FUTURE DEMAND FOR FISH IN THE SOUTHEAST ASIAN REGION

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1 FUTURE DEMAND FOR FISH IN THE SOUTHEAST ASIAN REGION Perry Smith Bureau of Agricultural Economics Canberra, Australia 1. Introduction The Southeast Asian region has a population of over 300 million and is a,major consumer of fish products. Nearly all of the fish consumed is produced in the waters of the region, and a small proportion is also exported. Production growth is expected to slow as many of the fisheries in the region approach the limits of biological production. This suggests that any further growth in demand may not be easily accommodated at present prices. It is therefore important for the managers of the resource to be aware of the potential demand pressures, so that appropriate policies can be put in place. The countries of the region are diverse in their natural and economic resources, economic systems and traditions, which makes any overall analysis of demand for fish difficult. This difficulty is exacerbated by inadequate data and the limited previous analyses of demand for fish in the region. In view of these limitations, the purpose of this paper is to outline the main factors likely to influence the longer term demand for fish produced'in Southeast Asia. Southeast Asia is here defined as Hong Kong, Indonesia, Kampuchea, Malaysia, the, Singapore, Thailand, Taiwan and Vietnam. The concepts of demand are briefly reviewed and then recent changes in fish consumption in the region are examined. Factors influencing the demand for fish are then examined in relation to the limited empirical work available, and longer term trends in these factors are outlined. Finally, some implications of these trends for the long term demand for fish are discussed. 2. Framework for analysis of long term demand In a market economy, demand for a particular commodity is the quantity of that commodity which will be purchased at any particular price, with all other prices and income constant. Each commodity has a characteristic relationship which defines the change in quantity demanded in response to changes in its price (price elasticity), to changes in the prices of other commodities (cross price elasticities) and to changes in income (income elasticity). The aggregate demand is the sum of the domestic demand and the net export demand for each country of the region. The aggregate demand relationship for fish in the region is difficult to define empirically. The relationship will be different for each country, depending on income levels and distribution, tastes and eating habits, population and demographic factors, and relative prices, all of which change over time. Moreover, fish is a highly heterogeneous commodity and the price-quantity relationship varies widely between species. As a consequence there have been few studies undertaken on the aggregate demand for fish. Since the aim in this paper is to examine changes in long term demand, the emphasis is on those variables which may shift the demand curve or change the structure of demand rather than simply cause movements along the demand curve. Therefore, the price of fish, which is the main influence on changes in the quantity of fish demanded in the short term and which is largely determined by the supply of fish, is assumed to be constant in this analysis..

2 3. Fish consumption in Southeast Asia Southeast Asia has traditionally been dependent on fishing as a major source of food. The region has some km of coastline and highly productive freshwater resources, both of which have for generations supported a large amount of artisanal fishing for direct consumption. Recorded commercial production has increased relatively quickly, with a rate of growth in recorded fish landings of 3.5 per cent a year over the period 1970 to 1983 for the region as a whole (see Table 1 for the rates of growth for individual countries). However, the rate of growth has slowed in recent years, possibly because stocks of many fish species are approaching full exploitation. To examine the sources and utilisation of fish in the region two periods were selected for comparison, and These correspond to the periods immediately before and after the declaration of exclusive economic zones. The adoption of 200-mile fishing zones by most coastal states between 1977 and 1979 under the Law of the Sea Convention was expected to displace some distant water fleets and increase fishing activity of the newly endowed coastal states. For the Southeast Asia countries it gave national jurisdiction to an area of 3.1 million NM~ (Valencia and Marsh 1986). Average annual production of fish in the region (excluding Taiwan, for which data are not available) in was an estimated 6500 kt (see Table 2). Indonesia and Thailand each accounted for 25 per cent of total landings and the for 22 per cent. Marine fish accounted for 83 per cent of production. At this time the region was a net importer of fish, though imports were less than 3 per cent of total regional production and were restricted mainly to processed fish products. Imports were a significant source of fish in Singapore, Hong Kong and Malaysia, and only Thailand was a net exporter of fish. Most fish (62 per cent) was consumed directly, while 35 per cent was used for manufacture and processing mainly for food use. Table 1: Average annual production and increase in production of fish, prawns, cephalopods in Southeast Asia Fish Prawns Cephalopods Average Average Average Average Average Average increase production increase production increase production Country vo Hong Kong 4.3 Indonesia 3.7 Malaysia Singapore -0.3 Thailand 2.6 Taiwan na Source: FA0 (1983) and previous issues; Taiwan Provincial Government (1985).

