Fishing

New Zealand’s seafood exports fell in value from $1.5 billion in 2002 to $1.1 billion in 2004, almost exclusively due to shifts in the New Zealand dollar against the US dollar. This demonstrates the sector’s short-term vulnerability to factors outside its control. One of the main challenges that the industry will face going forward is to increase the value of its products in the face of these uncertainties.

The issues that will impact on the growth of wild fisheries are somewhat different from those facing aquaculture. These are outlined separately below.

Wild Fisheries

The QMS is used to manage the vast majority, by value and tonnage, of New Zealand’s commercial fish stocks. The QMS aims to allow for the maximum utilisation of fisheries resources consistent with sustainability. The TACC caps the quantity of fish from each particular species that can be caught commercially each year. In this sense, to the extent that fish stocks are being caught at the TACC (which is largely the case for the commercially important stocks), there is little scope for growth simply through increasing catch.

Markets often place a premium on fresh, unprocessed fish. Nevertheless, there are still several avenues to pursue growth, including investigating the potential commercial value of new stocks, improving harvesting methods, reducing waste in the production process, increasing economies of scale, and increasing the value of fisheries exports through smart processing and more effective marketing.

Key issues likely to impact on the future growth of the industry include:

1. International demand for and supply of fish. As is the case for meat and dairy products, as world incomes increase and consumer preferences change, demand for fish products will continue to increase. The emergence of the Chinese ‘new middle class’, which is around 120 million people, will provide a growing market for New Zealand fish products over the next few years. Increases in the world supply of fish are increasingly being met through expansion of aquaculture, as many wild fish stocks are currently being fished at or above sustainable catches;
2. Trade barriers. New Zealand faces a variety of trade barriers in world fisheries markets. These include tariffs, quotas, licensing, and government financial transfers. Transfers were equal to 20% of the recorded landed value of catch in 1999 (OECD, 2003). In 2003 the trade-weighted applied tariff average of OECD countries was 3.1% (OECD, 2003), which is a reduction from previous levels. However,tariff escalation also applies: the average tariff for unprocessed fish was 2.5% versus 6.3% for processed products, making it more difficult for the New Zealand seafood industry to move into higher value-added exports. In China, a key emerging market that took around $80 million of New Zealand seafood exports in 2003, tariffs on fish are around 10%. The Ministry of Foreign Affairs and Trade continues to work with the local industry and with overseas governments to improve trade access;
3. Increasing focus on the environmental impacts of fishing. Two recent examples have highlighted the growing focus on the environmental impacts of fishing: the national and international concern about the effects of bottom trawling on underwater seamounts, and the impact of squid fishing on seabird mortality. Managing these and other impacts will be a challenge for the industry; there are opportunities to address these impacts through changes in catch methods and the development of new technology;
4. Lack of industry cohesion. Despite an enduring trend toward consolidation of the New Zealand fishing industry (which we would expect to continue), the industry is not particularly cohesive. This may be partly culture-driven (with fishers often characterised as rugged individuals), and it may be that the industry’s vertically integrated structure complicates collective action. The Seafood Industry Council (SeaFIC) has recently undertaken some work to encourage collective action in the industry, and published “The Toolbox – 12 building blocks to success”. The approach is being piloted in six applications across the industry;
5. Poaching of high-value fisheries expected to continue. The targeting by poachers of species such as paua and rock lobster over a long period has led to serious sustainability concerns. As an example of the scale of the problem, it is estimated that the amount of paua poached each year is equal to the TACC. While the Ministry of Fisheries will work to reduce poaching, the economic incentives for poaching are likely to remain, and this will continue to place a burden on the affected fisheries;
6. Opportunities to expand research and development efforts. Research into the health benefits of fish has highlighted the positive impact that omega-3 fatty acid can have: it reduces blood clotting, thereby reducing cardiovascular problems (Kris-Etherton et al, 2002). Opportunities exist to further investigate the non-food dimensions of fish products and to develop markets for nutriceuticals leveraging off these health benefits; and
7. Tension between commercial and non-commercial fishers. Recent increases in recreational fishing in some stocks have required reductions in the amount of catch taken by commercial fishers. Tools to manage recreational fishing effort such as bag limits and minimum size requirements are blunter than the controls on commercial catch. Commercial fishers have called for non-commercial catch to be more effectively controlled to prevent their catch rights being eroded; these calls will increase if, as expected, recreational catch continues to increase.

Aquaculture

The New Zealand aquaculture industry generates sales of around $285 million per annum, with $184 million of this exported (Moore et al, 2004). The performance of the industry has been attributed both to comparative advantage derived from natural resource endowment, and to the creation and application of innovation. Worldwide, aquaculture is a thriving commercial activity, growing at 15% per annum and providing nearly one-third of the world’s fish and shellfish (Moore et al, 2004).

Under previous legislation, applications for aquaculture space were processed on a first-come first-served basis, which led to a “gold-rush” of marine farm applications in some areas. The legislation did not give local government the ability to effectively plan and allocate coastal space where there was high demand. The government agreed to reform aquaculture management in 2001 and placed a moratorium on new applications for space.

The Aquaculture Reform Act 2004 amended this legislation to provide for aquaculture on a sustainable basis, and providing a balance between aquaculture and other uses of coastal space. The Act enables councils to designate areas of their coastline as Aquaculture Management Areas (AMAs), with no aquaculture to take place outside these areas, and with the space in AMAs to be tendered to the highest bidder.

The aquaculture industry has raised concerns about several aspects of the new legislation, many of which relate to the constraints that it will place on growth. These concerns include:

• The introduction of AMAs effectively gives aquaculture a prohibited industry status outside of defined areas for development; and
• Regional councils will not have the skills, incentives or support to establish AMAs in a timely manner.

The government is working closely with all stakeholders in the implementation of the new legislation to address these concerns. The new legislative framework will allow the New Zealand aquaculture industry to begin growing again, and to make use of the considerable technical expertise that already exists in the country.

Horticulture

The state of the international market will dictate the fortunes of the New Zealand horticultural industry in years to come. World consumer incomes will continue to rise; we should expect to see further changes in consumer tastes (such as the recent trend towards increased vegetable exports to Asia); and overseas producers will respond to opportunities that these changes in market conditions present.

New Zealand will continue to face significant competition in the international market for horticultural products. One advantage that we have had in supplying northern hemisphere markets is the ability to provide out-of-season production. While this advantage is expected to persist, technological developments such as the emergence of a summer-fruiting kiwifruit in Europe and the widespread adoption of SmartFresh, a technology that extends the shelf life of apples, could potentially erode this.

A number of market access issues still hamper the horticultural industry: both general tariffs – the average tariff in 2001 for fresh vegetables was 58%, and for fresh fruit it was 49% (World Bank, 2004) – and phyto-sanitary barriers such as the ban on export of New Zealand apples to Australia. The Doha round again provides opportunities for some of these global trade barriers to be reduced or removed, and New Zealand is attempting to address the restriction on apples in Australia.

Biosecurity threats will continue to be a worry for the industry going forward. Pests and diseases have the ability to decimate horticultural production, and to cut off access to foreign markets for our produce.

The horticultural industry has been able to increase production and efficiency in recent years through the application of innovation and research and development effort to improve crop management and processing, and to develop new products. The industry has the skills and experience to replicate and build on these improvements over time.