31 July 2007
Nairobi — The success of the export trade in fish from Lake Victoria all but crushed the small scale fisherman's domestic sales and set the stage for overexploitation.
The downward slide of the Sh4-billion-a-year fishing industry has not attracted much attention. But it represents an interesting study of economic behaviour, with key actors caught in a classical "tragedy of the commons".
Exported fish, which is only half the volume pulled out of the lake, accounts for 90 per cent of the value in the Sh4-billion-a-year fishing industry. Domestic sales consist mostly of low-value export rejects.
The 'tragedy' is a type of social trap that involves a conflict over resources between individual interests and the common good.
It occurs when there is a tendency towards free access and unrestricted demand for a limited resource. Ultimately, the resource is doomed through over-exploitation.
This problem was not lost on the 300 or so fishermen who trooped to the lakeside town of Homa-Bay early this year to discuss the industry. They were but a tiny fraction of Kenya's fishing army.
With only six per cent of the lake in Kenyan territory, the country has a disproportionately large population of about 55,000 fishermen.
Uganda with 43 per cent of the lake has 38,000, while Tanzania, with slightly half of the total water mass, has only 40,000 fishers.
Lake labourers became dependent on loans
During the meeting, Dr Richard Abila, Assistant Director Kenya Marine and Fisheries Research Institute (Kefri), told the fishermen that they were the biggest impediment to growth in the industry.
"Over-fishing in particular areas and resettlement endangers the fish in the lake," said Dr Abila. His comments are vindicated by a report titled: Fish in Kenya: The Nile-perch Chain, which says that the growth in the number of small-scale fishermen has resulted in over-fishing - sometimes by illegal means - threatening fish stocks in Lake Victoria.
The report tracks the beginning of the changes to the formation of a Nile Perch export chain in the 1970s. Initially this boosted the supply of fish through the introduction of superior technology.
Eventually, however, traditional jobs like fishmongers were lost as a buying-agent system took over and created demand for more fishermen.
These new lake labourers became dependent on loans from these buying agents to obtain access to boats and fishing gear, which in turn reduced their power in price negotiations.
"The international fish chain, as created by the (large-scale) processing industry, changed the fish-processing and marketing system considerably," the report concludes.
Fish stock is common property
The impact has been immense because "fishing was, and still is, a main source of income for households in the Lake Victoria area."
The report, authored by Ronald Schuurhuizen, Aad Van Tilburg and Emma Kambewa of the Department of Social Sciences at Wageningen University, Netherlands, says addressing the social trap remains a challenge.
"The tragedy... is that the fish stock is common property but every individual fisherman is trying to maximise his output," the team writes.
"The resulting (total) output is not in line with the public optimal level, which is based on the regeneration capacity of the fish stock."
The fact that this started happening about one decade ago is shown by a comparison of the daily catches of around 400-500kg in 1981 and about 100-150kg in 1996. Today, s ome fishermen say catches are down to 30kg.
Globally, an estimated 25 per cent of the fish stocks are under or moderately exploited, 50 per cent of stocks are fully exploited, 15 per cent are over exploited and about 10 per cent have been depleted or are recovering from depletion.
Dwindling stocks and low catch
Dwindling stocks and low catch have been cited as some of the factors making fish expensive in Homa-Bay and other lakeside towns like Kisumu.
"Competition for fish between the domestic and export market is also unequal and the drive to sell fish overseas has resulted in reduced local availability," says the report.
In the past few years, fishers have had to contend with pressure from Government to go easy on the lake, to allow recovery of fish stocks and certain species of fish believed to be in danger of depletion.
However, competition for fish between the domestic and export markets has been unequal because of the relatively high prices offered by the international markets and power of the fish processing industry.
For example, it costs Sh90 to buy one kilogram of tilapia directly from a fisherman on the shores, while the same goes for about Sh450 once it has been exported to a country like Sweden.
Maintaining high quality standards could help improve fishermen's incomes. The report, however, says that there is insufficient quality control in their part of the fish chain.
Supply chain here is also long
It gives the examples of the absence of quality monitoring, including throwing of fish on the landing beaches, insufficient use of ice on boats and long waiting times of the trucks at the beach. All this results in early deterioration of fish.