3 Table 2: Supply and utili'sation of fisheries products in Southeast Asia. Produetion Trade Domestlc Domestic utilisntion Fresh- Processed supply C) Country Pedod water MadneTotal ") Imports Exports b) Feed Manufacture Food Hong Kong Indonesia Kampuchea Malaysia Singapore Thailand Vietnam Total Taiwan a) Includes commercial and non-commercial production expressed as liveweight. b, Expressed as net trade (imports less exports) of processed fish as liveweight equivalent. C) Defined as production plus imports less exports plus processed trade (no account made for changes in stocks). Consists of product fed to livestock including compound feed elements. Consists of product used' in manufacturing for both food non-food uses. Sources: FA0 (1980, 1984); Taiwan Provincial Oovernment (1985). Total domestic supplies of fish in the region (excluding Taiwan, Vietnam and Kampuchea for which no data are avialable) fell by 3 per cent between the two periods, mainly as a result of lower marine production in Thailand and the. Although net trade (imports minus exports) in the region remained unchanged there was a large expansion in exports of processed fish from Thailand while most other countries expanded their imports of fish. Average annual consumption of fish per person in countries in the region is shown in Table 3. Excluding Taiwan, Vietnam and Kampuchea, average annual fish consumption in was 13.6 kg per person. Fish consumption per person had increased by 15 per cent to 15.7 kg in the period The major increases in consumption per person were in Indonesia, Malaysia and Hong Kong. The main source of the increase in Indonesia was the diversion of fish from manufacturing and animal feed to human consumption. In Malaysia and Hong Kong the increase resulted mainly from higher imports and domestic catches.

4 4. Factors influencing the demand for fish in Southeast Asia The factors likely to have a major effect on the quantity of fish demanded in the region are the price of fish, population and income growth, the prices of substitute or complementary foods, eating habits and tastes, and the level of subsistence fishing. As previously discussed, the price of fish is determined by the interaction of demand with supplies of fish and so is assumed to be constant for this examination. In this section, the other major factors influencing the demand relationship are briefly discussed. 4.1 Population growth Population growth has been the major factor behind an increasing need for food in Southeast Asia. The average rate of population growth for the region peaked in the period between 1965 and 1970 at around 2.5 per cent a year, but it has fallen slightly since then as a result of a slight decline in birth rates. This growth in population placed considerable pressure on food production and distribution systems to keep pace with the growth in demand for food. Nutritional standards in the region have been improving slowly, although in several countries they are still below the minimum requirements for a healthy diet as calculated by the Food and Agriculture Organization of the United Nations (FAO). The regional improvement in nutrition has been achieved mainly by better cropping practices and consequent increases in yields. Average daily protein intake per person increased by 3.8 g (8.6 per cent) between 1967 and More than half of this increase was due to a higher intake of plant proteins. Increased per person consumption of fisheries products contributed 29 per cent of the extra protein and other animal products accounted for 13 per cent. The total population of the region increased by more than 29 per cent between 1967 and 1977, thus the total intake of protein provided from fisheries products increased by 55 per cent over the same period (FA0 1980). The nutritional importance of fisheries products to countries of the region can be seen from Table 4, which shows the average daily intake of protein, carbohydrates and fats and the contribution of fisheries products to this intakein The average daily intake of proteins in the region was 47.9 per person. Fisheries products supplied nearly 14 per cent of this total and 56 per cent of all animal protein. The relative importance of fisheries products in the diet in Southeast Asia can best be shown by comparison with world statistics. The world average per person consumption of fisheries products provided only 5.5 per cent of total protein intake and 16 per cent of total animal protein intake, which is substantially less than the corresponding Southeast Asia figures (FA0 1980). The high historical dependence on fish is due in part to the ease of access to fisheries resources for both subsistence needs and commercial supply. A high proportion of the workforce of the region is engaged in food production and derives part of its food requirements from this source. A significant proportion of the remainder are also likely to engage in subsistence food production. In these circumstances it is difficult to establish from consumption information the relative importance of fish supplied through market sources and that supplied from subsistence fishing. In 1983 nearly 39 per cent of the population were classed as economically active (defined as all persons who furnish the supply of labour-for the production of economic goods and services) and, of these, over half (55 per cent) were engaged in agriculture, fisheries or forestry (Table 5).

