MARKETING, TRADE, AND MANAGEMENT OF FISHERIES AND AQUACULTURE RESOURCES

• Sponsoring Institution: National Institute of Food and Agriculture
• Project Status: COMPLETE
• Funding Source: HATCH
• Reporting Frequency: Annual
• Accession No.: 0206522
• Multistate No.: W-1004
• Project Start Date: Oct 1, 2003
• Project End Date: Aug 30, 2009
• Program Code: [(N/A)]- (N/A)

Recipient Organization
UNIVERSITY OF FLORIDA
G022 MCCARTY HALL
GAINESVILLE,FL 32611

Performing Department
INDIAN RIVER RESEARCH & EDUCATION CENTER, FT PIERCE

Non Technical Summary
Persistent low returns for citrus and the development and spread of diseases such as citrus canker and citrus tristeza virus have prompted citrus growers in central and south Florida to seek alternative or supplementary crops. Aquaculture, the production of aquatic plants and animals in a controlled environment, is one of the fastest growing sectors of U.S. agriculture. There is strong interest in aquaculture among Florida citrus growers, especially in the Indian River area, as a way to diversify from the present citrus monoculture operations. This research will investigate the market and economic feasibility of developing and expanding the aquaculture industry in central and south Florida.

Animal Health Component

75%

Research Effort Categories

Basic

25%

Applied

75%

Developmental

(N/A)

Classification

Knowledge Area (KA)	Subject of Investigation (SOI)	Field of Science (FOS)	Percent
603	3799	3010	25%
604	3799	3010	50%
607	3799	3010	25%

Knowledge Area
603 - Market Economics; 607 - Consumer Economics; 604 - Marketing and Distribution Practices;

Subject Of Investigation
3799 - Cultured aquatic animals, general/other;

Field Of Science
3010 - Economics;

Keywords

marketing

aquaculture

agricultural economics

econometric models

feasibility analysis

fish

food economics

market development

market research

market structure

product development

production economics

seafood

Goals / Objectives
This multistate proposal outlines a study of the relationship of marketing and trade and the management of fisheries and aquaculture resources. This subproject research will focus on two inter-related areas: 1) niche marketing and new value-added products, and 2) managing fisheries and aquaculture for dynamic markets. This proposal includes a brief Statement of the Issue for each major area of research. 1. Marketing, Niches, and New Products. Many rural communities in this nation and its affiliated territories that depend on the production of agricultural and aquatic products are at a crossroad because of the globalization of the fishery products trade, increasing competition for market share, and increasing consolidation of end-user institutions. They can choose to fight the changes taking place around them, sticking to traditional practices, approaches and products - or - choose to embrace this change and adapt new enterprises, methods and frontier technologies, such as advanced aquaculture techniques, and innovative food processing. The former choice will almost certainly lead towards continued economic decline. The later choice, if embraced, will lead to renewed effort and economic security in a changing marketplace. To meet the challenges ahead, these communities, and the small to mid-size companies that support them, must innovate by developing new products that end-users favor, position products in market niches that increase market penetration, and/or communicate with end-users to maximize the perceived value of the product. Thus, information concerning product distribution and flow, end-user preferences and perception, pricing, processing methods and technology, packaging, and institutional and structural arrangements in the supply chain are needed to ensure the success of marketing in domestic and international markets. Improved marketing will result in enhancing the sustainable return to fisheries and aquaculture assets. 2. Managing Fisheries and Aquaculture for Markets. Many aquatic species exhibit inter-and intra annual changes in physiological characteristics which significantly influence consumer and producer welfare. From the capture fisheries perspective, it is essential to select regulations and management systems which maximize these market-related economic benefits from optimally controlling product quality and product attributes for efficient management of these species and achieving national and regional objectives including economic efficiency, full utilization, and stock conservation. Similarly, in order for aquaculture producers to stay competitive, it is essential for them to maximize the financial benefits from optimally managing their operations to capture the potential benefits from the seasonal changes in biological growth and physiological changes. The need for practical bio-economic models that can be used to assist fishery managers and aquaculture producers to improve fishery and aquaculture-related producer and consumer welfare is then evident.

Project Methods
A species only has commercial development potential if there is a ready market at prices that provide a reasonable profit, with marketing infrastructures and channels that are adequate and efficient in handling increased production. An assessment of market economics, including market demand, marketing infrastructure, and marketing channels for a given species is the first priority of a market economic feasibility analysis. Comprehensive marketing research and economic feasibility approaches will be used to accomplish the project objectives. These approaches include: 1. Literature review of market characteristics and dynamics for selected crustacean and fish species. 2. Collection and analysis of existing U.S. secondary data on market supply (landings, imports, exports), demand, and prices for the species to identify market supply and demand trends. Secondary data analysis will include historical landings and dockside prices, dockside demand, wholesale prices, U.S. supply, domestic consumption, price flexibility, income elasticity, and future domestic demand. Analytical methods used will be time series forecasting and demand analysis. 3. Primary data collection/analysis of the seafood market dynamics for most species will be required, since comprehensive secondary data for most of the species is unavailable. Primary data collection will include in-depth personal interviews and surveys of seafood wholesalers, seafood restaurant buyers, and seafood retailers. 4. Traditional integrated marketing research methods for investigating buyer and consumer attitudes, preferences and purchasing behavior include focus groups and surveys incorporating conjoint and other choice experiments. Focus groups are widely used in market research to assess attitudes and preferences. Focus groups can be used to develop a thorough understanding of consumer behaviors, preferences and perceptions, and the decision-making processes for food products and services. Focus groups are also a useful tool for clarifying a potential research problem area and more fully developing the full context and nature of a perceived problem or research topic. Conjoint analysis and other choice experiments are the most widely-used quantitative methods in market research to measure the perceived values of specific product attributes, to learn how demand for a particular product or service is related to price and to forecast what the likely acceptance of a product would be if brought to market.

