The fisheries sector in Italy

Transcription

1 The fisheries sector in Italy Check-up 2008

2 Executive Summary The Check-up on the Italian fisheries sector provides an analysis of fishing, aquaculture and the fish and seafood processing industry, using a series of economic indicators related to supply and demand (added value, production, employment and productivity, costs and prices, consumption, and trade). These indicators are analysed both at national level, as part of the agricultural and food industry sector, and at European level, compared with the fisheries sector trends in the main countries of the European Union. By extending the analysis to the period, it was possible to determine and interpret the primary changes that have taken place in the fisheries sector at national and international level. For the year 2008, some of the available data and estimates have already indicated the first effects of the economic crisis on the Italian fisheries sector; such effects add to the structural difficulties that the ocean fishing sector, more than any other, has been experiencing in the last few years. In Italian agri-food, the fisheries sector occupies a secondary position. That is shown by the fact that the incidence of fishing and aquaculture on the entire primary sector (agriculture, forestry and fishing subsectors) in 2007 did not exceed 5% in terms of production and 5.9% in terms of added value. In the industrial sector, the role of fisheries is equally marginal, considering that in 2007 the turnover of canned fish accounted for less than 1% of the total food industry turnover. The share of frozen fishery and seafood products was even lower. The impact of the fisheries sector on the agri-food trade balance, on the other hand, was remarkable: in 2007, fisheries products amounted to 11.2% of total agri-food imports and only 2.3% of total exports. More than a third of the agri-food deficit was due to trade in fish, mollusks and crustaceans. From the analysis of the dynamic of the main economic variables in the fisheries sector, the picture that emerges is not very positive. On the production front, fishing in Mediterranean waters, following the 2006 recovery, showed a drop in catches (-6.5%) in 2007, which was large enough to determine a drop in national fisheries and seafood production (- 3.1%). The fall in fishing volumes recorded in 2007 can be traced back to less fishing activity, because the cost of fuel, with a short-term increase from March and a trend increase from the second half of September, discouraged fishing expeditions in poor weather conditions. No less important was the reduction in the fishing effort due to the decline in the number of active fishing vessels: such decline has been steady over the last few years. In the near future, there could be another substantial reduction in fishing capacity, resulting from the plan, adopted by Italy in August 2008, to put a definitive halt to fishing. The latest Ismea estimates for 2008, based on the historical Mipaaf-Irepa data series, indicate a consistent decline in catches, possibly matched by an equivalent reduction in business revenues. Although fuel has shown signs of price decreases beginning in August, no recovery appears to be in sight for the average activities of fishing vessels, not only because of the temporary emergency thirty-day halt in the Adriatic and Tyrrhenian seas, but also because of the unfavourable weather conditions at the end of November. 2

3 The social and economic impact of the reduction in fishing effort over the last few years has not been insignificant, considering that the number of people employed in ocean fishing in 2007 dropped to a little more than 30 thousand units, as against 38 thousand in 2002 and nearly 47 thousand in The reduction in workforce is probably due to a drop in the profitability of the sector, which is constantly subject to fluctuations related to exogenous factors (such as climate) which affect fishing activities. The latest Irepa data for the financial statements of fisheries show that revenues decreased more dramatically than catches in 2007, the reasons being a reduction in the average prices of some of the main fisheries products mainly anchovies and a variation in the composition of the haul, which contained smaller quantities of species with a higher unit value (deep-water rose shrimps, hake, swordfish, and scampi). The fall in earnings, together with the reduction in less-than-proportional production costs, determined a decrease in gross profits for businesses, as well as in compensation for work on board. The latter dynamic has to do with the slight decrease in the number of vessels recorded in 2007 and, above all, with production trends, due to the widespread application of piece-rate contracts, where the salary is strictly tied to haul growth patterns. In 2007, the cost of fuel affected the total costs for ocean fisheries by 51% (after salary expenditure), and by approximately 20% on overall earnings in the sector. For 2008, the likely forecast is that of a marked deterioration in profitability for the sector. At year-end, the average price of automotive fuel was (after local taxes) /litre, with a price increase of approximately 29% with respect to A weak demand and competition from imported products are among the main reasons for decreasing or stable production prices for many of the species fished in 2007, despite the reduction in catches. Unlike in the Mediterranean fisheries division, positive signs have been seen in the aquaculture division which, according to the latest Api data, recorded an increase in production of 2.2% in volume and 4.1% in value over 2007, to be ascribed to the positive dynamic of venericulture (shellfish) and the farming of sea bass and bream. The trout segment, while still one of the more productive and profitable, has been negatively affected by an unfavourable positioning on the Italian market, as compared to more economic importation products (for example, pangasius or catfish) and products that are more appreciated by customers and therefore can be sold at higher prices than trout (sea bass and bream primarily). The drop in production in 2007 might however be related not only to the reduction in national demand, but also to the decrease in foreign demand. The market trend of the euryhaline species sea bass and sea bream- was for the most part positive up until 2007, although it was heavily influenced by imports. This was confirmed by the low self-sufficiency rate, amounting to 39% for sea bream and 34% for sea bass. Over 2008, the enormous quantity of foreign products had an even greater influence on domestic market dynamics, which were again compromised in the second half of the year by the ongoing economic crisis. A heavy production of sea bream in Greece poured onto the Italian market at very low prices, thereby conditioning the sales prices of national producers. The abundant supply of sea bream was absorbed by a heavily increasing domestic demand, partly thanks to an adjustment in consumer prices, while sea bass sales decreased. The price reduction for sea bream might have 3