5 Table 3: Population and per person consumption of fisheries products in Southeast Asia. Per person consumption Population Fish Crustaceans Molluscs Total Country Hong Kong Indonesia Malaysia Singapore Thailand Total Kampuchea Vietnam Total Taiwan na - not available. Sources: FA0 (1980, 1984). Table 4: Averagedaily intake per person of proteins, calories and fats and contribution of fisheries products to intake: Proportion Contribution Contribution Total of total Total of fisheries Total of fisheries protein protein calorie products to fats products to Country intake Animal Fish intake calories intake fats cal. Hong Kong Indonesia Kampuchea Malaysia Singapore Thailand Vietnam Average Taiwan (a) World (a) Figures for Taiwan are 1981 values. Source: FA0 (1980); Taiwan Provincial Government (1984).

6 4.2 Changes in income Growth in personal income per household is the main factor influencing household food consumption patterns, but this information is not generally available. Consequently, gross domestic product, together with population growth, is used in this section as a measure of personal income growth in the individual countries. Table 5: Population, economically active p0puhti0n and percentage in agriculture, fisheries and forestry. Percentage Total economically Country Year population active Percentage of ecowmically active in agriculture, fisheries, forestry Hong Kong Indonesia Malaysia Singapore Thailand Source: International Labour Organisation (1983). Between 1975 and 1981 all countries in the region experienced strong growth in gross domestic product, ranging from 41 per cent in the (an.average of 6 per cent a year) to 96 per cent (12 per cent a year) in Hong Kong (Table 6). This range was significantly above the rate of population growth in all countries, resulting in relatively strong economic growth per person in most countries of the region - 16 per cent in the (just under 3 per cent a year) to 67 per cent in Hong Kong (9 per cent a year). These high rates of economic growth have been mainly due to the growth of the manufacturing, trade and financial sectors. There are wide differences in economic wealth per person between countries. Measured in US dollar terms, gross domestic product per person in Hong Kong and Singapore was around ten times that in Indonesia and seven times that in Thailand and the. Table 6: Annual growth in gross domestic product and gross domestic product per person: GDP per GDP per person Country GDP person in 1981 Hong Kong Indonesia Malaysia Singapore Thailand Taiwan Source: Asian Development Bank (1985).

7 The relationship between income changes and the demand for food is influenced by many factors, including the level and distribution of income, the nutritional status of the population and the proportion of the population engaged in food production. In general, in low income areas of developing countries the responsiveness of demand for food to changes in income is high because a high proportion of total income is committed to food. Demand becomes less responsive as basic nutritional needs are met and substitution between preferred and less preferred foods becomes more important. In Indonesia, for example, in 1969 approximately 70 per cent of total expenditure was on food, and a 10 per cent increase in income was associated with a 9.3 per cent increase in expenditure on food. The major part (40 per cent) of food expenditure was on cereal products and this was less responsive to changes in income (a 10 per cent increase in income resulted in a 6.6 per cent increase in expenditure) than more preferred products such as fish. Only 9 per cent of total food expenditure was on fish, and a 10 per cent increase in income was associated with a 13.4 per cent increase in expenditure on fish (FA0 1976). For countries which already have a high per person consumption of fish, higher income would be expected to have only a small effect on aggregate consumption offish, but to result more in substitution of higher valued fish for lower valued species. Income changes may also alter the relative consumption of different nutrient groups (carbohydrates, fats, protein) and foods in each nutrient group, particularly in regions where nutrition and income are relatively low. In response to income increases, low income groups tend to increase their consumption of basic food items while high income groups respond by consuming higher quality foods (usually high in protein), using more services added to food rather than more food in total and more non-food items. The relationship between income and the demand for food is illustrated by a study in Thailand by Konjing and Veerakitpanich(1985)(see Table 7) which shows that for the country as a whole the demand for animal protein was almost twice as responsive to changes in income than was the demand for either calories or vegetable proteins. However, the response varied greatly between different parts of the country. The responsiveness of demand for animal protein to changes in income was six times greater in the north-eastern region than in the central region, where incomes were three times higher. Income differences are therefore a major factor behind the differences in consumption. Table 7: Estimates of calorie and nutrient income elasticities for Thailand in 1978 and average income(a) Nutrients Central North North-east Whole Kingdom Calorie Protein - vegetable - animal Average income (baht/person) (a) Average incomes are 1980 figures. Source: Konjing and Veerakitpanich (1985). The distribution of income is an important determinant of the effect of growth in aggregate income. In general, the more concentrated is the wealth in high income households, the lower is the effect of a change in aggregate income on the demand for food. As can be seen in Table 8, income distribution in Southeast Asia is relatively highly concentrated, with 10 per cent of houskholds receiving more than 30 per cent of total household income and a significant proportion of the population in poverty.