The domestic chain, which is groping in the shadows of exports, is still characterised by small-scale fishermen, but prices have been soaring due to a number of factors.
The supply chain here is also long because fishers sell to wholesalers who then supply the fish to retailers who in turn sell to the consumers. In all, the fish may change hands six or seven times before ending up on the family table, substantially escalating retail prices.
Researchers from Kefri are now rooting for right gear for each type of fish in addition to implementing closed seasons, gazettment of landing sites, and licensing of fishermen and traders.
"If the management of the Lake is not properly taken care of, the situation is likely to worsen come next year," said Dr Abila. "That is why we are training beach management units (BMUs) to manage the resource."
Domestic markets are suffering
Although the international fish chain is credited with creating new market opportunities that have helped to stimulate local economies, the report says that this has mainly happened at the expense of traditional domestic fish markets at the beaches and in the interior parts of the country.
"The domestic markets are suffering due to the creation of a buying-agent system by the processing industry. It has made the fishermen dependent on loans from the buying agents to enable them obtain access to boats and fishing gear, which in turn has reduced their power in price negotiations."
This has led Kefri and a number of NGOs to initiate training for thousands of fishermen operating on Lake Victoria.
The trainings are mainly meant to coach them on negotiating skills, control over-fishing and protect dwindling stocks. Training is conducted under the umbrella of BMUs.
"We have realised that it might take long to teach some of them how to negotiate, so we've been encouraging them to start co-operative societies. That way, they will be able to sell directly to the co-operatives and avoid exploitation," says an employee of an NGO, which is currently training fishers in Asembo Bay beaches.
Foreign Direct Investment
The report estimates that more than 180,000 jobs have been created in the industry in the last two decades.
"The opportunity to earn foreign exchange by selling fish in the European Union or the United States led to an explosion of activities on almost 300 landing beaches of the Kenyan part of the lake," it says.
It has also led to Foreign Direct Investment by fish processing companies from countries like Israel, US and UK. In most cases, the activities of these plants involve unloading, washing, skinning, filleting, cleaning, packing and freezing to make the fish ready for the European market. Most of these companies buy fish through independent buying agents, who are also in charge of collecting fish from the landing beaches and bringing it to the processing factories.
The fishermen, says the report, are subject to exploitation by buying agents because they can make the fishers dependent through granting loans without formal contracts for undefined periods.
Need for improved financial systems
The report says there is need for improved financial systems to enlarge the ability of fishermen to acquire loans, government involvement in catch standards, and joint action for supply-chain governance in order to create a more competitive market and provide the desired sustainability. In a way, this will also check on a number of imbalances and allow the local population to also benefit from added value.
"A large part of the value added is taken by the buying agents, buying subagents and others occupying the chain between the fishermen and the processing industry. Also, the many people present in the chain for weighing, counting and carrying fish earn a part of the added value.
The price paid for fish to the fishermen is sometimes about half of the price received by the buying agent that is delivering fish to the processing plant," says the report.
During the Homa-Bay meeting, the fishermen complained about poor prices and lack of clear policies on the improvement of the Sh4 billion sub-sector.
Call for optimisation through product diversification
Under the aegis of Lake Victoria Fishers Co-operative Society, they proposed fixed export prices to save them from manipulation by middlemen.
According to the report, focus on only one species, the Nile perch, for export implies a considerable risk. About 50 per cent of all the fish production at Lake Victoria is related to the Nile perch.
It recommends the optimisation in the chain through product diversification, but says this could be difficult because there are almost no other choices.
"There are almost no incentives for fishermen to change the current status quo because of several market failures. For example, early subsidies for processing factories, provided by development banks and aid agencies led to underutilisation of processing capacity in the area."
In the downstream part of the fish channel, which runs from the processing industry to the export markets, states the report, information on prices, quality, quantity and standards is quite clear.
"In the upstream part of the channel, between fishermen and processing industry, the fishermen do not have insight in the price that the processing industry is willing to pay for their fish, and this price can differ among beaches and buying agents," says the report.
It adds that this is the result of an incomplete information flow and an interlocked market system.
"The fishermen are dependent on the price that the buying agents are willing to pay," the report says. "Cooperation among buying agents agreeing on which price to buy, is common, and leads to a kind of monopolistic buying behaviour on the beaches."
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