I. Title
Supply and Demand Projection for Fishery Products
Ⅱ. Purpose of Research
Fishery products are a major source of animal protein in Korea. With increased consumption of fishery products, consumption patterns of those products have changed so that people pursues varieties and high quality in purchasing them. As precautionary and curing effects of fishery products on diseases have been known to consumers, demand for fishery products is expected to fast increase in near future. Production of fishery products has decreased since 1994, and in recent years, fishery industry has difficulty in expanding its production because of the decline in its productivity and the loss of fishing grounds. Imports of fisher products have increased with average growth rate of 15% per year since the import liberalization of fishery products in 1997, and the increase in their imports would become faster and faster as a result of the launch of the WTO system and the early trade liberalization measures of APEC.
To copy with changes in consumers' preference and market situation of fisher products, we need to examine factors to affect the market for those products, forecast the demand and supply for them, and derive policy options for fishery industry.
The purpose of this research is to analyze changes in the market for fishery products and forecast the mid-long term demand and supply for them, and thus provide information useful to develop policy options for fishery industry. For these purposes, we analyze and forecast the environment surrounding the supply of fishery products in order to provide information useful to their sustainable production. In addition, we conduct various analysis of consumption patterns on fishery products. We expect that these research results provide information necessary to develop policy options for the market stabilization of fishery products.
Ⅲ. Scope and Methodology of Research
The subjects of research include fishes, shellfishes, and sea weeds. Pukyong National University conducts supply analysis for fishery products. We analyze the demand and supply of fishery products independently because, it is very difficult to develop a simultaneous model for fishery products. In addition, we estimate the export and import functions for major fishery products. In demand analysis, we use the Household Expenditure and Income Survey data published by the National Statistical Office, and conduct a survey of consumers' preference and purchasing patterns for fishery products.
Ⅳ. Results of Research
Fishery products are one of major sources of nutrition supply which account for 39%(2001) in the total animal protein supply, and evaluated as a cheap and nutritional food compared with meats because they provide not only protein with the supply price being 81% of meats' one but also high quality non-saturated fat, various vitamins, and inorganic minerals.
Production of fishery products has begun to decline since the late of 1980's because of the decrease in fishery resources, deterioration of fishing environment, and reduction of abroad fishing grounds. As the imports of fishery product have largely increased since the market liberalization of fishery products in 1997, the self-sufficiency rate of fisher product decreased from over 130% in 1980's to 81% in 2001.
Consumption of fishery products in Korea is less than that in Japan, but is much more than those in other countries. It has continued to increase with the average growth rate of 2% per year until 2001. Based on the analysis of 1991-2001 Household Expenditure and Income survey data, household expenditures on high quality fishery products and shellfishes among fishery products fastest have increased with the rise of household income, while expenditures on popular fishery products and processed fishery products have relatively slowly increased with the rise of household income. Households with heads employed in clerical work or being females or with double income earners, or households which reside in Seoul have less expenditure on fishes and shellfishes than other households, while household with heads having the highest education level have more expenditure on processed products and sea weeds. Household members aged over 50 have more expenditure on all fishery products except processed products than other members. Males more like fishes than females, while females more like shellfishes and salted & dried fishery products than males. Households residing in Seoul consume relatively more hair-tail than other households, while those households consume less mackerel than other households. Female household members and households with head having low education level more like squid than males and other households, respectively. Households residing in Seoul or with head having the highest education level consume more anchovy than other households, while females and household members aged over 50 more like anchovy than others.
