Taiwan Fishery Trade: Import Demand Market for Shrimps. Bith-Hong Ling

International Symposium Agribusiness Management towards Strengthening Agricultural Development and Trade III : Agribusiness Research on Marketing and Trade Taiwan Fishery Trade: Import Demand Market for Shrimps by Bith-Hong Ling Multiple Cropping Center, Chiang Mai University National Chung Hsing University The Ministry of Agriculture and Cooperatives 21

94 Agribusiness Management towards Strengthening Agricultural Development and Trade Taiwan Fishery Trade: Import Demand Market for Shrimps Bith-Hong Ling 1 1. Introduction In Taiwan, intensive farming activities of black tiger shrimp (Penaeus Monodon) and the strong and growing export demand had taken the shrimp industry into the take-off phase during the period of 1981-1987. However, since mid-1988, this industry has been threatened with the shrimp disease problem, high mortality, and stunted growth. Development of the shrimp industry went into a catastrophic decline phase. In 1987, Taiwan was the world s largest cultured shrimp producer and exporter. After the 1988 disease crisis, not only foreign competitors, such as Southeast Asian countries on the world shrimp market, have taken up the slack left by Taiwan, but also Taiwan turned into a net importer of shrimps after 1995. The purpose of this study is first to briefly review the status of the shrimp industry and then its import demand and structure in Taiwan. The following is given by discussing the role of Thai shrimps in Taiwan s import market. 2. Status of the Shrimp Industry in Taiwan Taiwan s intensive farming system of black tiger shrimp in producing high productivity rates per unit was considered as a model for the Southeast Asian producing countries since the 198s. It was a high technology, capital and labor intensive business, creating a full upstream and downstream network including hatcheries, nurseries, feed mills, growing ponds, and processing and exporting companies. Prior to the crisis situation in the mid-1988 black tiger shrimp had been the chief high-value aquacultural species, with 21.2% of aquacultural lands and 32.7% of total aqaucultural value in the 1987 peak year. By that time, Taiwan was the world-leading cultured shrimp supplier, and also the largest shrimp exporter to both Japanese and US markets. However, Taiwan experienced a massive disease outbreak in mid-1988 that resulted in high mortality rates of black tiger shrimp and significantly cut production from 8.2 metric tons in 1987 to 31.2 metric tons in 1988. About 8% of black tiger shrimp farms were affected and 1 Associate Professor, Department of Agricultural Marketing, National Chung Hsing University, Taiwan

III : Taiwan Fishery Trade: Import Demand Market for Shrimps 95 the scale of this industry has been drastically reduced in terms of production and farming area, as shown in Figure 1. In addition, because of the drastic drop in black tiger shrimp production, the production substitution of other cultured shrimp species (such as species of Kuruma shrimp, Giant freshwater prawn and Thick-shell shrimp) was attempted on a large scale, as shown in Figure 2. 3. Import Trend of Shrimps in Taiwan Based on the four-digit Standard International Trade Code (SITC) classification, there are seven categories of fishery products, including (1) Fish, live (SITC 31); (2) Fish, fresh or chilled (SITC 32); (3) Fish, frozen (SITC 33); (4) Fish, fillets and other fish meat (SITC 34); (5) Fish, dried, salted or in brine (SITC 35); Crustaceans (SITC 36); and Mollusks (SITC 37). As shown in Table 1, total trade of fishery commodities for the year 1999 in Taiwan reached up to US$128.3 million and Taiwan was a net exporter of total fishery commodities, with the value of US$62.4 million. In particular, frozen fish (SITC 33) accounted for the largest share (66.9%) of total fishery exports. Metric tons 9, Hectares 16, 8, 7, 6, 5, 4, 3, 2, 1, 14, 12, 1, 8, 6, 4, 2, 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 Production Farming area Figure 1 Production and Farming Area of Black Tiger Shrimp in Taiwan,1986-1999

96 Agribusiness Management towards Strengthening Agricultural Development and Trade Production share (%) 5 45 4 35 3 25 2 15 1 5 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 Black tiger Kuruma Giant freshwater Thick-shell Figure 2 Production Share of Major Cultured Shrimp Species in Taiwan, 1986-1999 Table 1 Fishery Exports and Imports by Category in Taiwan, 1999 Export Import Net Trade SITC Sub-groups of US$ Share US$ Share US$ code Fishery commodities Million % Million % Million 31 Fish, live 92.9 9.8 1.3 3.1 82.6 32 Fish, fresh/chilled 5.5 5.3 34.8 1.5 15.7 33 Fish, frozen 635.9 66.9 66.9 2.3 569.1 34 Fish, fillets/fish meat 54.5 5.7 31. 9.4 23.6 35 Fish, dried/salted/in brine 7.9.8 3.1.9 4.9 36 Crustaceans 29.4 3.1 15.7 45.7-121.3 37 Mollusks 79.2 8.3 33.3 1.1 45.9 Total 95.3 1. 329.9 1. 62.4 Source: Monthly Statistics of Exports and Imports, 1999.