8 The demand for fish in Southeast Asia is generally believed to be fairly unresponsive to changes in aggregate income. The limited number of studies which have been completed (shown in Table 9) have, however, shown wide differences in this response between countries. The level of income was also shown to affect the extent of the response in fish demand to changes in income. In general, the lower the income the greater the responsiveness of demand to changes in income. This is illustrated by the results of a study of patterns of fish consumption in the in 1978 and 1982 (Table lo), in which it was found that the average income elasticity of demand far fish was relatively low (0.17), but varied widely between areas. The income elasticity of demand for fish in the higher income urban areas was lower (0.08) than in rural areas (0.21 in 1978, 0.25 in 1982). 4.3 Prices of other foods Though there are few close substitutes for fish, prices of other food products are expected to have some influence on the demand for fish. This is because a relatively high proportion of total income of the region is spent on food, and changes in prices of major products influence expenditure on other foods. Poultry and pig meats are the closest substitutes in Hong Kong, Singapore and Taiwan, while in other countries plant proteins may be closer substitutes. Table 8: Income distribution in SoutheastAsia: share of total household income. Groups of households Lowest Second Third Fourth Highest Highest Country Year 20% 20% 20% 20% 20% 10% Hong Kong Indonesia Malaysia Thailand Source: World Bank (1986), Table 24. Note: Households are ranked by income, from the lowest to the highest, and then divided into five groups of equal numbers of households. For example, in Hong Kong the 20 per cent of households with the lowest household income receive only 5.4 per cent of total household income, whereas the 20 per cent with the highest household income receive 47 per cent of the total. Table 9: Income elasticity estimates for fisheries products. Proportion of * food Income Year of Country expenditure elasticity study Expenditure elasticities Hong Kong Indonesia Thailand

9 Table 9: (continued) Country Proportion of food expenditure Income* elasticity Year of study Vietnam (rural) Japan (high priced fish) (medium priced fish) (low priced fish) Quantity elasticities Indonesia (including shellfish, dried fish etc.) United States. Sources: Kitson and Maynard (1983); FA0 (1972, 1976) * -' Income elasticity of demand measures the change in quantity demanded in response to a 1 per cent change in income. As changes in consumption of a product are often difficult to measure the income elasticity of demand is sometimes measured by determining changes in total expenditure on a product in response to a change in income. Use of the expenditure measure overstates the response because it includes expenditure on improvements in quality as well as increased quantity. Table 10: Consumption, expenditure and income elasticities of fish in the. Percentage Daily per of total Per person fish person fish food Income consumption expenditure expenditure elasticities Region pesos pesos Metro Manila Other urban All urban Rural Luzon Visayas Mindinao Source: Florentino, el. al. (1985). Note: Figures in parenthese are kilograms a year.