Based on the result of survey, people purchase fresh fishery products once in a week, salted & dried fisher products and sea weeds once in a month. Most of respondents purchase fishery products at convenient stores or conventional markets. Households which purchase several fishery products during a year account for 63.7%, while most of them (72.4%) purchase fishery products trimmed at stores. Most of consumers (67.6%) rank freshness as the most important factor in purchasing fishery products. Consumer preference for packed or precooked fishery products appears to be not high. Sixty-four percent of respondents purchases processed fishery products because those products are convenient to cook, as 77.5% of them answered. Although 42% of respondents read country of origin label, most respondents do not consider whether fishery products are domestic or not because the price difference between domestic and foreign products is high and it is difficult to distinguish domestic products from foreign products with the eye. Sixty-seven percent of respondents prefer natural fishery products to raised ones. Most respondents more like raw fishes sliced from lived fishes rather than those from fresh fishes because of consumers' concern on safety on sliced fresh fishes. Consumers' concern on safety of fishery products appears to be very high as the survey results show that 49% of respondent do not eat raw fishers in summer and 60% of them do not eat raw fishes in the period of warning vibrio vulnificus septicemia.
We estimate supply and demand function for fishery products with partial adjustment model and Linearized Almost Ideal Demand System (LAIDS) model, respectively. For estimating demand function, we use the monthly shipment data obtained from the wholesale market located at Galak-dong in Seoul, and consider seasonality and habit in consumption of fishery products in estimating the LAIDS model. We also estimate export and import functions for major fishery products and use national income in Japan and export prices as explanatory variables of the export function.
The results of forcasting domestic supply for fishery products show that in 2012 the supply of fishery products captured at coastal sea is expected to increase by the range between 9.4% and 12.1% of the current level. Results of forcasting demand for fishery products show that demands for crab, mackerel, and anchovy among fishery products increase fastest with the average growth rate of from 2.4% to 3.4%, while demands for oyster, flatfish, and stingray increase relatively slowly with the average growth rate of from 0.1% to 1.2%. Total demand for fishery products is expected to have the average growth rate of 2.0% until 2012, and in kinds of fishery products, the demands for crustacea and fishes are expected to have the average growth rate of 2.5% and 2.4%, respectively, while the demand for shellfishes has the average growth rate of 0.3%. The export of squids is expect to increase faster than other fishery products and has the average growth rate of 3.8% until 2012. There appear to be little changes in exports of tuna and oyster, while the export of brown seaweed is expected to decline. The average growth rate of import for hair-tail appear to be 6.4% and rank as the highest among fishery products. The average growth rates of import for other fishery products range between 4 and 5 %. As a result, the sufficiency rates of Alaska pollack, hair-tail, and croaker are estimated to be 32%, 57%, 23%, respectively. For raised fishery products, the sufficiency rate of flounder, laver, and brown seaweed appear to e 124%, 117%, 130%, respectively, implying that we need policy measures to copy with the oversupply of raised fishery products.
Policy implications for stabilizing the market for fishery products and enhancing the competitiveness of fishery industry are summarized as:
1. It is necessary to introduce the ITA program, expand the subjects of the TAC and construct the infrastructure for fishery product production in order to develop the management system of stable supply for fishery products.
2. It is necessary to consider reduction of the number of fishing vessels, idling of fishing, restriction in the shipping amounts and the use of fishing implements, and development of standard fishing vessels in order to enhance the competitiveness of fishery industry through reorganization of the production structure.
3. It is necessary to develop recipes and processed fishery products appropriate to each age group and expand the production of small packed products, and pre-trimmed & packed fishery products in order to obtain the stable basis of fishery product consumption. In addition, it is necessary to provide consumers with right information about possible hazard in fishery products and educate them about the method of safely handling and cooking fishery products in order to improve consumers' confidential on safety of fishery products.
4. It is necessary to reduce the government purchase program for fishery products, enhance the marketing roles of private sectors, and introduce a kind of checkoff program and marketing order program for fishery products. In addition, we need to establish various marketing survey systems for fishery products in order to concisely evaluate the market situation of fishery products.
Ⅴ. Utilization of Research Results
Results of this research are expected to contribute to establishing policy options or nutrition programs for fishery products, and to provide useful information for processors and producers of fishery products. Especially, we recommend to utilize the results for the following areas:
- Analysis of consumption patterns and consumers' preference for fishery products
- Forecasting of fishery product production
- Forecasting of demand for fishery products
- Forecasting of export and import for major fishery products
- Policy recommendation for stabilizing markets for fishery products