III : Taiwan Fishery Trade: Import Demand Market for Shrimps 97 Imports of fishery commodities amounted to US$329.9 million, of which 45.7% were crustaceans. It was followed by frozen fish (SITC 33) and fresh/chilled fish (SITC 32), with the import share of 2.3% and 1.5% respectively. Only for crustacean products (SITC 36), Taiwan was a net importer with the value of US$121.3 million. Crustacean imports into Taiwan according to the different species are shown in Figure 3 for the period between 199 and 1999. The most prominent crustaceans are shrimps, prawns, rock lobsters and other sea crawfish, and crabs. The imports of shrimps and prawns increased rapidly from US$5.8 million in 199 to US$61.1 million in 1994 and US$75.9 million in 1997 and became the top leading import species over the period 1993 and 1997. Its market share increased from 2.7% to a peak of 51.3% between 199 and 1997. In general, more than 88% of total shrimp and prawn imports into Taiwan were frozen and the remainder was in non-frozen form such as fresh/chilled, live, dried/salted/in brine. Value (US$ million) 8 7 6 5 4 3 2 1 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 Shrimps and prawns Rock lobster and other sea crawfish Lobsters Crabs Other Figure 3 Import Share of Various Crustacean Products in Taiwan, 199-1999

98 Agribusiness Management towards Strengthening Agricultural Development and Trade Since 1998, however, rock lobsters became the leading species in the Taiwanese import market and the market share increased to 46.1% in 1999. The importance of shrimps and prawns decreased to US$52.2 million and its share declined to 34.6% in 1999. The future trend of import structure changes still need to be observed. Accompanying the big failure in the Taiwanese black tiger farming industry in mid-1988 as well as the strong competition from the low production cost of shrimp farming in the Southeast Asian producing countries (mainly Thailand and Indonesia) was a significant fall in the value of shrimp exports from Taiwan. It s share of world shrimp exports fell steadily. For the past decade, the value of shrimp exports in Taiwan was US$28.5 million in 1999, a decrease of 8% from the record US$141.9 million in 199. In turn, the value of shrimp imports in 1999 was US$52.2 million, which was a 9% increase from US$5.8 million in 199. (Figure 4 and 5) Since 1995, Taiwan turned into a net shrimp importer and the bulk of domestic shrimp production was to meet domestic consumption demand. Export (US$ million ) 15 12 9 6 3 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 Figure 4 Exports of Frozen and Non-Frozen Shrimps in Taiwan, 199-1999

III : Taiwan Fishery Trade: Import Demand Market for Shrimps 99 Imports (US$ million) 15 12 9 6 3 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 Frozen Non-frozen Figure 5 Imports of Frozen and Non-Frozen Shrimps in Taiwan, 199-1999 4. Import Structure of Shrimps in Taiwan Thailand became the world s leading supplier and exporter of cultured shrimp from 1994. The US was the leading importer accounting for nearly 42% of total shrimp exports from Thailand by value. Japan was the second major market, followed by the European Union, Singapore and China. Taiwan accounted for less a 6% of Thai shrimp exports but with a decreasing growth rate for the past five years. Shrimp imports, in value terms, in Taiwan during 1995-1999 according to country of origin are given in Table 2. Even though shrimp imports from Thailand traditionally dominated the Taiwanese imported shrimp market, the importance of Thai shrimps has undergone a significant change in terms of import value and market share. In the case of frozen shrimp imports, the share of Thai shrimps had dramatically fallen from 59.7% in 1995 to 29.1% in 1999, while its import value decreased from the peak of US$26,135 thousand in 1995 to US$14,85 thousand in 1999. Similarly, Thai non-frozen shrimp imports also faced a steady

1 Agribusiness Management towards Strengthening Agricultural Development and Trade decrease in Taiwan from US$11,75 to 2,434 thousand in the 1995-1999 period, which consequently led its leading share to decline from 97.4% to 65.3%. In 1999, Ecuador was instead at the top of the import list in Taiwan s shrimp market, with US$16,933 thousand and 34.9% of market share. Table 2 Shrimp Imports by Country of Origin in Taiwan, 1995-1999 1995 1996 1997 1998 1999 1999 Value (US$ 1,) (%) Frozen shrimps Ecuador 67 5,566 22,141 16,599 16,933 34.9 Thailand 26,135 22,873 22,832 17,415 14,85 29.1 Peru - - 3,95 3,81 4,738 9.8 Indonesia 6,392 9,544 9,297 5,489 4,489 9.3 Vietnam 1,469 1,224 815 195 2,37 4.9 Canada 1,793 1,523 1,91 996 1,572 3.2 Australia 643 78 83 446 889 1.8 Singapore 2,27 1,85 1,376 864 741 1.5 India 566 396 71 482 655 1.4 Malaysia 378 5 236 368 496 1. Sub-total 43,82 46,183 64,473 48,413 48,476 Non-frozen shrimps Thailand 11,75 11,621 1,736 1,735 2,434 65.8 USA 3 2 27 194 938 25.4 Indonesia 28 71 13 48 115 3.1 Singapore 52 17 133 47 89 2.4 Vietnam 78 285 56 5 3.8 Sub-total 12,62 12,35 11,413 2,154 3,697 1. Total import 55,864 58,533 75,886 5,567 52,173 Source: Monthly Statistics of Exports and Imports, 1999. This significant change shows that Thai shrimp is facing a weakened market position and losing its market competitiveness in Taiwan. According to (during interview) Mr. Paiboon Ponsuwanna, President of Thai Frozen Foods Association (TFFA), total areas used for shrimp culture farming in Thailand declined from its peak of 71 thousand hectares in 198 to 7 thousand hectares, mainly due to various disease and environmental problems. Thai frozen and fresh shrimp exports have decreased from 175 thousand metric tons in 1995 to 138 thousand metric tons in 1999.