4 caused a substitution between the two species, as they are similar products with the same uses. In the last two years, the market trend for mussels has been stable overall. The Italian market for clams, on the other hand, has shown a different pattern, as it depends exclusively on domestic production, both picked and (especially) farmed. Unlike 2007, the year 2008 does not promise to be particularly positive in terms of production, due to mass fish deaths over the year. This could be the reason for the increase in average production prices (and, consequently, consumer prices). Prices, however, stopped rising in the last quarter of the year, when supplies began to grow again to meet demand: this segment, too, has started to feel the effects of the general economic trend. In 2007, overall fisheries production experienced a drop, not only in Italy but also in many other European Union countries, almost invariably due to a decline in the number of catches. The scenario in the community fisheries division is somewhat negative, considering the -3.9% figure recorded on the average of catches in the EU-27 over the period from 2002 to 2007, along with a reduction in the fleet which, in the EU-15 alone, resulted in the expulsion of more than 10 thousand vessels in the five-year period under examination. Aside from the excessive fishing capacity, which might be the reason behind the overexploitation of many fish stocks, the Community fleet, like the Italian fleet, suffers from low profitability, as was clearly seen with the effects of fuel price increases over the course of In 2007, the fish-processing and conservation and fish-based products industry experienced a trend reversal, following a slight growth in also closed with a drop in production. The drop was slight and in line with that of the food industry, which continued to show its anti-cyclical qualities in a stage of economic crisis. The difficulties experienced by the Italian fishing industry, also found in many other European industrial sectors, particularly regard the division of canned tuna, the most important in Italy in terms of processing and conservation of fish and fish-based products. In the last few years, the increase in production costs, resulting primarily from the reduction of tuna catches, has led Italian businesses, completely dependent on foreign countries for the provision of raw materials, to change their own production and commercial strategies. On the one hand, the import of frozen tuna is again on the increase at the expense of semi-processed forms such as tuna loins, which are not as cheap. On the other hand, the need to reduce costs has led many businesses to relocate production to areas near the fishing zones and where the cost of manpower is lower. At the same time, a number of Italian brands have moved abroad, especially to Spain. A modest domestic demand has thus been increasingly met by foreign products. The increase in energy costs has further impacted the fisheries industry. Despite the fall in quantity in the primary sector as well as the industrial sector, there was a lower growth rate in imports over 2007 than in 2006, while exports, for the first time since 2002, remained relatively stable, partly thanks to a drop in ocean catches. The drop in production and a slowdown of imports brought to light, in 2007, stagnation in domestic consumption. The domestic component's internal demand has shown a marked decline in growth (+0.7% as against +4.9% in 2006), in the face of a slight increase in consumer prices for fisheries products (+1.6%). According to the most recent Ismea estimates, 2008 closed with a reduction in the final demand. The per capita 4

5 consumption was down by 20.6 kg, the lowest level in the last 10 years. The decrease in domestic consumption is expected to have especially affected the extra-domestic component, as domestic purchase of fisheries products showed an overall decrease by 0.8% with respect to 2007, with constant food consumption levels (+0,5%). In particular, the demand for fresh fish has experienced a marked reduction (-3,1%). In contrast to this, the consumption of processed products has grown by 1.7%. Among these, bulk frozen fish products, which are cheaper than fresh products, have shown a slight drop in price in Canned tuna, because of its multiple uses, has also shown some recovery with domestic consumption, despite the price increase in As a consequence of weak demand, Consumer prices of fresh fisheries products have not shifted from the average level of The +1.3% variation from the average price, recorded for the whole of the fisheries category (still lower than that of agri-food products), is related to the price increase of processed products. Foreign supplies also seem to have been affected by the decrease in domestic demand. According to Ismea estimates, 2008 should have closed with a drop in imports, reversing a growth trend which had been going on for a number of years. At the same time, exports, which were stable in 2007, should have shown a remarkable reduction (greater than 7%) at year-end, partly due to the decrease in domestic production. If these dynamics are confirmed by Istat s final balance of December, the trade balance for the fisheries and their structural deficit should record a turn for the worse in the main indicators for At the Community level, Italy still depends the most on foreign trade. The level of the deficit in 2007 turned out to be the highest in terms of overall trade exchanges and intra-eu trade. In trade exchanges outside the EU, Italy is preceded by Spain, the United Kingdom and Sweden. Italy s role as an exporting country is absolutely marginal, with a share of the community export down to 3.2% in Furthermore, an extremely high percentage of the exports (78.6% in 2007) is directed to the EU. Spain, Germany, France and Greece absorb approximately 60% of the national export. In the main exporting countries, Italy occupies a position as secondary supplier, as fresh Italian products often lack a specific identity that differentiates them from their direct competitors, and consequently, can only compete on price. With a few exceptions (in the case of, for example, anchovies on the Spanish market) the very slight differentiation in the supply is making Italy s competitive position increasingly more vulnerable to products from Third World countries, selling at lower prices. On the import front, even though slightly less than 60% of all the purchases are made in the EU (the percentage reaches 80% if imports of fresh fisheries products are considered), in the last few years it has been primarily countries outside the EU that have increased their sales in Italy. Ecuador, Thailand, Argentina, Peru, Morocco, Mexico and India are some of the main suppliers of transformed fisheries products, and in the last few years they have managed to gain growing market shares by applying lower and, in some cases, decreasing prices. 5