 8, 2014 (Translated from Thai). Retrieved February 12, 2014, from http://www. thaifishmeal.com/books/placp.pdf 8 Regional Office of Agricultural Economics, BAER, MOAC. (2008). Economics of Fishmeal Production and Market in Upper South Region in 2007 (Translated from Thai). (Agricultural Economics Research 111). Surat Thani: 8 Regional Office of Agricultural Economics.

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Appendix Trash fish composition A report prepared for FAO (Kungsawan 1996, http://www.fao.org/docrep/w6602e/ w6602e09.htm) asserted that very little discarding now takes place at sea in the Thai fishing industry; this gels with observations made at fish landings in southern Thailand. The trash fish component of the catch which is called “true trash” and made into fishmeal is made up a number of species the predominance of which depends on the fishing methods and areas. The most common families/groups are given in Table 1 below. Table 1 below. Table 1. Main species in the “true trash” component Species group

Rough proportions in trash

Leiognathidae

High

Trash crab

High

Apoginidae

Medium

Gobiidae

Medium

Balistidae

Medium

Biohidae

Medium

Tetraodontidae

Small to medium

Callionymidae

Small to medium

Pentapodidae

Small

Daya spp

Small

Periophthalmidae

Small

Platycephalidae

Small

Scorpaenidae

Small

Bragmaceros spp

Small

Synancedae

Very small

Pentaprion longimanus

Very small

Siganus spp

Very small

150 Small species of fish such as threadfin breams, monocle breams and croaker, are especially sorted from the rest for production of surimi type products and fish balls. Local traditional products such as salted dried fish, fish sauce, fermented fish, shrimp paste and dried cephalopods are also made from bycatch. Note that many species from several of these groups have now been reclassified as â&#x20AC;&#x153;food fishâ&#x20AC;?, both in practice and in fisheries statistics.

Table 2. Main commercial fish species caught as juveniles in the Thai shrimp bycatch Common Name

Scientific Name

Indian anchovy

Rastrelliger kanagurta

Lizard fish

Saurida isarankurai

Lizard fish

S. undosquamis

Lizard fish

S. elongata

Threadfin bream

Nemipterus hexodon

Threadfin bream

N. mesoprion

Purple spot bigeye

Priacanthus tayenus

One-finlet scad

Atule mate

Yellowstripe scad

Selaroides leptolepis

Monocle bream

Scolopsis teaeniopterus

Tonguesole

Cynoglossus spp

Flathead fish

Platycephalus spp

Deep bodied trevally

Atule kalla

Source: Kungsawan A (1996) Regulations, practices and statistics with regard to by-catch in the shrimp industries in Thailand. Paper prepared for FAO - mimeo 1996

151 List of Interviews Date

Organization

Participants/Interviewees

21/7/2013

Thai Sea Watch Association

Banjong Nasae, Chairman

23/7/2013

Paesae Songkhla

Sunee Apinuntanapong, Factory Manager

Aquatic Science, Faculty of Natural Resource, Prince Songkhla University

Jarunee Chiayvareesajja, Dr., Researcher

Southern Fish Powder Factory 1969

Pisit Suksriwan, Factory Manager

Songkhla Fishery Department

Sayan Eamrod, Director Sahas, Official

Pacific Fishmeal Industrial

Sak Lertwanangkul, Factory Manager

Thai Fishmeal Association

Sanguansak Akaravarinechai, President Nichkamol Kumaree, Manager

22/11/2013

Marine Fisheries Research and Development Bureau, Department of Fisheries

Suchada Boonpukdee, Fisheries Senior Technical Specialist

26/11/ 2013

Marine Fisheries Research and Development Bureau, Department of Fisheries

Nawaporn Lert-umnuaychok, Fisheries Biologist Waraporn Norsit, Fisheries Biologist

4/12/2013

Marine Fisheries Research and Development Bureau, Department of Fisheries

Manoch Roongratri, Director Marine Fisheries Research and Development Bureau Komonpan Awaiwanont, Dr., Fisheries Senior Technical Specialist

21/1/2013

Thaiunion Feedmill

Supis Thongrod, Dr., Director of Product Research & Development

27/1/2014

Songkhla Marine Fisheries Suppression and Prevention Center

Seri Petchrit, Chief

Paesae Songkhla

Sunee Apinuntanapong, Factory Manager

Songkhla Fish Inspection and Research Center

Suntorn Kumsuk, Director

Southern Fish Powder Factory 1969

Pisit Suksriwan, Factory Manager

Thai Charoen Animal Feed

Sukanya Pankerd

Pacific Fishmeal Industrial

Sak Lertwanangkul, Factory Manager

Songkhla Marine Products

Suvit Tanratanakorn, Owner

Jana Fish Industries

Pichart Piwbangkul, Deputy Factory Manager

Marine Fisheries Research and Development Bureau, Department of Fisheries

Suchada Boonpukdee, Fisheries Senior Technical Specialist

24/7/2013

7/8/2013

28/1/2014

29/1/2014

152

Date

Organization

Participants/Interviewees

30/1/2014

Marine Fisheries Research and Development Bureau, Department of Fisheries

Suchada Boonpukdee, Fisheries Senior Technical Specialist

10/2/2014

Thai Feed Mill Association

Pornsilp Patcharintanakul

13/2/2014

Charoen Pokphand Foods

Lucksamee Paiboon, Senior Vice President Aquaculture Feed Technology Office Pitipong Dejjarukul, Assistance Vice President, Feed Raw Material Office AQUA FEED BU

Companies in Songkhla fishmeal supply chain that declined to be interviewed Company

Stated Reason

Betagro, Animal feed mill

The company uses very little fishmeal.

Krungthai, Animal feed mill

The company has no policy to be interviewed and disclose the information.

Lee Pattana, Animal feed mill

The company has not officially rejected, but it has not responded to our several requests.

Songkhla Fishery Trading, Fishmeal producer

The company is a very small company currently operating once a week. However, the company gave partial information.

Sangcharoen Wattana Fishery, Fishmeal producer

Could not be reached.

Sinakorn, Fishmeal producer

Out of business.