III : Taiwan Fishery Trade: Import Demand Market for Shrimps 11 Mr. Paiboon Ponsuwanna pointed out that Thai shrimp export into Taiwan decreased by 42.8% in volume, from 11.7 thousand metric tons to 6,72 metric tons for the period 1995-1999. However, if taking into account the recent shrimp trading activities carried out by Thai and Taiwanese fishermen on the sea, the significant decrease in the official figure of shrimp exports from Thailand to Taiwan for 1998 and 1999 might be over-estimated, as compared with the actual export figure. Table 3 shows various Thai shrimps by different type and species being imported into Taiwan, in terms of the value, market share and the accompanying import tariff. There are no quantity restrictions on shrimp imports in Taiwan. Beside shrimp fry being duty-free, an import duty of 39% ad valorem is imposed on the import of dried shrimp skin and 22.5% ad valorem is charged for the rest of all types of shrimp products. Table 3 Values and Shares of Thai Shrimps According to Type and Species in Taiwan, 1999 Import Shrimp types and species Thai shrimps (A) Total imports (B) A/B tariff US$1 % US$1 % % Frozen shrimps Black tiger shrimp, frozen 22.5% 6,489 46.1 8,917 18.4 72.8 Shrimp, peeled, frozen 22.5% 6,378 45.3 12,462 25.7 51.2 Shrimps and prawns, others, frozen 22.5% 1,212 8.6 26,293 54.3 4.6 Sub-total 14,81 (85.3) 48,457 (92.9) 29.1 Non-frozen shrimps Black tiger shrimp, fresh/chilled 22.5% 95 37.2 913 24.6 99.1 Black tiger shrimp (other than spawner), live 22.5% 342 14. 353 9.5 96.9 Sand shrimp (speckled shrimp), live 22.5% 38 15.6 381 1.3 99.6 Shrimp, fry Free 759 31.2 86 21.7 94.1 Shrimp skin, dried 39.% 33 1.4 117 3.1 28.5 Other shrimps and prawns, live 22.5% 1. 75 2. 1.2 Sub-total 2,434 (14.7) 3,716 (7.1) 65.5 Total shrimps and prawns 16,516 52,173 31.7 Source: Monthly Statistics of Exports and Imports, 1999.

12 Agribusiness Management towards Strengthening Agricultural Development and Trade Imports of Thai shrimps in Taiwan totaled US$16,516 thousand in 1999. About 85.3% of Thai shrimp imports were provided in the frozen form, which include frozen black tiger shrimp for 46.1% and peeled frozen shrimp for 45.3%. Fresh/chilled, live, fry, and dried shrimps accounted for the remainder of imports, with the share of 14.7%. In addition, Thai shrimp imports were dominated by the species of black tiger shrimp. Thai frozen black tiger shrimp amounted to US$6,489 thousand and accounted for the largest share, 72.8% of total frozen shrimp imports in Taiwan. Only Thailand exported the bulk of fresh/chilled grass shrimp to Taiwan, with a share of 99.1%. 5. Conclusions The recent WTO accession for Taiwan significantly increases the need to deepen the reforms of Taiwan fishery policies on import tariffs and also to reconsider and reestablish the long-term development of both fishery and aquacultural sectors under the pressure of trade liberalization. Taiwan became a net shrimp importer and the majority of domestic shrimp production was to meet the domestic consumption demand since 1995. Further empirical research is necessary to evaluate the industry and the welfare impacts of shrimp market openness due to the policy adjustments of import tariffs in accordance with trade liberalization. References Monthly Statistics of Exports and Imports, 1999, Fishery exports and imports by category in taiwan, 1999. Taiwan, Republic of China., 1999, Shrimp import by country of origin in Taiwan,1995-1999. Taiwan, Republic of China., 1999, Values and shares of Thai shrimps according to type and species in Taiwan,1999. Taiwan, Republic of China.