Progress 10/01/03 to 08/30/09

Outputs
OUTPUTS: Nothing to report. Dr. Wirth is no longer at the University of Florida. Please terminate this project. PARTICIPANTS: Not relevant to this project. TARGET AUDIENCES: Not relevant to this project. PROJECT MODIFICATIONS: Not relevant to this project.

Impacts
Nothing to report. Dr. Wirth is no longer at the University of Florida. Please terminate this project.

Publications

• Wirth, Ferdinand F., Leigh A. Love, and Marco A. Palma. 2007. Purchasing Preferences: Survey Identifies Important Features of U.S. Farmed Shrimp. Global Aquaculture Advocate, 10(5): 41-42.
• Wirth, Ferdinand F. and Siddhartha Dasgupta. 2007. The Role of a Market Orientation in Developing a Sustainable Aquaculture Industry. World Aquaculture 2007 Book of Abstracts, World Aquaculture Society, Baton Rouge, LA., p. 1003.
• Clark Jennifer L., Charles Adams, Richard Weldon, Ferdinand Wirth and P.J. van Blokland. 2007. Application of Simulation Software to Evaluate Investment Risks of a Shrimp Aquaculture Investment. World Aquaculture 2007 Book of Abstracts, World Aquaculture Society, Baton Rouge, LA., p. 181.
• No publications reported this period

Progress 10/01/05 to 09/30/06

Outputs
Numerous public and private research facilities in U.S. coastal states have initiated projects designed to develop aquaculture technologies and techniques for a variety of marine species, including summer flounder, southern flounder, cobia, black sea bass, pompano, mutton snapper, red snapper, and common snook. However, as with any business, the success of aquatic farming ventures depends ultimately on the marketability of the product. Products have frequently been selected for aquaculture development primarily based on ease of culture without regard to demand, and development of aquaculture products has historically caused prices to plummet, perhaps below the cost of production, as supply has increased dramatically. A species has commercial development potential if, in addition to its biotechnical feasibility, there is a ready market at prices that provide a reasonable profit, with marketing infrastructures and channels that are adequate and efficient in handling increased production. So, an assessment of the market economics, including evaluation of market demand, marketing infrastructure, and marketing channels of a given species is considered the first priority for an economic feasibility analysis of an aquaculture project. During the October 2005 - September 2006 reporting period, significant progress was made in two areas on the research focus of investigating the feasibility of developing a food-species aquaculture industry in central and south Florida. 1. A study of the market economics of the U.S. flounder market determined that the relationship between dockside demand and prices and the inelastic demand suggests that the commercial flounder market is a stable, mature market. Excess annual market supply of about 150 million pounds has been suppressing real dockside prices for flounder. Demand can only be increased with substantial reductions in price; increases in supply cause price reductions and producer total revenue falls. 2. A market research survey was distributed to Treasure Coast residents who purchased live shrimp pondside at the UF/IFAS IRREC Aquaculture Demonstration Project. Survey results suggest that the cleaning, heading, peeling, and preparation process required for whole shrimp purchased for at-home consumption will not serve as an impediment to whole shrimp sales. A conjoint analysis experiment was included to quantify the utility value and relative importance of seven different shrimp product physical and credence features: species, size, refrigeration state, product form, purchase price, country of origin label, and production method label. Both credence features had positive impacts on shrimp product utility, with country of origin label conferring higher positive utility than any other shrimp feature. Utility associated with wild-harvested shrimp was slightly higher than the utility of farm-raised shrimp.

Impacts
The research has significant potential impacts on the development and expansion of a sustainable food-species aquaculture industry in central and south Florida. The flounder market economics study has already impacted flounder industry development. Harbor Branch Oceanographic Institution and others have stopped concentrating species aquaculture develop efforts on flounder in favor of other marine species with greater economic potential. The shrimp market research has provided market intelligence to existing and future shrimp farmers in the United States. Shrimp farmers selling live shrimp pondside direct to consumers will be able to charge a price premium with little market resistance. The high relative importance of credence features compared to physical characteristics provides justification of seafood industry support for mandatory country of origin labeling.

Publications

• Wirth, Ferdinand F., Leigh A. Love and Marco A. Palma. 2006. Purchasing Shrimp for At-Home Consumption: The Relative Importance of Credence versus Physical Product Features. Aquaculture Economics and Management. (In press)
• Dasgupta, Siddhartha, Ferdinand F. Wirth and Kathy J. Davis. 2006. Selling Freshwater Prawn in Food Festivals: A Marketing Experiment in Kentucky. Aquaculture Economics and Management. (In press)
• Wirth, Ferdinand F. and Kathy J. Davis. 2006. Shrimp Purchasing Preference Differences Across U.S. Seafood Market Segments. Aqua 2006 Book of Abstracts, World Aquaculture Society, Baton Rouge, LA.
• Wirth, Ferdinand F., Leigh A. Love and Marco A. Palma. 2006. Purchasing Shrimp for At-Home Consumption: The Relative Importance of Credence versus Physical Product Features. Aquaculture America 2006 Book of Abstracts, World Aquaculture Society, Baton Rouge, LA, p. 353.
• Dasgupta, Siddhartha and Ferdinand F. Wirth. 2006. Selling Freshwater Prawn in Food Festivals: A Marketing Experiment in Kentucky. Aquaculture America 2006 Book of Abstracts, World Aquaculture Society, Baton Rouge, LA, p. 76.