10 There may also be some complementarity between the demand for fish and the price of rice because of their nutritional relationship and the importance of rice as the staple food of the region. 4.4 Changes in tastes Taste changes also have an important influence on food demand, particularly in the longer term. Changes in technology have resulted in a much greater range of foods being available to consumers in the region in more convenient forms. For example, the high acceptance of canned fish is thought to have resulted in a decline in demand for dried fish. Market demand for fish is directly influenced by fishing activities of consumers and this is a major factor behind high consumption of fish in areas in close proximity to fishing. Market demand for fish in these areas is lower because consumers have direct access to fish. A relatively high proportion of fish is obtained from non-market sources. Florentino et al. (1985) found that almost 20 per cent of fish consumed was directly obtained but this differed between the urban and the rural populations. Nearly 24 per cent of fish consumed in rural areas was obtained outside of market sources, compared with 9 per cent in urban areas. 5. Extra-regional demand The demand for exports from the region depends on the demand for and supply of fish in other markets and the transfer costs associated with supplying those markets with fish in the product form required. Southeast Asia has had a comparative advantage in some products because of relatively low labour costs, but has been disadvantaged in the supply of others because of the lack of the marketing infrastructure required to handle highly perishable products such as fish effectively. The demand for exports from the region is also influenced by relative incomes, prices and preferences in the main importing countries. Japan is the most influential country outside the region and, together with Hong Kong and Singapore, is a major importer of fish in Asia. Factors influencing the demand for fish in Japan vary between fish species. For high valued species, demand is highly responsive to both changes in income and price (a 1 per cent increase in income results in an increase of 1.8 per cent in expenditure on high valued fish). The demand for medium valued and low valued fish is relatively unresponsive to changes in income and price (see Table 9). In Japan (and a number of other markets) the scope for substitution between high priced fish and other products has been limited by quota restrictions on the quantities of substitute products (such as beef) that are imported. It is believed that such restrictions have increased the income responsiveness of the demand for fish. Changes in relative exchange rates are also important determinants of export demand through their effect on prices in the overseas market. The yen has been appreciating against nearly all currencies over time and this has served to boost demand for imports in Japan. The existence of both tariff and non-tariff barriers to trade in a number of overseas countries will also reduce the demand for exports from the region. In many importing countries there are fewer barriers for unprocessed fish than for processed fish products in order to protect their own domestic industries. One such example is the tariff and quota arrangements applying to canned tuna imported to the United States, while imports of whole tuna may enter relatively free of duty. Export demand for fish from the region is likely to be more responsive to income changes in importing countries and less sensitive to changes in price than is demand for fish within Southeast Asia. In general, income per person and the absolute growth in income in the main fish importing countries are relatively high. However, the proportion of income spent on food is fairly low, and consumer spending is more influenced by taste preferences than by nutritional requirements.

11 6. Long term changes in the Southeast Asian demand for fish In the previous two sections the main factors which influence the demand for Southeast Asia fish were identified (and, where possible, their effects on demand outlined). In this section, likely future changes in these factors and their impact on the demand for fish up to 1995 are discussed. 6.1 Population growth While population growth in the region is declining it is nonetheless expected to remain relatively high for the forecast period (approximately 1.85 per cent a year). The average growth of the economically active portion of the population is predicted to increase at a faster rate (at an average 2.2 per cent a year up to the year 2000, World Bank 1986), so that the commercial demand for fish is likely to increase more quickly than suggested by the growth rate of total population. 6.2 Income and economic growth Economic growth in Southeast Asia is projected to be strong over the forecast period, averaging over 5 per cent a year. Though starting from a lower base, this rate of growth is well above the forecast average for industrialised countries of around 3.3 per cent (see Table 11 for projections of growth in gross domestic product and per person gross domestic product). Economic growth within the region is expected to vary widely between countries, reflecting different factor endowments of countries in the region. In the more industrialised countries (Taiwan, Hong Kong and Singapore) economic growth is expected to be high, principally as a result of increasing export earnings and the impact of low oil prices on manufacturing. Tabk 11: Annual rates of change of gross domestic product, population and gross domestic product per person. GDP per GDP per Country GDP Population person GDP Population person Hong Kong Indonesia Malaysia Singapore Thailand Japan United States Source: United Nations (1985). In the less industrialised countries, economic growth depends mainly on a recovery of commodity prices. Indonesia and Malaysia are reliant, in part, on the recovery of oil revenues, while Thailand and the are more dependent on the recovery of markets for agricultural products. In the less industrialised countries an increasing proportion of total economic growth is expected to come from sectors other than agriculture.

