Unlike the produce industry, the fishing industry is largely governed by quotas, also known as the Total Allowable Catch (TAC). Major sand eel producers like Denmark and Norway plan to increase their TAC in 2018. Although prevailing El Niño–Southern Oscillation (ENSO), neutral conditions pose no threat to sand eel abundance, rising concerns on water contamination and overfishing encourage countries to adopt a more precautionary approach to fisheries management. With Brexit looming, Danish sand eel fishermen anticipate a dismal financial outlook if the UK imposes restrictions on their access to British waters, which is known for high populations of a variety of sand eel called lesser.
In China, the government seeks to mitigate severing pollution through stricter regulation. Lack of fish meal availability due to quality non-conformance will have China be an import-dependent country for fish feed, contributing to overall market growth.
The Danish fishing industry has long benefited from having access to the British waters since the 1400s. The North Sea, in particular, is abundant in lesser sand eel, which accounts for more than 90% of sand eel catches.¹ 40% of Danish fishermen’s catches are 200 miles within the British economic zone. Some coastal communities in Denmark are fully dependent on British waters. When the UK leaves the EU, the British government will most likely restrict Danish access to a large part of its waters.
Denmark, Norway and Sweden are major producers of sand eel (source: Tridge)
British fishermen have long suffered from fishing quotas imposed by the European Union. However, after Brexit, Britain plans to set its own quota and regulations. While increased quota may benefit its fishing industry in the short-run, drop in price would ensue from more fish that is being brought by the British fleets. Similarly, if Denmark loses access to British waters, the country will stand to lose its market dominance.
China traditionally has been a large importer and producer of aquaculture feed ingredients like fishmeal and oil. Although China had previously satisfied 30% ² of its demand for fishmeal through domestic production, recent changes in environmental policies resulted in production reduction. The country’s domestic output, for example, was down by half in 2017.
Starting in 2018, producers will have to pay taxes on their livestock that surpass a certain size. Producers in the aquaculture industry may soon face similar prospects. A series of new standards that have been introduced to the industry has made domestically produced fishmeal difficult to reach the market if it failed quality control. High tax on large livestock and decreased availability of fish feed have overall led to importing fishmeal comparably cheaper.
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In July 2017, for example, China imported 210,000 tons of fishmeal, a 160% increase from the previous year. If the Chinese government plans to further tighten its supervision on environmental protection, the fishmeal market is expected to grow. Because 9% of fishmeal production comes from sand eel, the demand for sand eel will rise proportionally.
In 2017, Norway and Denmark jointly raised the sand eel market supply. Denmark’s sand eel harvest, for example, increased tenfold from the previous year. Peruvian fishmeal production increased by 40% amidst supply overflow. However, restricted fishing in British waters followed by Brexit suggests that Denmark may not enjoy long-term economic prosperity from its fishing industry. On the other hand, exclusive fishing rights for British fishermen would allow the UK to emerge more dominantly, possibly, as a global producer of sand eel and other fishmeal ingredients.
China has consistently been the main consumer market for fishmeal largely due to its aquaculture industry. In 2017, nearly 80% of Peruvian fishmeal and fish oil were exported to China. Tightening environmental regulation on domestic fishmeal production would likely have China depend on imports for a while, contributing to sand eel market growth.
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1. St. Andrew's House. “Sandeels.” Demographics, Scottish Government, St. Andrew's House, Regent Road, Edinburgh EH1 3DG Tel:0131 556 8400 Ceu@Scotland.gsi.gov.uk, 8 Dec. 2009, www.gov.scot/Topics/marine/marine-environment/species/fish/sandeels.
2. Einstein-Curtis, Aerin. “IFFO: Chinese Fishmeal Imports See a Boost.” Feednavigator.com, William Reed Business Media Ltd., 31 Oct. 2017, www.feednavigator.com/Article/2017/10/31/IFFO-Chinese-fishmeal-imports-see-a-boost.
3. “Sandeel Suppliers, Wholesale Prices, and Global Market Information - Tridge.” Global Trading Platform Tridge, www.tridge.com/intelligences/sandeel.