12 6.3 Prices of other foods Changes in the price of rice are likely to influence the demand for fish, given that rice is the dominant staple food of the region. Rice prices, relatively depressed following a succession of good seasons in major importing countries, are expected to increase over the forecast period, but the timing and extent of this recovery is difficult to forecast because of the instability of the world market for rice (World Bank 1984). By comparison, real prices of wheat and coarse grains are projected to decline slightly over the forecast period as growth in supply is forecast to exceed demand growth. Some substitution of other grains for rice is expected to limit the impact of higher rice prices on demand for fish. Prices for the main meats in the region (pig and poultry meats) are also expected t~ decline slightly as a result of substantial productivity gains and lower cereal prices. While beef prices are likely to rise slightly in the longer term, consumption is expected to remain relatively low (World Bank 1984). As these products do not appear to be close substitutes for fish, the small changes expected in prices over the next ten years are not likely to have a significant impact on the demand for fish. 6.4 Changes in taste It is expected that diets in the region will become more varied in the longer term. However, the extent and timing of changes in diet are difficult to estimate. The population is relatively young, with a median age of 20.2 years, and the relative importance of the main youth category (15-24) will peak betweeh 1985 and This group is likely to be more amenable to changes in diet than others because of the freedom in personal consumption, unconstrained by family commitments. Taste changes are likely to be an important influence on demand for fish in the region over the next decade. Expenditure on fish purchases is far more responsive to changes in income than is the quantity of fish demanded, suggesting that the demand for higher quality of fish is likely to grow at a faster rate than the total demand for fish. It is likely that per person expenditure on fish will increase by around 1.3 per cent a year in the period and by more than 2.8 per cent a year in the period Changes in technology are likely to be an important factor behind this trend. More producers and consumers have access to improved handling techniques which overcome the restrictions associated with handling a highly perishable product in tropical conditions. As a consequence it is likely that more fish will be consumed fresh rather than dried and this is likely to increase yields because of the reduced processing involved. 6.5 Reduced subsistence opportunities Increasing urbanisation of the region is expected to increase the demand for fish because of the reduced subsistence possibilities. In 1985 nearly 29 per cent of the region's population lived in urban areas (United Nations 1986). This is forecast to rise to over 36 per cent in This change, combined with the reduced subsistence opportunities in an urban environment, is expected to increase the demand for fish in the region by around 8 per cent over the period. Assuming that the demand for fish is relatively unresponsive to income increases resulting from economic growth in the region (as argued), that real prices for fish are constant and that there are no major changes in relative prices for other products, some broad estimates of future demand are now possible. Using the results from Florentino et al. (1985) to take account of subsistance fishing (where around 10 per cent of fish consumed in urban areas was derived from non-market sources and 25 per cent derived from non-market sources in rural areas) Table 12 shows the estimated market demand for fish in 198'5 and The major growth in per person demand is expected to occur in Hong Kong, Taiwan and Malaysia. Only small growth in per person demand for fish is expected in the and this is likely to be as a result of increased urbanisation. Indonesian demand for fish is expected to show the largest increase in aggregate because, while economic growth is expected to be modest until oil prices recover, population growth will be relatively high. The demand for all foods is likely to increase as a result.

13 These estimates are likely to form the upper bound of demand levels because the assumption of constant prices implies that supplies of fish will be able to expand to meet any increase in demand at these prices. For this to occur there would have to be no biological or economic constraints to expansion of catches. This is obviously not the case. Table 12: Market demand for fish in Southeast Asia Per person Total Per person Total Country demand Population demand demand Population demand Hong Kong Indonesia Malaysia Singapore Thailand Taiwan Total Source: United Nations (1986); Bureau of Agricultural Economics (SAE). In these circumstances the quantity of fish demanded will depend on the interaction of long term supply with the regional demand for fish. To establish this it is necessary to know the fundamental quantity-price relationship of both supply and demand in the longer term. Total supplies of fish are likely to be relatively unresponsive to changes in price. The responsiveness will be directly related to the potential for expanding catches of species not currently utilised and to the adoption of new technologies and management methods to increase economic efficiency. The lower is this potential, the less responsive the long term supply of fish will be to changes in price. If no increase in supplies is possible, the increase in demand will be translated directly into higher prices. More realistically, some increase in supplies will be possible over the long term, but this may be less than the increase in demand, so that prices will rise in real terms. The domestic demand for fish in the region is likely to be relatively responsive to price because of the importance of fish to consumers and their relatively low incomes. As a consequence of these higher prices, fish consumption per person is likely to be reduced. 6.6 Export demand for fish The demand for exports from the region is expected to increase from its present level. Economic growth in the main market countries such as Japan and the United States is likely to be more moderate than within Southeast Asia, but the rate of population growth will be much lower, resulting in a relatively high rate of economic growth per person. While the aggregate demand for fish in these countries is less responsive to increasing incomes than in Southeast Asia, there are major market segments where high growth is likely. The market for high valued fish in Japan is one example and the US demand for fish to be eaten outside the home is another. Both markets have grown rapidly in response to income growth.

14 The demand for exports is also influenced by prices and exchange rate differences between exporting and importing countries. In general, price levels in more developed countries are higher than in less developed countries, reflecting in part the higher ihcome levels. Moreover,.the relative strength of the main trading currencies, such as the yen and the US dollar, increase the demand for exports from countries with weaker currencies. The current high cost of exporting fish from Southeast Asia resulting from a lack of processing and handling facilities is also likely to be reduced in the future. Improved facilities and adoption of better handling practices on board vessels that are more suitable for fishing for export markets are likely to reduce transfer costs and make exporting viable. This has already occurred in the prawn industries of the region. 7. Conclusions The market demand for fish in Southeast Asia is likely to increase by around 2.5 per cent a year over the period Given an unlimited supply of fish, this would translate into an increase in consumption in the region from an estimated 4300 kt in 1985 to 550 kt by Whether this increase in consumption will be realised dependeds on the level of supplies available either form whithin the region or from imports. If growth in supplies does not keep pace with demand (as seems likely) prices for fish will rise. This will dampen demand for fish and increase the susbtitution of other products. Higher prices for fish will also increase pressure for higher supplies through more commercial fishing activity and aquaculture ant through increased emphasis on processing of fish for food (such as through surimi) and on increased recovery rates. It is expected that the structure of demand for fish in the region will alter significantly, with the growth in demand for higher quality fish outstripping the growth in demand for fish as a whole. This may be reflected in a greater demand for increased services, such as better processing and handling, and higher demand for demersal rather than pelagic fish because of their better eating qualities. The major factor behind the projected growth in demand is the rate of growth of population. Although economic growth in the region is expected to be strong over the next decade, the relatively high rate of population increase will serve to limit the increase in incomes per person and therefore limit the growth in demand from this source. Moreover, it is likely that the responsiveness of demand to changes in income is relatively low in aggregate. While part of this extra consumption is likely to be accommodated-through increased imports of fish products, greater pressure will inevitably be placed on domestic fisheries to satisfy most of the demand. Depending on prospects for domestic supplies, fisheries managers may well face increasing problems in reconciling the potential supply-demand imbalance. References ASIAN DEVELOPMENT BANG, Key Indicators of Development Mamber Countries, MacMillan Press, London FLORENTINO, R.F., G. J. VILLOVIEJE, T.E. VALERIO, A.C. DOMDOM and E.R. RED, 'Fish consumption 1985 patterns in the ', ASEAN Food Journal 1(2), pp FA0 (Food and Agriculture Organization of the United Nations), Income elasticities of demand for agricultural 1972 products, Rome., Income elasticities of demand for agricultural products, Rome. 1976, Food Balance Sheets; Average: Per Caput Food Supplies ; Average 1967 to Rome., Yearbook of Fishery Statistics, Rome, (and previous issues) , Food Balance Sheets; , Average, Rome.

15 INTERNATIONAL LABOUR ORGANISATION, Yearbook of Labour Statistics 1983, Geneva KITSON, G. and J. MAYNARD, 'High value finishs markets in Hong Kong, Singapore and Japan' ADB/FAO 1983 Infofish Market Report, Vol. 8, Kuala Lumpur, Appendix KONJING, K. and M. VEERAKITPANICH, 'Food consumption and nutrition in Thailand', in Panayotou (ed.) 1985 Food Policy Analysis in Thailand, Agricultural Development Council, Bangkok, pp TAIWAN PROVINCIAL GOVERNMENT, Taiwan Agricultural Yearbook 1984, Department of Agriculture 1984 and Forestry, Taiwan., Taiwan Agricultural Yearbook 1985, Department of Agriculture and Forestry, Taiwan UNITED NATIONS, World Population Prospects: Estimates and Projections as Assessed in 1982, New York. 1985, World Population Prospects: Estimates and Projections as Assessed in 1984, New York VALENCIA, M.J. and J.B. MARSH, 'Southeast Asia: marine resources, extended maritime jurisdiction, and 1986 development', Marine Resource Economics 3(1), pp WORLD BANK, The Outlook for Primary Commodities; 1984 to 1955, World Bank Staff Commodity-Working 1984 Papers No. 11, washington' DC., World Development Report 1986, Report No. 6134, Washington DC. 1986